By Yinka Kolawole

Nigeria’s manufacturers are increasingly embracing local sourcing and value addition as a survival strategy to reduce dependence on imported inputs amid rising production costs that continue to undermine their competitiveness within the domestic and regional markets.

Industry operators, however, warn that without lower financing costs, improved infrastructure, better logistics and stronger government support for local raw material development, the country’s manufacturing sector may struggle to fully harness opportunities under the African Continental Free Trade Area (AfCFTA).

Speaking in a television interview, Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said manufacturers are increasingly investing in local sourcing and value addition to reduce exposure to imported raw materials, but stressed that the prevailing exchange rate remains too high to support competitive industrial production.

Ajayi-Kadir warned that although AfCFTA offers Nigerian manufacturers access to a wider continental market, the country risks losing out to competitors operating in lower-cost economies unless structural impediments are addressed.

He identified affordable financing, efficient transport and logistics, reliable power supply, improved infrastructure, tax efficiency and competitive input costs as critical requirements for Nigerian manufacturers to compete effectively across Africa. 

Regional General Manager of Bel Papyrus Limited, a tissue paper manufacturing firm, Charbel Kairouz, said manufacturers continue to grapple with foreign exchange constraints for importing essential raw materials, while unstable electricity supply further raises production costs.

According to him, expanding the local availability of industrial raw materials would significantly reduce costs, shorten supply chains and improve manufacturers’ operational efficiency.

“Local raw materials, with stable pricing, will allow companies to save costs, reduce delays and overcome major supply-chain challenges,” Kairouz said.

Similarly, Managing Director of Colexa Biosensor Ltd, an indigenous pharma company, urged government to adopt policies that place local manufacturing at the centre of Nigeria’s industrial strategy.

He stated: “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.”

It is estimated that over 70 per cent of the inputs used in the country’s manufacturing sector are sourced from abroad, according to Director General of Raw Materials Research and Development Council, RMRDC, Prof. Nnanyelugo Ike-Muonso

This, he noted, reflects a major structural weakness that reduces the sector’s contribution to GDP, hinders job creation, and increases production costs. He added that the over-reliance on imported inputs, compounded by factors such as exchange rate volatility, had driven costs off limits of sustainability and threatens Nigeria’s industrial future.

According to him, Nigeria must reduce its dependence on foreign raw materials by at least 60 per cent over the next five years to reposition itself as an industrial powerhouse.

“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.

“In general, it is clear that to reposition Nigeria as an industrial powerhouse, we must reduce foreign raw material imports by at least 60 per cent in the next five years and significantly increase local resource utilisation; incentivise value addition through technology adoption and tax support; support the emergence of industrial hubs and clusters around strategic raw material zones; deepen research–industry collaboration for tailored innovation; facilitate technology transfer, infrastructure finance, and SME integration across the manufacturing spectrum,” Ike-Muonso stated.