Manufacturers pump N3.2trn into economy in 3 years

Nigerian manufacturers invested N3.18 trillion in the economy between 2013 and 2015, despite all odds in the business environment,  a document obtained exclusively from the Manufacturers Association of Nigeria (MAN) shows.

However, foreign exchange scarcity, election tensions and lack of policy clarity by the new administration in 2015 forced investors to backtrack within the year, resulting in decrease in investments by 41 percent when compared with 2014. The data likewise show that total investments made in 2013 were N816 billion higher than those made in 2014 and 2015 combined.
As such, local manufacturers pumped N2 trillion in 2013, while investing N691.80 billion in 2014 and N489.45 billion in 2015.

The investments were made in land and buildings, plant, machinery, vehicles, furniture, equipment, as well as assets.

According to MAN, the Federal Government needs to improve local sourcing of raw-materials through effective development of agriculture, solid minerals and the petro-chemical sectors, in order to encourage existing and new investors in the manufacturing sector and prevent them from chasing FX, which is in acute supply.

“The Nigeria’s petro-chemical sector should be resuscitated. Modern industrialisation is chemical based and most of the industrial chemicals are by-products of crude oil which Nigeria has in abundance,” says MAN in the report.

“Government should always carry out exhaustive consultation among stakeholders in policy design and maintain consistency for a reasonable length of time with the policy, when eventually implemented, so as to forestall policy summersault,” the document says.

BusinessDay’s independent checks show that Dangote Group is a stand-out performer within the three-year period. Apart from several investments made in the cement and foods industries, Dangote pumped $2 billion into the sugar industry, making the entity biggest investor in that industry. Other investors in the industry include HoneyGold Group ($300 million); Confluence Sugar Company ($240million); and Golden Sugar ($300 million), among others.

Lafarge Africa’s subsidiary, Ashaka Cement, is also one of the investors within the period under review, betting N100 billion to raise cement capacity from one million metric tonnes to four million, while building a coal-fired plant to power its operations. Fidson Healthcare Plc invested over N9 billion to complete its drug plant in Sango-Otta, Ogun State.

Other stand-out performers in the pharmaceutical industry were Swiss Pharma, Evans Medical, May & Baker, Chi Limited, which enabled them to obtain prequalification from the World Health Organisation within the period.

Procter & Gamble also pumped $300 million into  a new plant located at Agbara, Ogun State. African Industries Group, made up of 12 subsidiaries, also invested in expanding its six steel plants.

“People are looking at macroeconomic indicators before they invest,” Frank Jacobs, president, Manufacturers Association of Nigeria (MAN), told BusinessDay, in reference to the current investment environment.

“The current investment environment is not attractive. Investors go to places where the environment is good. Investors do not need a discordant monetary policy. Investors who know they have to generate their own power will think twice before they come. This is why you see a good policy interrupted mid-way,” Jacobs said.

Nigeria is currently hit by recession, resulting from oil price lows, which makes foreign exchange acutely scarce. The country with a population of almost 180 million imports most of its needs, resulting in excessive demand for FX. Manufacturers need FX to import inputs, but have faced acute shortage, resulting in interruptions in production and factory closures in the last 14 years.

“You need to regain the confidence of investors. This is because investors are key in terms of rebuilding the economy,” said Yusuf, director-general, Lagos Chamber of Commerce and Industry.
Yusuf said Nigeria needs investments now to pull economy out of recession, adding that there is a need to properly fine-tune FX management.