The inventory of unsold finished goods in Nigeria’s manufacturing sector rose to N2.14 trillion in 2024 as subdued consumer demand and persistent foreign exchange pressure continue to erode sales across key industries.
The spike represents a major setback for manufacturers already contending with rising input costs and tightening access to credit.
According to the Manufacturers Association of Nigeria, the increase in unsold goods was driven by weakening purchasing power, high inflation and the sustained volatility in the foreign exchange market.
These factors have elevated the cost of production and pushed retail prices beyond what consumers can afford in the current economic climate.
The association noted that manufacturers in food, beverages, textiles and footwear faced the sharpest inventory accumulation as demand for non-essential goods declined across urban and rural markets.
Despite marginal improvements in capacity utilisation, firms are struggling to clear finished stock as inflation reached multi-decade highs and consumer income stagnated.
The naira’s depreciation against major currencies further compounded cost pressures with manufacturers reliant on imported raw materials facing unpredictable pricing and delayed shipments.
This has limited the flexibility of local producers to adjust output or reduce prices to stimulate demand.
In response to subdued sales, many companies scaled back production targets and postponed expansion plans. Investment in manufacturing fell during the year as uncertainty around interest rates and energy tariffs discouraged capital deployment.
Lending rates averaging over 35 percent created additional barriers for manufacturers seeking working capital.
Energy expenses also surged as firms increased reliance on alternative power sources due to persistent national grid disruptions.
The sector’s total expenditure on off-grid power rose sharply, contributing to higher cost-per-unit and reduced price competitiveness in both domestic and export markets.
Industry analysts say the current level of unsold inventory is unsustainable and could lead to factory shutdowns if sales do not improve in the short term.
They warn that without targeted intervention to stabilise the exchange rate, ease access to finance and reduce operational bottlenecks, the sector may face deeper contraction in 2025.
Manufacturers have called for policy measures to stimulate demand and improve local sourcing to cushion the impact of currency volatility.
The association urged the government to prioritise infrastructure investment, reduce taxes on production inputs and accelerate reforms that enhance affordability for consumers.
Despite limited output growth in 2024, the sharp rise in unsold inventory underscores the mismatch between production activity and market absorption.
Stakeholders have said there is a need for structural adjustments to improve supply chain efficiency and restore balance in Nigeria’s real sector.
