Naira depreciation to N1,993 by 2028 could challenge Nigeria’s pharmaceutical sector, BMI report warns

Nigeria’s pharmaceutical sector faces significant challenges as the naira is expected to depreciate to N1,993 per US dollar by 2028. The country’s reliance on imported medical devices will result in rising costs, exacerbating the strain on both the health system and patients. The sector’s growth is forecasted to reach N171.1bn by 2028, but local production remains hindered by persistent structural barriers.

Nigeria’s pharmaceutical and medical devices industry is facing increasing challenges due to the anticipated depreciation of the naira, with forecasts predicting the currency will reach N1,993 per US dollar by 2028, down from N306 in 2018.

This dramatic devaluation poses significant risks, particularly for the country’s medical devices sector, which relies on imports for more than 95% of its supplies.

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According to a new report by BMI, a subsidiary of Fitch Solutions, the continued weakness of the naira is expected to drive up the costs of importing medical devices, thereby straining Nigeria’s healthcare system and reducing consumer purchasing power.

The increasing cost of medical devices could further undermine efforts to provide essential healthcare services, especially in a sector already facing underfunding. This trend is expected to particularly affect high-cost devices, such as diagnostics, orthopaedic, and dental products.

Despite an expected recovery in Nigeria’s broader economy, with growth projections of 3.0% in 2024, challenges such as inflation, tight monetary policies, and low foreign direct investment are likely to continue impacting the medical devices market.

BMI’s report highlights that while a weaker naira could make locally manufactured medical devices more competitive on the international market, local production remains hindered by persistent issues such as a shortage of skilled labor, limited access to modern technology, and inadequate infrastructure.

In an effort to ease these challenges, the administration of President Bola Tinubu has implemented measures to reduce local production costs.

In June 2024, an executive order was issued eliminating tariffs, excise duties, and Value Added Tax (VAT) on specific machinery, equipment, and raw materials.

However, the report stresses that these measures may not be sufficient to address the long-term structural issues within the medical devices sector.

The market is expected to grow to a value of N171.1bn (£344.7m) by 2028, fueled by Nigeria’s large population, a growing focus on universal health coverage, and the double burden of chronic and communicable diseases.

However, the market faces significant short-term challenges, including rising import costs and a lack of local manufacturing capacity.

As the naira continues to weaken, the impact on the medical devices sector is expected to deepen, making it harder for Nigerians to access essential healthcare technologies and further burdening the country’s overtaxed health system.