By Akinsuroju Olubunmi
Naira woes: Surge in raw material imports hits N3tn
The National Bureau of Statistics (NBS) report reveals a significant increase in raw material imports, soaring to N3 trillion in 2023, marking a 25% rise. Published Foreign Trade Statistics data shed light on this surge, attributing it to various factors, including the depreciation of the naira.
Among the major raw materials imported during this period were cane sugar, lubricating oils, preparations of milk, mixtures of odoriferous substances, and sheets for veneering, among others. Conversely, Nigeria’s export of raw materials between 2022 and 2023 amounted to only N1.8 trillion, resulting in a trade imbalance of N3.6 trillion.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, linked the uptick in raw material imports to the devaluation of the naira. He explained that the depreciation led to inflated import costs in naira terms, even if the actual import volume in dollar terms might have remained steady or decreased.
Manufacturers have long lamented the over-reliance on imported raw materials, citing it as a major challenge for the real sector of the economy. Mansur Ahmed, the immediate past President of the Manufacturers Association of Nigeria (MAN), highlighted the sector’s weakness due to excessive dependence on imported materials.
Ahmed emphasized the need for a shift towards backward integration, import substitution, and other measures to reduce reliance on imported raw materials. He advocated for public-private partnerships to address this issue and promote indigenous production.
Responding to the recent hike in the Monetary Policy Rate by the Central Bank of Nigeria, MAN expressed concerns about limited access to credit hindering efforts towards backward integration, research, development, and innovation. The association called for incentives to encourage investment in local sourcing and reduce the country’s reliance on imported products and raw materials.
The surge in raw material imports underscores the urgency of implementing measures to strengthen domestic production and reduce dependence on foreign sources.
– Raw Material Imports
– Naira Depreciation