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Raw Materials’ Imports Gulp N19.5tn in Seven Years

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  • Raw Materials’ Imports Gulp N19.5tn in Seven Years

Although Nigeria and many of the African countries are admired for being commodity markets, a study of importation in the country shows that Nigeria has spent as much as N19.5tn on the importation of primary raw materials into the country in the past seven years.

Statistics obtained from the Raw Materials Research and Development Council showed that between 2010 and 2015, Nigeria spent N13.6tn on the importation of raw materials that could be replaced with other materials from local sources if some more rigorous work could be put into the country’s import substitution strategy.

By 2016, the country spent another N5.89tn on the importation of similar raw materials; thus, bringing the total sum spent on the importation of primary raw materials into the country within the seven-year period to N19.5tn. The imports in 2016 included some finished products.

This means that, on the average, the country splashed N2.79tn every year in the past seven years.

In broad categorisation, according to the RMRDC, the importation of cereals into the country constituted the highest source of capital flight in the importation of primary raw materials into the country.

For the first six years (2010 to 2015), cereals worth N2.49tn were imported into the country. This was followed by the importation of plastics, which gulped N1.88tn. Articles of iron and steel used as raw materials consumed N1.59tn.

Other categories of raw materials imports that hit the N1tn mark within the first six-year period were fish and crustacean, mollusc and other aquatic invertebrate, which gulped N1.28tn and rubber, which consumed N1.04tn.

Iron and steel raw materials consumed N949.38bn; sugar and sugar confectionery gulped N897.23bn; dairy consumed N692.37bn; while paper gulped N664.91bn.

Organic chemicals gulped N637.79bn; aluminium and articles of aluminium gulped N470.76bn; pharmaceutical products consumed N371.38bn; inorganic chemicals, N305.73bn; fertilisers, N237.13bn; and tomatoes, N102.69bn.

In 2016 alone, the importation of mineral fuels, oils, waxes and bituminous sub gulped N1.12tn; the importation of cereals gulped a total of N301.08bn; while the importation of fish and crustaceans gulped N206.43bn.

Other imports that consumed considerable amount of money were given as paper, paperboard and articles of paper wood, N129.74bn; miscellaneous chemical products, N124.08bn; plastics, rubber and articles of plastic, N236.47bn; dairy, eggs, and honey, N134.31bn; and animal or vegetable fats, oil and waxes, N62.54bn.

The Director-General, Raw Materials Research and Development Council, Dr. Hussaini Ibrahim, said the high level of imports of raw materials was not good for the economy, adding that government’s intervention was necessary to ensure domestic production of raw materials, which would reflect on declining levels of imports over time.

He said, “Efforts and resources could be properly channelled towards domestic production of the imported items by harnessing domestic potential for successful adoption of appropriate standards, conformity assessment and metrology parameters within the confines of business and societal concerns.

“Given dwindling oil revenue needed for national development, Nigeria’s ambition is to look inwards and commence domestic production of essential raw materials and products, especially in the areas where we have potential to source within the country.”

Similarly, the Minister of Science and Technology, Dr. Ogbonnaya Onu, said any economy not diversified and heavily dependent on the import of raw materials would find it difficult to confront the challenges of the growing shifts in global production and trade patterns.

According to the minister, Nigeria needs to begin to produce what it needs not only in the area of raw materials but also to fully prepare for a post-oil economy.

He said, “To enable us to achieve this, Nigeria should put in place measures that will enable her to emerge as a nation that can produce what she needs and export the surplus to other parts of the world.

“This will strengthen our foreign reserves and boost foreign trade with its multiplier benefits to our national economy. This is the only reasonable way to go. Indeed, we do not even have a choice if we must be the great nation, which we deserve.”

Onu added, “We have put together a novel National Strategy for Promoting Competitiveness in Raw Materials and Products Development in Nigeria. It is intended to confront and defeat the challenges posed by growing shifts in global production and trade patterns. This will help Nigeria conserve her scarce foreign exchange and stimulate global competitiveness that is derived from a resilient domestic capacity in a diversified economy for the good of all.”

The minister said it was in order to achieve this that the government had approved new guidelines for project and contract execution in science, design, engineering and technology in order to infuse local technology.

According to him, the guidelines are designed to drastically reduce capital flight, promote local capacity, strengthen local manpower development, encourage indigenous technology capacity, enhance national self-reliance and restore national pride.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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