FG Grants Tax Incentives to Manufacturers Sourcing Local Raw Materials

The Federal Government has approved a package of tax incentives for manufacturers who utilise locally sourced raw materials in their production processes. The policy, announced on Thursday, is part of efforts to stimulate domestic industrial growth, reduce dependence on imports, and promote value addition within Nigeria’s economy.

Minister of Industry, Trade and Investment, Dr. Doris Uzoka-Anite, disclosed the development after a meeting of the Federal Executive Council (FEC) presided over by President Bola Tinubu in Abuja. She explained that the incentives are designed to encourage manufacturers to take advantage of Nigeria’s abundant natural resources and agricultural produce, thereby fostering job creation and economic diversification.

According to her, the scheme will provide qualifying manufacturers with tax rebates, reduced import duties on essential equipment, and priority access to government-backed credit facilities. The incentives will be available to firms in key sectors such as agro-processing, textiles, chemicals, construction materials, and food and beverages.

Dr. Uzoka-Anite said the policy is aimed at reversing the trend of heavy reliance on imported raw materials, which has been a major factor in the country’s high production costs. She emphasised that with inflationary pressures and foreign exchange volatility affecting manufacturing operations, local sourcing offers a viable pathway to cost efficiency, competitiveness, and sustainability.

“The approved tax incentives are a strategic intervention to support our manufacturers in making the most of what we have within our borders. By sourcing locally, we reduce import dependency, conserve foreign exchange, create jobs, and stimulate rural economies. This policy will also encourage investment in local supply chains and processing industries,” the minister stated.

She added that the Federal Government will collaborate with the Nigerian Investment Promotion Commission (NIPC), the Manufacturers Association of Nigeria (MAN), and other stakeholders to ensure the smooth implementation of the scheme. Eligible companies will be required to present evidence of local content utilisation, with regular audits conducted to ensure compliance.

The minister further noted that the initiative aligns with the Renewed Hope Agenda’s industrialisation roadmap, which prioritises domestic production and the development of small and medium-scale enterprises (SMEs) as engines of economic growth. She stressed that the government’s commitment to fostering a manufacturing-friendly environment also includes ongoing infrastructure upgrades, port reforms, and targeted power supply interventions.

The President of the Manufacturers Association of Nigeria, Mr. Francis Meshioye, welcomed the announcement, describing it as a step in the right direction. He said the policy has the potential to improve the competitiveness of Nigerian goods in both local and export markets. Meshioye, however, called for clarity on the implementation framework, particularly the criteria for eligibility and the duration of the incentives.

Industry analysts have observed that similar initiatives in the past have yielded mixed results due to weak monitoring and enforcement. They note that the success of the new policy will depend largely on transparent administration, robust local supply networks, and consistent government support.

Nigeria’s manufacturing sector has faced significant challenges in recent years, including high energy costs, inadequate infrastructure, foreign exchange scarcity, and competition from cheaper imported goods. The Federal Government believes that encouraging the use of local raw materials can mitigate some of these issues while unlocking new economic opportunities.

By linking tax relief to domestic sourcing, the policy is expected to stimulate demand for agricultural produce, solid minerals, and other raw inputs from rural and semi-urban areas. This, in turn, could boost incomes for farmers, miners, and small-scale suppliers, creating a ripple effect across the economy.

Dr. Uzoka-Anite assured that the policy would not only benefit large-scale manufacturers but also support SMEs that form the backbone of Nigeria’s industrial base. She noted that capacity-building programmes and technical assistance will be provided to smaller firms to enable them meet quality standards and supply chain requirements.

The new incentives come at a time when the Federal Government is intensifying efforts to revive domestic industries and achieve self-sufficiency in key sectors. With the African Continental Free Trade Area (AfCFTA) opening up wider markets for locally produced goods, officials believe that increased local sourcing will strengthen Nigeria’s competitive advantage.

 

The minister reaffirmed the government’s determination to see the policy through to full implementation, stating that progress reports will be presented periodically to the Federal Executive Council. She urged manufacturers to take advantage of the opportunity to reduce costs, improve quality, and expand market reach while contributing to the nation’s economic resilience.