Manufacturers deepen local raw materials sourcing, up 11% in 3yrs
By Yinka Kolawole
Nigeria’s manufacturing sector has seen a notable increase in the utilization of locally sourced raw materials from 2021 to 2024. The proportion of domestic raw materials used by manufacturers rose from 51.5% in 2021 to 57.1% in 2024. This shift is largely due to mounting foreign exchange pressures, the depreciation of the naira, and rising import costs, which have prompted manufacturers to seek domestic alternatives.
Data released by the Manufacturers Association of Nigeria (MAN) indicated that local raw material sourcing averaged 51.5% in 2021. This figure increased slightly to 52.8% in 2022 and 53.5% in 2023, before making a notable jump to 57.1% in 2024. The overall rise of 5.6 percentage points represents an improvement of approximately 10.9% over the four-year period.
Segun Ajayi-Kadir, Director-General of MAN, attributed this improvement to manufacturers’ growing efforts to enhance backward integration in response to ongoing foreign exchange challenges and high import costs. He highlighted specific sectors that have shown significant progress in local sourcing, including Wood and Wood Products, Textile, Apparel and Footwear, as well as Chemical and Pharmaceutical industries. However, he noted that the Electrical and Electronics sector still relies heavily on imported components.
The naira’s sharp depreciation in 2023 and 2024 has led to increased costs for imported machinery and raw materials, further incentivizing manufacturers to explore domestic sourcing options. For example, Ajayi-Kadir cited Chemical and Allied Products, which now sources approximately 90% of its calcium carbonate locally.
The rise in local sourcing has paralleled an improvement in manufacturing capacity utilization across various sectors. Recent data from the Central Bank of Nigeria (CBN) indicated that overall manufacturing capacity utilization increased from 51.33% in the first quarter of 2025 to 57.50% in the second quarter.
The non-metallic products sector reported the highest capacity utilization in the second quarter at 74.11%, followed by the Food, Beverage, and Tobacco sector at 60.73%. Ajayi-Kadir noted that these sectors have benefited from growing domestic demand, supportive policy measures, and enhanced local raw material sourcing.
According to the MAN Economic Report for the first half of 2025, capacity utilization in the non-metallic sector rose from 57.1% in the second half of 2024 to 62.3% in the first half of 2025, while the Food, Beverage, and Tobacco sector experienced an increase from 57.6% to 62.52%.
Ajayi-Kadir pointed out that the increased demand for non-metallic mineral products—such as cement, tiles, and construction materials—is mainly driven by rising housing construction in urban areas. Similarly, the Food, Beverage, and Tobacco sector has been supported by heightened food demand resulting from Nigeria’s large and growing urban population.
He emphasized that deeper local sourcing could significantly reduce manufacturers’ exposure to foreign exchange volatility and import challenges. “These sectors benefit from higher percentages of locally sourced raw materials, leading to less pressure from foreign exchange fluctuations and import constraints,” he said. “This facilitates better planning, expansion opportunities, increased capacity, and development along the value chain.”
