In 2023, the nation’s raw material imports increased by 25% to N3 trillion. This is in line with data from the National Bureau of Statistics’ Foreign Trade Statistics.
During that time, cane sugar, various lubricating oils intended for further mixing, milk preparations comprising vegetable fats and oils, odoriferous material mixtures, and veneering sheets were among the main raw materials imported. On the other hand, Nigeria’s raw material exports were limited to N1.8 trillion between 2022 and 2023, resulting in a N3.6 trillion trade balance.
Muda Yusuf, the CEO of the Center for the Promotion of Private Enterprise, connected the depreciation of the naira with the surge in imports of raw materials expressed in naira.
He said, “I think it is because of the naira depreciation. If you were importing something that was $1m when the exchange rate was N450, now you are importing products worth $1m and the exchange rate is N1,500.
“That is three times already if you multiply it in naira. So, in dollar terms, the import may have even reduced. We have to consider that.”
In the last few years, manufacturers had lamented that over-reliance on imported raw materials had been an albatross on the real sector of the economy.
During an annual general meeting of the Apapa branch of the Manufacturers Association of Nigeria, the immediate past MAN President, Mansur Ahmed, said that excessive reliance on imported raw materials had significantly weakened the Nigerian manufacturing sector.
He noted, “Our manufacturing sector is weak because it is dependent on imported materials that we then process. We must therefore scale up or scale down. Our manufacturers have to go back and do the transformation.
“We in manufacturing need to focus on this issue. We need to build infrastructure. I was in a meeting where the Vice President inaugurated the National Council on Infrastructure.”
Mansur recommended a public-private partnership that aimed to encourage backward integration, import substitution and other measures that would curb excessive import of raw materials.
Recently, in a statement released in response to the recent hike in the Monetary Policy Rate by the Central Bank of Nigeria, MAN expressed worry that the resulting limited access to credit would limit backward integration, research and development and innovation needed to enhance productivity and rapid industrial-led economic growth.
It declared, “Further reduce the reliance of the country on imported products and raw materials by providing incentives for investment in backward integration and local sourcing to reduce the pressure on the dollar to the barest minimum.”
