A recent report by the Manufacturers Association of Nigeria (MAN) reveals that ongoing foreign exchange (FX) challenges have led to an increase in local raw material sourcing within Nigeria’s manufacturing sector during the first half of 2024 (H1’24).
MAN’s survey shows that many manufacturers are turning to domestic resources to mitigate the effects of FX scarcity, which has hindered the import of necessary materials.
The report notes that local raw material sourcing in the sector improved slightly, reaching 56.03% in H1’24, up from 55.4% in the same period of 2023. This gradual shift indicates a growing preference for local sourcing due to FX challenges, though the trend is uneven across different subsectors.
For instance, production in non-metallic mineral products, textiles, clothing, and footwear saw a decrease in local raw material usage, highlighting continued reliance on imported supplies.
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Francis Meshioye, President of MAN, noted a year-on-year decline of 1.66% in the real output of the manufacturing sector, dropping to N1.34 trillion in H1’24 from N1.36 trillion in H1’23, despite a substantial nominal increase of 30.38% to N5.34 trillion in the same period.
He attributed the sector’s nominal growth to inflationary pressures and emphasized the need for consistent economic reforms to address these challenges.
Meshioye highlighted that as Nigeria faces economic uncertainty, the stability of its policy framework and the government’s effectiveness in managing the economy will play critical roles in supporting the manufacturing sector’s sustainability and growth.
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