The Manufacturers Association of Nigeria says the first half of 2024 manufacturing reports have underscored the urgent need to implement decisive and coherent economic reforms.

Francis Meshioye, MAN president, said this in the association’s first-half economic report on Monday in Lagos.

Mr Meshioye said the reforms were to address the challenges being faced by manufacturers.

He said the report focused on manufacturing indicators such as capacity utilisation, production value, inventory, local raw materials utilisation, and investment and expenditure on alternative energy sources.

Mr Meshioye noted that the first half of 2024 was marked by significant challenges for Nigeria’s manufacturing sector, including high operational costs, declining consumer demand, and rising inflation.

He said while some sectors showed resilience and growth, others struggled with declining production values, rising inventories, and reduced employment.

He identified key areas of focus as enhancing policy consistency, improving the business environment, and fostering economic diversification.

“The success of these reforms will be crucial in reversing the current economic downturn, creating jobs, reducing inflation, and improving the overall welfare of Nigerian citizens.

“As the country navigates through these turbulent times, the resilience of its policy framework and the effectiveness of its economic management will determine the path forward,” he said.

Mr Meshioye said the global economy was resilient during the period, with major economies avoiding a severe downturn and bringing down inflation without increasing unemployment.

He, however, noted that the lingering impact of high interest rates, debt sustainability challenges, continuing geopolitical tensions and ever-worsening climate risks continued to pose challenges to growth.

He said this threatened decades of development gains, especially for developing and small island developing states.

Mr Meshioye said the economic outlook for many African countries had deteriorated because of high inflation, elevated borrowing costs, persistent exchange rate pressures and lingering political instability.

He added that Nigeria’s economy continued to grapple with formidable challenges that have stymied its growth potential and eroded economic stability.

He noted that despite efforts to stabilise the economy, including aggressive monetary tightening by the Central Bank of Nigeria, the desired outcomes in curbing inflation and stimulating growth remained elusive.

The MAN president said that capacity utilisation in Nigeria’s manufacturing sector showed a slight year-on-year decline, from 56.4 per cent in H1 2024 to 56.5 per cent in H1 2023.

He, however, revealed a 2.8 per cent increase compared to H2 2023, reflecting some recovery.

“Real manufacturing output in Nigeria declined by 1.66 per cent year-on-year in H1 2024, falling to N1.34 trillion from N1.36 trillion in H1 2023. In spite of this decline, the sector saw a 9.97 per cent increase compared to H2 2023, driven by a baseline effect.

“In nominal terms, the manufacturing sector’s output in Nigeria increased by 30.38 per cent year-on-year, reaching N5.34 trillion in H1 2024. This growth was primarily driven by the sharp rise in domestic prices, as reflected in the Consumer Price Index, which surged to 34.19 per cent in June 2024,” he said.

Mr Meshioye said the manufacturing sector’s local raw material sourcing improved slightly to 56.03 per cent in H1 2024, up from 55.4 per cent in H1 2023.

According to him, the modest increase indicates a gradual shift towards local sourcing, driven by difficulties in obtaining foreign exchange.

He, however, noted that some sectors, such as non-metallic mineral products and textile, apparel and footwear, faced declines in local sourcing, reflecting the challenges of shifting away from imported raw materials.

(NAN)