Naira crash pushes raw material imports to N3tn – NBS report

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.

Speaking, Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise, connected the depreciation of the naira to the surge in imports of raw materials (measured in naira).

"I believe it is due to the depreciation of the naira," he stated. When the currency rate was N450, you would import goods worth $1 million. Now, however, the exchange rate is N1,500, and you are importing goods worth $1 million.

If you double that by the value in naira, it is already three times. Therefore, the import may have even decreased in terms of dollars. That is something we must take into account.

Overreliance on imported raw materials has been an encumbrance on the real sector of the economy, as manufacturers have bemoaned in recent years.

The immediate past president of the Manufacturers Association of Nigeria, Mansur Ahmed, stated at the organization's annual general meeting in Apapa that Nigerian industry has been severely undermined by an overreliance on imported raw materials.
"Because our manufacturing sector is dependent on imported materials that we then process, it is weak," he said. Thus, we have to either scale up or down. Our manufacturers need to make the necessary adjustments.

"We in manufacturing must pay attention to this matter. Infrastructure development is necessary. The Vice President officially launched the National Council on Infrastructure during a meeting I attended.

Mansur suggested a public-private cooperation with the goal of promoting import substitution, backward integration, and other steps to reduce the overabundance of raw material imports.

In a recent statement issued in reaction to the Central Bank of Nigeria's raise in the Monetary Policy Rate, MAN voiced concern that the consequent restricted credit availability might restrict backward integration, research and development and innovation needed to enhance productivity and rapid industrial-led economic growth.
In order to minimise the pressure on the dollar, it was stated that the nation should "further reduce its reliance on imported products and raw materials by providing incentives for investment in backward integration and local sourcing."