MAN Pushes for Local Raw Material Sourcing to Boost Economy

The Manufacturers Association of Nigeria (MAN) has called for improved sourcing of local raw materials and deeper backward integration across industries, following recent Central Bank of Nigeria data that the non-metallic and food, beverage and tobacco sectors recorded the strongest capacity utilisation gains in the first half of 2025.

Data from the CBN’s Quarterly Statistics (December 2025 edition), based on a sample of 2,340 establishments, showed that the non-metallic products sector led the pack with 74.11 per cent capacity utilisation in the second quarter of 2025, followed by the Food, Beverage and Tobacco sector at 60.73 per cent.

The CBN report showed that overall manufacturing sector capacity utilisation improved from 51.33 per cent in Q1 2025 to 57.50 per cent in Q2 2025.

A breakdown of subsectors showed that basic metal, iron and steel moved marginally from 47.66 per cent in Q1 to 47.71 per cent in Q2; chemical and pharmaceutical products declined from 59.46 per cent to 57.99 per cent; electrical and electronics rose from 51.00 per cent to 57.00 per cent; while Food, Beverage and Tobacco increased from 59.51 per cent to 60.73 per cent.

Motor vehicle manufacturing and assembly rose from 48.00 per cent to 51.00 per cent; non-metallic products jumped from 67.20 per cent to 74.11 per cent; oil refining edged up from 51.00 per cent to 52.00 per cent; plastic and rubber products dipped from 63.45 per cent to 60.49 per cent; pulp, paper and paper products increased from 59.89 per cent to 61.82 per cent; textiles, apparel and footwear rose from 52.07 per cent to 54.99 per cent; wood and wood products climbed from 47.75 per cent to 52.29 per cent, while other manufacturing improved from 58.50 per cent to 59.83 per cent.

Based on Q2 2025 figures, the subsectors ranked as follows: Non-metallic products – 74.11 per cent; pulp, paper and paper products – 61.82 per cent; Food, Beverage and Tobacco – 60.73 per cent; and plastic and rubber products – 60.49 per cent.

Other manufacturing – 59.83 per cent; Chemical and Pharmaceutical Products – 57.99 per cent; Electrical and electronics – 57.00 per cent; Textile, apparel and footwear – 54.99 per cent; and Oil refining – 52.00 per cent.

Also, wood and wood products – 52.29 per cent; motor vehicle manufacturing and assembly – 51.00 per cent; and basic metal, iron and steel – 47.71 per cent.

Reacting to the development, the Director-General of MAN, Segun Ajayi-Kadir, attributed the strong performance of the top sectors to domestic demand growth, favourable policy measures and higher local sourcing of raw materials.

“The non-metallic sector and the Food, Beverage and Tobacco sector are a few of the sectors that recorded the most notable improvements in capacity utilisation, according to the stated CBN report. Also, the MAN Economic Report for H1 2025 revealed that the capacity utilisation of the Non-metallic Sector recorded an increase in capacity from 57.1 per cent in H2 2024 to 62.3 per cent in H1 2025, while the Food, Beverage and Tobacco sector increased from 57.6 per cent in H2 2024 to 62.52 per cent in H1 2025,” Ajayi-Kadir stated.

He said rising domestic demand, especially in housing and food consumption, supported sustained production in the leading sectors.

“The non-metallic mineral products, such as cement, tiles and construction materials, benefit from increased demand tied to housing construction, especially in urban areas, which supports continuous production to meet the growing demand. Similarly, the performance of the Food, Beverage and Tobacco sector centres on the increase in the overall demand for food because of Nigeria’s large and fast-growing population, particularly in urban areas. As the population grows faster, it places increased pressure on food. Moreover, food is the first on the hierarchy of needs”, he said.

Ajayi-Kadir stressed that stronger local raw material sourcing reduced exposure to foreign exchange volatility and import bottlenecks.

“The two mentioned sectors access a higher percentage of raw material inputs locally, thereby facing less foreign exchange pressures and import constraints. This aids planning, allowing expansion, increasing capacity, and development along the value chain,” he said.

He added that government incentives and market protection policies also supported expansion. “Government incentives around importation of the products and local content policy on construction restrict foreign competition, thereby encouraging expansion and improved production in the sectors,” he said.

Despite the modest gains, the MAN DG warned that capacity utilisation in the sector remained moderate by global standards.

“It is important to note that capacity utilisation in Nigeria’s manufacturing sector remains moderate, around 60 per cent, and improvements have been marginal compared to other industrialised economies. Therefore, there is a need for effective and consistent policy measures to address the structural challenges hindering the optimal performance of the manufacturing sector, such as high production costs, energy instability, weak consumer purchasing power, and limited financing access,” Ajayi-Kadir said.

He noted that MAN’s State of Affairs 2025 report showed that manufacturing capacity utilisation rose 61.3 per cent in H1 2025 from 57.6 per cent in H2 2024, reflecting modest resilience.

Looking ahead to 2026, he called for intentional policies to deepen local sourcing, stabilise the macroeconomic environment and improve infrastructure.

“For further performance in 2026, there is a need for the formulation of an intentional policy that will make the environment conducive to boosting the capacity of the sector. It is essential to ensure full implementation of the policies to enhance a positive impact on the sector and the economy at large,” Ajayi-Kadir said.

He urged the Federal Government to prioritise macroeconomic stability, infrastructure upgrades and local integration.

“The Central Bank of Nigeria aims to ensure macroeconomic stability to lower input costs. Stabilising the exchange rate around N1,300–N1,400 to the dollar and further reduction of the MPR rate from the current 27 per cent to around 22 per cent and 24 per cent in 2026 will aid production planning and encourage investment,” he said.

He added, “Focus on backward integration to secure raw materials locally and reduce reliance on imports. It is essential to increase downstream processing, like the development of petrochemicals for plastics industries and raw agricultural produce for packaged foods. The government should support cluster development, such as textiles in Kano, leather in Sokoto and agro-processing hubs in the Middle Belt.”

Ajayi-Kadir also called for improved power supply, logistics upgrades, adoption of Industry 4.0 technologies and streamlined regulatory processes to lower production costs and enhance competitiveness.