New investments show manufacturers confident of Nigerian economy

A number of new investments in the manufacturing sector indicate that real sector players are confident of the Nigerian economy despite age-old challenges that have refused to go.

This year alone, new factories and production lines have opened, and many manufacturers are entering into new markets.

Age-old problems such as high energy spend, poor infrastructure, low patronage, smuggling and funding gap are still issues dogging the manufacturing sector, but these have not deterred firms from making new investments. Economic confidence measures the degree of optimism by consumers, households or firms in the economy. Economists say the more individuals, households and firms are willing to spend, the more confidence they have in the economy, and vice versa.

Nigeria’s President Muhammadu Buhari will tomorrow inaugurate the $250million state-of-the-art International Breweries in Ogun State, seen as biggest in West Africa.

About 90 per cent of the company’s raw materials are expected to be sourced locally, while 300 people have already been engaged.

BUA Group last month commissioned a 1.5 million metric tonnes Kalambaina cement plant in Sokoto State, which cost the firm $350 million to build.

The ultramodern cement plant has a 32 megawatts multi-fuel captive power plant and a coal mill, blessed with huge limestone deposits.

BUA is also building a $1 billion Obu Cement Complex in Okpella, Edo State.By the time the Okpella plant is completed by end of the year, BUA’s total production capacity will hit eight million MT and would give 35 percent of the entire volumes produced in Nigeria.

Abdul Samad Rabiu, chairman and CEO of BUA Group, said the new plant would be generating more power than is currently generated by the entire Sokoto State.

Beloxxi, on February 9 this year 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 a $80 million deal with a consortium of 8 Miles (London), African Capital Alliance (Nigeria) and KFW DEG Bank (Germany). The investment is set to raise the company’s capacity from 40,000MT to 80,000MT while the staff strength is over 3,700.

Obi Ezeude,CEO of Beloxxi Industries, said during the commissioning of the lines by Nigeria’s vice president Yemi Osinbajo that the investments were demonstrations that the firm had confidence in Nigeria and Ogun State.

On the same day, a N4.1 billion Nestle Milo Ready-to-Drink (RTD) beverage plant was also commissioned by Osinbajo in Agbara. 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 March, Dangote Group inaugurated a multi-billion Naira rice processing mill in Hadin, Jigawa state.

The mill has the capacity to process 16 metric tons of paddy rice per hour as well as N14 billion worth of rice annually directly from the famers in Jigawa at market rate.

More so, a new 30,000 metric tonnes per annum cocoa processing plant in Ikom, Cross River State, is over 60 percent completed and may be commissioned in December, according to BusinessDay checks.

“This is the first cocoa processing plant that will process cocoa beans to chocolate,” Ben Ayade, Cross River State governor, said last month.

Nigerian manufacturers face high energy as they self-generate most of their power needs. Annual self-generating capacity in the manufacturing sector is 13,223 megawatts, according to a survey conducted by Adeola Adenikinju, professor of economics at University of Ibadan, funded by the European Union and German government.

Expenditure on alternative energy in the sector totalled N117.38 billion in 2017 and N129.95 billion in 2016, the Manufacturers Association of Nigeria (MAN) said.

But for the new Central Bank N10 billion per project financing unveiled last Thursday, manufacturers’ access to finance has been limited, with most of the available funds in double-digit.

Absence of a strong infrastructure base is also a major challenge as bad good roads, railway absence connecting cities, poor technology penetration and low broadband are big issues.

ODINAKA ANUDU