HomeBusinessNaira slump: Manufacturers’ raw material imports hit N8tn

Naira slump: Manufacturers’ raw material imports hit N8tn

Manufacturers have spent at least N7.9tn to import raw materials in the past three years, according to findings by The PUNCH.

According to manufacturers, the high raw materials imports bill is due to operators’ decision to source foreign exchange from the parallel market at high rates following the shortage of FX at the official market.

An analysis of the foreign trade reports of the National Bureau of Statistics also showed Nigeria was only able to export raw materials worth N1.77tn during the period, leaving a balance of trade deficit of 6.1tn.

A breakdown of the data showed that in the second quarter of 2020, manufacturers imported raw materials worth N570.6bn. The figure increased to N710.2bn in the third quarter of the same year before increasing further to N715.7bn in Q4.

Further breakdown of the data showed that in 2021, raw materials imports by manufacturers was N2.9tn. It slowed to N2.4tn in 2022, while N555.4bn worth of raw materials was imported in the first quarter of 2023.

The major raw materials imported during this time included cane sugar from Brazil, milk preparations from Ireland, mixtures of odiferous substances from Ireland and Swaziland, and lubricating oils from The Netherlands.

According to the Manufacturers Association of Nigeria Bi-Annual economic report, the manufacturing sector’s local raw materials sourcing averaged 52.8 per cent as against 51.5 per cent recorded in 2021.

“If you are manufacturing a car in Nigeria, you cannot backward integrate to start building engines or even producing tires. You more or less still import most of the components and just put them together.”

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