Nigeria’s manufacturing industry is increasingly looking for local solutions as the country deals with the effects of currency devaluation and a lack of foreign money.

According to a recent report from the Financial Times, businesses are adjusting to changes in the foreign exchange market by focusing more on using local materials instead of relying on imported goods. Many companies that used to depend on foreign raw materials are now shifting to local suppliers to lessen the pressure caused by currency issues.

The transition came about after the Central Bank decided to float the naira, which is a key part of President Bola Tinubu’s strategy for economic reform aimed at boosting growth and attracting investments. However, this decision has led to significant instability in the market. Manufacturers, who contribute about nine percent to Nigeria’s overall economy, have faced challenges as the value of the naira dropped and fewer dollars entered the country.

As a result, various sectors have experienced turmoil, with many manufacturers struggling to get the raw materials they need from abroad. The Manufacturers Association of Nigeria reported that nearly 800 companies closed down last year due to rising costs and limited access to foreign currency. Some large international companies, like Procter & Gamble, Unilever, and Bayer, have also reduced their operations in Nigeria because of these economic difficulties. For those businesses that have managed to continue operating, the reforms have brought both challenges and opportunities. For example, at Chemical and Allied Products, a leading paint manufacturer, executives see the current situation as a wake-up call to adapt and innovate.

In early 2024, the company’s Chief Supply Officer, Lekan Aluko, described the period as one of the most challenging period from a supply chain perspective. He noted that purchase orders were frequently rejected within seconds due to the extreme volatility of foreign exchange prices. This situation worsened due to the currency being devalued twice within an eight-month timeframe.

Many companies are facing higher costs and the risk of running out of stock, so they’re using the challenges from the past year as a chance to rely less on materials from other countries. Bolarin Okunowo, the CEO of CAP, said, “With the rising costs and the fall of the naira, we had to make changes.”

The previous government, led by the late Muhammadu Buhari, tried to keep the naira’s value stable by linking it to the US dollar. They believed that changing its value would hurt the poorest people in the country.

Since President Tinubu took office in 2023, he and a lot of experts started noticing that the way things were being handled was causing some problems. It made the naira look more valuable than it really was and led to a shortage of US dollars because there just weren’t enough dollars coming into the country. With oil production dropping—Nigeria’s main source of foreign money—the dollar situation got even worse.

For manufacturers in Nigeria who often import raw materials from distant places to create products for the local market, finding US dollars to purchase what they needed became a major problem. After the currency was devalued, everything got really messy. The naira dropped in value very quickly, and getting dollars became an even bigger struggle. Manufacturers faced difficulties buying supplies that were priced in dollars while the naira continued to lose value. Aluko said during a visit to CAP’s large facilities in Ikeja, Lagos, that “it took a lot of management time” to deal with all these problems.

Now, CAP works with three local suppliers to get calcium carbonate, a key ingredient needed for making paint, which helps with thickness and color. Currently, 90 percent of the calcium required is sourced locally, a major shift from previous practices where the mineral was imported from countries such as South Africa, Egypt, and Tunisia.

The company has successfully lowered its costs for calcium carbonate by nearly 60 percent over the ten months leading up to June 2025. Okunowo remarked, “This has helped us maintain a stable financial position. If we hadn’t changed our approach, we would have needed to increase prices by another 50 percent, but now we can keep our expenses below the rate of inflation.”

Local suppliers have become an important part of the manufacturing process, with the use of materials sourced within the country rising to an average of 57.1 percent last year. This marks a significant increase from the previous year. Dumebi Oluwole, an economist at a Lagos-based data analytics firm called Stears, noted, “Many manufacturers are getting innovative in how they obtain, process, and distribute their materials, and we’re observing more collaboration across supply chains.”

When local sources for essential materials run low, businesses are finding clever ways to cut costs. For example, soda ash, a key ingredient in making glass, isn’t produced in Nigeria. However, Beta Glass, which manufactures glass bottles for beverages, medicines, and food products, has found a smart solution. Instead of importing soda ash directly, they partner with international suppliers who deliver it to Nigeria and charge in the local currency, naira. This helps reduce the risks associated with foreign exchange rates.

Alex Gendis, the CEO of Beta Glass, shared that directly importing materials had been challenging, especially during periods when dollars were in short supply. He expressed that spending U.S. dollars was like “working for the banks,” particularly in a country where interest rates are above 25 percent, he added. The big supply chain shift hasn’t been easy for local suppliers.

Executives report that local suppliers occasionally struggle to meet the capacity demands of large-scale manufacturers due to persistent issues with inadequate electricity infrastructure and terrible road conditions in Nigeria. These challenges affect the operational efficiency of both suppliers and their clients.

Regulatory uncertainty remains a major barrier for businesses. However, there is optimism surrounding the recently enacted tax law by President Tinubu, which is set to take effect next year, and is anticipated to mitigate some of the existing burdens faced by the business community.

In spite of these challenges, efforts to localize supply chains have yielded positive outcomes for certain firms. Also, the naira’s stabilization since the devaluation last year indicates that Tinubu’s reform initiatives are beginning to bear fruit.

“Business confidence is on an upward trajectory according to the measures that we look at, including consumer spending forecasts; that the trends are shifting positively,” said Gendis. He was hopeful “that we are [now] progressing in the right direction.”