Economic reality forces manufacturers to embrace resource-based industrialisation

Nigeria’s economic realities are forcing local manufacturers to shift focus to resource-based industrialisation, defined as the utilisation of naturally-given resources to drive industries.
“We are today serious with resource-based industrialisation. We are beginning to develop local raw materials to utilise them in our factories. But some of them may not immediately meet our standards and could need further investment,” said Frank Udemba Jacobs, president of Manufacturers Association of Nigeria (MAN), said in Lagos.
Jacobs recently said at MAN’s annual general meeting that challenges of foreign exchange encountered by manufacturers in 2016 would be solved once firms tenaciously drove the resource-based industrialisation programme.
Manufacturers struggled in 2016 as dollar needed to import inputs and packaging materials became very scarce, owing to price crash in the crude oil market which provides 90 percent of Nigeria’s foreign exchange earnings. There were massive job losses, caused by low capacity utilisation of firms and factory closures.
Despite rise of oil price to close to $60, Nigerian economy is still vulnerable as militancy or oil price vicissitudes could set in. Manufacturers are hedging against this by looking at local raw materials.
Data from MAN show that local raw material utilisation picked up in the second half of 2016, rising to 59.98 percent as against 51.88 percent recorded in the corresponding half of 2015.
Rather than continue to import raw sugar from Brazil, which gulps huge FX, Dangote Sugar is developing sugar plantations in many states, signing a $700 million deal with Nasarawa State government for the establishment of sugar plantations in the state.
In August, Dangote Group penned another $450 million deal with Niger State to develop sugar plantations and fully integrated sugar estate.
Flour Mills of Nigeria, through its sugar subsidiary known as Golden Sugar Estate Limited, is investing $300 million in sugar plantations at Sunti, Niger State.
Flour Mills subsidiary, Agri Palm Limited, has plantations at Ugbogui and Iguiye, near Benin City in Edo State, and has expanded to 4,000 hectares (ha) of established palm in the first phase of local palm oil production. This is meant to provide raw materials for the group’s upstream oil refining operations in Ibadan.
Olam International’s $150 million integrated feed mill plant in Kaduna State, which has just been completed, will serve the group’s poultry farm.
The plant by the Singapore-based Olam is the largest integrated feed mill in the country, with capacity to employ 8,000 Nigerians directly and indirectly, including 200 veterinary doctors and a storage facility of 50,000 metric tonnes estimated to sell 72,000,000 eggs and 52,600,000 day old chicks.
Rather than continue to import billets for the production of steel, Standard Metallurgical Company Limited (SMC) is building a billet mill to produce standard wire rods in Nigeria.
“This will be the first factory to produce billet suitable for producing standard wire rods in Nigeria. All wire rods produced today in Nigeria are being made from imported billets, but in three months from now, we are going to start producing billets in Nigeria,” Mohammed Saade, managing director, SMC, told BusinessDay.
FrieslandCampina WAMCO, producer of Peak Milk and Crown Milk, has launched its fifth milk plant in Oyo State. The five milk plants process milk supplied by Fulani herdsmen, reducing importation of raw milk which stands at about 95 percent of the industry.

In 2015, the dairy maker engaged and trained over 920 women and 726 men Fulani milk producers and potential small-holder dairy farmers in Oyo State.
“Our company has taken a strategic and comprehensive approach to developing the Diary Development Programme (DDP), focusing on key projects, programme content and enabling facilities,” said Ben Langat, managing director of FrieslandCampina WAMCO, at the commissioning of the firm’s 5th milk plant at Saki, Oyo State.
“But these investments must be supported by policies and socio-economic infrastructures to realise a robust dairy farming sector that can serve over 180 million Nigerians,” Langat said.

ODINAKA ANUDU