Depreciation of the Naira leads to a surge in raw material imports, totalling N3 trillion – NBS
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The influx of raw material imports into the country surged by 25 percent to N3 trillion in 2023, as reported by the Foreign Trade Statistics data released by the National Bureau of Statistics. Among the major imports were cane sugar, lubricating oils, milk preparations, and odoriferous substances. In contrast, Nigeria’s export of raw materials amounted to only N1.8 trillion between 2022 and 2023, resulting in a trade imbalance of N3.6 trillion.
Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, attributed the increase in raw material imports to the depreciation of the naira. He highlighted that while the imports may seem higher in naira terms due to currency devaluation, they might actually decrease when viewed in dollar terms. This situation underscores the challenges posed by currency fluctuations on import-dependent economies.
Manufacturers have long lamented the over-reliance on imported raw materials, citing it as a significant hindrance to the growth of the domestic manufacturing sector. Mansur Ahmed, the immediate past President of the Manufacturers Association of Nigeria (MAN), emphasized the need for a shift towards backward integration, import substitution, and infrastructure development to strengthen the manufacturing sector. He advocated for public-private partnerships aimed at reducing import dependency and fostering local production.
In response to the recent Monetary Policy Rate hike by the Central Bank of Nigeria, MAN expressed concerns about limited access to credit, which could hamper efforts towards backward integration, research, and innovation essential for sustainable industrial growth. The association called for incentives to encourage investment in local sourcing and backward integration, aiming to reduce the country’s reliance on imported products and raw materials. This, they argue, would alleviate pressure on foreign exchange reserves and foster economic resilience.
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