The Director General of the Manufacturers Association of Nigeria (MAN), Mr. Segun Ajayi-Kadir, says that manufacturers in Nigeria are increasingly selling products below production cost in a desperate bid to clear nearly N2 trillion worth of unsold inventory.
Speaking in an interview, Mr. Ajayi-Kadir, said that the development underscored the severe cost pressures and weak consumer demand confronting the Nigerian industrial sector.
According to him, while manufacturers have recorded modest improvements in sales volumes, the gains are largely driven by aggressive price cuts and thinner profit margins rather than any meaningful recovery in consumer purchasing power.
He explained that many manufacturers had been forced to absorb losses simply to move products and keep their factories operating.
“What has happened is that manufacturers have continued to sell more, not because demand has improved, but because they have taken a hit by lowering prices in order to sell more,” he said.
He explained that the sector’s unplanned inventory, estimated at just under N2 trillion, has compelled many firms to dispose of finished goods at prices far below optimal profitability and, in several cases, below production cost.
The development highlights the difficult operating environment facing manufacturers, who continue to battle soaring production costs, weak consumer demand, high borrowing costs, foreign exchange volatility, poor infrastructure, insecurity, and persistent logistics bottlenecks.
Mr. Ajayi-Kadir stated that manufacturers are responding by increasing local sourcing of raw materials and investing more in value addition to reduce dependence on imports.
However, he noted that high foreign exchange costs and import-duty benchmark pricing continue to undermine the competitiveness of locally manufactured products, limiting Nigeria’s ability to maximise opportunities under the African Continental Free Trade Area (AfCFTA). Demographics
Local media reports quoted Mr. Ajayi-Kadir as saying that improved incentives, cheaper financing and more efficient logistics are critical to positioning Nigerian manufacturers to compete effectively across African markets.
He noted that financing remains one of the biggest obstacles to industrial growth in Nigeria and that with the monetary policy rate hovering around 26 per cent, commercial bank lending rates have climbed to between 30 and 35 per cent, making borrowing commercially unsustainable for most manufacturers.
“It is hardly possible for any manufacturer to borrow from commercial banks and still make a profit,” he added.
GIK/APA