A new report from BMI, a subsidiary of Fitch Solutions, predicts that the naira will depreciate to N1,993/$1 by 2028, presenting a major challenge to Nigeria’s pharmaceutical industry, particularly in importing essential medical devices.
Titled “Weak Naira and Structural Challenges to Constrain Nigeria’s Medical Devices Market Growth,” the report highlights that despite a projected economic rebound, Nigeria’s medical devices sector will face significant operational and demand challenges in the short term. The country’s heavy reliance on imports, which account for over 95% of medical devices, makes it vulnerable to exchange rate fluctuations.
The report warns that the continued weakness of the naira will drive up medical device import costs and reduce consumer purchasing power. With the healthcare system already underfunded, this will particularly impact the demand for high-cost devices like diagnostics, orthopaedics, and dental products. On a positive note, a weaker naira could boost the competitiveness of locally manufactured medical devices, encouraging sector growth.
However, BMI points out ongoing barriers to local production, including a lack of skilled labor, limited access to modern technology, and poor infrastructure. Despite government incentives, these challenges persist.
In June 2024, President Bola Tinubu’s administration took steps to alleviate some of these pressures by eliminating tariffs, excise duties, and VAT on certain medical machinery, equipment, and raw materials, with the aim of reducing local production costs. Despite these efforts, BMI projects the medical devices market will continue to face challenges in the near term.
The report forecasts the medical devices market will grow to N171.1bn (£344.7m) by 2028, driven by Nigeria’s large population, a growing focus on universal health coverage, and the burden of both chronic and communicable diseases. Nigeria’s economy is expected to recover in 2025, with a 3.0% growth rate predicted for 2024, up from 2.9% in 2023.
However, persistent issues like high inflation, tighter monetary policies, and weak foreign direct investment could slow growth in the medical devices sector.
On November 11, 2024, the naira traded at N1,681.42 per dollar, reflecting a slight decline of 0.15% from the previous trading day. FX turnover on the official market also dropped significantly by 66.41%, from $1.4bn to $471.5m, indicating reduced market activity. The naira fluctuated between N1,695 and N1,631 during this period.
