The return of Wemy Industries Limited to the Nigerian diapers market, after three and a half years of near shutdown, underlines the opportunity in a market BusinessDay estimates at N280 billion per annum.
“We are back to the diapers market,” Paul Odunaiya, managing director, Wemy Industries, told BusinessDay in an interview on Friday.
“We are bringing in adult diaper machines. We are going to be pioneer adult diaper manufacturer in Nigeria and we will service the Nigerian market and that of the whole West Africa by exporting what we produce here to the ECOWAS region,” he said.
Wemy got funding from the Bank of Industry (BOI), and another intervention from the Central Bank of Nigeria (CBN), to enable the resuscitation of its factory, Odunaiya said.
Wemy Industries, founded in 1978, is a manufacturer of adult, feminine and baby diapers, sold under Dr Brown’s and Nightingale brand names. The company was hard hit by the recession of 2016, as it was heavily exposed to foreign exchange risks, being an importer of raw materials and finished products.
But opportunities exist in the industry as 7 million children are born each year, according to the United Nations International Children’s Emergency Fund (UNICEF). Data from the National Population Commission in 2015 said there were 32 million under-five children in Nigeria.
If we assume an estimated diaper penetration rate of about 10 percent or 3.2 million children, using an average of four diapers a day at a cost of N60 per diaper, it gives an annual market roughly estimated at N280 billion. This excludes the adult segment and export market.
There are more babies born in Nigeria in a year than in all of Western Europe, a signal of the opportunity in the sector.
“Globally, over half of the world’s births are estimated to take place in just eight countries, including Nigeria,” Pernille Ironside, UNICEF’s Nigeria acting representative, said on December 31, 2018, adding that 25,685 children would be born on January 1, 2019.
The diaper industry was once dominated by Procter&Gamble’s Pampers, manufactured in its Ibadan and Agbara plants.
P&G shut down its $300 million Agbara plant in July 2018 and insiders told BusinessDay that the company is now importing diapers. Until July 2018, it had been the biggest US non-oil investment in Nigeria. Sources close to the company told BusinessDay that the company faced multiple taxation and harsh treatment in the hands of Nigeria Customs Service, which regularly acts as a revenue earner rather than a business facilitator.
P&G also faced multiplicity of taxes in Agbara where government agencies, who could not even build good roads, demanded huge taxes and levies.
“They did not meet their projections due to increased competition and overhead costs,” a source close to the company said.
“You now have the Customs and other agencies. The company was also exposed to FX risks,” the source added.
Industry sources say today’s industry leader is the Agbara, Ogun State-based Hayat Kimya, which makes Molifix, preferred by a number of mothers.
The Lagos-based Kimberly Clark is also a key player, producing Huggies, which is also a major brand. But insiders told BusinessDay that the company is leaving Nigeria.
“Yes, the company said it would leave Nigeria and return in 18 to 24 months,” a source, who was once a staff member of the company, told BusinessDay.
It was not immediately possible to contact the US company which serviced the Nigerian market through its South African branch.
Other players are small in size because they also produce or market products other than diapers. For instance, Eleganza produces diapers and plastics. Virony, which is another player, distributes diapers, building materials and household items.
“We still have a low penetration rate in the industry. But there is multiplicity and duplication of functions by government agencies,” Odunaiya of Wemy said.
“There are many substandard diapers flooding the Nigerian market. They pack them in white bails, sell them to Nigerian merchants at ridiculously low prices and bring them into this market. What we need is to stop this kind of products from coming into this market because they cause rashes and infections and there could be leakages because they are not of good quality,” he added.
Ike Ibeabuchi, managing director of a chemical firm, said the way to develop the industry was to provide incentives for the players.
“It tells a story about our business environment if companies that make direct investments leave us, sacking their workers, who would be mostly Nigerians,” Ibeabuchi said.
ODINAKA ANUDU
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