Nigerian manufacturers are facing challenges in sourcing raw materials locally, despite that domestic input sourcing is 56.6 percent, according to data from the Manufacturers Association of Nigeria (MAN).
“Right now, there is not much local material sourced locally— even in oranges,” Peter Njonjo, president of West Africa business unit of Coca-Cola, told BusinessDay after his firm acquired Chi Limited.
“This is down to the fact that we don’t have large-scale agricultural projects that can competitively produce some of them here,” he said of Chi’s input sourcing, in an exclusive interview.
He explained that on the dairy side, the situation was not different.
“It is a lot more longer term, because you need to have the animal with the right yield in terms of milk, which can survive in the Nigerian environment.
“So, there are many challenges that we will have to overcome. But one of the things that we have to do is to work with government and private sector in some of these projects. We also have development partners that we can work with to finance some of these projects,” he added.
FrieslandCampina WAMCO sources some of its raw milk from herders in Oyo State, South-West Nigeria, but this involves huge financial investment, BusinessDay understands.
Even at that, only a small percentage of raw milk is sourced from the company’s five milking plants in Oyo State.
Chi Limited uses oranges, pine apples, flour, raw milk, and cocoa, among others, as inputs, but most of them are imported.
Utilisation of local raw materials by manufacturers stood at 56.6 percent in the first half of 2018, down by 4.12 and 9.1 percentage points from 60.72 percent of the same half of 2017 and 65.7 percent of the prece0ding half respectively, MAN says.
Millers such as Flour Mills of Nigeria, Honeywell and Chagoury are willing to add 10 percent of cassava flour to their wheat, but issues around quality, standards and availability of locally available crops are hurting the plan. The Federal Government had made a policy on High Quality Cassava in 2013, encouraging millers to add five to 10 percent of cassava to their wheat, but the policy is not practicable owing to quality issues.
Olalekan Saliu, secretary, Flour Milling Association of Nigeria, told BusinessDay that much of the cassava flour in the market was not of industrial standards, but that millers are still buying up the industrial grade cassava flours from big processors like Thai Farms.
“Much of the cassava flour produced by the small- and medium-sized processors is of low quality and does not meet industrial requirements, but we are still buying what is available from processors with industrial grade cassava flour,” Saliu said.
The situation also extends to the steel sector, where even scraps of sheets are not always available. More so, ores are equally scarce.
Jude Abalaka, managing director of Tranos Contracting Limited, a manufacturing and engineering solutions provider, said that quality and availability were two key issues that must be worked on to put Nigeria on world’s manufacturing map.
“There are some raw materials that cannot be found yet,” he said. “For example, common types of stainless steel are 304 and 316. Getting to the market, the seller may not know that steel has grades. So, after telling him what you want, he will offer something else.”
He said that quality was interwoven with availability.
Latest data from the Manufacturers Association of Nigeria (MAN) show that local sourcing declined from 60.72 percent in the first half of 2017 to 56.6 percent in the same period of 2018.
MAN attributes the fall to two factors.
“This may be adduced to the general sluggishness of the economy and a renewed ability for importation of raw-materials considering the tranquillity in the foreign exchange market.”
ODINAKA ANUDU
