BMI, a Fitch Solutions company, has projected that the Nigerian naira will depreciate to N1,993 per US dollar by 2028, a sharp decline from N306/$ in 2018. This depreciation is expected to significantly impact the country’s pharmaceutical sector, particularly the ability of industry players to import medical devices.
In a recent report, “Weak Naira and Structural Challenges to Constrain Nigeria’s Medical Devices Market Growth,” BMI highlighted that while Nigeria’s economy is expected to rebound, the medical devices market will face continued operational and demand challenges in the near term. The report emphasized that the naira’s persistent weakness will drive up the cost of importing medical devices, further eroding consumer purchasing power.
“Nigeria relies heavily on imports for medical devices, with over 95% of its market supply coming from overseas. The weakening naira will only increase these import costs, which, coupled with limited public healthcare funding, will make it even harder for Nigerians to afford essential medical technologies,” the report stated.
The report also noted that high-cost medical devices, such as diagnostics, orthopaedics, and dental products, would be particularly affected. On the positive side, a weaker naira could enhance the competitiveness of locally manufactured medical devices, potentially fostering growth in this sector.
Despite government initiatives, such as the June 2024 executive order signed by President Bola Tinubu to reduce medical service costs by eliminating tariffs, excise duties, and VAT on medical machinery, equipment, and raw materials, the report indicated that the sector would continue to face significant challenges in the short term.
BMI estimates that Nigeria’s medical devices market will grow to N171.1 billion ($344.7 million) by 2028. However, the report cautioned that this growth will be constrained by ongoing structural issues, such as a substandard regulatory environment, high inflation, tighter monetary policies, and weak foreign direct investment. These factors continue to weigh on the growth prospects of the medical devices sector.
The report also pointed to the exit of some pharmaceutical companies, such as Türkiye’s Jubilee Syringe Manufacturing (JSM), which paused operations in Nigeria in January 2024. Similar moves have been made by companies like Sanofi and GlaxoSmithKline, all citing operational difficulties stemming from the country’s challenging macroeconomic environment.
“Key barriers to the development of local medical device manufacturing include a lack of skilled labor, limited access to modern technology, and poor infrastructure. In addition, bureaucratic hurdles and a substandard regulatory environment delay the approval and market entry of new medical devices, which discourages investment and innovation,” BMI noted.
While the operationalization of the African Medicines Agency (AMA) could improve the regulatory landscape for medical products in Africa, this is expected to have a long-term impact, depending on the full implementation of the AMA. Furthermore, inadequate supply chain infrastructure, including unreliable electricity and poor transportation networks, complicates manufacturing and distribution efforts.
Despite the government’s attempts to incentivize local production, BMI concluded that these structural and macroeconomic challenges will continue to limit the growth prospects for Nigeria’s medical device manufacturers in the foreseeable future.
