• Thursday, March 28, 2024
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BusinessDay

Manufacturers defy policy flip-flop to pump N4.55trn in economy in 5 years

Manufacturing sector

Members of the Manufacturers Association of Nigeria (MAN) ignored policy inconsistencies and high interest rates to invest N4.55 trillion in the economy between 2013 and 2018, data from the association say.

The investments were made in plant, machinery, land, building, assets, vehicle furniture and different kinds of equipment.

More than 70 percent of these investments went to Lagos and Ogun axes.

The data show that N552.64 billion were pumped by the manufacturers in 2018.

Manufacturers in Lagos, which includes Apapa and Ikeja industrial zones, invested N287.16 billion while those in Ogun pumped N186.47 billion into the economy.

Independent checks show that the companies that have made huge investments included Dangote Group, Flour Mills of Nigeria, Honeywell, De-United Foods, and African Industries, among others.

In 2014 alone, new investors such as Shongai Technologies Limited, Ijako in Sango-Otta, Apples and Pears Limited, Ceplas Farms Limited, Greenlife Bliss Healthcare Limited, and Sumo Steel Limited, berthed Ogun.

Procter &Gamble (P&G) set up a diaper plant in Agbara within that year, but this shut down in 2018 owing to high production and running costs.

Fidson Healthcare set up a N9 billion drug manufacturing plant in Ogun in 2016.

Less than six months after commissioning its 1.5million metric tonnes per annum (mtpa) Kalambaina Cement Plant in Sokoto State, BUA has Cement completed its newest Obu plant in Edo State, which has a capacity to churn out three million mtpa of cement annually.

This brings the total capacity of BUA Obu cement operations to six million tonnes and move the entire group’s installed capacity to eight million mtpa.

Beloxxi, on February 9, 2018, launched the second and third phases of its biscuit lines in Agbara, Ogun State. Beloxxi Industries is one of the largest biscuit makers in Nigeria with a capacity to produce 40,000 metric tons (MT) per annum, amounting to 28 million cartons.

The biscuit firm in 2016 closed an $80 million deal with a consortium of 8 Miles (London), African Capital Alliance (Nigeria) and KFW DEG Bank (Germany). The investment is raising the company’s capacity from 40,000MT to 80,000MT while the staff strength is over 3,700.

Similarly, Nestlé also pumped N4.1 billion into its Milo Ready-to-Drink (RTD) beverage plant in Agbara last year. The plant manufactures Nestlé Milo Ready-To-Drink (RTD) beverage in 180ml cartons and has a yearly production capacity above 8,000 tonnes.

“This new production plant is a true reflection of how Nestlé creates shared value for all, by providing good jobs, sourcing 80 per cent of our inputs with local farmers and investing in the development of rural communities,” said Mauricio Alarcon, managing director and CEO of Nestlé Nigeria.

In the last four years, PZ Wilmar has pumped almost $150 million into oil palm plantations and palm oil mills, Santosh Pillai, managing director of PZ Wilmar, told BusinessDay.

“We are determined to continue with these investments and looking for opportunities to expand our plantations in the state,” he said.

Presco has so far invested N75 billion into the palm oil industry, Felix Nwabuko, managing director of Presco, said, adding that the company also plans a capital expenditure investment of N46 billion over a five-year period (2018-2022).

Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, is 13.5 percent. Deposit money banks lend as high as 30 to 35 percent, according to BusinessDay checks. Manufacturers say they were charged over 20 percent in 2018.

Policy inconsistencies have hurdled manufacturers, with the steel sector being one of the hardest hit. Apart from the suspended Export Expansion Grant (EEG), which is yet to be fully restored since August 2013, a particular policy on cold-rolled steel was suspended abruptly by the present administration. Lack of policy relating to importation of textiles has killed almost all the firms in the sub-sector. In many manufacturing sub-sectors, there are policy laxities or silence, players in the sector say.

 

ODINAKA ANUDU