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

President Bola Tinubu's economic reforms are causing a growing disparity within Nigeria's manufacturing sector, according to industry experts. Companies that depend on locally sourced inputs are gaining an advantage, while those that rely heavily on imports face increasing cost pressures and reduced profit margins, Nairametrics reports.

The divergence has become more apparent since the removal of the petrol subsidy and the liberalization of the foreign exchange market in May 2023, which has led to higher energy, financing, and imported input costs for manufacturers. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, noted that manufacturers with strong local supply chains are better equipped to handle the impact of the naira adjustment.

Similarly, Princess Funlayo Bakare Okeowo, CEO and MD of FAE Ltd and Vice President of the Lagos Chamber of Commerce and Industry, said import-dependent businesses are still facing significant challenges despite some stability in the foreign exchange market. Financial economist Zakari Mohammed of Auchi Polytechnic and Professor Tayo Bello of Adeleke University both emphasized that the naira adjustment has significantly increased production and working capital costs for firms relying on foreign inputs.

The cement industry offers a clear example of how domestic raw material linkages can enhance manufacturers' resilience in the face of currency volatility. However, the pharmaceutical industry, which relies on imported medicines and production inputs, remains highly exposed to foreign exchange volatility. The textile, apparel, and footwear sector also struggles with sluggish production growth and increasing import dependence, despite record high import values.

These contrasting outcomes among different industries highlight the growing significance of domestic input sourcing in determining how Nigerian manufacturers navigate the post-2023 economic landscape.