• Monday, March 04, 2024
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Nigeria’s manufacturing paradox: The story of the toothpick

Nigeria’s manufacturing paradox: The story of the toothpick

Nigeria imports toothpicks when it has bamboo, starch when it is the largest cassava producer, and tomatoes when it has a tomato base.

Toothpicks are simple yet highly sought-after items all over Nigeria and the world. Despite the CBN-imposed ban on foreign exchange for this commodity in June 2015 which has now been lifted, Nigeria still relies on the importation of toothpicks manufactured and packaged in other countries.

However, the demand for toothpicks has continued to spread across the urban and rural areas in Nigeria, thereby creating a continually growing market for toothpick production.

Read also: Of rice and toothpicks: Control freakery will immiserate Nigerians

The dearth of infrastructure in Nigeria means local producers are not competitive with several companies resorting to importation of goods that could be manufactured in the country.

According to some findings by BusinessDay, United Bamboo & Plastic Co, a local manufacturing company in Asaba, Delta State churns out over 2 billion toothpicks per year with revenues of over N200 million (USD$640,000) in 2016 and 2017.

“We succeeded with our toothpick venture by outsourcing the toothpick production and focusing on efficient re-packaging. Specifically, we’ve invented proprietary packaging machines that semi-automatically fill cups with toothpicks, eliminating the need to do it by hand, allowing us to pack them 4x faster than our competition in China,” the company said on its website page.

While United Bamboo & Plastic Co produces toothpicks in Delta, another firm, Pemo Groups, also produces toothpicks from bamboo in Edo State.

“Through Taiwanese technology, we have been able to bring in machines that made us produce toothpicks at Anegbette in Edo State. Presently, we are unable to meet the local demand for toothpicks without thinking of exporting our products. I only service Lagos and Kaduna and I have not been able to meet their demands,” John Yacim, Pemo Group’s group head, business development, said in an interview in 2014.

“The Bank of Industry has come and they indicated interest to help me expand my machinery so that I can produce more toothpicks for the country. The expansion, will create more employment and conserve foreign exchange by stopping the importation of toothpicks. We have about seven product lines. They did not come in one day. We have the toothpick, chopstick, window blinds, furniture, and floor tiles based on customer’s demand and requirement,” he said.

With all of these feats, a former minister of Agriculture and Rural Development, Audu Ogbe, quoting a Central Bank of Nigeria (CBN) report, said Nigeria spends over $18 million annually on importation of toothpicks.

Muda Yusuf, the director and chief executive officer of the Centre for Promotion of Private Enterprise (CPPE) said the government needs to provide an enabling environment to ease the cost of production of local manufacturing companies.

As of 2020, Nigeria’s ease of doing business ranked 131st worldwide, with a general score of 56.9. The highest scores were obtained in the fields of starting a business, dealing with construction permits, and getting credit, according to the World Bank.

“Many of the companies import their raw materials and the cost of importation is very prohibitive now because of foreign exchange rate and exchange rate depreciation.

“Secondly, the cost of energy is also extremely high, the power supply is not stable – the cost of diesel, petrol – will affect their production, especially for those in manufacturing,” Yusuf said.

He added that even if the local manufacturing companies try to produce, “the borders are too porous and some of these items often get smuggled in illegally, and they now compete with those that are producing locally who are producing with high cost of exchange rate, energy and even logistics”.

The immediate past director of Lagos Chamber of Commerce and Industry (LCCI) emphasised that the cost of transporting items produced by a company in Asaba down to Lagos which is the biggest market, is very expensive.

“Imagine someone that manages to smuggle these items from the Benin Republic or through our own ports here, there is no way local companies can compete with them,” he said.

The CPPE director recommends that the government must ensure that the raw materials used by the local manufacturers are available locally so they are not sourcing for foreign exchange, adding that a reduction in the cost of energy and that of transportation or logistics will help to stimulate local productions and reduce imports of products that can be locally made.