Manufacturers leverage value-chains to check raw materials import
Acknowledging the lack of sustainability involved in the importation of raw materials for local production, manufacturers have stated that measures are under way to leverage value-chains among research institutes and operators to improve access to raw materials locally.
According to the President of the Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, operators are leveraging relationships with large and medium size corporations to retool and get local alternatives of raw materials that can aid production, reduce cost and time of procurement.
By doing that, local operators will reduce dependence on importation of raw materials for local production as well as deepen access to plants and machineries necessary for value addition.
Jacobs in chat with The Guardian noted that efforts are ongoing between operators in the private and public sectors opportunity to appraise developments in manufacturing and industry to jointly propose quick-win solutions that will help Nigeria grow its manufacturing sector.
“At present, we are working with some tertiary institutions, Chemical Society of Nigeria, research institutes and on raw materials production. We have signed MoU with them in that regards. We have also preached to our members to adopt resource-based industrialisation rather than depending on imports. Most of them are looking inwards.
“We believe that importing raw materials is not a sustainable way of industrial revolution. We have abundant resources in this country that cannot be processed. We are working to achieve that. Value-chains are being developed between small and large scale industries to ensure that needed raw materials are produced. Government’s backward integration has also helped to improve local sourcing”, he added.
The Central Bank of Nigeria had stated that the manufacturing PMI rose to 54.1 per cent in July, up from 52.9 in June, while the non-manufacturing PMI also rose to 54.4 per cent from 54.2 per cent in June.
With the apex bank sustaining its foreign exchange intervention in the real sector for importation of key raw materials, the manufacturing sector’s raw materials inventory index grew for the third consecutive month to close at 52.3 points.
However, the Director-General, Raw Materials Research and Development Council, Dr. Hussaini Ibrahim, noted in a report that 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.
Statistics 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.
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