• Manufacturers abandon backward integration over rising insecurity, weak infrastructure
• Operators import 70% of raw materials
• ‘Cashew farmers, others now kidnappers’ targets’
• Nigeria can save $120m monthly from copper processing, says MAN boss
The renewed industrial revival aspiration, alongside President Bola Tinubu’s ‘Nigeria First Policy’, risks implementation challenges as insecurity and infrastructure deficit undermine the moderate gains in the backward integration programme (BIP).
The Guardian understands that many manufacturing giants have scaled down considerably or suspended their previous backward integration plans as fiscal headwinds, including insecurity, take a toll on their operations.
The flagship BIP, the Nigeria Sugar Master Plan (NSMP), which was originally launched in 2012, according to the Minister of State for Industry, John Enoh, who is leading the new industrial policy development, is being reviewed.
Whereas the National Sugar Development Council (NSDC) recently signed landmark deals to scale up sugar production to meet the 1.7 million metric tonnes demand, efforts to bridge the estimated $4.5 billion investment gap have been stalled by insecurity and other fiscal concerns.
Market and other risks, The Guardian was informed, have stalled the take-off of new projects by existing operators and final investment decisions (FID) of prospective investors.
Enoh had expressed concerns about the commitment of the operators at an event in Lagos, warning that future allocation of quota to operators would be based on performance going forward.
Two months after the Federal Government launched the ‘Nigeria First Policy, industries are still struggling to source a significant amount of their raw materials locally to produce efficiently and take advantage of the protectionist move.
The ‘Nigeria First Policy’, launched amidst great applause, mandates all federal ministries, departments and agencies (MDAs) to prioritise locally-made goods and services in public procurement in a bid to stimulate domestic production, reduce import dependency and foster pride in locally made products.
The move is reminiscent of several protectionist policies in the past, including the ‘Buy Nigeria Policy’, Executive Orders 003 and 005, among others, which industry stakeholders say failed to deliver desired results.
While the policies hold great promise for the industrial sector, significant structural challenges have restrained their delivery. Among the challenges are insecurity in farming belts, poor harvest yields and inability to process locally.
Director-General/Chief Executive Officer (CEO), Raw Materials Research and Development Council (RMRDC), Prof. Nnanyelugo Martin Ike-Muonso, recently revealed that despite efforts at improving the use of locally-sourced materials for manufacturing inputs in the country, 70 per cent of inputs used are still being imported.
A managing director of a publicly quoted company said his company sourced over 80 per cent of its inputs from Asia, particularly as insecurity, logistics hitches and other challenges undermine efforts to increase low material sourcing.
Raw material procurement is a major item on the import bills. The Manufacturers Association of Nigeria (MAN) had lamented that raw material imports surged by 119 per cent to N4.53 trillion in the first nine months of last year.
The recently passed Raw Materials Research and Development Council (Establishment) Amendment Bill (2025), which mandates that no raw material leaves the country’s shores unless they have undergone at least 30 per cent processing or value-addition, is designed to support a robust local manufacturing as it seeks to drastically cut the export of unprocessed commodities.
The law has the prospect of providing a huge market for manufacturing companies that desire to source inputs. But experts said its efficiency would depend on the authority’s capacity and willingness to implement it.
The Ministry of Industry, Trade and Investment (FMITI) has also set its own target – to slash importation of input by at least 60 per cent in the next five years.
Ogun State Chair of the Manufacturers Association of Nigeria (MAN) and Chief Executive Officer (CEO), Coleman Wires and Cables Ltd, George Onafowakan, said while these are good and achievable goals, there are gaps in efforts taken to achieve them. He pointed out that though some of the company’s raw materials are sourced locally, most are still being imported.
Onafowakan said: “We expect that under the African Continental Free Trade Area (AfCFTA) agreement, we should be able to bring in copper cathodes from the Democratic Republic of Congo (DRC), Zambia and Namibia and process them here. However, there is copper here in Nigeria and with some effort, we should be able to mine copper or its concentrates into cathodes. This is part of what we plan to do.
“But where is copper located? It is located in Zamfara, Nassarawa and Yobe. These are states that are battling insecurity. Mining should be a massive gain for Nigeria, yet we get nothing from it because of insecurity and conflict.
“Sadly, it is the gold they are mostly after, but what they do not know is that there are so many other products that can be mined besides gold.
But, we are not mining it because of the problems in these areas.”
According to the United Nations ComTrade, Nigeria, despite its richness in copper, imported $25.24 million copper in 2024.
Onafowakan said opportunities must be created for local sourcing of materials, noting, “Insecurity has affected copper sourcing that we have here in abundance. The government must become more deliberate in enhancing other processes. If we are processing copper cathodes in Nigeria today, we could save as much as $70 million monthly.
“By the time we move to phase two of locally processing cathodes, we could save as much as $120 million monthly. This would be a game-changer for us, as the money we pour into importation could easily be reinvested into the economy.
“What we need is for the copper or copper concentrates to be processed into copper cathodes, which is not a big issue, as there are off-takers on the ground, guaranteeing the next level of backward integration.
Regretting that they still import about 70 per cent of raw materials currently, he said, over the next two years, the goal is to bring this number down to about 20 per cent.”
On his part, Chairperson of the Manufacturers Association of Nigeria (MAN), South East Kaduna branch, Kabiru Kassim, argued that while the BIP has recorded some level of success in some industries, it is yet to permeate most industries.
He regretted that insecurity has played a significant role in the sourcing of many agro-allied raw materials, as the number of farmers and farmlands has reduced as a result of insecurity.
“If we can have the farmers go back to their farms as they should, we would have more materials for industry use and the prices of finished products would reduce. Insecurity contributes to the high prices of processed goods,” he said.
According to available data, he said, over 30 per cent of farmers have abandoned their farms due to insecurity – a crisis that has affected the availability and prices of raw materials.
A former MAN Chair and Executive Director, Universal Luggage Ltd, Frank Onyebu, questioned the steps taken to ensure the success of local content in the plastics sub-sector. Regretting that there is currently only one supplier of virgin plastics locally, he noted that it was difficult for companies to survive the challenge.
“Indorama is supposed to supply us with virgin plastics, but it is more focused on the international market. What we later realised is that the difference in price between buying local virgin plastics and the imported ones is not much. Hence, some people are still importing to date.
“Locally sourced raw materials are supposed to be cheaper. But sadly, in some cases, we discovered that the imported ones are even cheaper. How do you encourage people to buy local materials?” he queried.
Last year, the country imported $1.82 billion of plastics and plastic articles, mostly from China. This was, however, a sharp improvement from the $2.53 billion recorded in 2021.
Pointing out that sourcing raw materials for plastics should not ordinarily be a problem, as Nigeria is blessed with the resources needed to make virgin plastics, Onyebu said the cost, rather than availability, is the prohibitive factor.
“Any slight change in petrol or dollar prices sends the cost of our raw materials through the roof. Because of this, more and more of us are turning to recycled plastics.”
Onyebu revealed that currently, the operators use just 30 per cent of virgin plastic while recycled ones make up the remaining 70 per cent.
Chief Operating Officer (COO), Creativo El-Matador Ltd, Ibrahim Husseini, a top agro-allied processor and exporter in the cashew, sesame and soybean sub-sectors, also lamented the impact of insecurity on the produce, a key produce for the chemical and allied industry.
Husseini said while the cashew belts (Kogi, Kwara, parts of Edo and Oyo states) have not become overwhelmed by insecurity yet, there have been several concerning incidents.
“There have been many kidnapping incidents, forcing farmers to abandon their farms. Because cashew is quite expensive, there is a false perception in those areas that cashew farmers are rich. So, the kidnapping of cashew farmers is becoming rampant. Many of them have fled for their lives and this is telling on the product’s cost,” he said.
Despite the challenge, he said, about 95 per cent of raw materials in the sector are sourced locally, which has helped to keep the cost of operation stable and low.
According to the Nigeria Export Promotion Council (NEPC), cashew, at 12.35 per cent, was Nigeria’s third top exported commodity in the first half of the year, just behind cocoa beans (34.88 per cent) and Urea/fertiliser (17.65 per cent).
Husseini regretted that despite Nigeria’s ranking fourth in cashew production globally, it still struggles with value addition, processing just about 15 per cent of what is grown yearly.
“We export the rest with zero value-addition, giving us a tiny fraction of what we would have gotten if we processed locally and extracted as much value as we can from it.
“To put it simply, if an exporter exports 100 trucks of raw cashew, the highest number of jobs that can be generated is maybe 15, compared to those of us who process locally, employing 150-300 individuals. Aside from exporting thousands of jobs, we are losing knowledge and a lot of money. Raw cashews average about N2 million per metric tonne. Compare it to the processed one that averages N12 million per metric tonne,” he said.
