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MANUFACTURING: Backward integration projects boost local content by 53%— MAN

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By Franklin Alli

MANUFACTURERS Association of Nigeria (MAN) has disclosed that investments in backward integration projects have boosted local content by 53.17 per cent. Investigation by Vanguard showed that Nigerian Breweries Plc, has been procuring 99 per cent of its packaging materials from local suppliers. The company also procured 60 per cent of its cassava starch and 100 per cent of sorghum from indigenous suppliers.

It was learned that Friesland Campina Wamco Plc, also sources 40,000 litres of raw milk locally from dairy farmers in Oyo State. Other manufacturers, including Nestle, PZ Wilmar; Dangote Group, Flour Mills of Nigeria, De-United Food, Chi Limited, Presco Oil, Okomu Oil, and BUA Group are also noted to have shifted drastically to local inputs for their products.

Responding to Vanguard’s enquiry on the extent of backward integration projects in the real sector, President of MAN, Dr. Frank Jacobs, stated: “MAN has gauged the performance of local raw-materials utilisation in the sector over the period 2014-2016, and the outcome of the survey showed that local sourcing of raw-material increased to 53.17 per cent in 2016 as against 48.75 per cent of 2015 and 47.18 per cent of 2014. The increase has been the highest since 2013 when it was 54.73 per cent.

“The beauty of increased investments in backward integration projects by manufacturers is that they would, in the short and long run have positive trickle down effects on foreign exchange (FX) conservation, FX earnings through export proceeds, the demand for US dollars, value of naira, employment and wealth generation, etc.

“No doubt, local raw-materials development is critical to sustainable growth of the economy and the manufacturing sector. The short-run effect is already being felt. Manufacturers are now able to source more raw-materials locally thereby conserving FX for importation of other inputs that are not locally available at the moment. If the development of local raw-materials is continuously improved upon through appropriate policy supports especially by the government, it would provide sustainable pathways for Nigeria’s industrialization on the long run.”

Earlier, Mrs. Oluyemisi Iranloye, Managing Director/ Chief Executive Officer, Psaltry International Company Limited, whose company produces cassava starch for several industries, noted that the impact of local sourcing of raw materials on the economy is huge. She stated: “You could imagine the amount of dollars only our company is saving Nigeria in import substitutions, it’s quite huge – $4 million in 2016.”

“When the price of Dollars went up, there was a stampede of customers’ demand for our product. In fact, those who were not even buying our product before and who were importing and could not import anymore. Today, we have big clients- NB Plc, Nestle, and Yale Foods. Unilever is about to come in and May & Baker and some packaging companies.”

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