By Yinka Kolawole 

The difficulties in obtaining foreign exchange (FX) have pushed manufacturers into sourcing their raw materials locally in the first half of 2024 (H1’24), a report by the Manufacturers Association of Nigeria (MAN) has revealed.

The report of a survey of the manufacturing sector by MAN for H1’24 noted that manufacturers are increasingly turning to locally produced raw materials to mitigate import problems occasioned by FX scarcity.

MAN attributed the shift to the growing difficulties faced by manufacturers in obtaining foreign currency, which is pushing companies to explore options for local sourcing of raw materials.

It, however, noted that the changes have not been consistent across all subsectors.

For instance, the production of non-metallic mineral products, as well as textiles, clothing and footwear, saw a decline in local supply depending more on imported raw materials, highlighting the challenges of reducing import dependence.

“The manufacturing sector’s local raw material sourcing improved slightly to 56.03 percent in H1 2024, up from 55.4 percent in H1 2023. This modest increase indicates a gradual shift towards local sourcing, driven by difficulties in obtaining foreign exchange. 

“However, some sectors, like Non-Metallic Mineral Products and Textile, Apparel & Footwear, faced declines in local sourcing, reflecting the challenges of shifting away from imported raw materials,” the report stated.

In his comment, President of MAN, Francis Meshioye, noted that the real output of the manufacturing sector declined 1.66% year-on-year to N1.34 trillion H1’24 from N1.36 trillion in H1’23, while nominal industrial output increased significantly, up 30.38% year-on-year to N5.34 trillion in H1’24.

“Nigeria’s real industrial output declined by 1.66 percent year-on-year H1’24, falling to N1.34 trillion from N1.36 trillion in H1’23.

“Despite this decline, the sector experienced growth of 9.97% compared to H2’23, driven by the base effect.

“In nominal terms, Nigeria’s manufacturing output increased by 30.38% year-on-year to reach N5.34 trillion in H1’24,” he said.

Meshioye emphasized the urgent need for Nigeria to implement decisive and coherent economic reforms to tackle the challenges confronting the manufacturing sector. 

“As the country navigates through these turbulent times, the resilience of its policy framework and the effectiveness of its economic management will determine the path forward,” he stated.