It is not all gloom and doom in Nigeria. Amid tales of firms’ exits, losses, regulatory hiccups and insecurity, some corporate entities are still bullish about the Nigerian market.
Dangote Group has braved the odds to set up a $20 billion crude oil refinery in Lekki, Lagos, with fertilizer and petrochemical plants.
Its facility can refine 650,000 barrels of oil per day and feed the entire Nigerian and West African market.
“We have enough gasoline to give to at least the entire West Africa, diesel to give to West Africa and Central Africa. We have enough aviation fuel to give to the entire continent and also export some to Brazil and Mexico,” Aliko Dangote, president of Dangote Group, said at the Africa CEO Forum Annual Summit in Kigali in May.
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Dangote Industries entered into an agreement with China Sinoma International Engineering in February 2023 to build a six million tons per annum (mtpa) cement plant in Itori, Ogun State.
Aliko Dangote, president of the group, while speaking at the signing ceremony, said that new integrated cement plant, upon completion, would strengthen the local production capacity of Dangote Cement, bringing its local capacity to 41.25 million tons per annum and total African capacity to 57.6 million tons per annum.
The plant was projected to feature two production lines, each with a capacity of 6,000 tons per day (TPD) of clinker, resulting in a total installed daily production capacity of 12,000 tons per day (TPD).
But Dangote is not the only group that is expanding. Nestle Nigeria has introduced new products in Nigeria in the past one year and expanded its local input sourcing in cocoa to 100 percent.
“We source 100 percent of cocoa in Nigeria. We are not importing any cocoa,” Victoria Uwadoka, corporate communications and public affairs manager, Nestle Nigeria, said in July 2023, noting that 100,000 farmers were trained in the previous one year.
Similarly, Emzor Pharmaceutical is building a $23 million active pharmaceutical ingredients (APIs) plant in Sagamu, Ogun State. Upon completion, the plant is expected to churn out 400 metric tonnes of APIs annually.
“This initiative not only strengthens the antimalarial supply chain but also contributes to expanding pharmaceutical manufacturing capacity in the region,” a joint statement released in April by Kunle Faloye, head of marketing and strategy, and Uzoma Ezeoke, executive director, said.
BUA Cement is also bullish about the Nigerian market. Less than six months after commissioning a 1.5million mtpa Kalambaina Cement Plant in Sokoto State, BUA Cement announced it had completed the construction of its 3 million mtpa Obu II cement plant in Okpella, Edo State.
This brought the total capacity of BUA Obu cement operations to six million tons and moved the entire group’s installed capacity to 8 million MTPA.
“Through a strategic combination of BUA Cement’s newer, more energy efficient plants and the proximity of our factory locations to key regional markets across Nigeria, BUA Cement has in no time become the industry leader in capacity utilization as well as maintaining a strong presence and brand leadership position in regional markets where it operates,” Abdul Samad Rabiu, executive chairman of BUA Group, said.
More so, Eraskorp Nigeria Limited is setting up a $50 million Eraskon Lubricant Blending Plant with 128,000-litres-per-day production capacity in Gbarain, Yenagoa, Bayelsa State.
“As of today, overall, we are over 70 percent of work done. Our expectation is that by the fourth quarter of 2024, we will be commissioning. It’s important to state that our own factory cuts across the three business line of lubricant and chemical blending, packaging, and plastics,” Maxwell Oko, executive vice-chairman of Eraskorp Nigeria Limited, said in May 2024.
Uchenna Uzo, a professor of marketing at Lagos Business School, provided an insight into the expansion programmes of these firms.
“The firms that are expanding have already projected and invested based on the worst case scenario, given the naira devaluation. Hence when the situation got worse for other manufacturers, they were able to pull through because they got their scenario planning right,” he said.
“The expansion of these firms are very strategic,” Uzo said.
“The more companies expand, the more the market share for them and expansion opens more employment opportunities in the areas where there are expansion, but it also creates room for innovation in goods and services rendered by these firms,” he stated.
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There have been exits of several multinationals in Nigeria in the last three to five years. A report by Vincent Nwani, former director of research and advocacy at the Lagos Chamber of Commerce and Industry in Nigeria, said Nigeria lost N94 trillion to these exits.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), said it is possible that the companies that are expanding started the process before the challenging business environment in Nigeria.
“Some pharmaceutical companies who are foreign have left, but some indigenous pharmaceutical companies are scaling up their production through expansion to be able to fill the gaps created,” Yusuf said.
He noted that some manufacturers believe in the long-term resilience of the Nigerian economy, noting that there are opportunities in the economy.
“There are emerging new opportunities for export, especially to the sub region, because Nigerian products are cheaper as a result of the depreciation in exchange rate. The incentive to export has increased, which will provide opportunities for firms to expand,” Yusuf added.
The Manufacturers Association of Nigeria (MAN) said that 767 manufacturing companies shut down in 2023 and up to 365 experienced distress in the year due to economic difficulties resulting from rising inflation, interest rate problems, exchange rate volatilities etc.
The association further disclosed that capacity utilisation in the manufacturing sector had declined in 2023 and the value of inventory of unsold goods had risen to N350 billion.
