LAGOS, Nigeria (VOICE OF NAIJA)-According to data from the National Bureau of Statistics (NBS), imports of raw materials surged by 25 percent to N3tn in 2023 due to the depreciation of the naira.
Major imported raw materials included cane sugar, lubricating oils, preparations of milk with vegetable fats, sheets for veneering and mixtures of odoriferous substances.
Nigeria exports of raw materials amounted to only N1.8tn between 2022 and 2023, resulting in a trade deficit of N3.6tn.
In an interview with The PUNCH, the CEO of the Centre for the Promotion of Private Enterprise, Muda Yusuf, attributed the rise in raw material imports (in naira terms) to the devaluation of the naira.
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.”
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In recent years, manufacturers have expressed concerns over the detrimental impact of over-reliance on imported raw materials on Nigeria’s real economy.
At an annual general meeting of the Apapa branch of the Manufacturers Association of Nigeria, former MAN President, Mansur Ahmed highlighted how excessive dependence on imported raw materials has greatly undermined the strength of the Nigerian manufacturing sector.
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 proposed a collaborative effort between the public and private sectors to promote backward integration, import substitution, and other initiatives aimed at reducing the overreliance on imported raw materials.
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Following the Central Bank of Nigeria’s recent hike in the Monetary Policy Rate, MAN released a statement expressing concern about the potential consequences, including restricted access to credit.
They feared that this could hinder efforts toward backward integration, research and development, and innovation essential for enhancing productivity and fostering rapid industrial-led economic growth.
“Further reduce the reliance of the country on imported products and raw materials by providing incentives for investment in backward integration and local sourcing to reduce the pressure on the dollar to the barest minimum,” it said.