Dangote, Flour Mills, NB, Nestlé Push Local Input Sourcing to 66%

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The results of backward integration projects of Nigerian manufacturers are trending positive, with numbers showing a significant rise in local raw materials sourcing since the second half of 2016.

According to the latest report released by the Manufacturers Association of Nigeria (MAN), local input sourcing in the manufacturing sector dived to 65.70 percent in the second half of 2017, from 60.72 percent recorded in the first half period.

In the second half of 2016, the percentage of local sourcing was 59.98 percent as against 46.3 percent recorded in the first half of the same period.

BusinessDay independent checks show that the spike in local sourcing in the second half of 2017 was driven by aggressive activities of Dangote Group, Flour Mills of Nigeria, Nigerian Breweries, Nestlé, Unilever, and FrieslandCampina WAMCO, Dufil Prima, Lafarge Africa, PZ, among others.

“The upward movement was linked to the implementation of resource-based industrialization and backward integration policy as contained in Nigeria’s Industrial Revolution Plan (NIRP),” MAN says, in its latest economic review released to BusinessDay.

Resource-based industrialization is the use of locally available resources, such as raw materials, manpower, and natural resources, to grow domestic production. On the other hand, backward integration occurs when a company buys its suppliers or internally produces segments of its supply chain.

According to the report, industries in Kano Bompai and Imo/Abia industrial zones beat those in Lagos, Ogun, and others in local raw materials sourcing within the period under review.

Imo/Abia zone recorded 73.6 percent as against 51.7 percent in the corresponding half of 2016. Similarly, Kano Bompai’s local input preference was 75.5 percent, while Ogun zone stood at 68.7 percent as against 68 percent recorded in the corresponding period of 2016.

Apapa gave a good showing, recording 70.7 percent in the period as against 54 percent reported in the corresponding half of 2016. Local raw-materials utilization increased in Ikeja zones in the review period rose to 63.2 percent as against 61.3 percent in the corresponding half of 2016. However, Apapa’s and Ikeja’s are still lower than Kano Bompai’s and Imo/Abia’s.

Harangued by foreign exchange crisis of 2016, manufacturers are now getting their raw materials from farmers and subsidiaries, while sourcing packaging materials from other local firms.

The personal care manufacturer Unilever Nigeria is aggressively pushing its local input sourcing towards 100 percent.

“Unilever has achieved over 90 percent in local sourcing of packaging materials. The aim is to achieve 100 percent by the end of 2019 and overcome the current challenges of local vendor’s capacity to meet up with global best standard,” Thomas Mwanza, procurement director, Unilever West Africa, at Manufacturing and Equipment, Nigerian Raw Materials Expo held in Lagos recently.

“In the agro-allied sector, Unilever is partnering with intermediary companies, for the supply of cassava and starch,” Mwanza he said.

Nestlé Nigeria is sourcing 80 percent of its maize, sorghum, millet, soya, cassava starch, cocoa powder, palm oil from more than 41, 600 local farmers and processors scattered across the country.

“The Industry has huge needs and we must help farmers improve their yields to meet them. To achieve real success with connecting farmers to industry, a 360-degree approach which will include the aggregators, processors, and logistics suppliers must be considered within this value chain,” said Mauricio Alarcon, CEO of Nestlé Nigeria Plc.

Dangote Cement is sourcing over 80 percent of its limestone and gypsum locally, while Dufil, makers of Indomie noodles, sources its palm oil and maize domestically.

Flour Mills sources palm oil from its subsidiary Agri Palm Limited at Ugbogui and Iguiye near Benin City in Edo State.

Dairy maker FrieslandCampina WAMCO is sourcing some of its raw milk from farmers in communities in Oyo State.

As of 2017, over 70 farming communities, including 962 women, supply raw milk to FrieslandCampina WAMCO on a daily basis, BusinessDay found.

“The capacity the company has there is even more than what I can supply. Things have dramatically changed for us dairy farmers,” Mayosore Olatunde Rafiu, CEO of Genius Integrated Farms, one of the milk suppliers in Iseyin, told BusinessDay.

Nigerian Breweries is already substituting barley for sorghum sourced locally from an agriculture-based firm called Psaltery Nigeria Limited.

More than 250,000 farmers spread across several agronomic zones in the North are directly or indirectly involved planting sorghum for the country’s biggest brewer, BusinessDay understands.

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  1. Pingback: Dangote, Flour Mills, NB, Nestlé Push Local Input Sourcing To 66% - Business - Nigeria

  2. Pingback: Dangote, Flour Mills, NB, Nestlé Push Local Input Sourcing To 66% - NaijaEnjoy || Best Affiliate Network

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