The value of raw materials imported into the country rose Year-on-Year, YoY, by 160.9 percent in the second quarter of 2024 (Q2’24) despite efforts at backward integration by manufacturers to ease the pressure on their cost of production especially foreign exchange cost arising from raw materials importation.

Depreciation of the Naira amidst foreign exchange scarcity and inflationary pressure have resulted in manufacturers’ direct cost hitting the roof while pushing many of them into huge losses.

Specifically, the National Bureau of Statistics, NBS, ‘Foreign Trade in Goods Statistics’ for Q2 2024, showed that the value of imported raw materials rose to N1.482 trillion in Q2’24 from N567.80 billion in Q2’23, reflecting the effect of naira depreciation on imports .

On a Quarter-on-Quarter, QoQ, basis, (between Q’24 and Q1’24), the value rose marginally  by 0.96 percent from N1.467 trillion in Q1’24.

On the other hand, the value of raw material exports in Q2 2024 stood at N366.91 billion, a rise of 151.96 percent from N145.62 billion in Q2 2023 and 4.01 percent from N352.75 billion in Q1 2024.

Details of the trade statistics shows that cane sugar meant for sugar refinery, ‘Prep. of milk containing vegetable fats and oils, powdered or granula’, glutamic acids and its salt, constituted chunk of the imported raw materials within the period.

The report stated: “The total trade value of the raw materials sector stood at N1.848 trillion in the second quarter of 2024 of which imports were valued at N1.482 trillion, while exports stood at N366.91 billion.

“The major raw material goods exported were ‘Urea whether or not in aqueous solution’ was exported to Brazil at a value of N103.56 billion. This was followed by exports of Nonmonetary Gold (including gold plated with platinum) in powder form to Switzerland valued at N47.45 billion.

“In terms of imports, cane sugar meant for sugar refinery worth N188.67 billion was imported from Brazil, this was followed by ‘Prep. of milk containing vegetable fats and oils, powdered or granular’ imported from Ireland valued at N21.35 billion, while oher glutamic acid and its salts imported from China was valued at N41.93 billion.”

Commenting, David Adonri, Vice Chairman, Highcap Securities, said that besides inflation and naira devaluation, insecurity also plays a part as it hampers local sourcing of raw materials.

He stated: “Nigeria’s economy has been grappling with cost push inflation for several years occasioned by insecurity which is crippling domestic sourcing of raw materials and depreciation of the Naira causing imported raw materials to be costly”.