Nigeria's manufacturers generated N494.2 billion from the export of goods in the fourth quarter of 2024, marking a 110% increase compared to N235 billion recorded in the same period of 2023. However, exports declined by 52.5% from the preceding quarter, according to the latest Foreign Trade Report.
Manufacturing Sector's Export and Import Trends
A breakdown of the report shows that manufactured goods accounted for 24.5% of the total N8.97 trillion traded in Q4 2024. The key export commodity was unwrought aluminum alloys, with Japan and China as the top destinations, valued at N63 billion and N9.3 billion, respectively.
By region, the largest share of manufactured goods exports went to:
Africa – N215.9 billion
Asia – N165.9 billion
Europe – N62 billion
However, despite the surge in exports, Nigeria's manufacturers imported N8.5 trillion worth of manufactured goods in Q4 2024, a 113% increase from N3.97 trillion in Q4 2023, and 21.37% higher than the N6.98 trillion recorded in Q3 2024.
Exchange Rate Volatility Worsens Manufacturing Costs
Manufacturers attribute the rising import bill to the volatile exchange rate, which saw the naira trade at 1,700/$ during the period, according to BusinessDay's analysis. Since most raw materials and machinery are imported and invoiced in dollars, the weakening naira has significantly increased production costs.
"The exchange rate volatility has been raising production costs for manufacturers because of their dependence on imported raw materials," said Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise.
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According to the Manufacturers Association of Nigeria (MAN), exposure to foreign exchange risk varies by sector, with industries like pharmaceuticals and chemicals having higher FX exposure due to the lack of a robust petrochemical industry in Nigeria.
Manufacturers Struggle Amid Forex Scarcity
At the 2024 MAN Annual General Meeting (AGM), George Onafowokan, Managing Director of Coleman Wires and Cables Industries Ltd, emphasized that forex scarcity has severely impacted manufacturing operations, making business sustainability increasingly difficult.
"Foreign exchange volatility is negatively impacting the country's manufacturing sector as the cost of importing essential raw materials and machinery has tripled," Onafowokan stated.
Despite being among the country's biggest importers, the manufacturing sector faces high costs and supply chain disruptions, limiting its potential to drive FX inflows into the economy through exports.
The manufacturing sector continues to navigate these challenges, with stakeholders calling for policy interventions to stabilize the foreign exchange market and boost local production.
