Nigeria’s value addition potential strengthened by N800bn local input

Nigeria’s local raw materials sourcing between June and August 2015, which is estimated at N800.10 billion,  highlights the processing and value-addition potential of the country.

“There is so much potential in agriculture and manufacturing in Nigeria,” says Eric Umeofia, CEO, Erisco Foods Limited.

“If you go to certain parts of the country and you see what is available, you will shudder. In the north, you see onions everywhere. There is high demand for onion juice, dry onions and onion concentrates in Europe. Just provide them with machines with which to do processing and you see them unleash potential,” Umeofia told BusinessDay.

Data from the Raw Materials Research and Development Council (RMRDC) show that 183 manufacturers in the country sourced local sorghum, maize, cassava, yam, starch, palm oil, limestone, gypsum, among others, worth N800.10 billion in three months, proceeding June, 2015.

The data further show that these economic activities were carried out by 83 large, 38 medium, 47 small and 16 micro manufacturers in food and beverages; domestic and industrial plastic, rubber and foam; chemical and pharmaceuticals, as well as basic metal, iron, steel and fabricated metal product sectors.

Others include electrical and electronics; pulp, paper and paper products, printing and publishing; textile, wearing apparel, carpet, leather and footwear, as well non-metallic products sectors.

BusinessDay’s independent findings show that companies that used these local raw materials within the period were Dangote Cement ( limestone, gypsum & others), Lafarge Africa ( limestone, gypsum & others), Wempco and West African Ceramics Limited (feldspar, iron, silica, quartz, clay, others), Erisco Foods ( fresh tomatoes) and Dufil (starch, palm oil, flour, others).

Others were A&P Foods and Beloxxi Biscuits (flour, sugar, salt, butter, flavour), Flour Mills ( wheat, starch, oil ,others) & Honeywell (wheat flour), Unilever (starch, oil), Cadbury (cocoa powder, sugar) among others.

Apart from the fact many multinationals backward integrated for some of their raw materials, there are still areas where they get inputs from other companies.

Checks show Matna Foods supplies starch to Unilever and many other food and beverage companies, while Okomu and Presco supply crude palm oil to Dufil (maker of Indomie noodles) and Unilever.

Psaltry International Company Limited supplies industrial cassava starch to Nigerian Breweries, which extracts maltose syrup for use in the brewing process.

Zacheaus Egbewusi, agric Inspection officer, Azeeco International, said his organisation supplies cocoa to Cadbury, Olam, and Bolawole International.

Dangote Sugar supplies sugar to many food and beverage companies, including Dangote Flour, Erisco Foods, Nigerian Breweries, Nigeria Bottling Company, among others.

Despite the volume of activities in the agriculture and manufacturing value chain, the Manufacturers Association of Nigeria (MAN) says the sector is still under-exploited.

According to MAN, at the commencement of the Backward Integration Programme (BIP) in 2013, local sourcing of raw materials for the industrial sector was galvanised through various agricultural and solid minerals agenda as it  brought local input preference to 55 percent.

But MAN says since 2014, local input sourcing has been on the downward trend, hitting a new low of 46 percent currently.

This has also been re-echoed by players in the value chain.

“The volume of starch we get from farmers is reducing over the years because they are not increasing their output,” said Ikechukwu Onyemenem, a cassava supplier and expert.

“We supply 80 tonnes of dry starch to companies weekly. We spend more buying cassava from farmers despite volume being the same and this is due to the high cost of transportation of the produce to our factory,” said Onyemenem, who added that his firm supplies starch to Dufil, Nestle and Starlink Pharmacy.

Concerning palm oil, Henry Olaguntoye, national president, National Palm Produce Association of Nigeria, said there are few investments in palm oil, as farmers are not cultivating new farmlands because they lack capital.

Adiodun Olorundenro, a farmer in Ogun State said, “I have not been able to increase my output over the years and this is because I don’t have access to improved and quality seedlings and cassava stems for planting, coupled with bad roads. Our farmlands are not accessible.

“I no longer supply farm produce to companies because they bid cheaper prices and would make payments after three to four weeks after delivery. The middlemen that come to buy from us bid our produce better and pay immediately,” he said.

ODINAKA ANUDU & JOSEPHINE OKOJIE