Analysis reveals Naira could drop to N1,993/$1 – BMI

A recent analysis by BMI, a division of Fitch Solutions has revealed that the Naira is expected to weaken to N1,993 against the US Dollar by 2028.

This will provide a serious obstacle for Nigeria’s pharmaceutical sector, especially when it comes to importing necessary medical equipment according to report.

According to BMI’s analysis, “Weak Naira and Structural Challenges to Constrain Nigeria’s Medical Devices Market Growth,” Nigeria’s medical devices industry would confront operational and demand challenges in the near future, even with an expected economic recovery.

According to the report, more than 95% of Nigeria’s medical gadgets are imported, leaving it susceptible to changes in exchange rates.

“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,” the report stated.

A weaker naira could make locally produced medical devices more competitive, but BMI pointed out that there are still obstacles to local manufacturing.

Despite government incentives, these factors, such as lack of qualified labor, restricted access to contemporary technology, and poor infrastructure, continue to impede industrial endeavors.

President Bola Tinubu’s administration has reportedly taken steps to lessen these tensions.

In order to lessen domestic production costs, an executive order was issued in June 2024 to eliminate value-added tax, excise charges, and tariffs on certain machinery, equipment, and raw materials.

Nonetheless, BMI analysis noted that the market for medical devices will likely continue to encounter formidable obstacles in the near future.

According to the report, Nigeria’s medical equipment market might reach a valuation of N171.1 billion (£344.7 million) by 2028.

It asserts that it may be driven by the country’s sizable population, growing emphasis on universal health care, and the combined burden of communicable and chronic illnesses.

Nigeria’s economy is anticipated to rebound in 2025.

This is expected to occur with a growth rate of 3.0% anticipated in 2024, up from 2.9% in 2023.

However, enduring problems including high inflation, stricter monetary policy, and low foreign direct investment may hinder the medical devices industry’s expansion.

A news expect also said that on Monday, November 11, 2024, the Naira was trading at N1,681.42 per dollar.

This was a slight decrease of 0.15 percent from Friday’s closing rate of N1,678.87.

Lower market activity was indicated by the large decline in FX turnover on the official market.

This fell by 66.41 percent from $1.4 billion on Friday to $471.5 million on Monday.

The naira fluctuated between a high of N1,695 and a low of N1,631 throughout the reviewed period.

About BMI

BMI Research is a division of Fitch Solutions.

It provides forecasting and analysis on country, industry, and company-level developments.

This helps businesses and investors make informed decisions about emerging markets.

Their research covers over 20 industries and 35 commodities.

Such researches offer deep insight into each country’s market through quarterly reports, event-driven daily analysis, and industry trend research.

Key Areas of Expertise

– Agribusiness: Providing market analysis and trend research for the agricultural sector.
– Autos: Offering insights into the global automotive market.
– Banking & Financial Services: Analyzing the financial sector and its trends.
– Commodities: Researching and forecasting commodity prices and market trends.
– Consumer & Retail: Examining consumer behavior and retail market trends.

Their team of expert analysts integrates political, macroeconomic, and industry expertise to provide comprehensive analysis and forecasting.

With a 40-year track record, BMI Research supports investors, risk managers, and strategists in identifying opportunities and quantifying risks in markets where reliable information is hard to find.

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