Nigeria’s manufacturing sector is increasingly looking inward for survival as the impact of naira devaluation and persistent foreign exchange scarcity reshapes supply chains across the country.
A Financial Times report on Sunday revealed that companies once dependent on imported raw materials are now embracing local sourcing as a way to ease pressure on scarce dollars and stabilize operations.
The shift follows the Central Bank of Nigeria’s decision to float the naira last year, part of President Bola Tinubu’s sweeping reforms to revive growth and attract investors. But the move triggered unprecedented volatility, leaving manufacturers who contribute about nine per cent of GDP struggling as the naira tumbled and dollar inflows dried up.
The Manufacturers Association of Nigeria (MAN) estimates that about 800 companies shut down last year due to soaring input costs and limited access to foreign exchange. Multinationals including Procter & Gamble, Unilever, GlaxoSmithKline, PZ Cussons, Bayer, and Sanofi have either exited or scaled back Nigerian operations.
For those that stayed, the reforms have proved disruptive but also transformative. Chemical and Allied Products (CAP), a leading paint producer, said the crisis forced it to rethink its dependency on imports.
“From a supply chain point of view it was the worst period I have ever witnessed because we would wake up and give a purchase order and within five seconds it was rejected because FX prices were so unstable,” recalled CAP’s Chief Supply Officer, Lekan Aluko, of early 2024 when the currency was devalued for the second time in eight months.
Today, CAP sources about 90 per cent of its calcium carbonate an essential paint ingredient locally, compared to almost total reliance on imports from South Africa, Egypt, and Tunisia previously. The company says the switch has cut its costs by nearly 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, but now we can keep our costs below real inflation,” CAP CEO Bolarin Okunowo explained.
Data from MAN shows local raw material usage in manufacturing rose to an average of 57.1 per cent in 2024, up five percentage points from the previous year.
Economist Dumebi Oluwole of Lagos-based Stears noted: “Most manufacturers are becoming more innovative with how they procure their raw materials, how they process those materials, and how they distribute them, and we have seen an increased use of collaboration across supply chains.”
Some companies have found creative workarounds where local sourcing is impossible. Beta Glass, which produces bottles for beverage and pharmaceutical firms, no longer imports soda ash directly. Instead, it partners with international suppliers that import the compound into Nigeria and invoice in naira, shielding the company from exchange-rate risks.
Still, challenges persist. Local suppliers often lack capacity, while decades-old issues such as poor electricity, bad roads, and regulatory uncertainty continue to hamper operations.
Despite these hurdles, many manufacturers see value in localisation. The naira has stabilised somewhat since last year’s turbulence, and industry executives say Tinubu’s reforms are gradually restoring confidence.
“Business confidence has been going up in the measures that we look at [such as consumer spending forecasts], and that shows us that things are trending in the right direction,” said Beta Glass CEO, Alex Gendis. “We are hopeful that we are now going in the right direction.”