The Real Cost of Nigeria’s Import Problem

In 2023, Nigeria imported goods worth $49.43 billion. That figure tells a larger story, not just about trade, but about dependency. Over the last two decades, Nigeria’s import bill has consistently remained high, peaking in 2014 and fluctuating since. Even after setbacks like the COVID-19 pandemic, the trend is clear: we rely heavily on what the world produces. We import fuel while exporting crude oil and food despite having arable land. We import essential medicines, manufacturing inputs, and machinery, leaving the fate of our economy at the mercy of foreign supply chains. Meanwhile, the global trade climate is becoming increasingly unstable. In 2023 alone, attacks in the Red Sea forced major shipping lines to reroute, pushing up freight costs and delaying deliveries. Inflation hit developed and developing countries alike. And nations with diversified economies pivoted inward, protecting their industries, stabilizing their markets. Nigeria, however, felt the pressure more acutely. Not because the world was changing, but because we hadn’t. We’ve long known that economic diversification is necessary. But now, the stakes are higher. The question is no longer whether we should diversify, but whether we’re already running out of time.

What’s Happening Globally?

The global economy is shifting in ways that make dependency increasingly dangerous for Nigeria. From rising protectionism to disrupted trade routes, the signals are clear: the old rules of globalization no longer apply. In 2023, attacks in the Red Sea forced major shipping lines to reroute around the Cape of Good Hope, adding up to two weeks of travel time and significantly raising costs. For Nigeria, which imports over 30% of its food and nearly all refined petroleum, this rerouting could increase import costs by 15–30% on goods from Asia and the Middle East. Shipping insurance premiums alone have risen by as much as 45% in high-risk zones. At the same time, global trade is slowing. The IMF projects global trade growth to drop from 3.8% to 1.7%, driven largely by escalating tensions between the U.S. and China. These disputes, including tariffs on over $350 billion worth of Chinese goods, are pushing countries to retreat inward, making it harder and more expensive for Nigeria to access critical imports like machinery, raw materials, and tech components. Energy dynamics are also shifting. Oil remains the backbone of Nigeria’s economy, yet it’s growing more volatile. A projected global oil surplus of 600,000 barrels per day in 2025 threatens to push Brent crude prices down to around $70 per barrel, well below what Nigeria needs to sustain its fiscal plans. Meanwhile, Europe, once a key buyer of Nigerian oil, has pivoted sharply. Russian gas imports to the EU have dropped from 35% to 8%, replaced largely by U.S. LNG. Nigeria, with its underdeveloped gas infrastructure, is struggling to compete. Inflation is the final pressure point. While global inflation may ease to 4.2%, Nigeria's stands at a staggering 31.7% as of mid-2025, driven by naira depreciation, elevated shipping costs, and rising input prices. Fertilizer costs, for example, have increased by 10%, threatening domestic food production and worsening food insecurity. In short, global conditions are tightening. And in this climate, countries that depend on others to survive will find it harder to thrive.

Underlying Causes of Persistent Import Dependence in Nigeria

Import dependence is deeply rooted in the historical economic structure. Originally integrated into the global economy as a supplier of raw materials and importer of finished goods, the country has struggled to shift toward domestic manufacturing. Attempts at industrialization face internal capacity gaps and external resistance, making progress difficult. The weak domestic manufacturing base further exacerbates the problem. Inadequate infrastructure, unreliable power supply, high production costs, and limited access to credit mean that local goods often cannot compete with imports. Instead of becoming a driver of economic growth, manufacturing remains stagnant and uncompetitive. Dependence on oil revenues since the 1970s has also weakened other sectors. Oil accounts for the majority of Nigeria’s export earnings, but contributes relatively little to GDP, making the economy vulnerable to global oil price shocks and creating persistent foreign exchange shortages. Policy inconsistency and weak institutions have made matters worse. Despite various import substitution initiatives, poor implementation and unstable policies have hindered domestic industries from scaling effectively. Consumer preferences reinforce the cycle of dependence, as imported goods are often seen as higher quality, discouraging support for local products. Global shocks, such as financial crises, pandemics, and wars, further expose the fragility of Nigeria’s economy, leading to inflation and scarcity of essential goods. Together, these factors create a self-perpetuating cycle of import reliance. Without comprehensive reforms to strengthen local production, improve infrastructure, stabilize policies, and shift consumer behavior, Nigeria’s path to economic resilience will remain elusive.

Consequences of Nigeria’s Import Dependence

Nigeria’s growing reliance on imports has shifted from a developmental necessity to a structural weakness, exposing the economy to widespread vulnerabilities. The healthcare sector depends on imports for 80 percent of medicines and all vaccines, leading to a 200 percent surge in drug prices during COVID-19. In food security, 30 percent of supplies, including 40 percent of rice, are imported, with currency volatility alone adding ₦7,000 to the price of a 50kg bag of rice in 2023. Despite its oil wealth, Nigeria imports 80 percent of its refined fuel, spending $23.3 billion annually, 30 percent of its foreign exchange reserves. Meanwhile, machinery imports reached $9.1 billion in 2023, reinforcing dependence on external markets. This pattern has strained the naira, which lost 68 percent of its value between 2022 and 2024, fueling inflation and pushing manufacturing output down by 34 percent. The consequences are severe. Imported inflation has driven overall inflation to 31.7 percent in 2024. Household spending on food and healthcare has jumped to 73 percent of income, and over 82 percent of businesses now operate with profit margins below 5 percent. Nigeria’s forex reserves face monthly pressures of $4 billion, while oil, the main source of foreign exchange, remains vulnerable to global price swings. Critically, Nigeria’s level of import dependence exceeds the point where it supports growth, now actively stifling domestic production, employment, and industrialization. Attempts at import restrictions without first strengthening local infrastructure have largely failed, leading to scarcity and higher prices. Stuck in a cycle of exporting raw materials and importing finished goods, Nigeria’s economy remains fragile and heavily exposed to external shocks. Without decisive efforts to build a competitive domestic production base and diversify exports, the country risks deepening its stagflation crisis and trapping more citizens in multidimensional poverty.

 

Pathways to Reducing Import Dependence in Nigeria

Reducing Nigeria’s deep-rooted import reliance demands structural transformation across policy, production, and infrastructure. It requires strengthening domestic capacity and aligning institutional actions with sector-specific strategies. A key pillar is policy reform and industrial targeting. Rather than broad-based interventions, Nigeria must adopt sector-specific industrial policies, such as 10-year tax holidays for Agro-processing and renewable energy. Agencies like NASENI are advancing innovation through agendas like “Creation, Collaboration, Commercialization,” aimed at turning research into scalable production. Streamlining regulation is equally critical; simplifying business registration from eight to three steps, for instance, could significantly lower entry barriers for domestic producers. Equally important is infrastructure development, especially for power and transport. With a 4,000MW energy deficit, deploying mini-grids for industrial clusters and dedicating 30% of infrastructure funds to rehabilitate Agro-corridor roads would lower production costs and enhance competitiveness. Digital infrastructure must also support industry, with initiatives like manufacturing-focused IoT networks across geopolitical zones. Financial enablers can catalyze production. Expanding the manufacturing portfolio of development banks and establishing matching funds for sourcing local raw materials would strengthen supply chains. Export credit guarantees could further encourage production for regional markets. Encouraging signs exist: Special Agro-Industrial Zones have reduced cassava post-harvest losses by over 25%, BUA Cement’s expansion has cut cement import dependency by half, and local steel now meets 43% of construction needs. Indorama’s $3 billion expansion in petrochemicals and local fertilizer output is replacing billions in imports. With an ambitious yet achievable goal to raise manufacturing’s GDP share from 9% to 18% and attain 65% local content in critical sectors by 2030, Nigeria’s pathway lies in coordinated industrial policy, infrastructure clustering, and institutional discipline.

Conclusion

Nigeria’s industrial trajectory has been shaped by deep-rooted import dependence, currency instability, and weak domestic production. This structure has left the economy vulnerable to global shocks and stifled long-term growth. However, progress in sectors like agro-processing and petrochemicals shows what’s possible when policy, infrastructure, and investment align. The path forward demands more than rhetoric. It requires building productive ecosystems, supporting local manufacturers, and maintaining consistent policy direction.