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Imported Raw Materials Gulp N837bn in 11 Months

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  • Imported Raw Materials Gulp N837bn in 11 Months

Encouraged by the availability of forex, manufacturers have spent more on imported raw materials while reducing local sourcing in 2018, Anna Okon writes

Local sourcing of raw materials has dropped significantly since the country emerged from recession and manufacturers could access foreign exchange.

The Manufacturers Association of Nigeria confirmed this in its perspectives on the 2019 budget.

“The aggregate local sourcing of raw materials by the manufacturing sector dropped to about 57.87 per cent in 2018 from 63.21 per cent recorded in 2017,” the President, MAN, Mansur Ahmed, stated.

Data from the National Bureau of Statistics published in December 2018 showed that the volume of raw materials imported between January and November 2018, stood at N837.5bn.

A further breakdown of the figure showed that N284.81bn worth of raw materials were imported in the first quarter, N261.10bn in the second quarter and N291.57bn in the third quarter.

Import in the first quarter represented 1.93 per cent increase over the volume recorded in the fourth quarter of 2017, which was N279.41bn and an increase of 9.89 per cent over the figure of N259.17bn recorded in the first quarter of the same year.

The volume imported in the second quarter, however, represented a decline of 8.3 per cent over the volume imported in the first quarter and 14.2 per cent lower than the volume imported in the corresponding quarter of 2017, which was N304.43bn.

The third quarter import represented 11.67 per cent higher than the volume imported in the second quarter and 2.19 per cent higher than the volume recorded in the first quarter.

The volume of manufactured goods imported in the first quarter of 2018, the NBS said, stood at N1.19tn, a decline of 1.65 per cent over the previous quarter, which stood at N1.20tn, but an increase of 12.11 per cent over the same quarter in 2017, which was N1.061tn.

Again, 21.1 per cent of the imports came from China, 12.1 per cent from The Netherlands, Belgium 10.6 per cent, and the United States had 6.5 per cent while India had 6.3 per cent.

Following the 2016 recession, the subsequent rationing of the dollar by the Central Bank of Nigeria and the restriction of importers of 41 items from access to forex, manufacturers in Nigeria embarked on aggressive local sourcing of raw materials and backward integration.

MAN reported that following the implementation of the resource-based industrialisation policy of the Federal Government, local sourcing of raw materials had increased to 65.7 per cent in 2017 from 59.98 per cent recorded in the first half of 2016.

Also, the Backward Integration Programme created opportunities for big firms to establish local outlets for their raw material suppliers and to go into the production of the raw materials needed in their factories.

Local raw materials utilisation also increased across the sectors.

Unfortunately, the raw materials sourcing had dropped by 5.34 per cent in the third quarter of 2018, while capacity utilisation in the sector slowed to 54.6 per cent from 57.14 per cent recorded in 2017.

The Economic Analyst at MAN, Mr Ambrose Oruche, confirmed that the drop in local raw materials sourcing was because manufacturers were importing more than they were sourcing locally.

Asked if this was not a negation of the concept of local content promotion, Oruche responded that in raw materials sourcing, manufacturers were more concerned about plant specification.

He said, “The plant specification cannot be compromised because if you do that, you will waste materials and that will affect your bottom-line.

“If the plant specifies a certain formula and it is not available locally in the quantity and the quality that is prescribed, you have to import. It is not about patriotism, business owners are in business to make a profit so you cannot jettison your profit for patriotism.”

He added, “But we have a programme that will take off this year, where a link would be created between the Small and Medium Enterprises and the large corporations, to be raw materials suppliers to the large corporations.

“The SMEs will be guided to supply the quality and quantity of raw materials that the large corporations need.

“We are confident that this programme will greatly increase the local sourcing of raw materials.”

Exports of raw materials, however, decreased by 13.62 per cent in the first quarter of 2018 (N32.70bn) compared to the fourth quarter of 2017 (N37.85bn) but increased by 47.71 per cent compared to first quarter of 2017 (N22.13bn).

Raw materials exports decreased by 2.98 per cent in the second quarter of 2018 (N31.72bn) compared to the first quarter, which was N32.70bn but increased by 19.7per cent compared to the second quarter of 2017 (N26.50bn).

Manufactured goods exports in the second quarter of 2018 were N69.86bn, representing a decline of 83.9 per cent over the previous quarter (N434.37bn), and an increase of 0.9 per cent when compared to the second quarter of 2017 which was N69.26bn.

In the third quarter, raw materials exports increased by 1.63 per cent, over the volume of the second quarter, and 21.7 per cent over the volume recorded in the third quarter of 2017.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Siemens Energy Nigeria Appoints Seun Suleiman as Managing Director

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Seun Suleiman is the New Managing Director of Siemens Energy Nigeria

Mr. Seun Suleiman is the new managing director of Siemens Energy Nigeria, the company announced on Wednesday.

According to the statement released by the energy company, Suleiman will be responsible for the entire management of operations and decisions on business policies and corporate strategy.

Commenting on his appointment, Suleiman said, “It is an absolute honor to lead the business for Siemens Energy Nigeria and I look forward to delivering on the brand’s promise of excellence.

Suleiman joined Siemens Energy in 2014, bringing over 15 years’ experience and deep expertise in the private sector across Europe and West Africa.

The statement said, “He is an accomplished business strategist and success-driven leader with strong business acumen. Suleiman has also been a core member of the executive management team at Siemens Energy serving in roles as Sales Director West Africa – Service Distributed Generation Oil & Gas and Vice President Service & Digital.

“Prior to this, he also held various functional and managerial positions with ABB Ltd UK, ABBNG Nigeria, Schneider Electric Nigeria and Dresser-Rand Nigeria Ltd.

It added that Suleiman was experienced in establishing operational excellence with specific competence in the power, oil and gas sectors.

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FG Reopens Osubi Airport Warri for Daylight Operations

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FG Reopens Osubi Airport Warri for Daylight Operations

The Federal Government on Monday said the Osubi Airport in Warri has been reopened for daylight operations.

The Minister of Aviation, Hadi Siriki, disclosed this in a tweet.

The airport was closed in February 2020 over mismanagement and debt allegation involving aviation service providers and airport management.

However, Oberuakpefe Afe, a lawmaker representing Okpe/Sapeie/vaie federal constituency, recently moved a motion for the Federal Government through the ministry of aviation and relevant authorities to reopen the airport for flight operations.

On Monday, Hadi Siriki said “I have just approved the reopening of Osubi Airport Warri, for daylight operations in VFR conditions, subject to all procedures, practices and protocols, including COVID-19, strictly being observed. There will not be need for local approvals henceforth.

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

JR Firms, an agribusiness firm with headquarters in Nigeria, has announced partnership with Sanit Wing Rwanda through the acquisition of 11 per cent stake in the company.

The CEO of the company, Mr Rotimi Olawale, explained in a statement that the partnership was in furtherance of its goals to ensure food security, create decent jobs and raise the next generation of agrarian leaders in Africa.

The stake was acquired through Green Agribusiness Fund, an initiative of JR Farms designed to invest in youth-led agribusinesses across Africa.

Sanit Wing Rwanda is an agro-processing company that processes avocado oil and cosmetics that are natural, quality, affordable, reliable and viable.

The vision of the company is to become the leading producers of best quality avocado and avocado by-products in Africa by creating value across the avocado value chain.

With focus on bringing together over 20,000 professional Avocado farmers on board and planting of three million avocado trees by 2025 through contract farming, the company currently works with One Acre Fund in supply of avocado to its processing facility.

The products of the company which include avocado oil, skin care (SANTAVO), hair cream and soap are being sold locally and exported to regional market in Kenya.

With the new partnership with JR Farms- the products of the company will enjoy more access to markets focusing on Africa and the European Union by leveraging on partnerships and trade windows available.

Aside funding, the partnership comes with project support in areas of market exposure, capacity building, exposure and other thematic support to grow the business over the next four years.

JR Farms has agribusiness operations in Nigeria, Rwanda, United States and Zambia respectively.

In Nigeria, the company deals in cassava value chain processing cassava to national staple “garri” which is consumed by over 80 million Nigerians on daily basis, while in Rwanda, it works in the coffee value chain with over 4,000 coffee farmers spread across the East Central African country.

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