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Imported Raw Materials Gulp N837bn in 11 Months



  • 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, with over a decade experience in the global financial markets.

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Company News

Guinness Nigeria Returns to Profitability For the Quarter Ended September 2021



Guinness - Investors King

The financial results of Guinness Nigeria for the quarter ended September 2021 show a return to profitability for the Beverages Giant during the period compared to a loss made in the prior period.

This return to profitability was driven by a huge jump in revenue from N30 Billion in the same quarter of 2020 to N47.4 Billion in 2021, although the cost of sales also increased from N23 Billion 2020 to N32.2 Billion filed in 2021 thereby giving an increase in gross profit from N7 Billion in 2020 to N15.2 Billion in the quarter under review

Guinness Nigeria increased its marketing and distribution expenses during the period, marketing and distribution expenses rose from N4.6 Billion in 2020 to N6.5 Billion in 2021. This led to a huge jump in Operating profit for the period, operating profit jumped from just N586 Million in 2020 to N6.5 Billion in 2021. This culminated in profit for the period rising to N4 Billion from a loss of N841 Million posted in 2020.

The Chairman, Board of Directors of Guinness Nigeria Plc, Dr. Omobola Johnson maintained that the Company will keep up with its growth strategy to continue on its path of profitability. He said “We are confident that our strategy is comprehensive and robust. We are keen on making the right investments that will drive growth across the board and ensure our competitiveness, despite the challenging business environment. We thank our shareholders for their confidence in the Board and Management of our dear company and we are committed to ensuring that we sustain the momentum.”

Guinness Nigeria is the Nigerian subsidiary of the Irish brand Guinness. Its principal activities continue to be brewing, packaging, marketing, and selling of Guinness Foreign Extra Stout, Guinness Smooth, Malta Guinness, Guinness Gold, Harp Lager, Smirnoff Ice, Satzenbrau Lager, Dubic Malt, Snapp, Orijin Spirit Mixed Drink, Orijin Bitters, Smirnoff Ice Double Black with Guarana, Orijin Zero, and Orijin Herbal Gin, Baileys Delight, Gordons Moringa among others.

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FBNHoldings Renews Adesola Adeduntan Tenure, Appoints Nnamdi Okonkwo as GMD



Dr. Adesola Adeduntan - FirstBank CEO - Investors King

The Board of FBN Holdings Plc (FBNHoldings) has appointed the immediate past Managing Director of Fidelity Bank Plc., Mr. Nnamdi Okonkwo as its Group Managing Director.

Okonkwo’s appointment takes effect from January 1, 2022.

His appointment followed the retirement of Mr. U.K. Eke, who has completed his two-term tenure.

Uke, according to the board, tendered his Notice of Retirement on August 10, 2021

The Board further announced the renewal of the appointments of Dr. Adesola Adeduntan and Mr. Gbenga Shobo as the Managing Director and Deputy Managing Director of FirstBank respectively, for another term.

In the same vein, the Board announced the renewal of appointments of Mr. Kayode Akinkugbe and Mr. Taiwo Okeowo as the Managing Director and Deputy Managing Director of FBNQuest Merchant Bank Limited respectively, for another term.

“Uke’s retirement takes effect at the end of the current Financial Year on December 31, 2021. Mr. Eke’s retirement follows from a 35 years’ career in financial services, strategy, auditing, consulting, taxation, process reengineering and capital market operations.

“FBNHoldings Board has also announced that Eke will be succeeded by Mr. Nnamdi Okonkwo, a focused and result-oriented top banker, who will assume office as Group Managing Director, FBN Holdings Plc effective January 1, 2022,” Seye Kosoko, the Company Secretary said

Okonkwo, the immediate past Chief Executive Officer of Fidelity Bank Plc, brings to bear on the Board of FBNHoldings more than 30 years unbroken banking career spanning local and international experience. He has a wealth of experience in transformational leadership, business strategy development and visioning, innovative corporate governance and risk management.

He has led the transformation of banks, with the most recent being Fidelity Bank, where he led the management team for seven years to achieve remarkable results culminating in tripling profit and shareholder value.

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Are There Better Ways to Help Consumers Tackle Social and Environmental Problems?



Consumers - Investors King

Techniques used by online microfinance platforms to spur user involvement could be useful in helping organisations to persuade people to behave in ways that benefit both society and environment.

Microfinance platforms have popularised the idea that ordinary people can become bankers to the poor. Communities of lenders get together every day to crowdfund microloans to disadvantaged micro-entrepreneurs by investing small sums of around only 25 dollars.

A new study digs into the universe of these microloan platforms to investigate how they manage to attract investors and perpetuate their enthusiasm for responding to social problems such as poverty.

Researchers from the Universities of Birmingham and Southern Denmark have identified two major ways through which platforms maintain and potentiate lending. Their findings are published in the Journal of Consumer Research.

Firstly, the platforms assemble resources that function as an ‘apparatus of affirmation’ – providing first-hand evidence of impact that help consumers imagine the benefits of their actions, thereby creating a sense of empowerment.

Secondly, the platforms translate complex and distant social problems, such as poverty, into personal encounters between lenders and borrowers – creating a sense of connection and familiarity via photographs, stories and loan updates. This set of techniques is theorised as the ‘apparatus of relatability’.

Co-author Dr Pilar Rojas-Gaviria, Lecturer in Marketing at the University of Birmingham, comments: “Organisations such as microlending platforms, which strive to mobilise responsible consumers, face two key challenges – overcoming the powerlessness felt when facing daunting problems, and removing a sense of disconnection from ‘faraway’ problems.

“Supplementing the power of ideas and knowledge with personal stories that inspire hope and aspiration, affinity and connection are powerful techniques that could be useful in inspiring consumers to more actively participate in efforts to tackle social and environmental problems, such as climate change.”

Through storytelling, imagery, platform design and communication, the researchers note that online microlending platforms nurture a feeling that genuine change is possible through affordable actions. They also develop a sense of affinity and empathy among potential investors with aspiring micro-entrepreneurs, particularly those from Low-and Middle-income Countries (LMIC).

For example, the platforms publish loan requests to showcase individual borrowers with first names, photographs, and short biographies. This personalised strategy effectively frames microlending as a virtual encounter with a borrower and their story of micro-entrepreneurship. Celebrities, such as actor Natalie Portman, have over the past years helped the microfinance industry to promote microloans as an act of hope that empowers resourceful poor in their efforts to escape poverty.

Co-author Domen Bajde, from the University of Southern Denmark comments: “The advent of online microlending has expanded the pool of potential investors to anyone with internet access and $25 to spare.

“After learning that lenders were more interested in ’emotional returns’ rather than financial profit from their loans, platforms began to dramatise microlending as an act of aspirational hope and affinity toward the entrepreneurial poor.”

The research is also significant for charitable giving, noting that donors are more likely to contribute when they see their donations as a way of empowering the disadvantaged and when donations are experienced as impactful investments.

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