The Moderating Role of Foreign Exchange Volatility on the Relationship between Local Procurement Practices and Supply Chain Resilience in Nigerian Manufacturing Firms

This study investigates the moderating effect of foreign exchange volatility on the relationship between local procurement practices (measured by local raw material utilisation) and supply chain resilience in the Nigerian manufacturing sector. Using half-yearly aggregate secondary data from H1 2016 to H2 2024 sourced from the Manufacturers Association of Nigeria (MAN), Central Bank of Nigeria (CBN), and National Bureau of Statistics (NBS), the study employed moderated Ordinary Least Squares (OLS) regression with robust standard errors (n = 18). Results show that local raw material utilisation has a significant positive effect on capacity utilisation (β = 0.233, p < 0.01) and a smaller but significant positive effect on unsold inventory (β = 0.033, p < 0.05). Using a continuous measure of exchange-rate volatility (the absolute half-yearly percentage change in the USD/NGN rate), forex volatility significantly strengthens the positive relationship between local raw material utilisation and unsold inventory (interaction β = 0.263, p < 0.05), while its interaction with capacity utilisation is not statistically significant. A robustness check using a simpler pre/post-2023 volatility dummy instead finds a significant positive interaction on capacity utilisation (interaction β = 0.199, p < 0.01), suggesting the 2023 forex-unification episode coincided with a broad strengthening of the localisation-resilience relationship whose statistical signature is clearest on the market-absorption side once currency movement is measured directly. Together, these findings point to short-term market-absorption challenges — compounded by elevated inflation and interest rates over the same period — that require complementary demand-side interventions rather than localisation alone. Grounded in Resource Dependence Theory and Contingency Theory, the results highlight the value of localisation in bolstering operational continuity during periods of volatility, while also revealing contextual constraints related to infrastructure, quality, and demand. The findings have implications for policy incentives to support supplier development and for managerial strategies aimed at optimising domestic sourcing to foster sustainable industrial growth in volatile emerging markets.

Local procurement, supply chain resilience, foreign exchange volatility

1. Asikhia, O. U., Makinde, G., Akinlabi, H. B., & Olawore, O. P. (2022). Supply chain risk management and business performance of selected oil and gas marketing companies in Lagos State, Nigeria: Moderating role of firms’ size. Journal of Procurement & Supply Chain, 6(1), 58–75. https://doi.org/10.53819/81018102t4054 [Google Scholar] [Crossref]

2. Ayobami, O. T. (2019). Exchange rate volatility and the performance of manufacturing sector in Nigeria (1981–2016). African Journal of Economic Review, 7(1), 1–20. [Google Scholar] [Crossref]

3. Belhadi, A., Kamble, S., Jabbour, C. J. C., Gunasekaran, A., Ndubisi, N. O., & Venkatesh, V. G. (2021). Manufacturing and service supply chain resilience in the era of COVID-19. Journal of Business Research, 134, 518–528. https://doi.org/10.1016/j.jbusres.2021.05.038 [Google Scholar] [Crossref]

4. Central Bank of Nigeria. (2024). Statistical bulletin CBN. [Google Scholar] [Crossref]

5. Chopra, S., & Sodhi, M. S. (2014). Reducing the risk of supply chain disruptions. MIT Sloan Management Review, 55(3), 72–80. [Google Scholar] [Crossref]

6. Fredson, E. K., Baah, C., & Opoku, A. (2025). Building resilient supply chains in emerging markets: Sustainable procurement and stakeholder engagement. World Scientific News, 192, 45–67. [Google Scholar] [Crossref]

7. Goshit, D. Z., Abimiku, C., & Bakle, M. (2024). Exchange rate volatility and manufacturing performance in Nigeria. Journal of Economic Studies, 12(2), 78–95. [Google Scholar] [Crossref]

8. Hendry, L. C., et al. (2019). Reshoring and nearshoring: Drivers and performance effects in UK manufacturing. International Journal of Operations & Production Management, 39(9), 1234–1256. [Google Scholar] [Crossref]

9. Kinkel, S. (2018). The role of reshoring for resilience: Evidence from German manufacturing. International Journal of Production Economics, 203, 234–247. [Google Scholar] [Crossref]

10. Kuteyi, D., & Winkler, H. (2022). Logistics challenges in Sub-Saharan Africa and opportunities for digitalization. Sustainability, 14(4), Article 2399. https://doi.org/10.3390/su14042399 [Google Scholar] [Crossref]

11. Lawal, S. A., & Isiyaku, A. (2025). Enhancing supply chain resilience in emerging economies through predictive analytics and localized inventory automation. World Journal of Advanced Research and Reviews, 27(2), 1118–1132. https://doi.org/10.30574/wjarr.2025.27.2.2864 [Google Scholar] [Crossref]

12. Lawrence, P. R., & Lorsch, J. W. (1967). Organization and environment: Managing differentiation and integration. Harvard Business School Press. [Google Scholar] [Crossref]

13. Mutangili, S. K. (2024). Supply chain localization strategies in African public procurement systems. Journal of Procurement & Supply Chain, 8(3), 60–69. https://doi.org/10.53819/81018102t2448 [Google Scholar] [Crossref]

14. Manufacturers Association of Nigeria. (2025). MAN economic review 2025. MAN. [Google Scholar] [Crossref]

15. McDougall, N., & Davis, P. (2024). Localisation strategies and supply chain resilience in African manufacturing. International Journal of Operations & Production Management, 44(5), 892–917. [Google Scholar] [Crossref]

16. Narula, R. (2019). Quality challenges among local suppliers in developing countries. Journal of International Management, 25(4), 100–112. [Google Scholar] [Crossref]

17. National Bureau of Statistics. (2024). Nigerian gross domestic product report (Q4 2023 and Q1 2024). NBS. [Google Scholar] [Crossref]

18. Okaforocha, C. M., Imoagwu, C. P., Onwuka, I. N., & Okoli, C. K. (2024). Exchange rate fluctuations and manufacturing sector performance in Nigeria: Issues and implications for economic recovery. International Journal of Research and Innovation in Social Science, 8(11), 2130–2138. https://dx.doi.org/10.47772/IJRISS.2024.8110170 [Google Scholar] [Crossref]

19. Oyelami, L. O., & Olaniyi, E. (2023). Import dependency and manufacturing performance in Nigeria. Nigerian Journal of Economic and Social Studies, 65(2), 45–67. [Google Scholar] [Crossref]

20. Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. Harper & Row. [Google Scholar] [Crossref]

21. Ponomarov, S. Y., & Holcomb, M. C. (2009). Understanding the concept of supply chain resilience. The International Journal of Logistics Management, 20(1), 124–143. https://doi.org/10.1108/09574090910954882 [Google Scholar] [Crossref]

22. Queiroz, M. M., Ivanov, D., Dolgui, A., & Wamba, S. F. (2024). Supply chain resilience in the post-pandemic era. International Journal of Production Economics, 268, Article 109125. [Google Scholar] [Crossref]

23. Saunders, M. N. K., Lewis, P., & Thornhill, A. (2019). Research methods for business students (8th ed.). Pearson Education. [Google Scholar] [Crossref]

24. Şerbetçioğlu, A., & Oflaç, B. S. (2025). Emerging trends in supply chain resilience: A systematic literature review. Management and Governance Development Review, 12(1), 34–58. [Google Scholar] [Crossref]

• Operational and Supply Chain Inefficiencies in Malaysian Service SMEs: A Case Study of Puncak Geliga Holidays Sdn Bhd
• Operational Factors Influencing Passenger Satisfaction at CAAP-Managed Airports
• Mapping Technological Frontiers in Construction Planning and Scheduling: A Bibliometric Review (2015-2025)
• Process Management Strategies on Organizational Performance of Manufacturing Firms in Asaba, Delta State
• Ranking Malaysian Domestic E-Logistics System Providers Using Fuzzy TOPSIS Based on E-Service Quality Criteria