The Growing Dependence on Imported Raw Materials in Nigeria’s Manufacturing Sector
Nigeria’s manufacturing sector is facing a critical challenge as it increasingly relies on imported raw materials for survival, a trend that contradicts the government’s long-standing import substitution policy. This development has raised concerns among industry stakeholders and analysts, highlighting a significant structural weakness in the country’s economy.
According to findings by Financial Vanguard, the value of raw material imports surged by 19.7% year-on-year (y/y) to N3.53 trillion in the first half of 2025 (H1’25), up from N2.95 trillion in the same period in 2024 (H1’24). These figures underscore the growing reliance on foreign inputs, which has been further exacerbated by several factors including high energy costs, limited local processing capacity, and currency devaluation.
The National Bureau of Statistics (NBS) data reveals that key imports include sugar cane and related products for the sugar refining and confectionary industries, additives for lubricating oil manufacturers, veneer sheets, and hides and skins for leather products. Additionally, cement manufacturers heavily depend on imported gypsum, while paint producers rely on imported binders and resins. These imports primarily come from countries such as Brazil, the United States of America, the United Kingdom, France, China, Germany, and Tanzania.
Structural Weaknesses and Policy Challenges
The over-reliance on imported raw materials poses a serious threat to Nigeria’s economic goals. According to Prof. Nnanyelugo Ike-Muonso, Director General of the Raw Materials Research and Development Council (RMRDC), more than 70% of manufacturing inputs are still sourced from abroad. This situation, he argues, reflects a major structural weakness that reduces the sector’s contribution to GDP, hinders job creation, and increases production costs.
Ike-Muonso emphasized that unless urgent reforms are implemented, Nigeria risks remaining locked in a cycle of economic dependency. He called for bold reforms to boost local resource utilization and drive industrial transformation, advocating for a 60% reduction in foreign raw material imports over the next five years to reposition the country as an industrial powerhouse.
To support this vision, the federal government recently granted RMRDC the authority to implement tax incentives designed to reward manufacturers and innovators who use locally sourced inputs. This initiative aims to attract private-sector investment and stimulate technology-driven manufacturing.
Industry Stakeholders’ Concerns
Manufacturing sector stakeholders have echoed similar concerns. Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria (MAN), pointed out that the cost of imported raw materials and machinery remains a major expense for Nigerian manufacturers. He lamented that raw materials imports reached N6.64 trillion in 2024, with over 70% of manufacturing inputs sourced from abroad.
Ajayi-Kadir highlighted the structural weaknesses in the economy, which compel manufacturers to rely on imported components even for basic products. Many companies have scaled back or suspended their backward integration plans due to fiscal challenges, including insecurity and rising operational costs.
He stressed the need for government policies focused on encouraging value addition through technology adoption and financial incentives. Supporting the emergence of industrial hubs and research-industry collaborations is crucial for developing tailored local innovations, he added.
The Role of Import Substitution Policy
Gabriel Idahosa, President of the Lagos Chamber of Commerce and Industry (LCCI), cited the failure of Nigeria’s import substitution strategy as a key reason for the over-reliance on imported raw materials. He noted that while importing raw materials may not be inherently harmful, the lack of export diversification makes it difficult to balance foreign exchange outflows.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), emphasized the importance of import substitution in national development. He urged the government to provide appropriate policies that encourage manufacturers to backwardly integrate and reduce dependence on imported raw materials, which could lower production costs and enable diversification into various value chains.
A Path Forward
Despite these challenges, Ike-Muonso remains optimistic about Nigeria’s potential. He pointed to the country’s vast natural resources, including over 120 commercially viable solid minerals, abundant agricultural products, and a youthful population. However, he stressed that strategic coordination, bold implementation, and technology-backed commitment are essential for unlocking this potential.
Nigeria must embrace the Fourth Industrial Revolution, adopting smart technologies, resource-efficient processes, and a national industrial ethos anchored on sustainability. By leveraging local raw materials and skilled labor, the country can move toward self-sufficiency in essential goods and reduce reliance on imports.
The RMRDC’s efforts, including the Research and Demonstration Plant Complex (RDPC) in Abuja, showcase the potential for converting indigenous materials like cassava, talc, and shea into finished industrial products. Furthermore, the recent passage of the Raw Materials Research and Development Council (Establishment) Amendment Bill (2025) mandates that no raw material leaves the country unless it has undergone at least 30% processing or value addition, aiming to drastically cut the export of unprocessed commodities.
