Plastic/polybag sector stronger, fuelled by 26% export surge

Plastics, polybags and plastic articles have shown stronger growth in the last 12 months as exports to various markets in the Economic Community of West African States (ECOWAS) by the end of 2013 reached $27.45 million, representing 26.15 percent upward trend from $21.76 million posted in 2012, information from the Nigerian Export Promotion Council (NEPC), compiled by Cobalt International Services Limited, has shown.

The NEPC identified the direction of the plastics and polybags (as well as a number of other non-oil exports such as tobacco, biscuits, milk and insecticides, among others) as Ghana, Niger Republic, Cote D’Ivoire, Togo, Benin Republic, and Burkina Faso, among others.

“The increase in the number of products being exported and countries of destinations are strong indications of export diversification,’’ said Olusegun Awolowo, CEO, NEPC, recently.

Analysts say the exponential growth in export of plastics, polybags and plastic articles reflects the upsurge in the industry regarding capacity utilisation, investments, local input content and inventory, among others.

A survey by the Manufacturers Association of Nigeria (MAN) shows that capacity utilisation in the domestic/industrial plastics and rubber rose to 59.5 percent in the second half of 2013 (H2 2013) as against 51.7 percent obtained in the first half of the same year (H1 2013) and 51.1 percent posted in the second half of 2012 (H2 2012).

Similarly, the sector is increasingly sourcing its raw materials locally as local input content in H2 2013 surged to 58.55 percent as opposed to 50.91 percent in H1 2013 and 44.24 percent in H2 2012.

Again, inventory, which represents stock of manufactured products ready for sale, fell from N4.54 billion in H2 2012 to N1.12 billion in H1 2013, and then further to N447.70 million in H2 2013.

The sector has also recorded new investments in the second half of 2013. Investments rose from N39.7 billion recorded in H1 2013 to N125.27 billion in H2 2013.

But manufacturers say this growing sector is still bogged down by the unresolved five percent levy on polymers of polythene and polypropylene products, adding that series of meetings and efforts made with the Federal Government seem not to have have yielded positive results.

Players add that the government’s organisation of a workshop to phase out non-biodegradable plastics should be extensively discussed and agreed with plastic raw materials producers and processors in order to achieve set objectives.

“Much of what we want is for the government to remove 5 percent levy on polypropylene and polyethylene,’’ said a plastic maker, who spoke to Real Sector Watch on the condition of anonymity.

“Then there is the issue of limited local supply of high density petrochemical products that can help in production. You can see the state of the power sector and influx of substandard products,’’ he said.

Odinaka Anudu