Dearth of raw materials drops local input content to 48%

The manufacturing sector of Nigeria’s economy appears to be heading for anomie as dearth of local raw materials to drive its operations to optimal production capacity is creating some production hiccups. Latest sectoral input con- tent data show that local input preference, which represents the level of domestic raw material sourcing, dipped to 47.6 percent in the first half of 2014. Data released to BusinessDay by the Manufacturers Association of Nigeria (MAN) show that this figures are lower than the 58.58 percent recorded in the second half of 2013 and 50.93 percent reported in the first quarter of the same year. This implies that 10 broad manufacturing sub- sectors relied more on foreign raw materials within the period under review, as imported content reached 52.4 percent.
Manufacturers have attributed this reliance on imported raw materials to poor quality and insufficiency of available local inputs. Keith Richards, chairman, Promasidor Nigeria, said local manufacturers had had to take the pains to import raw materials be- cause of the persistent problem of shortages in terms of quantity and quality. “Who would go to the cost and trouble of importing, if local raw materials were available at the required quality and quantity?” Richards asked, in his article in BusinessDay. It was his responding to the CBN’s restriction of raw material importers to the inter-bank market, rather than the Retail Dutch Auction System. In an exclusive inter- view with BusinessDay, Joe Hudson, immediate past chief executive officer (CEO), Lafarge WAPCO, said manufacturers have had to import locally available raw materials, because some of them were not yet fully developed to meet international standards. He gave an example of gypsum, which is a key raw material in cement making, as a product that is still being imported despite its availability locally. “Nigeria needs to pay closer attention to the development of gypsum. No manufacturer will be glad to import any raw material if it is available in adequate quantity and quality,” Hudson said. Patrick Oaikhinan, CEO, Epina Technologies Limited and professor of ceramics engineering, said that apart from quality and quantity, skills gap and lack of investor interest had led the country into losing foreign exchange and jobs that could accrue from exploitation of local raw materials. “Take ceramics as an ex- ample, what you have is lack of significant number of professionals with appropriate skills and expertise to exploit feldspar, quartz, silica and other minerals. “What I think we need now are the enabling laws to encourage investors. We also need institutions to provide capital for prospective start-ups in local ceramics production. This is over $400 million market, but we lose this and about 1.2 million jobs to other countries,” he said. Local content in the food, beverage and tobacco industry, as contained in the data within the period under review was 62.4 percent as against 79.34 percent in the second half of 2013 and 68.99 percent is reported in the first half of 2013. Textile, apparel and footwear makers had only 45.8 percent local content within the period as against 60.79 in the second half of 2013 and 52.86 percent in the first half of the same year. Similarly, chemical and pharmaceutical players sourced only 46.3 percent raw materials domestically, lower than 61.18 percent in the second half of 2013 and 53.2 percent reported in the first half of the year.