Nigeria’s manufacturing sector is increasingly turning to local raw materials as the country’s currency crisis reshapes industrial supply chains.
A new Financial Times report on Sunday revealed that the volatility in the foreign exchange market—triggered by the Central Bank’s decision to float the naira under President Bola Tinubu’s reform agenda—has forced companies to cut their reliance on imports.
Manufacturers, who contribute roughly nine percent to Nigeria’s GDP, have been hit hard by the naira’s sharp depreciation and limited dollar inflows. The Manufacturers Association of Nigeria (MAN) disclosed that about 800 firms closed shop last year due to soaring input costs and a lack of access to foreign currency.
Several multinational corporations—including Procter & Gamble, Unilever, GlaxoSmithKline, PZ Cussons, Bayer, and Sanofi—have reduced operations in Nigeria in recent years, citing persistent macroeconomic headwinds. But some local players say the crisis has also spurred innovation.
Executives at Chemical and Allied Products (CAP), one of the country’s top paint producers, described the period following last year’s devaluation as “the worst” for supply chains. “We would issue purchase orders and within minutes, they were rejected because of unstable forex prices,” said Chief Supply Officer, Lekan Aluko.
To survive, CAP shifted aggressively to local sourcing. The company now procures 90 percent of its calcium carbonate, a key ingredient in paint production, from Nigerian suppliers—compared to its previous reliance on imports from South Africa, Egypt, and Tunisia. According to CEO Bolarin Okunowo, this change has cut costs by nearly 60 percent in ten months, preventing what would have been a 50 percent price hike for consumers.
MAN data shows that local raw material usage in the sector rose to 57.1 percent in 2024, up from 52 percent a year earlier. “We’re seeing manufacturers rethink procurement, processing, and distribution, with more collaboration across supply chains,” noted Dumebi Oluwole, economist at Lagos-based firm Stears.
For materials not available locally, some companies are finding creative workarounds. Beta Glass, a leading bottle manufacturer, no longer imports soda ash directly. Instead, it partners with international suppliers who bring the product into Nigeria but invoice in naira—helping the firm avoid forex shocks. “Using scarce dollars felt like we were working for the banks,” said CEO Alex Gendis, referring to interest rates above 25 percent.
Challenges remain, including weak electricity infrastructure, poor transport networks, and capacity issues among local suppliers. Regulatory uncertainty also continues to frustrate manufacturers, though executives expect relief from a new tax law set to take effect next year.
Still, optimism is returning as the naira shows signs of stabilisation. “Business confidence is rising, consumer spending forecasts are improving, and the trend is positive,” said Gendis.
