The Manufacturers Association of Nigeria (MAN) has expressed concerns over the performance of the manufacturing export sector in 2024, despite a reported 65.84% increase in the value of exported manufactured goods compared to 2023. While the gross value reached N2.28 trillion in 2024, up from N778.44 billion in 2023, MAN argues that this figure falls short of expectations and does not reflect genuine growth within the sector. The association attributes this underwhelming performance to a challenging operating environment characterized by high energy costs, exorbitant borrowing rates, and volatile exchange rates, all of which have hampered the sector’s ability to reach its full potential. The significant drop in export value during the fourth quarter of 2024, down 52.48% to N494.22 billion, further underscores the sector’s vulnerability to these unfavorable conditions.
MAN emphasizes that the reported increase in export value should not be misconstrued as actual growth. The association points out that manufacturing companies are operating far below their installed capacity, indicating a significant untapped potential for expansion and increased output. While the year-on-year increase is statistically notable, it masks the underlying struggles faced by manufacturers, who continue to grapple with a hostile business climate that stifles productivity and profitability. MAN stresses the need for a more nuanced understanding of the sector’s performance, looking beyond the raw figures to consider the broader context of operational challenges and the industry’s capacity utilization.
A key concern raised by MAN is the government’s alleged failure to disburse the Export Expansion Grant (EEG), a vital financial instrument designed to incentivize and support non-oil exports. This grant, which historically has proven effective in boosting export performance, has been subject to significant payment backlogs, effectively crippling its intended impact. MAN asserts that consistent and timely payment of the EEG is crucial for unlocking the full potential of the manufacturing export sector. This would not only generate higher foreign exchange earnings but also encourage greater participation in the formal export channel, potentially drawing informal sector operators into a more regulated and transparent trading environment.
The challenging operating environment for manufacturers, characterized by high production and distribution costs, further compounds the sector’s woes. According to MAN’s Q4 2024 Manufacturers Chief Executive Officers Confidence Index, these costs surged by 18.2% during the quarter, compounding the existing pressures on profitability. This increase, coming on the heels of a 20.1% rise in the previous quarter, highlights the persistent inflationary pressures facing manufacturers, squeezing margins and hindering their ability to compete effectively in the global market. The cumulative effect of these escalating costs creates a significant obstacle to growth and underscores the urgent need for policy interventions to alleviate these burdens on the manufacturing sector.
The NBS data provides further insights into the composition and destination of manufactured exports. The main export commodities in Q4 2024 included unwrought aluminum alloys, primarily destined for Japan and China, dredgers exported to Ivory Coast, and cathodes also shipped to Japan and China. Regionally, Africa absorbed the largest share of manufactured exports, valued at N215.85 billion, followed by Asia at N165.97 billion and Europe at N62.13 billion. This breakdown reveals the key markets for Nigerian manufactured goods and highlights the importance of maintaining and strengthening trade relationships within these regions.
MAN’s concerns underscore the need for a comprehensive and proactive approach to bolster the manufacturing export sector. Addressing the challenges related to the operating environment, including high energy costs, access to finance, and exchange rate volatility, is paramount. Furthermore, the government’s commitment to fulfilling its obligations regarding the EEG is crucial for providing manufacturers with the financial support they need to compete effectively in the international market. By implementing these essential measures, the government can create a more conducive environment for manufacturing growth, enabling the sector to realize its full potential and contribute significantly to Nigeria’s economic diversification and prosperity.
