Fx Volatility Forces 9 Rise In Local Raw Materials Sourcing Man

The Manufacturers Association of Nigeria MAN has reported a 9 percent surge in the local sourcing of raw materials in Nigerias manufacturing sector in 2024, buoyed by the lingering foreign exchange FX volatility, high import costs, and government incentives promoting local content.

This is even as investment in the manufacturing sector contracted by 35.3 percent in 2024. In its Second Half 2024 H224 Economic Review, MAN reported that local sourcing of raw materials rose to 57.1 in 2024 from 52.0 in 2023. The manufacturing sectors local raw material sourcing increased to 57.1 percent in 2024, up from 52.0 percent in 2023. This shift was largely driven by forex scarcity, high import costs, and government incentives promoting local content.

Notable improvements were observed in Wood Wood Products, Textile, Apparel Footwear, and Chemical Pharmaceuticals, while Electrical Electronics continued to lag due to dependency on imported components, the report stated. MAN however noted that despite some resilience observed in sectoral performance and increased local sourcing of raw materials, real output remained subdued.

The sectors real manufacturing output increased modestly by 1.7 percent year-on-year to N7.78 trillion, buoyed by increased activity in Motor Vehicle Miscellaneous Assembly, Non-Metallic Mineral Products, and Electrical Electronics. However, a half-on-half decline of 3.1 percent in real production reflected rising costs and weak consumer demand. Nominal manufacturing output rose sharply by 34.9 percent to N33.43 trillion, primarily due to inflationary pressures and rising domestic prices, MAN reported.