Nigeria’s manufacturers are increasingly sourcing raw materials locally as foreign exchange scarcity and naira devaluation disrupt imports, according to a Financial Times report released on Sunday.
The shift comes in the wake of the Central Bank of Nigeria’s decision to float the naira last year as part of President Bola Tinubu’s reform agenda. While aimed at attracting investors and stabilising growth, the move triggered steep volatility that left manufacturers scrambling for dollars.
Manufacturers, who account for about nine per cent of Nigeria’s GDP, were particularly hard hit. The Manufacturers Association of Nigeria (MAN) said roughly 800 companies shut down operations in 2024 due to soaring costs and reduced access to foreign currency. Multinationals including Procter & Gamble, GlaxoSmithKline, Bayer, and Unilever have also scaled back in recent years, citing Nigeria’s tough macroeconomic environment.
For those that remained, the crisis forced a rethink. At Chemical and Allied Products (CAP), one of Nigeria’s largest paint producers, executives say the turmoil became a turning point.
“From a supply chain point of view it was the worst period I have ever witnessed,” said Chief Supply Officer, Lekan Aluko, recalling early 2024 when the naira was devalued for the second time in eight months.
Faced with surging input costs, CAP turned to local vendors for calcium carbonate, a compound used in paint manufacturing. Today, the company sources about 90 per cent of its needs domestically—down from a heavy reliance on imports from South Africa, Tunisia, and Egypt. CAP estimates it cut costs by 60 per cent in the 10 months to June 2025.
“If we had not taken this measure, we would have had to increase pricing by an additional 50 per cent,” said CAP’s chief executive, Bolarin Okunowo.
The trend is spreading. MAN data shows that local raw material use across the sector rose to 57.1 per cent in 2024, up five percentage points from the previous year. Analysts say companies are also becoming more innovative in sourcing, processing, and distribution strategies.
In some cases, where raw materials are unavailable locally, firms are negotiating new models. Beta Glass, a major producer of bottles for beverage and pharmaceutical firms, now works with international suppliers who invoice in naira rather than dollars. This approach, according to CEO Alex Gendis, shields the company from direct forex exposure and reduces reliance on costly bank lending rates, which hover above 25 per cent.
Challenges remain. Local suppliers often lack the capacity to meet industrial demand, while poor electricity supply, bad roads, and regulatory uncertainty weigh on production. Still, executives say the benefits of localisation outweigh the drawbacks, particularly as the naira shows signs of stabilising.
“Business confidence has been going up in the measures we look at, such as consumer spending forecasts, and that shows us that things are trending in the right direction,” said Gendis.
With Tinubu’s reforms gradually taking root, manufacturers hope their supply chain adjustments will help them weather future shocks in Africa’s largest economy.