Heavy Dependence on Imported Inputs
Industry experts estimate that more than 70 percent of the inputs used in Nigeria’s manufacturing sector are imported. This places heavy pressure on the country’s foreign-exchange reserves and exposes manufacturers to global price shocks and currency volatility.
Despite having abundant natural resources, Nigeria still struggles to process most of its raw materials locally. Instead, they are either exported in their raw form or not processed at all, forcing manufacturers to import refined or semi-processed inputs.
Key Sectors and Major Imports
The largest share of raw material imports in the first half of 2025 came from a few key sectors:
- Food and beverages: including sugar-cane products for sugar refining and confectionery.
- Leather and textiles: hides and skins for footwear and leather goods.
- Building materials: gypsum and other additives used in cement production.
- Chemicals and industrial materials: binders, resins, and additives for paints and lubricants.
Most of these raw materials originated from countries such as Brazil, the United States, the United Kingdom, China, Germany, and Tanzania.
Why High Imports Persist
Several structural factors explain why Nigeria continues to spend so heavily on importing raw materials:
- Limited local processing capacity
Although Nigeria has the natural resources, the country lacks the infrastructure, technology, and investment needed to process them into usable manufacturing inputs. - High cost of local production
Poor power supply, bad roads, insecurity, and other operational challenges make domestic production expensive, pushing manufacturers toward cheaper and more reliable foreign suppliers. - Currency and foreign exchange issues
Exchange rate fluctuations and access to foreign currency have made imports volatile, but many manufacturers still find importing easier than sourcing locally. - Weak implementation of backward integration policies
While government policies exist on paper to encourage local sourcing, the actual linkages between raw-material producers and manufacturers remain weak.
Economic Implications
Nigeria’s heavy reliance on imported raw materials has far-reaching consequences:
- Pressure on foreign exchange: Every naira spent on imported materials reduces FX reserves needed for other national priorities.
- Reduced competitiveness: Manufacturers face higher costs due to FX risks and global price volatility.
- Limited job creation: Relying on imports limits local value addition and slows down industrial development.
- Missed opportunity for diversification: The import trend contradicts the country’s push for self-sufficiency and industrial growth.
What Experts Recommend
To reduce this dependence, experts and industry groups have called for several measures:
- Boost local production: Invest in processing plants, industrial clusters, and technology to turn raw resources into usable inputs domestically.
- Incentivize backward integration: Offer tax breaks, low-interest loans, and subsidies to companies that source and process locally.
- Improve infrastructure: Reliable power supply, better transportation, and reduced insecurity will lower production costs.
- Stabilize the naira: A more predictable exchange rate will make long-term local investment more attractive.
- Enhance coordination: Better planning and stronger public-private partnerships are needed to build sustainable supply chains.
Outlook
The N3.53 trillion spent on raw material imports in just six months underscores a critical challenge — and an opportunity. Reducing this dependence could save billions in foreign exchange, create jobs, and boost industrial competitiveness.
Experts have called for at least a 60 percent reduction in raw material imports over the next five years, arguing that with the right infrastructure, incentives, and political will, Nigeria can process more of what it produces and rely less on imports.
Unless significant changes are made, however, the country risks continuing a cycle where it exports raw resources cheaply, imports refined inputs at a higher cost, and misses out on the benefits of a strong industrial base.
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