BMI Predicts Naira Will Slide to N1,993/$ by 2028, Impacting Medical Imports

BMI, a Fitch Solutions company, has predicted that the naira would slide to as low as N1,993 to one US dollar in 2028, severely impacting the ability of players in the country’s pharmaceutical industry to import medical devices.

In a new report, the company stated that despite expected rebound in the economy, Nigeria’s medical devices market will continue to face operational and demand headwinds over the near term.

According to the report themed: “Weak Naira and Structural Challenges to Constrain Nigeria’s Medical Devices Market Growth”, it projected that continued weakness of the naira will increase medical device import costs and erode consumer purchasing power.

Several challenges, it said, remain for Nigeria’s medical devices local manufacturing to take off, despite government incentives.

“Continued weakness of the naira will increase medical device import costs and erode consumer purchasing power. Similar to other markets in sub-Saharan Africa, Nigeria heavily relies on medical device imports, with reliance of over 95 per cent.

“We expect that the naira will end 2028 at N1,993/$ from N306/$ in 2018. As the naira weakens, the cost of importing medical devices will continually increase, eroding both the health system and patient purchasing power especially to invest in essential medical technologies given underfunding of the public health sector.

“This would particularly affect high-cost demand for devices such as diagnostics, orthopaedics and dental products. On the export front, a weaker naira will enhance the competitiveness of locally manufactured medical devices, fostering growth in the sector,” it maintained.

However, it noted that this is in spite of the efforts of the President Bola Tinubu administration which for instance, in June 2024, signed an executive order to reduce medical service costs amid high inflation.

The order sought to eliminate tariffs, excise duties as well as Value Added Tax (VAT) on specific machinery, equipment, and raw materials, aiming to cut local production costs and enhance competitiveness.

Despite these attempts, the report stated that Nigeria’s medical devices market will continue to face operational and demand headwinds over the near term.

Expected to grow to a market value of N171.1 billion or $344.7 million by 2028, the Fitch company stated that it believes that improving health spending through a focus on universal health coverage coupled with a large population size and double burden of chronic and communicable diseases will sustain high demand for all medical devices, particularly diagnostics, consumables and hospital equipment over the near to medium term.

“In terms of macroeconomics, our Country Risk expect Nigeria’s economic to rebound in 2025, expanding by 3.0 per cent in 2024, up slightly from the 2.9 per cent recorded in 2023.

“Despite these upside risks, the market continues to face high inflation, tighter monetary policy and weak foreign direct investment, which we believe will weigh in on growth in the medical devices sector.

“For example, in January 2024, Türkiye’s Jubilee Syringe Manufacturing (JSM) announced it has paused its operations in Nigeria and is undergoing a restructuring phase, citing unforeseen circumstances which affected its business operations.

“The company began manufacturing activities in the country in 2017, aiming to become the largest syringe manufacturer in Africa over the long term. This operational disruption follows similar actions by several pharmaceutical companies, including Sanofi and GlaxoSmithKline, which have ceased manufacturing activities in Nigeria also citing operational difficulties, including a challenging macroeconomic environment,” the report added.

Several challenges, the report said, remain for Nigeria’s medical devices local manufacturing to take off despite government incentives.

“Key barriers include the scarcity of skilled labour, limited access to modern technology and inadequate infrastructure.

“Moreover, the country faces a substandard regulatory environment and bureaucratic hurdles which often delay the approval and market entry of new medical devices, discouraging investment and innovation,” it pointed out.

But the Fitch company highlighted that operationalisation of the African Medicines Agency (AMA) has the potential of enhancing the regulatory landscape for medical products in Africa, but this is only in the long-term if the AMA is fully implemented.

Additionally, the lack of a robust supply chain infrastructure, including reliable electricity and transportation networks, it stressed, further complicates manufacturing and distribution processes.

“Despite government efforts to incentivise local production, these structural challenges in addition to challenging macroeconomic environment will limit growth prospects for medical device manufactures in Nigeria,” it argued.

Emmanuel Addeh

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