Nigeria’s Manufacturing Sector Faces Rising Dependence on Imported Raw Materials, Threatening Industrial Goals
Despite years of policy efforts aimed at promoting self-sufficiency, Nigeria’s manufacturing sector remains heavily dependent on imported raw materials — a trend that experts say undermines the country’s import substitution agenda and exposes the economy to external shocks.
Recent data from the National Bureau of Statistics (NBS) reveal that the value of raw material imports rose by 19.7 per cent year-on-year, reaching ₦3.53 trillion in the first half of 2025, up from ₦2.95 trillion during the same period in 2024. The imported materials include sugar cane and its derivatives for confectionery production, additives for lubricating oils, veneering sheets, and hides and skins for leather goods.
These imports primarily originate from Brazil, the United States, the United Kingdom, France, China, Germany, and Tanzania, reflecting the country’s continued external reliance across several manufacturing subsectors — from cement and paints to textiles and lubricants.
Mounting Pressure on Foreign Exchange and Local Industry
Manufacturers and policy analysts warn that this rising dependence on imported inputs runs counter to Nigeria’s import substitution policy, which aims to replace imported goods with locally produced alternatives, thereby conserving foreign exchange and stimulating domestic industry.
According to Prof. Nnanyelugo Ike-Muonso, Director-General of the Raw Materials Research and Development Council (RMRDC), over 70 per cent of inputs used by Nigerian manufacturers are still imported. He described this as a “major structural weakness” that limits the sector’s contribution to GDP, weakens job creation, and inflates production costs.
“The over-reliance on foreign raw materials, compounded by exchange rate volatility, has driven costs beyond sustainability,” Ike-Muonso warned. “Unless we undertake bold reforms, Nigeria risks being trapped in a cycle of industrial dependence.”
He advocated a 60 per cent reduction in imported raw materials within the next five years, supported by tax incentives for manufacturers who patronise locally sourced inputs. The RMRDC, he noted, has been empowered to implement fiscal incentives rewarding firms that invest in research and use indigenous resources.
Manufacturers Highlight Structural Bottlenecks
The Manufacturers Association of Nigeria (MAN) also voiced concern over the rising cost of imported materials, blaming energy constraints, insecurity, and currency depreciation for the failure of local backward integration programmes.
According to Segun Ajayi-Kadir, MAN’s Director-General, raw material imports totalled ₦6.64 trillion in 2024, with over 70 per cent of manufacturing inputs sourced abroad. “Many factories have had to suspend backward integration plans due to adverse operating conditions,” he said.
Ajayi-Kadir urged the government to strengthen local value chains through incentives, technology adoption, and industrial clusters. He lamented that local raw materials — which should be cheaper — often cost more than imported ones, discouraging manufacturers from buying locally.
He also pointed to the African Continental Free Trade Area (AfCFTA) as an opportunity for Nigerian firms to source raw materials within Africa and process them for regional export, provided domestic policies support competitiveness.
Former MAN President Mansur Ahmed echoed these concerns, stressing that the sector’s vulnerability stems from its dependence on imported components and machinery. “We must build infrastructure and collaborate with government to scale down this dependence,” he said.
Import Substitution Policy Falling Short
The Lagos Chamber of Commerce and Industry (LCCI) described the situation as a “failure of Nigeria’s import substitution strategy.” Its President, Gabriel Idahosa, explained that while importing some raw materials may be inevitable, the absence of export balance makes the situation harmful to the economy.
“In many cases, we cannot backwardly integrate because we lack the local raw materials or the technology,” Idahosa said. “Even car assembly plants still import most components. What we do locally is mainly assembling, not manufacturing.”
Path Forward: Innovation and Technology
For Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), a sustainable solution lies in policy consistency and innovation-led manufacturing. He noted that effective implementation of import substitution could revolutionise the economy by cutting costs, creating jobs, and expanding industrial value chains.
“The government must create policies that enable manufacturers to integrate backwardly and reduce import dependence,” Yusuf said. “This will not only stabilise costs but also diversify the manufacturing base.”
Despite the challenges, Ike-Muonso maintained that Nigeria possesses over 120 commercially viable solid minerals and vast agricultural resources capable of supporting industrial growth. He emphasised the need for “strategic coordination and technology-backed implementation” to harness these assets effectively.
He cited RMRDC’s Research and Demonstration Plant Complex (RDPC) in Abuja — which houses over 50 pilot plants converting indigenous materials like cassava, talc, and shea into industrial products — as proof that Nigeria can industrialise through local resource utilisation.
In line with this vision, the National Assembly recently passed the RMRDC (Establishment) Amendment Bill 2025, mandating that no raw material be exported without at least 30 per cent local value addition, a move expected to reduce the export of unprocessed commodities.
Conclusion
Nigeria’s manufacturing dilemma underscores a deeper structural imbalance — a country rich in raw materials but still dependent on imports to stay productive. Experts agree that reversing this trend will require more than rhetoric: it demands bold policy reform, technology-driven value addition, and consistent government support to transform the nation from a consumer economy to a productive industrial hub.