The manufacturing sector has recorded a 52 per cent increase in unsold finished goods in six months, a new report by the Manufacturers of Nigeria has shown.
This was despite a 32 per cent (N1.31tn) decrease in the manufacturing sector factory output in the second half of 2022, when compared with N3.99tn recorded in the preceding half of the year.
These were contained in the Manufacturers Association of Nigeria’s Bi-Annual Economic Review report obtained by
The document presented the summary of the findings of the survey of the manufacturing sector by the Manufacturers Association of Nigeria for the second half of 2022.
According to the report, the value of manufacturing production was N6.67tn in 2022 as against N7.39tn recorded in 2021.
The report said manufacturing production was severely affected in the second half of 2022 by the absence of implementation of new capital projects by the government as the general elections drew closer.
Production in the sector was also said to have been negatively affected by limited purchases by households due to the naira redesign policy, high inflationary pressure, high cost of energy, particularly diesel and gas, acute shortage of forex for importation of raw materials and machinery needs of the sector, among others.
The report partly read, “Inventory of unsold finished products in the manufacturing sector increased to N282.56bn in the second half of 2022 up from N169.75bn recorded in the corresponding half of 2021; thus, indicating N112.81bn or 66 per cent increase over the period.
“It also increased by N85.46bn or 51 percent when compared with N187.1bn recorded in the first half of the year. Inventory of unsold goods in the sector totaled N469.66bn in 2022 as against N384.58bn recorded in 2021. The high inventory recorded in the period is attributed to low purchasing power in the economy due to the declining real income of households following the continuous increase in inflationary pressures in the country. This is worsened by the Naira Redesign policy which began in the last quarter of 2022.”
According to the report, capacity utilisation in the manufacturing sector declined to 54.9 per cent from 59 per cent recorded in the corresponding half of 2021; thus, indicated 4.1 percentage points decline over the period.
Quarter-on-quarter, it declined by three percentage points when compared with 57.9 per cent recorded in the first half of the year. Manufacturing capacity utilisation averaged 56.4 percent in 2022 as against 55.9 per cent average of 2021.
The report also noted that there was an increase in local raw materials utilisation in the sector during the period due to increased difficulty in sourcing forex which compelled manufacturers to look more inward for raw materials notwithstanding the associated huge cost.
On investments into the sector, the report said manufacturing sector investment dipped to N145.59bn in the second half of 2022 down from N160.88bn recorded in the corresponding half of 2021; thus, indicating N15.29bn or 10 per cent decline over the period.
It further declined by N32.8bn or 18 per cent when compared with N178.39bn recorded in the first half of the year. Manufacturing investment totaled N323.98bn in 2022 as against N305.02bn recorded in 2021.