Nigeria’s reliance on imported raw materials has reached an all-time high of N3.53 trillion in Q1 of 2026. It has also choked domestic manufacturing and local value addition. Even the food import bills had exceeded exports in the last three years at approximately N18.07 trillion or $7 billion, according to data from the National Bureau of Statistics (NBS). Due to the high dependence on imports, estimated at over 70 per cent of total manufacturing requirement, industry leaders have raised the alarm on the risks involved and urged the Federal Government to reverse the situation, as this undermines import substitution goals, and suppresses the sector’s contribution to the country’s gross domestic product (GDP).
The manufacturing sector’s contribution to the nation’s GDP has dropped to 2.5 per cent from 3.3 per cent recorded a few years ago. The Manufacturers’ Association of Nigeria (MAN) and the National Institute for Policy and Strategic Studies (NIPS), stated this recently during the 54th Annual General Meeting of MAN and ‘Made-in-Nigeria’ Products Exhibition on how to position Nigeria as Africa’s industrial hub. Latest data from the NBS show that the sector has recorded successive quarterly decline of 1.25 per cent in real growth, even though recent statistics have shown a little improvement in the purchasing managers index (PMI), a key indicator that reflects the state of stability and direction of the manufacturing sector.
President of MAN, Francis Meshioye, has decried Nigeria’s continued dependence on imported raw materials, estimated at N3.53 trillion. About N1.72 trillion of the import bills came from Asian countries. Between 2023 and 2024, raw material imports rose by 119 per cent to N4.53 trillion in the first nine months of 2024, from N2.07 trillion in the same period of 2023. The astronomical increase underscores Nigeria’s increasing dependence on imported raw materials, which exposes the country’s manufacturers to global market fluctuations. Raw material imports into the country were valued at N1.47 trillion in Q1 2024, N1.482 trillion in Q2 2024, bringing the total to N4.53 trillion in the first nine months of 2024.
This illustrates the extent to which domestic production continues to depend on foreign inputs. If not urgently addressed, the risks would worsen the growth of the sector. Among the challenges are policy inconsistency, exorbitant cost of production, high cost of borrowing from banks, foreign exchange scarcity and unfair competition from cheap imports from Asia. This makes the sector vulnerable to exchange rate swings. This is why the ‘Made-in Nigeria’ agenda should be given priority attention through measurable industrial outcomes, including increased domestic support, lower production costs, higher capacity utilisation, stronger domestic supply chain, increased manufacturing investments and greater participation in regional and international markets. Attempts have been made by previous administrations to promote local sourcing of materials through a backward integration policy. But little has been achieved in that regard.
There is a failure of Nigeria’s import substitution policy that makes local sourcing of raw materials unachievable. The constraints limit the capacity of the manufacturing sector to create more employment opportunities. As a result of the challenges confronting manufacturers, industrial activity in the sector declined significantly in 2024-2025, with the PMI dropping to 49.7 per cent. This is below the growth threshold that has resulted in a sharp decline of 57 per cent in capacity utilisation. Real growth also slowed from 14.7 per cent in 2014 to 1.38 per cent in 2025. This has made Nigeria to drop to the 97th position in Global Competitive Industrial Performance Index. This is 44 places below South Africa. Data from the World Trade Organisation (WTO) showed that Nigeria is far behind South Africa in export of manufactured goods, valued at $46 billion in 2022, compared to Nigeria’s $3 billion within the same period.
The decline in global demand for Nigerian products is attributed to the neglect of the manufacturing sector, representing 166 per cent decline of Nigeria’s exports from a record N2.07 billion in 2019 to N778.4 billion in 2023. The cost of imported raw materials surged by 118 per cent, while spending on alternative energy reached N1.1 trillion in 2024. For the manufacturing sector to reach the projected 3.1 per cent growth and 10.2 per cent GDP in 2026, government should create favourable business climate that will make local businesses for export thrive.
The manufacturing sector needs a special raw materials policy that will curtail the current high import bill of almost N4 trillion. Implementation, not mere policy adoption, will determine Nigeria’s industrialisation. Nations do not industrialise by adopting policies alone; they industrialise by implementing policies consistently. For the manufacturing sector to ramp up the needed growth that will drive the economy, government must avoid policy reversals.
The manufacturing sector spent over N1.35 trillion in alternative power in 2025, up from N1.11 trillion in 2024, while raw material imports hit N3.37 trillion in first half (H1) of 2026. This has worsened Nigeria’s industrial competitiveness. Real manufacturing output has only grown by 3.29 per cent year-on-year in Q1 2026. Energy remains one of the major cost factors. This places additional pressure on resources that could otherwise be applied to capacity expansion and productivity improvement. Increasing local production of finished goods without strengthening domestic production of raw materials and intermediate inputs will limit local value addition.