Impact of Foreign Exchange Volatility on Import Supply Chain Costs in Nigerian Manufacturing Firms: An Empirical Analysis

This study empirically analyses the impact of foreign exchange volatility on import supply chain costs in Nigerian manufacturing firms, with data drawn from firms across the South West, North Central, and South South geopolitical zones. Manufacturing firms dependent on imported raw materials, packaging, and machinery components are particularly exposed to exchange rate fluctuations, which translate directly into cost escalation across procurement, logistics, and production planning. Using a longitudinal survey design supplemented by archival import cost records, data were collected from 95 supply chain directors and financial controllers in manufacturing firms registered with the Manufacturers Association of Nigeria. Foreign exchange volatility is operationalised through average monthly naira-dollar rate variance and hedging position availability. Import supply chain cost variables include raw material procurement cost, freight and insurance cost, port charges, and landed cost per unit of key production inputs. The study employs panel data analysis and fixed-effects regression to control for firm-level heterogeneity. It draws on open economy macroeconomics, supply chain cost theory, and recent empirical literature on exchange rate pass-through in African manufacturing. Findings are expected to demonstrate significant positive relationships between exchange rate volatility and import cost inflation, with weaker effects observed in firms employing structured hedging strategies. The study contributes original empirical estimates of the supply chain cost sensitivity to exchange rate shocks in the Nigerian manufacturing context. Recommendations address the Central Bank of Nigeria, manufacturing associations, and supply chain finance providers on hedging instrument accessibility and domestic input substitution incentive policies. Keywords: foreign exchange volatility, import supply chain, manufacturing costs, Nigeria, exchange rate.