Nigeria’s manufacturing sector is undergoing a major transformation as firms increasingly turn to local raw materials to survive the naira crisis, foreign exchange (FX) scarcity, and persistent macroeconomic volatility.
This shift comes in the wake of the Central Bank of Nigeria’s decision to float the naira in 2023 as part of President Bola Tinubu’s economic reform agenda.
While the move was intended to attract investors and stabilize the market, it triggered unprecedented currency swings that left many businesses exposed to higher input costs and a severe shortage of dollars.
According to the Manufacturers Association of Nigeria (MAN), more than 800 companies shut down operations in 2024 due to escalating production costs and difficulties accessing foreign currency.
Multinationals such as Procter & Gamble, GlaxoSmithKline, and Unilever have scaled back their Nigerian operations in recent years, citing the hostile business environment.
For firms that stayed, the crisis has become a turning point. Many have been forced to abandon their heavy reliance on imports and build resilient supply chains using domestic resources.
At Chemical and Allied Products (CAP) Plc, one of Nigeria’s leading paint producers, executives described the past year as the most turbulent period in decades.
“From a supply chain point of view, it was the worst period I have ever witnessed,” said Chief Supply Officer, Lekan Aluko, recalling the chaos that followed successive devaluations in 2023 and early 2024.
To stay afloat, CAP pivoted to sourcing 90 per cent of its calcium carbonate locally, compared to heavy dependence on imports from South Africa and North Africa in previous years.
The company estimates savings of nearly 60 per cent in calcium carbonate costs between August 2024 and June 2025.
“If we had not taken this step, we would have increased prices by an additional 50 per cent,” said CEO Bolarin Okunowo.
Industry-wide, MAN reports that local raw material utilisation in the sector rose to 57.1 per cent in 2024, up from 52 per cent the previous year.
The shift to local inputs is not limited to paints. Beta Glass Plc, which supplies bottles to Nigeria’s food and beverage sector, has adopted creative workarounds to reduce FX exposure.
While Nigeria does not produce soda ash—a key glassmaking ingredient—the company struck supply agreements with international partners who import the chemical and invoice in naira.
“It saves us from burning scarce dollars and frees up cash flow,” said CEO Alex Gendis, noting that borrowing costs in Nigeria, with interest rates above 25 per cent, make direct dollar sourcing unsustainable.
Despite the gains, manufacturers face bottlenecks. Local suppliers often lack the capacity to meet the scale required by large companies.
Decades-old infrastructure challenges, such as poor electricity supply and bad roads, continue to hamper domestic production.
Economist Dumebi Oluwole of Stears noted that manufacturers have become more innovative.
“We are seeing greater collaboration across supply chains, more local partnerships, and deeper investment in domestic processing facilities,” she explained.
Yet, executives remain wary of regulatory uncertainties.
New taxes and compliance costs weigh heavily on the sector, though Tinubu’s newly signed tax reform bill—set to take effect in 2026—aims to simplify the system.
There are signs that reforms are beginning to pay off. The naira has shown relative stability since mid-2025, supported by increased oil revenues and tighter monetary policy.
Business confidence is also rising, with consumer spending forecasts improving.
“Things are trending in the right direction,” said Gendis. “The journey has been tough, but local sourcing has given us a fighting chance.”
For Nigeria’s manufacturing sector, the currency turmoil has been both a crisis and an opportunity.
While FX scarcity has exposed deep vulnerabilities, it has also forced companies to embrace domestic value chains, a shift that may ultimately strengthen the nation’s industrial resilience in the long term.