MAN Bemoans Surge in Imported Raw Materials Costby 118%, N1.62trn FX Losses

Dike Onwuamaeze

The Manufacturers Association of Nigeria (MAN), has bemoaned the astronomical surge of 118 per cent in the cost of imported raw materials, which grew to N6.64 trillion and foreign exchange (FX) losses of N1.62 trillion that its members suffered in 2024 alone. 

The Director General of MAN, Mr. Segun Ajayi-Kadir, stated this in his address at the 2025 BusinessDay Manufacturing Conference with the theme, “Unlocking Nigeria’s Manufacturing Potential: Strategies for Sustainable Growth Amid Economic Turbulence.”

The MAN used the conference to ask the federal government to gazette the “Nigeria First Policy,” enact it into law  with stipulated punitive measures for violators in order, “to give the policy legal standing, ensuring transparency, public awareness, and enforceability across government institutions and the private sector.”

According to him, the manufacturing sector is worse hit by the prevailing economic downturn and is now facing the combined storm of foreign exchange (FX) losses, rising raw material costs, high energy prices, multiple taxation and escalated borrowing among other challenges.

Ajayi-Kadir said that due to the high and volatile foreign exchange rate and high import duties, the cost of importing needed raw materials has risen astronomically while most of these raw materials are not available locally, those that are available are scarce and becoming limited in supply.  

He said: “Credible data revealed that in last year alone, the exchange rate depreciated by 53 per cent and the cost of imported raw materials surged by 118 per cent to N6.64 trillion. In the same year, documented forex losses of manufacturers within MAN increased from N983 billion in 2023 to N1.62 trillion due to Naira depreciation as well as the non-settlement of the $2.4 billion worth of Forex forward contract by the CBN.”

He added that manufacturers within the Small and Medium Industries (SMI) cadre were particularly impacted by the cost of alternative energy which skyrocketed from N781.7 billion in 2023 to N1.1 trillion in 2024, consequent upon the 240 per cent increase in electricity tariff.

“In addition, Finance costs jumped by over 44 per cent to N2.06 trillion in the 2024 from N1.43 trillion in 2023, while multiplicity of taxes and excessive regulation have further stifled manufacturing growth,” he said.

According to him, 767 manufacturing companies shut down operations in 2023 and over 18,000 jobs were lost in 2024 alone due to the hostile business environment.

The effect of the hostile business environment, according to MAN, is evident in the country’s ranking of 97th “in the Global Competitive Industrial Performance Index; an uninspiring 44 places below South Africa.”  

Ajayi-Kadir attributed the sub-optimal performance of the Nigerian manufacturing sector to numerous but familiar binding constraints like unstable exchange rate, inadequate power supply/ high cost of energy, high inflation, insecurity, multiplicity of regulatory agencies and high regulation costs, high interest rate & poor access to credit, deficient infrastructure, high logistics cost, unfavourable trade policies and low patronage 

He said, “Available data shows that manufacturing capacity utilisation plummeted from 73.3 per cent in 1981 to 57 per cent in 2024 and contribution to the economy (GDP) has shrunk from 29.9 per cent to 8.6 per cent over the same period. Real growth has decelerated from 14.7 per cent in 2014 to 1.38 per cent in 2024, while non-oil export contributions have nose-dived from 82.37 per cent in 2019 to 25.13 per cent in 2024.”

He also pointed out that market access and integration have remained limited due to inadequate trading information and infrastructure deficits.

He said: “The poor transport system has escalated logistics costs, making Nigerian manufacturers less competitive. Insecurity has elevated business risks, increased costs and made the investment environment uncertain. Agro-allied industrial activities have remained challenged by insurgent activities and farmer-herder clashes.”

Ajayi-Kadir said that from the foregoing, it is evident that the business-operating environment is constraining Nigeria’s industrialisation.

He, therefore, said that urgent action is required to address these challenges and unlock the growth potential of the manufacturing sector.    

“The Nigerian government holds the primary responsibility for creating an enabling environment to unlock the manufacturing sector’s potential, a task that requires strategic interventions across infrastructure, fiscal policy, and regional integration issues. In this regard, we should commend the Federal Government for the passage of the four tax reform bills aimed at restructuring, streamlining and establishing unified tax processes. 

“The government should equally be commended for pronouncement of the Nigeria First Initiative. The nation anxiously awaits the expedited consummation of these initiatives and effective implementation,” he said.