PZ Cussons pumps $300m in backward integration projects
Nigeria’s agro-industrial giant and Fast-Moving Consumer Goods (FMCG) Company PZ Cussons Nigeria Plc, says it has so far invested $300 million in backward integration projects across the country.
“We have invested something close to the region of $300 million,” Christos Giannopoulos, managing director/CEO, PZ Cussons Nigeria Plc, said at an interview on the sideline of an event organised by the Nigerian-British Chamber of Commerce (NBCC) weekend in Lagos.
Backward integration occurs when a company buys its suppliers or internally produces segments of its supply chain.
PZ Wilmar, which is a subsidiary of PZ Cussons, bought over the 5,500-hectares, and previously defunct Calaro Oil Palm Estate, formerly owned by Cross River government. It also acquired the 12,805-hectare Kwa Falls oil palm plantation, formerly owned by Obasanjo Farms, including the 5,450-hectare Ibiae Oil Palm Estate and another 8,000 hectares estate in Biase. Overall the company owns over 50,000 hectares of oil palm plantation in the state.
“By next year (2017), our plantations are going to start fruiting,” he said, while speaking on ‘Manufacturing Sector As a Catalyst for Economic Growth in Nigeria’.
According to him, the company sources more local raw materials now, stressing that PZ is looking first at satisfying the huge local demand before exporting.
Official figures in the oil palm sector shows that the country is currently producing about one million metric tonnes (MT) per annum, with local consumption estimated at 2.7 million MT and an estimated demand-supply gap of about 1.7 million metric tonnes yearly. This gap poses difficulties for the manufacturing sector that depends largely on crude palm oil (CPO) as a major source of raw material.
The oil palm belt covers twenty-four states, including all nine states of the Niger Delta and 80 percent of production comes from dispersed smallholders who harvest semi-wild plants and use manual processing techniques.
About 90 percent of palm oil is consumed by food industry and the remaining 10 percent is used by the non-food industry. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics thrive on palm oil.
The CEO said the company is willing to produce more for Nigeria, stressing that manufacturers need stability, whether it is in foreign exchange, policies or concessions.
He said government should ensure that there is no preferential treatment for any company, stressing that incentives should be given to players on sectoral basis.
According to him, most of PZ’s inputs are sourced locally, pointing out that the FMCG firm now sources calcium carbonate, which is a key input, from the northern part of Nigeria. He regretted that some of its inputs are yet to be found locally.
“If today, after my plantations are fully grown, I will reduce my import of inputs by 25 percent. When a petrochemical refinery like Kaduna Refinery comes on board, I will reduce my imports by another 25 percent,” he stated.
On foreign exchange crisis, the CEO confirmed that PZ is now getting more from the market, stating that the company recently entered into an agreement with Ministry of Agriculture targeted at transferring knowledge from Asia, in order to develop high yielding palm oil seeds in Nigeria.
On his part, Dapo Adelegan, president, NBCC, said notwithstanding the current state of the economy, Nigerian Manufacturers are upbeat and have a positive outlook on the economy over the next year, with 76 percent expecting economic conditions to improve.
“In the modern world, manufacturing sector is regarded as a basis for determining a nation’s economic efficiency. However, after the discovery of crude oil in Nigeria in the late 1950s, the nation shifted from its pre-eminent developing industrial production base and placed heavy weight on crude oil production. Not only has this jeopardized its economic activities, it also aggravated the nation’s level of unemployment,” Adelegan said.
ODINAKA ANUDU