Manufacturers face export market on back of external demand, productivity surge

As productivity and demand for local products across continental markets continue to rise, Nigerian manufacturers are consistently looking outwards and also finding bigger markets across Africa, Europe and the United States of America, BusinessDay checks have shown.

The new shift is occasioned by improvement in the quality of the products as Nigerian manufacturers now compete favourably with their foreign counterparts, further investigations reveal.

The manufacturers are also encouraged by the recent GDP rebasing that has made the Nigerian economy the biggest on the African continent, a development that has increased their perception globally.

The acceptability of Nigerian products across various markets in the globe has continued to be driven by improved competiveness of locally manufactured goods, which reflects on deliberate increase in product quality, design and affordability, Dom Opara, general manager, Posh International, whose firm is a key exporter across these markets, told BusinessDay.

Central Bank of Nigeria (CBN) data show that Memuda Industries sold $82.3 million worth of finished leather to Italy in 2012, emerging the 4th biggest non-oil exporter, compared with $10.6 million worth of the same item sold overseas in the preceding year.

Multitan, also a key player in the tanning sector, had an export value of $36 million, from $3 million reported in the preceding year. Its export destinations have been Europe, West and Central Africa.

Deepak Singhal, CEO, Dufil Prima Foods, said the company’s exports to the West African and other markets in 2013 were worth $50 million, and about 90 percent of the company’s raw materials were sourced locally.

Everest Metal Ltd, a key player in aluminium and lead, earned $33.7 million in exports in 2012, according to the CBN data. This compares positively with $10 million gathered in the preceding year.

Dansa Food Processing Limited, maker of fruit juice and bottled water, had its exports rise by $32 million through the sale of Gum Arabic to France and Germany, while Dangote Agrosacks Ltd, part of Dangote Group and maker of woven and laminated polypropylene sacks, realised $0.39 million from playing in the Central, West, and East African markets, the CBN data show.

Similarly, West African Cotton Company Limited, a player in the textile and apparels sector, found its markets in Indonesia, Germany and Vietnam. Cumulatively, its total exports to these countries were $29.8 million in 2012, as against $9.4 million in 2011.  

Sapele Integrated Industries, a company which processes crumb rubber, in 2013 also exported nearly 100 percent of its product to Bridgestone Tyre Company, one of the largest tyre companies in the world, whose offices are located in Spain, Italy, Poland, Japan, and other parts of the world.

“There are large-scale palm oil plantations owned by the Dunlop Group and sold to an investor. We have about 2,000 hectares under plantation, with Okomu’s doing between 20,000 and 25,000,” said Ede Dafinone, CEO, Sapele Integrated Industries, in an interview with BusinessDay.

Other key exporters who are discovering external markets include Chi Limited, Juhel Pharmaceutical, Asia Plastics Industries, British American Tobacco, Emzor Pharmaceuticals, Flour Mills of Nigeria, among others.

Productivity in the manufacturing sector of Africa’s largest economy has reflected on increased output, capacity utilisation, investments and local content.

“Productivity in the real sector is rising, thanks to improved favourable policies of the Federal Government, ability of local firms to re-engineer internally and cut down costs. By looking outwards, they are proving that the forthcoming Common External Tariff regime will be most favourable to the country,” said Mathew Ibe, CEO, MD Services Limited.

According to the Manufacturers Association of Nigeria (MAN), there has been a steady rise in manufacturing output since 2012, when total output was N218.46 billion. In the first half of 2013 (H1 2013), output was N353.20 billion, whereas output value expanded further to N483.53 billion by the second half of 2013 (H2 2013).

This signifies an increase of about 37 percent, compared with the mid-year figure of 19 percent by H1 2013, according to MAN.

Capacity utilisation in the sector has also been on a steady rise. In the first half of 2012 (H1 2012), capacity was 49 percent, though this fell to 46.6 percent by the second half of the same year (H2 2012). Capacity utilisation was 46.3 percent in H1 2013, but this soared to 52.7 percent by the end of 2013.

In terms of local input content, as reflected on percentage of raw materials sourced locally, there has been a rise since 2012. In H1 2012, local content was 47.56 percent, remaining the same by H2 2012. In H1 2013, local content rose to 50.93 percent, while it rose further to 58.58 percent H2 2013. Moreover, total investments in H2 2013 rose to N1.434 trillion, from N566.33 billion recorded in H1 2013.

“Nigerian local products are competitive in terms of quality and standards in African markets, especially in Central and West African markets,” said Manufacturers Association of Nigeria Export Group (MANEG), headed by Tunde Oyelola, in a statement released to BusinessDay.

“Our products are everywhere in these markets. Nigerian manufacturers have new markets in East and Southern African markets. We are also in many European and American markets,” MANEG said in the statement.

ODINAKA ANUDU