- New minimum wage boosts household purchasing power, enables greater spending on imported products
The continued depreciation of the naira is set to drive Nigeria’s import bill to an unprecedented N66.89 trillion in the 2025 fiscal period, marking a significant rise of N34.4 trillion compared to current levels.
The amount is captured in the 2025-2027 Medium-Term Expenditure Framework prepared by the Ministry of Finance and submitted to the National Assembly by President Bola Tinubu.
The MTEF provides the basis for annual budget planning and consists of a macroeconomic framework that indicates fiscal targets, estimates, revenues and expenditure, including government financial obligations in the medium term.
The document, prepared by the Ministry of Budget and National Planning, also sets out the underlying assumptions for these projections, provides an evaluation and analysis of the previous budget and presents an overview of consolidated debt and potential fiscal risks.
According to projections in the 2025-2027 MTEF, this proposed N34.4 trillion increase in import is largely fueled by higher disposable incomes resulting from recent minimum wage adjustments and cash transfer programmes, which have heightened Nigerians’ demand for imported goods.
The implementation of a new minimum wage has boosted household purchasing power, enabling greater spending on imported products.
Similarly, the government-led cash transfers to support households have further spurred consumer spending, significantly increasing the demand for imports.
Despite concerns over rising imports, the MTEF outlines a positive economic growth trajectory over the next three years.
Real GDP growth is projected as: 2025 4.6 per cent; 2025 4.4 per cent; and 2027 5.5 per cent.
This growth is expected to be driven by domestic oil refining capacity, the expansion of the telecommunications sector, crop production, and job creation, with the bulk of growth coming from the non-oil sector.
Investments from the Renewed Hope Infrastructure Development Fund are anticipated to further strengthen infrastructure and agriculture, supporting sustainable economic expansion.
Nigeria’s nominal consumption is expected to rise sharply over the medium term from the projected N206.83 trillion in 2025, to N233.31 trillion and N263.95 trillion in the 2026 and 2027 fiscal periods.
But while this reflects improving consumer activity, experts have said it also fuels inflationary pressures.
Nigeria’s inflation is projected to decline to 15.8 per cent by 2025 but will likely remain in the double digits through 2027, posing challenges for economic stability.
The depreciation of the naira is a key factor behind the projected surge in import bills. However, the MTEF anticipates a stabilization of this trend by 2026, with imports expected to decline marginally to N65.67 trillion and N65.70 trillion in 2026 and 2027 respectively.
This moderation reflects the waning effects of currency depreciation, alongside expected improvements in domestic production capacities.
By 2026 and 2027, inflationary pressures are projected to ease due to the lagged effects of tighter monetary policies, reduced deficit financing, and the resolution of supply-side constraints.
The document stated that the government’s strategic focus on local production and infrastructure investment is expected to curb reliance on imports while boosting economic resilience.
The Manufacturers Association of Nigeria had in October described the high cost of production as a major obstacle to the competitiveness of made-in-Nigeria goods.
The Director General of MAN, Segun Ajayi-Kadir, stated that Nigerian products were of standard quality but struggled to compete with imported goods due to the harsh operating environment.
Ajayi-Kadir addressed the status of Nigerian products in the international market, noting that export remained a viable option for manufacturers but was hampered by the high cost of production.
He said, “Export is always a viable opportunity for you to increase your profitability. I mean, if you can produce and export, you will earn dollars, improve the economy and even assist you in importing some of your machines and raw materials that are not locally available.
“But you then ask, is this export for export’s sake? Because if it is exported, you must be able to sell it in the international market.
“So it is not just enough for you to put your goods on a ship or aircraft and then take it into another country. Your goods have to go to that country and compete with those from so many other countries and even the ones produced in that country.”
According to the MAN, locally manufactured goods prices and quality have to be right to be competitive.
“So, if you are facing a high-cost environment, your export cannot be competitive, even though the exchange rates will favour you as your currency will be cheaper.”
He highlighted the difficulties manufacturers faced due to delays in export processes, which sometimes resulted in products nearing their shelf life before they could be shipped.
“In some cases, you have some of our products nearing their shelf life before we proceed to export because of the processes that surround export documentation, inspection, and delays that come with it.
“So, we are not able to get the kind of efficiency that is required for you to competitively export, and that is very important in any environment. You cannot operate in a macroeconomic environment that is unconducive and expects that you will be able to grow your manufacturing and then be able to export,” he declared.
Ajayi-Kadir dismissed claims that Nigerian products were inferior to imported ones, attributing the misconception to products manufactured by unregulated operators.
“It is untrue that local products are inferior to imported ones. We have Nigerian standards, and our members adhere strictly to these. Without MANCAP (Mandatory Conformity Assessment Programme), you cannot manufacture or sell your products in the market,” the MAN Director General said.
He stressed that regulated Nigerian manufacturers produce goods that meet globally acceptable standards, adding that any notion to the contrary was misguided.
