Tinubu’s reforms favour local manufacturers, squeeze import dependent firms, experts say

President Bola Tinubu’s economic reforms are creating a widening divide in Nigeria’s manufacturing sector, with companies that rely on locally sourced inputs gaining a competitive edge while import dependent firms face mounting cost and margin pressures, industry experts have said.

The divergence has become increasingly pronounced following the removal of the petrol subsidy and the liberalisation of the foreign exchange market in May 2023, as higher energy, financing and imported input costs continue to weigh on manufacturers.

According to the experts, who spoke with Nairametrics, manufacturers with strong local supply chains and backward integration are better positioned to absorb the impact of the naira adjustment, while businesses that depend heavily on imported raw materials, machinery and finished products remain exposed to exchange rate volatility.

What they are saying

Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said manufacturers sourcing their inputs locally are benefiting more from the reforms.

• “Energy costs have more than doubled, severely impacting logistics, while monetary tightening has pushed up funding costs,” Yusuf said.
• “However, manufacturers who source raw materials locally are benefiting from the reforms. Backward integrated firms remain far more competitive than those reliant on foreign inputs,” he added.

Similarly, Managing Director and Chief Executive Officer of FAE Ltd and Vice President of the Lagos Chamber of Commerce and Industry (LCCI), Princess Funlayo Bakare Okeowo, said import dependent businesses remain under significant pressure despite some stability in the foreign exchange market.

• “Importers face immense pressure from currency depreciation and global supply chain bottlenecks,” Okeowo said.
• “Manufacturing is the bedrock of any economy. Given commercial bank interest rates, the government must adequately capitalise Development Finance Institutions (DFIs) to help manufacturers import critical machinery.”

Manufacturing growth masks uneven recovery

The experts’ assessment comes as official data point to a modest recovery in manufacturing activity.

• Data from the National Bureau of Statistics (NBS) showed that real manufacturing sector growth reached 3.29% year on year in the first quarter of 2026, while the sector accounted for 9.57% of real GDP.
• However, the recovery is taking place amid persistent cost pressures and weak consumer purchasing power. Headline inflation stood at 15.43% in July 2026, while food inflation was 20.31%.

The combination of elevated operating costs, expensive credit and subdued household purchasing power has left manufacturers with markedly different outcomes depending on their exposure to imported inputs.

Financial economist at Auchi Polytechnic, Zakari Mohammed, said the naira adjustment has significantly increased production and working capital costs for manufacturers that depend on foreign inputs.

• “The naira adjustment following the foreign exchange reforms, consequently, amplified the local currency cost of production and working capital. For manufacturers who cannot directly transfer the full increase to consumers, margins come under pressure,” Mohammed said.

Development economist at Adeleke University, Professor Tayo Bello, said the impact of the reforms has varied according to the structure of individual manufacturing industries.

• “The bigger picture is that exchange rate reform has produced different results depending on the structure of individual industries in the manufacturing sector,” Bello said.

Cement shows advantage of local inputs

The cement industry provides one of the clearest examples of how domestic raw material linkages can strengthen manufacturers’ resilience during periods of currency volatility.

• Dangote Cement reported group revenue of N4.31 trillion in 2025, representing a 20.3% increase from N3.58 trillion in 2024. Profit after tax more than doubled to N1.015 trillion from N503.2 billion over the same period.
• Its Nigerian operations generated N2.96 trillion in revenue, representing a 34.8% increase.
• BUA Cement also recorded strong growth, with revenue rising 34.5% to N1.2 trillion in 2025 from N876.5 billion in 2024. Profit after tax increased to N356 billion.

The performance does not mean the cement industry has been insulated from rising energy, logistics and financing costs. Rather, it highlights the relative advantage enjoyed by manufacturers with access to domestic raw materials, large local markets and greater pricing power.

The experience suggests that domestic sourcing can reduce exposure to foreign exchange shocks and provide manufacturers with greater operational resilience.

Pharmaceuticals, textiles remain heavily exposed to FX pressures

The pharmaceutical industry presents a contrasting picture because of its continued dependence on imported medicines and production inputs.

• The pharmaceutical market is projected to grow at a compound annual growth rate of between 6.5% and 9.5% between 2023 and 2026, with its market value expected to reach approximately $3.3 billion to $3.6 billion in 2026, according to Pharma West Africa.
• However, more than 70% of medicines in the Nigerian market are imported, largely from India, China and the Netherlands, while only about 30% are produced locally.

Local pharmaceutical manufacturers also import more than 96% of their raw materials and active pharmaceutical ingredients, leaving them highly exposed to foreign exchange volatility.

• Government interventions, including import duty and VAT waivers on raw materials and machinery through federal executive orders, are intended to strengthen domestic production capacity.

However, the industry’s high dependence on imported inputs continues to expose manufacturers to currency related cost increases.

Nigeria’s textile, apparel and footwear industry also illustrates the challenges facing import dependent manufacturers.

The sector recorded sluggish production growth between 2023 and 2026, while import dependence increased significantly. Manufacturers operated at roughly half of installed capacity during the period, even as import values continued to rise.

• Local textile, apparel and footwear producers operated at 50.72% capacity in 2024, increasing marginally to 53.05% in 2025.

Import values continued to surge into the first quarter of 2026, with inflation and naira depreciation contributing to higher import costs rather than being matched by a corresponding expansion in local supply.

The contrasting performance across cement, pharmaceuticals and textiles underscores the growing importance of domestic input sourcing in determining how Nigerian manufacturers navigate the post 2023 economic environment.