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By Merit Ibe
For many experts, Nigeria is a nation that imports its inputs instead of sourcing them locally.
This has been a perennial economic bane and a cog in the wheel of industrialisation.
Raw material imports gulp N3.35 trillion on a conservative estimate according to industry records.
This horror translates to sustained threats that expose the weaknesses in the country’s industrial base.
Ongoing pressure in the Middle East, which is disrupting markets and global supply chains, has further worsened the plight of Nigerian manufacturers and highlighted the risks of an import-driven production model.
Data from the National Bureau of Statistics (NBS) shows that spending on raw material imports rose by 19.7 per cent in the first half of 2025, from N2.95 trillion recorded in the corresponding period of 2024.
Analysts say the heavy dependence on imported inputs, despite Nigeria’s abundant domestic resources, is constraining manufacturing growth and weakening competitiveness. They estimate that more than 70 per cent of manufacturing inputs are sourced externally, a trend that increases exposure to foreign exchange volatility and global supply disruptions.
Economists describe the situation as evidence of structural underdevelopment, noting that Nigeria continues to export low-value raw materials while importing higher-value finished and semi-processed goods. This has led to loss of jobs, foreign exchange and potential economic value.
Manufacturers say high input costs, combined with elevated interest rates and infrastructure deficits, are squeezing margins and reducing their ability to compete with imported goods. Policy inconsistency has also discouraged long-term investment in processing facilities, as investors seek clarity and stability before committing capital.
Access to finance remains another challenge. Businesses face high borrowing costs, limiting their capacity to invest in processing plants and industrial infrastructure. Experts suggest development finance institutions such as the Bank of Industry and the Bank of Agriculture should provide targeted funding to support local value addition.
The processing gap is particularly evident in agriculture, where weak post-harvest systems lead to significant losses. Nigeria loses between N3.5 trillion and N5 trillion annually due to poor storage, inefficient transportation and inadequate cold chain infrastructure. Less than five per cent of food is transported under temperature-controlled conditions, resulting in spoilage rates of up to 60 per cent.
Director General, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir warned that heavy reliance on imported raw materials remains a major structural weakness, contributing to high production costs, foreign exchange scarcity and vulnerability to external shocks.
Ajayi-Kadir noted that import dependence has reduced capacity utilisation and increased unsold inventory, with some subsectors recording a 51 per cent rise in unsold finished goods.
The director general urged the federal government to accelerate backward integration initiatives and provide incentives to encourage local sourcing, particularly in sectors where raw materials are available domestically. The Raw Materials Research and Development Council (RMRDC) also called for a 60 per cent reduction in raw material imports and supported policies that promote local value addition.
Industry stakeholders are advocating the implementation of a “Nigeria First” policy that would encourage minimum local value addition before export and promote patronage of locally produced goods.
They argue that strengthening domestic processing capacity would reduce import dependence, create jobs and improve economic resilience.
Ajayi-Kadir also linked the push for value addition to broader continental goals, including expanding intra-African trade under the African Continental Free Trade Area (AfCFTA). Building industrial capacity, he said , will enable Nigeria and other African economies to capture more value from their natural resources and compete effectively in regional markets.
However, competitiveness remains a key concern. According to the MAN boss, the cost of adding value locally remains high due to energy shortages, logistics challenges and expensive financing. This gap has discouraged investment in processing industries and reinforced reliance on imports.
As global economic conditions become more uncertain, Ajayi-Kadir advised that Nigeria must accelerate structural reforms aimed at developing local processing industries. Priorities include improving infrastructure, ensuring policy consistency, expanding access to affordable finance and investing in value chain development across regions.
He warned that failure to close the processing gap will limit job creation, reduce industrial output and increase vulnerability to external shocks. For Nigeria, the N3.53 trillion raw material import bill reflects not just rising costs but the urgent need to shift from exporting raw materials to building integrated value chains that retain value within the economy.
