8 sub-sectors source N1.9trn worth of inputs in 2 months
Between June 18 and August 21, 2015, eight manufacturing sub-sectors obtained raw materials estimated at N1.94 trillion from local and international sources, exclusive data obtained from the Raw Materials Research and Development Council (RMRDC) show.
The eight sub-sectors were food, beverage and tobacco; domestic and industrial plastic, rubber and foam; chemical and pharmaceutical; as well as basic metal, iron, steel and fabricated metal products.
Others were electrical and electronics; pulp, paper and paper products printing and publishing; textile, wearing apparel, carpet, leather/leather footwear; as well as non-metallic mineral products sectors.
However, more raw materials were sourced from abroad than locally within the period. Out of the N1.94 trillion worth of raw materials sourced from both local and international avenues, N1.14 trillion were imported, representing 58.76 percent, while N800.10 billion were sourced locally, indicating 41.24 percent.
“The difference of N339.81 billion represents the trade imbalance between Nigeria and her foreign trading partners,” said the RMRDC in the data released to Real Sector Watch.
“The result indicated depletion in aggregate foreign exchange capacity and import dependency. Virtually all the sectors of the nation’s economy are actually import dependent,” the RMRDC further said.
Nigeria’s manufacturers source more raw materials from other economies than locally. The Manufacturers Association of Nigeria (MAN) said in its latest economic review that only 45.65 percent of local inputs were generated locally in the first half of 2015, as against 47.60 and 46.71 percent in the first and second half of 2014.
According to MAN, at the commencement of the Backward Integration Programme (BIP) in 2013, local sourcing of raw materials for the industrial sector was galvanised through various agricultural and solid minerals agenda, which succeeded in bringing local input preference to 55 percent. But MAN says since 2014, local input sourcing has been on the downward trend, hitting a new low of 46 percent currently.
The body attributed the downward in local raw materials sourcing in the first half of 2015 to tough business environment caused by general election that diverted the attention of the federal government away from the economy.
MAN added that crash in crude oil market diverted the attention of the government to naira exchange rate management without adequately mitigating the effects of frameworks employed on the various developmental programmes already running in the economy.
Nigerian manufacturers have been hard hit scarcity of foreign exchange with which to import their raw materials.
The Central Bank of Nigeria (CBN)’s foreign exchange restrictions mean that many local manufacturers have to buy foreign exchange from the parallel market for up to N340/$, as against N197-N199/$. The ban placed on 41 raw materials used by manufacturers implies that importers of these items, which are manufacturers, now struggle to produce finished products.
“I think the items for manufacturers are actually 95 in number,” said Frank Udemba Jacobs, president, MAN, at a press briefing in Lagos.
“For my sector, we source 90 percent of raw materials locally and only ten from abroad. But many manufacturers import many of their raw materials from abroad because we do not have the capacity to produce them now. That is why we want the CBN to ensure that they can get their raw materials,” Jacobs said.
ODINAKA ANUDU