Manufacturers look inwards as local input content rises to 59%

Local manufacturers are becoming increasingly aware of the availability of abundant raw materials in the country as they now source more inputs within the economy than from abroad.

This trend has increased the percentage of raw materials sourced locally to 58.58 by the second half of 2013 (H2 2013), as against 50.93 percent obtained by the first quarter of the same year (H1 2013).

The result of H2 2013 represents an 11.01 percent rise from 47.56 percent recorded in the corresponding period of 2012 (H2 2012), data from the Manufacturers Association of Nigeria (MAN) show.

“From the information gathered from members, most manufacturers are finding ways of adapting to the use of local raw materials where possible. The essence is to make savings on costs, as input purchased abroad tends to cost more. Using local input also saves foreign exchange for the country and simultaneously saves costs,” says MAN.

“The costs saved from such are being used to answer other needs in the factories. Such needs include changing of machines and equipment, purchases of other production assets and working capital.”

A sector by sector breakdown shows that local input content of the food, beverage and tobacco subsector rose to 79.34 percent by H2 2013, as against 68.99 percent reported in H1 2013 and 70.74 percent in H2 2012.

Food, beverage and tobacco comprises subsectors such as breweries, soft drinks, flour-mills, cereals and bakery products, dairy products, meat and meat products, tea and coffee, sugar and sugar confectioneries, among others.

Players in the sector are Nestlé Nigeria plc, Cadbury plc, Nigerian Bottling Company, Promasidor Nigeria, De-United Foods, Seven-Up Bottling Company and Guinness Nigeria plc. Others are Dangote Flour Mills, Chi Limited, Atlantic Shrimpers Limited, Barnaly Nigeria Limited, Dansa Foods Limited, Flour Mills of Nigeria plc, Honeywell Nigeria, among others.

J. M. Babajide, lecturer in food science and technology, University of Agriculture, says local manufacturers in this sector source four different kinds of raw materials, which include unprocessed agricultural products, semi-processed agricultural products, finished products and by-products or effluent.

Unprocessed agricultural products, according to Babajide, include cassava, yam, grains, fruits and vegetables; while semi-processed products occur in the form of dry-cocoa beans, dry sugar, pasteurised milk, grain flour, cocoa mass, malted grains, among others.

On the other hand, finished products include refined granulated sugar, starch, ascorbic acid and flavor, among others, whereas by-product or effluent of an industry can serve as input for another industry, e.g., molasses and biscuit dust, among others.

While some manufacturers buy these products from farmers, others are directly involved in farming. Some, however, are also involved in both methods. Dangote Sugar, for example, buys sugarcane from farmers and directly plants the product, while Nestle Nigeria plc grows maize and soymilk directly in some parts of the country.

Similarly, textile, apparel and footwear makers now source 60.79 percent of raw materials from within, as against 52.86 percent reported in H1 2013 and 47.22 percent in H2 2012. Experts say main raw material used by textile and apparel players is cotton, mostly grown in the north of the country. Apart from the security challenge, a critical problem associated with growing cotton in the north is poor research and development (R&D), which hampers its proper maturity and availability, says Badaru Mohammed, president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

On the other hand, a major input of the leather industry is animal hides and skin, whose availability depends so much on animal rearers. Players in the industry include African Textile Manufacturing Limited (ATM), United Nigeria Textiles plc, West African Cotton Limited (WACL), Angel Spinning and Dyeing Limited, Nigerian Ropes plc, among others.

The wood and wood products sector had its local input rise to 61.90 percent in H2 2013, from 53.83 in H1 2013 and 46.05 in H2 2012, according to MAN. Local input used by key players, who are furniture makers, is wood, mainly derived from trees.

Players include Caprisage Exports Company Limited, R. A. Trading and Investment Limited, among others

Research carried out by A. A. Ogunwusi of the Raw Materials Research and Development Council (RMRDC) shows that between the 1960s and early 1970s, the country’s exports of wood products and agricultural commodities provided more than 70 percent of the Gross Domestic Product (GDP). The research pointed out that over-exploitation of wood, overemphasis on oil, among other factors, stifled this process.

“Deficiencies in technologies and finance, lack of qualified manpower and their rapid turnover are major problems militating against optimal development of this sector. Thus, technical training is a priority to promote production to international standard and customers,” notes Ogunwusi.

In the same vein, pulp, paper, printing and publishing had its local content input rise to 61.10 percent in H2 2013, from 53.13 percent in H1 2013, 52.24 percent in H2 2012 and 44.41 percent in H1 2012. The input for this sector is paper, obtained mainly from trees. Funlayo Adebo Enterprises Limited, Literamed Publication Nigeria Limited, among others, are key players in this sector.

The chemical and pharmaceutical sector also witnessed a robust increase in local input of 61.18 percent in H2 2013, from 53.2 percent reported in H1 2013, 50.67 percent in H2 2012 and 40.26 percent in H1 2012. Raw materials used in this sector include alcohol, acids, esters, phenones and pyridines, among others.

Key players in this sector include May&Baker, Juhel Nigeria Limited, Emzor Pharmaceutical Industries Limited, Neimeth International Pharmaceuticals plc, GlaxoSmithkline Consumer Nigeria plc, Bio-Organics Nutrient Systems Limited (pharmaceutical category), Purechem Manufacturing Limited, S. I. L. Chemicals Limited, and Unikem Industries Limited (chemical category), among others.

Furthermore, the non-metallic industry had its local content increase to 91.48 percent in H2 2013, as against 79.55 percent recorded in H1 2012 and 63.16 percent in H2 2012. Local raw materials used in this sector include limestone, gypsum, marl, quartz, calcite and shale, among others. Key players are cement, ceramics and glass makers, such as Dangote Cement (DangCem), Lafarge WAPCO, the United Cement Company of Nigeria (UniCem), Ashaka Cement (AshakaCem), the Cement Company of Northern Nigeria, West African Ceramics Limited (WACL), Frigo-Glass Limited, among others.  

ODINAKA ANUDU