According to the Foreign Trade Statistics data published by the National Bureau of Statistics, imports of raw materials into the country increased by 25 percent to N3tn in 2023.
Cane sugar, various lubricating oils intended for further mixing, milk preparations comprising vegetable fats and oils, combinations of odoriferous ingredients, and veneer sheets were among the main raw materials imported during that time.
On the other hand, Nigeria’s trade balance was N3.6 trillion, with only N1.8 trillion worth of raw materials exported between 2022 and 2023.
The chief executive officer of the Center for the Promotion of Private Enterprise, Muda Yusuf, connected the depreciation of the naira and the surge in imports of raw materials (in naira terms) in an interview with The PUNCH.
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.”
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 (MAN), Mansur Ahmed, stated during the organization’s annual general meeting in Apapa that the manufacturing industry in Nigeria had been severely undermined by an over-reliance on imported raw materials.
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 suggested a public-private cooperation to promote 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 hike in the Monetary Policy Rate, MAN expressed concern that the resulting restricted credit availability would impede research and development, innovation, and backward integration—all of which are necessary to improve productivity and spur rapid industrial-led economic growth.
In order to minimize 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.”
