Dr. Muda Yusuf, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), has given an insightful thought on the implication of the challenge faced by the naira, the Nigeria currency on the importation of raw materials in the country.
The one time Chairman Lagos Chamber of Commerce, linked the increase in raw material imports (in naira terms) to the depreciation of the naira.
He said, “I think it is because of the naira depreciation. If you were importing something that was $1m when the exchange rate was N450, now you are importing products worth $1m and the exchange rate is N1,500.
“That is three times already if you multiply it in naira. So, in dollar terms, the import may have even reduced. We have to consider that.”
His reaction is coming on the heels of the recently released report of the Nigeria Bureau of Statistics (NBS) indicating that Imports of raw materials into the country rose by 25 per cent to N3tn in 2023.
The report also indicated that, the major raw materials imported during the period included cane sugar, other lubricating oils meant to be mixed further, preparations of milk containing vegetable fats and oils, mixtures of odoriferous substances, sheets for veneering, among others.
Conversely, Nigeria could only export raw materials worth N1.8tn between 2022 and 2023, recording a N3.6tn balance of trade.
Commenting on the implication of the trend, Mansur Ahmed, the immediate past president of the Manufacturing Association of Nigeria (MAN), said excessive reliance on the imported raw materials had significantly weakened the Nigerian manufacturing sector.
He said this during an annual general meeting of the Apapa branch of the Manufacturers Association of Nigeria.
According to him, “Our manufacturing sector is weak because it is dependent on imported materials that we then process. We must therefore scale up or scale down. Our manufacturers have to go back and do the transformation.
He noted that “Expert in manufacturing sector need to focus on this issue. We need to build infrastructure. I was in a meeting where the Vice President inaugurated the National Council on Infrastructure.”
Mansur, however, recommended a public-private partnership that aimed to encourage backward integration, import substitution and other measures that would curb excessive import of raw materials.
Recall that in a recent statement released in response to the recent hike in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria, the MAN expressed worry that the resulting limited access to credit would limit backward integration, research and development and innovation needed to enhance productivity and rapid industrial-led economic growth.
