As Nigeria's national grid continues to falter and energy prices rise, manufacturers spent a staggering N708 billion on alternative energy in the second half of 2024—a 75% increase from the N404.8 billion recorded in H1 2024.
The data, released in the Manufacturers Association of Nigeria (MAN)'s Second Half Economic Review 2024, paints a troubling picture of a sector burdened by high energy costs, surging inflation, and shrinking consumer demand. According to the report, total alternative energy expenditure for 2024 hit N1.11 trillion, a 42.3% rise from the previous year.
Despite a slight improvement in daily electricity supply (now 13.3 hours per day), a 200% hike in tariffs for Band A consumers and frequent grid collapses pushed manufacturers further into costlier self-generation options. In 2024 alone, Nigeria experienced 12 national grid collapses.
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Unsold goods surged to N2.14 trillion—an 87.5% rise—reflecting weak consumer demand and rising production costs. Sectors hit hardest included Food, Beverage & Tobacco (N229.41bn in energy costs), and Chemical & Pharmaceutical (N208.68bn). The Textile, Apparel & Footwear industry saw a dramatic rise in energy spend—from N6.97bn in 2023 to N26.45bn in 2024.
Rising interest rates compounded the strain. Commercial bank lending to manufacturers hit 35.5% in 2024, up from 28.06% in 2023, driven by the CBN's aggressive rate hikes that brought the Monetary Policy Rate (MPR) to 27.50%. This pushed manufacturers' finance costs to N1.3 trillion and led to a 35.3% drop in real investment, which fell to N658.81 billion.
MAN's Director General, Segun Ajayi-Kadir, noted that while nominal output rose to N33.43 trillion—driven largely by inflation—real output growth remained subdued at 1.7%. Capacity utilization improved slightly to 57.0%, and local sourcing of raw materials rose to 57.1%, but these gains were overshadowed by forex volatility and high borrowing costs.
Ajayi-Kadir urged the government to stabilize macroeconomic conditions, improve energy reliability, and create easier access to financing to support manufacturers—many of whom remain under severe pressure.
