Nigeria’s pharmaceutical and medical devices market is set to face increasing challenges as the naira is projected to depreciate to N1,993 per US dollar by 2028, a new report by BMI, a subsidiary of Fitch Solutions, has revealed. This depreciation is expected to exacerbate the country’s reliance on imported medical devices, which currently accounts for over 95% of the market. The report, titled “Weak Naira and Structural Challenges to Constrain Nigeria’s Medical Devices Market Growth”, highlights the economic and structural hurdles that will continue to limit growth in the sector, despite an anticipated rebound in the wider economy.
“Continued weakness of the naira will significantly increase the cost of importing medical devices, further eroding consumer purchasing power,” the report warns. This scenario mirrors broader challenges faced by many sub-Saharan African nations, where a heavy reliance on imports has made healthcare markets vulnerable to currency fluctuations. Despite these pressures, BMI projects that Nigeria’s medical devices market could grow to N171.1 billion (about £344.7 million) by 2028, driven by factors such as a large population, increasing demand for universal health coverage, and the dual burden of chronic and communicable diseases. However, the report cautions that growth will be slow, with persistent structural issues hindering the full potential of the sector.
The report identifies a series of ongoing challenges that continue to undermine the local manufacturing of medical devices in Nigeria.
These include a shortage of skilled labor, limited access to modern manufacturing technology, and inadequate infrastructure. While the government has implemented incentives aimed at bolstering local production—such as the 2024 executive order to remove tariffs, excise duties, and VAT on essential machinery and raw materials—the market remains heavily reliant on imports. “The government’s efforts to lower production costs through tariff exemptions are commendable, but they are unlikely to fully offset the pressures of currency depreciation and the structural weaknesses that the sector faces,” said BMI.
Nigeria’s economy is expected to recover with a predicted growth rate of 3.0% in 2024, a slight improvement over the 2.9% recorded in 2023. However, despite these positive economic projections, the report highlights several challenges that could impede the growth of the medical devices market.
These include high inflation, restrictive monetary policies, and limited foreign direct investment (FDI). “While the economy is expected to grow, the medical devices market will continue to face headwinds due to macroeconomic factors and the country’s ongoing reliance on imports,” BMI added.
The report also addresses the ongoing volatility of the naira, which has seen a gradual decline in recent months. As of November 11, 2024, the naira traded at N1,681.42 per dollar, reflecting a marginal decrease of 0.15% from N1,678.87 on November 8, 2024. Moreover, the report notes a significant drop in FX turnover, which fell by 66.41%, from $1.4 billion on November 8 to $471.5 million on November 11, indicating a slowdown in market activity.
This exchange rate instability is expected to have a direct impact on the medical devices market, increasing the costs of imported equipment and limiting access to affordable healthcare for the Nigerian population. With 95% of medical devices sourced from abroad, the price of essential equipment such as diagnostic tools, surgical instruments, and life-saving devices is expected to rise as the cost of imports escalates.
Despite these challenges, the Nigerian medical devices market is expected to continue growing, albeit at a slower pace. BMI predicts that by 2028, the market could reach N171.1 billion, driven by population growth, rising healthcare needs, and a growing focus on universal health coverage. However, this growth will be tempered by ongoing structural barriers and the impact of a weak currency. As Nigeria works to address these issues, the report stresses the importance of diversifying the supply chain, increasing local production capacity, and fostering a favorable environment for foreign investment. “A long-term solution will require sustained efforts to build infrastructure, improve local manufacturing capabilities, and stabilize the foreign exchange market,” BMI concludes.
