In the first half of 2024, Nigerian manufacturers spent an additional N238.31 billion to provide alternative electricity to complement the grid’s power supply.
The amount was a 7.69 per cent increase from spending to generate alternative energy in the first half of 2023 despite the claim that power supply improved in the year’s first half.
The expenditure on alternative energy is contained in the survey summary by the Manufacturers Association of Nigeria (MAN) for the first half of 2024. The survey, designed to monitor changes in manufacturing sector performance indicators viz-a-viz the behaviours of macroeconomic and policy environments focus on indicators such as capacity utilisation, production value, inventory, level of utilisation of local raw materials, investment, and expenditure on alternative energy sources.
The survey noted an increase of 11.28 hours of average daily supply per day; however, it highlighted those industries complemented the grid power supply with N238.21 billion spending.
The increase in alternative power generation was driven by higher prices for diesel, gas, and other energy sources, and the need for manufacturers to invest in self-energy generation due to unreliable power supply from the national grid.
Manufacturers also bear the brunt of the increase in electricity tariffs by over 200 per cent imposed by DisCos, raising significantly the cost of electricity for manufacturers.
The ongoing power outages placed additional financial strain on the sector which had to spend more to generate the electricity required to keep their factories running.
These challenges with high operational costs, declining consumer demand and rising inflation impacted Nigeria’s manufacturing sector’s capacity to generate employment, which declined by 30 per cent in the period.
The sector created only 2,606 jobs in H1 2024, representing an annual decline of 37.83 per cent in job creation, reflecting the ongoing challenges of economic uncertainties, inflationary pressures, and an unfavourable business environment that have beset it.
Only the Chemical and Pharmaceuticals sub-sector remained the highest job creator, while the Motor Vehicle & Miscellaneous Assembly industry created the fewest jobs.
While some subsectors showed resilience and growth, others struggled with declining production values, rising inventories, and reduced employment, underscoring the urgent need for Nigeria to implement decisive and coherent economic reforms to address these challenges.
Key areas to focus on include enhancing policy consistency, improving the business environment, and fostering economic diversification.
MAN added 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.
