Agro-industrial cluster model to increase productivity, employment

In light of the present downturn in Nigeria’s economy, schemes that can put jobs in the hand of people and reduce rising unemployment are being sought. Closely related is the model to employ the agro-industrial cluster to drive new investments, a catalyst of some sort in boosting production.

The agro-industrial cluster model is to jumpstart micro, small and medium scale enterprises to produce and market snacks and other food products. The catch is to latch on available local agricultural produce, depending on the crop of local advantage and consumer preference.

According to Mr. Duro Kuteyi, Managing Director, Spectra Industries Limited, a food processing outfit in Agege, Lagos, members of the cluster are able to use machines and other equipment commonly as they make products based on the member’s formula. Normally, the snacks come in packs of 240gram containers and 50gram sachets.

This kind of business model creates economies of scale, and allows for better information sharing and synergies between businesses, he submits.

According to Kuteyi, the cluster investment is a model ready to roll out for commercial business.

“We have this as a model, where we can start production of snacks like plantain chips, which is a first generation snacks, There is also the secondary one, in which there is extrusion, frying and yet another is that in which you extrude, dry and fry later, the tertiary type.”

The more you move from one snack stage to another machines and investment increase to give a better product and more value to the consumer. At this stage, it is not easily discerned whether the product is fried or baked, a quality of good terms.

Estimating the produce quantity for first generation snack like plantain or sweet potato is not that easy; for plantain, it is handled in bunches and may not be of regular size and weight. For the second-generation snack, if the raw material is granular product, it is measurable and the input and expected output, including any loss can be well calculated.

In the cluster model, which prototype is already in place, it can take 30 persons or entrepreneurs working, but in another step, each person would come up with the kind of snack wanted. The formulations are made with recipes unique to each product and this would make for non-duplication of products.

According to Kuteyi, the system has the capacity to register about 50 people with their own formula, which they would bring along each time they come to the common plant for production.
Irrespective of your location within the city/town, where the machine is installed, the execution of the order would be done by manufacturing team on ground.

Overall, the intention is promote processing and packaging local agro-produce for markets in the country and abroad using the cluster approach. In that case, he said it could open door of foreign exchange income for small scale operators.

The scheme provides access to the industrial facility, an arrangement that takes off the burden of sourcing close to N10million to set up a plantain chips plant. The advantage the system brings is that a small fraction of a million naira would be enough to become part owner of an established processing plant.

Kuteyi, who is a top executive of National Association of Small Scale Industrialists (NASSI), said young entrepreneurs have much to gain from the leverage the cluster brings.

Under the nurture of NASSI, utilisation of local raw material is at the core of using the format to push the development and growth of SMEs.

The Spectra MD said the cluster in Lagos has been tested and a running project in which the company provides access to the industrial facility.

Initially, Spectra started with a plantain chips production cluster with five-ton installed capacity output monthly. Although, plantain chips which the plant produced with various operators came in special forms and packs, the consumption could be enhanced with peanut butter and tomato ketchup.

Production and market 

Explaining the potentials in the cluster strategy, Kuteyi said the products have better attributes: a 12-month shelf life and an upbeat quality, which would help entrepreneurs target both local and export markets.
However, since the individual operator keying into the cluster has the responsibility of developing his/her product, the rate of expansion of both production and market is dependent of skills deployed.

The more the business expands, from the viewpoint of the cluster member, the more the opportunity to take the unemployed off the job market.

When the cluster gains sufficient traction, Kuteyi, not new treading the path of small and medium scale venturing, said the plan is to set up units in Lagos and in several States of the country. For instance, only Lagos could spread to five districts and would entail bigger machines, more entrants, who would subscribe.

The pilot project aimed at five tons per day, and spreading to other States would expand production, take in more entrepreneurs, employ more hands and manufacture more food.

Getting a nationwide attention, Kuteyi said would be strengthened if the Federal and State governments throw their weight behind the employment-generating strategy.

Bank of Industry support

He is optimistic of the impact the Bank of Industry would make knowing that its mandate would suit the aspirations the cluster entreprise.

The bank’s products tailored towards development of cottage agro processing industries, Kuteyi affirmed, is well suited to the format and operations of the clusters.

It is hoped that the bank would lend support to the cause of creating jobs and boosting the nation’s food sufficiency especially as the Federal Government have captured the school feed programme in the 2016 budget.