Nigeria’s manufacturing sector recorded a steady increase in the use of locally sourced raw materials between 2021 and 2024, with the share rising from 51.5 per cent in 2021 to 57.1 per cent in 2024, as foreign exchange pressures, naira depreciation and rising import costs pushed manufacturers towards domestic alternatives.
Data from the Manufacturers Association of Nigeria, MAN, showed that local raw material sourcing averaged 51.5 per cent in 2021, rising marginally to 52.8 per cent in 2022 and 53.5 per cent in 2023, before climbing sharply to 57.1 per cent in 2024.
The 5.6 percentage-point increase recorded between 2021 and 2024 represents an improvement of about 10.9 per cent over the four-year period.
Director-General of MAN, Segun Ajayi-Kadir, attributed the latest improvement to increased efforts by manufacturers to deepen backward integration amid persistent foreign exchange challenges and high import costs.
According to him, notable improvements in local sourcing were recorded in the Wood and Wood Products, Textile, Apparel and Footwear, and Chemical and Pharmaceutical subsectors, while Electrical and Electronics remained heavily dependent on imported components.
The naira’s sharp depreciation in 2023 and 2024 significantly increased the cost of imported machinery and raw materials, but also encouraged manufacturers to seek domestic alternatives.
Ajayi-Kadir cited Chemical and Allied Products as an example, noting that the company now sources about 90 per cent of its calcium carbonate locally.
The increase in local sourcing has also coincided with improved capacity utilisation in some manufacturing subsectors.
Recent CBN data showed that overall manufacturing capacity utilisation rose from 51.33 per cent in the first quarter of 2025 to 57.50 per cent in the second quarter.
Non-metallic products recorded the highest capacity utilisation at 74.11 per cent in Q2 2025, followed by Food, Beverage and Tobacco at 60.73 per cent. Ajayi-Kadir attributed the performance of the leading sectors to rising domestic demand, favourable policy measures and increased local sourcing of raw materials.
He said the MAN Economic Report for H1 2025 showed that capacity utilisation in the non-metallic sector rose from 57.1 per cent in H2 2024 to 62.3 per cent in H1 2025, while Food, Beverage and Tobacco increased from 57.6 per cent to 62.52 per cent.
“The non-metallic mineral products, such as cement, tiles and construction materials, benefit from increased demand tied to housing construction, especially in urban areas,” he said.
Similarly, the MAN DG said the Food, Beverage and Tobacco sector was supported by rising food demand driven by Nigeria’s large and growing population, particularly in urban areas.
Ajayi-Kadir stressed that deeper local sourcing would reduce manufacturers’ exposure to foreign exchange volatility and import bottlenecks.
“The two mentioned sectors access a higher percentage of raw material inputs locally, thereby facing less foreign exchange pressures and import constraints.
This aids planning, allowing expansion, increasing capacity, and development along the value chain,” he stated.
