High Raw-material Import Dependence Threatens Nigeria’s N40trn Manufacturing Opportunity

Nigeria’s ambition to become Africa’s industrial hub may remain constrained unless domestic production of raw materials and intermediate inputs catches up with finished-goods manufacturing, industry stakeholders have warned.

The warning comes against the backdrop of a report by SEID, a Lagos-based marketing communications and market intelligence firm, which identified more than N40 trillion in untapped manufacturing opportunities in Nigeria.

According to the Nigerian Manufacturing Opportunity Report 2026, imports met 64 per cent of local demand for manufactured goods in 2025, representing a $29.4 billion market that domestic producers did not serve.

The report, launched at the 54th Annual General Meeting of the Manufacturers Association of Nigeria, said the import gap presented an opportunity to deepen local production, strengthen value chains and capture more of the value generated by Nigeria’s growing demand.

However, manufacturers said the opportunity could remain out of reach without a stronger domestic supply chain for industrial raw material inputs.

In the first half of 2025, Nigeria imported raw materials valued at approximately N3.53 trillion, with about N1.72 trillion sourced from Asia. The figure highlights the country’s continued dependence on foreign inputs, despite efforts to expand local manufacturing capacity.

Data from the National Bureau of Statistics showed that raw-material imports fell by 4.5 per cent to N3.37 trillion in the first half of 2026. However, raw-material exports more than doubled to N3.84tn, representing a 105.9 per cent year-on-year increase.

The trend points to the continued export of unprocessed commodities while manufacturers import inputs needed to produce finished goods.

President of MAN, Otunba Francis Meshioye, expressed concern over Nigeria’s reliance on imported raw materials, saying the N3.53 trillion import bill recorded in the first half of 2025 highlighted the weakness of the domestic supply chain for industrial inputs.

Meshioye said increasing local production of finished goods without strengthening domestic production of raw materials and intermediate inputs would limit local value addition.

He noted that about N1.72 trillion of the imports were sourced from Asia.

He said manufacturers still face high energy costs, foreign-exchange exposure, financing constraints, logistics bottlenecks, multiple taxation, and weak consumer demand, which drive up production costs despite government efforts to improve the business climate.

He urged the government to back industrial policy with implementation discipline and measurable targets that support local content, reduce regulatory costs and boost competitiveness, stressing that Nigeria’s participation in the African Continental Free Trade Area would depend on manufacturers’ ability to compete on cost, quality and delivery.

The director/chief executive officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the rise in local sourcing to 57 per cent reflected forced adaptation rather than improved productivity.

“We must give credit to the outcomes of the current economic reforms, especially the foreign exchange reform, for this increased backward integration,” he said, noting that the high cost of forex had compelled firms that previously depended on imports to look inwards.

Yusuf, however, said Nigeria’s industrial feedstock sectors remained weak, identifying agriculture, iron and steel, and pulp and paper as critical gaps.

According to him, agro-processing cannot scale without addressing insecurity and investing in improved seedlings to reduce wheat imports, while the failure of Ajaokuta Steel, Delta Steel, and other plants has kept the country dependent on imported structural steel.

He noted that paper mills in Jebba and Iwopin, which were meant to supply the packaging industry, failed to deliver value after poorly handled privatisation. He, however, described Dangote Refinery’s polypropylene production as a rare bright spot that would cut plastic raw-material imports.

The president of the Association of Small Business Owners of Nigeria, Dr Femi Egbesola, said the headline local-sourcing figure masked deeper structural gaps.

“The rise in local sourcing to 57.1 per cent is encouraging, but the N3.53 trillion spent on raw-material imports shows that Nigeria still has a major gap in domestic production and value addition,” Egbesola said.

“The issue is not simply the availability of raw materials; it is our capacity to process them to the quality, volume and consistency required by manufacturers.”

He said manufacturers continued to rely on imports despite the availability of some raw materials locally due to concerns about quality, consistency, and supply reliability.

“There should be consistent incentives for companies that invest in local raw-material production and value addition, alongside effective implementation of local-content policies,” he said.

Egbesola warned that without affordable financing, reliable electricity, improved transport infrastructure, modern processing facilities and stronger linkages between farmers, miners and manufacturers, import dependence would persist.

The Manufacturers Association of Nigeria reported that the use of locally sourced raw materials rose from 51.5 per cent in 2021 to 57.1 per cent in 2024, representing an improvement of 5.6 percentage points.

Industry efforts are also being supported by a proposed 30 per cent raw-material value-addition framework led by the Raw Materials Research and Development Council. The framework would require a minimum of 30 per cent local value addition before raw materials could be exported.

The House of Representatives advanced the RMRDC amendment bill in October 2025, signalling legislative support for increased local processing and manufacturing.

Director-General of the RMRDC, Prof Nnanyelugo Ike-Muonso, has stressed the need to diversify Nigeria’s economy away from the export of unprocessed commodities. He called for initiatives that would improve domestic processing capacity and optimise the use of local resources.

The RMRDC has also announced the launch of the Nigerian Raw Materials Information System. The digital platform is expected to map local raw materials, provide real-time information on resource availability and suppliers, and simplify local procurement for manufacturers.

According to SEID’s report, Nigeria’s manufacturing landscape is shaped by distinct areas of industrial strength, with states, regions and value chains demonstrating different levels of scale, specialisation and competitiveness.

The report said the South-West remained Nigeria’s largest manufacturing zone, while other regions were developing strengths in food and agro-processing, textiles, chemicals, pharmaceuticals, cement, steel and light manufacturing.

It identified five major subsectors with significant opportunities: light manufacturing and packaging; food and agro-processing; textiles, apparel and leather; chemicals and pharmaceuticals; and cement and steel.

Three of the five subsectors account for about 71 per cent of manufacturing output, making their competitiveness and continued development critical to the sector’s overall performance.

The report also noted that manufacturing’s contribution to gross domestic product declined from 8.42 per cent in 2023 to 8.05 per cent in 2025, even as demand for manufactured goods continued to grow.

Managing Partner at SEID, Tubosun Akeju, said Nigeria already had the demand and some of the industrial strengths required to build a stronger manufacturing sector.

“Nigeria already has the demand and some of the industrial strengths required to build a much stronger manufacturing sector. The opportunity is to understand where those strengths exist, deepen them and build the competitiveness required to capture more value locally and compete beyond our borders. The Nigerian Manufacturing Opportunity Report 2026 provides decision-makers with the insights on opportunities that are most immediate, where Nigeria is already making progress and what needs to be done better to unlock greater value.”

The report said unlocking the opportunity would require improvements in energy, logistics, infrastructure, technical skills, processing capacity and export competitiveness.

It added that for investors, the report provided insight into where to enter; for manufacturers, where to scale; and for policymakers, what to enable.