Manufacturers Slash Prices to Clear ₦2tn Inventory

Nigerian manufacturers are increasingly selling goods below production cost as they struggle to clear nearly ₦2 trillion worth of unsold inventory, highlighting the mounting pressure facing the country’s industrial sector.

According to the Manufacturers Association of Nigeria (MAN), recent improvements in sales have not been driven by stronger consumer demand. Instead, many companies have reduced prices sharply and accepted lower profit margins to move finished goods and keep production lines running. This trend reflects the growing challenges confronting Nigerian manufacturers amid rising operating costs and weak purchasing power.

MAN Director General Segun Ajayi-Kadir said many businesses have been forced to absorb losses simply to keep their factories operational. He explained, “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 added that the industry’s unplanned inventory, valued at almost ₦2 trillion, has compelled many firms to sell products below profitable levels and, in some cases, below the actual cost of production.

Ajayi-Kadir said Nigerian manufacturers continue to face soaring production costs, weak consumer demand, high borrowing costs, foreign exchange volatility, poor infrastructure, insecurity and persistent logistics challenges. While many companies are increasing local sourcing of raw materials and investing in value addition to reduce reliance on imports, he noted that expensive foreign exchange and import-duty benchmark pricing continue to weaken their competitiveness, including under the African Continental Free Trade Area (AfCFTA).

Access to affordable financing also remains a major concern. Ajayi-Kadir said the Monetary Policy Rate (MPR) of about 26 per cent has pushed commercial lending rates to between 30 and 35 per cent, making bank loans unviable for most manufacturers.

He said, “It is hardly possible for any manufacturer to borrow from commercial banks and still make a profit.” Although some firms rely on the Bank of Industry (BoI) and offshore funding, he noted that development finance has also become more expensive. Loans that previously attracted single-digit interest rates now cost as much as 15 per cent, increasing debt servicing costs and putting additional pressure on company finances.

Ajayi-Kadir urged the Federal Government to release the proposed ₦1 trillion Manufacturing Stabilisation Fund, saying the intervention would provide much-needed affordable financing and help support the recovery of Nigerian manufacturers.

Do you think affordable financing would be enough to revive Nigeria’s manufacturing sector, or are broader economic reforms needed?