Nigeria’s manufacturing sector is increasingly turning to local sourcing manufacturing and value addition as companies seek to reduce their dependence on imported raw materials amid rising production costs and persistent foreign exchange challenges. Industry leaders, however, warned that sustainable growth will require stronger government support through affordable financing, improved infrastructure, reliable electricity, efficient logistics and policies that encourage domestic raw material development.
Speaking during a television interview, Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said manufacturers are investing more in local sourcing and value addition to reduce exposure to imported inputs and volatile foreign exchange rates.
He explained that although businesses are making progress in increasing local content, the prevailing exchange rate remains too high to support globally competitive manufacturing. Ajayi-Kadir noted that reducing reliance on imported raw materials has become a survival strategy for many manufacturers seeking to remain competitive in both domestic and regional markets
According to Ajayi-Kadir, the African Continental Free Trade Area (AfCFTA) presents Nigerian manufacturers with access to a much larger continental market.
However, he warned that Nigeria could struggle to compete with manufacturers in countries that enjoy lower production costs unless longstanding structural challenges are addressed. He identified affordable financing, reliable electricity, efficient transportation and logistics, improved infrastructure, competitive taxation and lower production costs as essential requirements for Nigerian manufacturers to maximise AfCFTA opportunities.
The Regional General Manager of Bel Papyrus Limited, Charbel Kairouz, said manufacturers continue to face significant challenges accessing foreign exchange needed to import essential raw materials. He also identified unstable electricity supply as another major factor driving up production costs across the sector. According to Kairouz, expanding the availability of locally sourced industrial raw materials would reduce operating expenses, shorten supply chains and improve production efficiency.
“Local raw materials, with stable pricing, will allow companies to save costs, reduce delays and overcome major supply-chain challenges,” he said.
The Managing Director of Colexa Biosensor Ltd, an indigenous pharmaceutical company, urged the Federal Government to place local manufacturing at the centre of Nigeria’s industrial development strategy.
He acknowledged that imports remain necessary for some sectors but argued that government policies should steadily shift the country’s production base towards greater domestic manufacturing. According to him, achieving that goal will require consistent policy implementation rather than repeated policy announcements.
“While imports remain necessary, policy should progressively shift the country’s production mix from its current dependence on imported goods towards greater domestic manufacturing. However, such a transition requires consistent implementation rather than policy pronouncements.”
The Director General of the Raw Materials Research and Development Council (RMRDC), Prof. Nnanyelugo Ike-Muonso, said more than 70 per cent of raw materials used by Nigerian manufacturers are still imported.
He described the situation as a major structural weakness that limits the manufacturing sector’s contribution to economic growth, reduces job creation and significantly increases production costs. According to him, exchange rate volatility and heavy dependence on imported inputs continue to threaten the long-term sustainability of Nigeria’s industrial sector.
Ike-Muonso said Nigeria should reduce its dependence on imported raw materials by at least 60 per cent within the next five years to strengthen industrial development. He disclosed that manufacturers investing in research, development and utilisation of locally sourced raw materials would soon enjoy lower tax obligations than companies that continue relying heavily on imports.
“Very soon, manufacturers who research, develop and patronise local raw materials will pay significantly lower taxes than those who do not. This is now an instrumental tool for attracting private-sector investment and stimulating technology-driven manufacturing.”
He also recommended the creation of industrial hubs around strategic raw material locations, stronger collaboration between research institutions and industry, increased technology transfer, infrastructure financing and greater integration of small and medium-sized enterprises into the manufacturing value chain. Industry stakeholders believe that expanding local sourcing manufacturing could improve competitiveness, create jobs, reduce foreign exchange pressure and position Nigeria to benefit more effectively from continental trade opportunities under AfCFTA.
