By Merit Ibe
The Manufacturers Association of Nigeria (MAN) has lamented that operators spent N238.31 billion on alternative energy sources in H1 2024, a 7.69 percent increase from H2 2023.
The association made the disclosure yesterday in its executive summary of the survey of the sector by the association in the first half of 2023. The survey is designed to monitor changes in manufacturing sector performance indicators viz-a-viz the behavior of macroeconomic and policy environments during the period of the survey.
According to the association, the cost of providing alternative power continued to rise, attributing the surge in costs as driven by higher prices for diesel, gas, and other energy sources, as well as the need for manufacturers to invest in self-energy generation due to unreliable power supply from the national grid.
The association noted that the electricity supply to industries showed some improvement in H1 2024, with average daily supply hours increasing to 11.28 hours per day, it however, pointed out that the increase in electricity tariffs by over 200 percent imposed by DisCos significantly raised the cost of electricity for manufacturers.
“This, coupled with ongoing power outages, placed additional financial strain on the sector,” MAN said.
The association further revealed 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. It noted that while some sectors showed resilience and growth, others struggled with declining production values, rising inventories, and reduced employment.
“The report underscores the urgent need for Nigeria to implement coherent economic reforms to address these challenges. Key areas of focus include 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.
“The survey also showed that the real manufacturing output in Nigeria declined by 1.66 percent year-on-year in H1 2024, falling to N1.34 trillion from N1.36 trillion in H1 2023.
“Despite this decline, the sector saw a 9.97 percent increase compared to H2 2023, driven by a baseline effect. The sector’s challenges included rising electricity tariffs, exchange rate volatility, and higher energy costs, which heightened production costs amidst declining consumer demand. The persistent increase in interest rates by the Central Bank of Nigeria further strained the sector,” MAN stated.