The importation of raw materials into Nigeria surged by 25 percent to N3 trillion in 2023, as reported by the National Bureau of Statistics using Foreign Trade Statistics data.
Major raw materials imported during this period included cane sugar, other lubricating oils intended for further mixing, preparations of milk containing vegetable fats and oils, mixtures of odoriferous substances, and sheets for veneering, among others.
In contrast, Nigeria’s export of raw materials amounted to only N1.8 trillion between 2022 and 2023, resulting in a trade balance deficit of N3.6 trillion.
Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, attributed the increase in raw material imports (in naira terms) to the depreciation of the naira.
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He explained that the depreciation of the naira led to higher costs in naira for importing the same quantity of goods, even though the quantity imported might not have increased significantly when measured in dollar terms.
The over-reliance on imported raw materials has long been a concern for Nigeria’s manufacturing sector. Mansur Ahmed, the immediate past President of the Manufacturers Association of Nigeria (MAN), highlighted how this dependence weakens the manufacturing sector.
He emphasized the need for measures such as backward integration, import substitution, and public-private partnerships to address this challenge and promote local sourcing of raw materials.
In response to recent policy changes, MAN expressed concerns about limited access to credit hindering efforts in backward integration, research and development, and innovation.
The association called for incentives to encourage investment in backward integration and local sourcing, aiming to reduce the country’s reliance on imported products and raw materials.
These developments underscore the importance of addressing the structural challenges facing Nigeria’s economy, particularly in promoting domestic production and reducing dependency on imports.
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