Naira crash Spurs Imports Surge as Nigeria’s Raw Material Imports Jump by 25% in 2023



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In the year 2023, Nigeria witnessed a significant surge in the importation of raw materials, with figures soaring by 25% to N3 trillion, as reported by the National Bureau of Statistics (NBS) in its Foreign Trade Statistics data.

The imported raw materials during this period comprised a range of essential items, including cane sugar, lubricating oils for further blending, milk preparations containing vegetable fats and oils, mixtures of odoriferous substances, and sheets for veneering, among others.

Conversely, Nigeria’s export of raw materials amounted to only N1.8 trillion between 2022 and 2023, resulting in a trade balance deficit of N3.6 trillion.

Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, attributed the surge in raw material imports (in naira terms) to the depreciation of the national currency.

He explained, “The depreciation of the naira plays a significant role in this increase. For instance, if a product that was valued at $1 million was imported when the exchange rate was N450, now with an exchange rate of N1,500, importing the same product would cost three times more in naira terms. However, it’s essential to consider this in dollar terms as well.”

In recent years, manufacturers have been vocal about the challenges posed by over-reliance on imported raw materials, which has hindered the growth of the country’s manufacturing sector.

During a meeting of the Apapa branch of the Manufacturers Association of Nigeria (MAN), Mansur Ahmed, the immediate past MAN President, highlighted the detrimental impact of excessive reliance on imported materials on the Nigerian manufacturing sector.

Ahmed emphasized the need for a paradigm shift towards backward integration, import substitution, and other measures aimed at reducing the excessive importation of raw materials.

Expressing concerns over the recent increase in the Monetary Policy Rate by the Central Bank of Nigeria, MAN emphasized the importance of access to credit for promoting backward integration, research and development, and innovation to enhance productivity and foster rapid industrial-led economic growth.

In conclusion, there’s a growing call for policies and initiatives that encourage local production, backward integration, and investment in critical sectors to reduce Nigeria’s dependence on imported raw materials and promote sustainable economic growth.

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