Nigeria’s manufacturing sector experienced a staggering decline in growth, as its year-on-year (YoY) nominal GDP growth plummeted by 90.11% in the third quarter of 2024.
This is according to the latest Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS).
The sector’s growth fell from 36.59% in Q3 2023 to a mere 3.62% in Q3 2024, reflecting significant challenges across its sub-sectors and highlighting the urgent need for remedial measures.
What the data says
Despite recording a quarter-on-quarter growth of 31.67% in nominal terms, the sector’s contribution to nominal GDP dropped to 14.30% in Q3 2024, down from 16.18% in the same period the previous year.
The GDP report read: “Nominal GDP growth of the Manufacturing sector in the third quarter of 2024 was recorded at 3.62% (year-on-year), 32.97% points lower than the figure recorded in the corresponding period of 2023 (36.59%) and 1.72% points higher than the preceding quarter figure of 1.91%.
“Quarter-on-quarter, growth of the sector was recorded at 31.67% during the quarter. The contribution of Manufacturing to Nominal GDP in the third quarter of 2024 was 14.30%, lower than the figure recorded in the corresponding period of 2023 at 16.18% and higher than the second quarter of 2024 at 12.68%.”
Real GDP growth in the manufacturing sector was 0.92%, marginally higher than the 0.48% recorded in Q3 2023 but lower than the 1.27% achieved in Q2 2024.
The sector’s real contribution to GDP stood at 8.21%, a decline from 8.42% in Q3 2023 and 8.46% in Q2 2024.
The GDP report noted: “Real GDP growth in the manufacturing sector in the third quarter of 2024 was 0.92% (year-on-year), higher than the same quarter of 2023 and lower than the preceding quarter by 0.44% points and 0.35% points respectively.
“The growth rate of the sector on a quarter-on-quarter basis stood at 6.74%. The Real contribution to GDP in the 2024 third quarter was 8.21%, lower than the 8.42% recorded in the third quarter of 2023 and lower than the 8.46% recorded in the second quarter of 2024.”
The manufacturing sector comprises thirteen activities: Oil Refining; Cement; Food, Beverages and Tobacco; Textile, Apparel, and Footwear; Wood and Wood Products; Pulp Paper and Paper Products; Chemical and Pharmaceutical Products; Non-metallic Products; Plastic and Rubber Products; Electrical and Electronic; Basic Metal and Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.
What you should know
The sharp decline in the sector’s GDP growth underlines the persistent structural and operational challenges facing manufacturers in Nigeria.
These include limited access to foreign exchange, high production costs exacerbated by erratic power supply, and import dependency on raw materials.
- The impact of these constraints has led to reduced industrial capacity utilization, directly affecting job creation and export diversification efforts.
- Sub-sectors like food, beverages, and tobacco—traditionally drivers of manufacturing growth—also showed limited momentum, further dampening overall sector performance.
- Odiri Erewa-Meggison, the Chairman of the Export Promotion Group within the Manufacturers Association of Nigeria (MAN), recently said that the current period is the most challenging in the history of the manufacturing sector.
- The Manufacturing Association of Nigeria (MAN) further reported a concerning trend within the industry, revealing that about 767 manufacturing companies shut down operations while 335 experienced distress in 2023. This development was attributed to various economic difficulties, including exchange rate volatility, rising inflation, and a general worsening of the investment climate.
- These adversities have taken a toll on the manufacturing sector, significantly impacting its performance and sustainability.
- The manufacturing sector’s struggles are reflective of broader economic issues, including challenges in power supply, access to finance, and infrastructural deficiencies, which have impeded the sector’s productivity and growth potential.
- Also, the persistent inflationary pressures and currency volatility have exacerbated these challenges, leading to reduced consumer demand and higher production costs.
Earlier this year, MAN projected a tough start for the manufacturing sector in 2024 but anticipated improvements towards the third quarter.
The Director General of the group, Mr. Segun Ajayi-Kadir, said that the prospect of recovery relies heavily on implementing policy stimuli and a synthesis of domestic growth through export-focused and trade strategies.
This approach is expected to enhance resilience, foster steady growth, and ensure the sector gains significant traction this year.
