Manufacturers return to factory expansion as economy eases
by ODINAKA ANUDU
September 19, 2017 | 4:38 pm| | | Start Conversation
After many months of lull in the manufacturing sector, deep pocket investors have returned to factory expansion, setting up new plants as foreign exchange becomes more readily available and economic crunch eases.
President Muhammadu Buhari commissioned Olam International’s $150 million integrated feed mill, breeding and hatchery farm in Kaduna State last week.
The plant by the Singapore-based Olam is the largest integrated feed mill in the country, with capacity to employ 8,000 Nigerians directly and indirectly, including 200 veterinary doctors and a storage facility of 50,000 metric tonnes estimated to sell 72,000,000 eggs and 52,600,000 day old chicks.
“This investment will utilise around 180,000 tonnes of corn and 75,000 tonnes of soya beans for feed production. It has the capacity to produce 360,000 tonnes of animal feeds every year,” Vinod Kumar, Mishra, Middle East Olam International business head, said before the commissioning.
Standard Metallurgical Company Limited (SMC) last month announced plans to launch a billet mill to produce standard wire rods in Nigeria.
The company will be the first factory to produce billets suitable for producing standard wire rods in Nigeria as almost all wire rods produced in the country currently are made from imported billets.
“Three months from now, we are going to start producing billets in Nigeria,” Mohammed Saade, managing director, SMC, told BusinessDay.
“Currently we are producing 300,000 tonnes of wire rods per year. With phase two, we would produce 260,000 tons of billets in Nigeria. Nigeria today is a big market and we are committed to meeting local demands and the surplus can go to the ECOWAS market,” Saade said.
On August 29, Nigeria’s vice president Yemi Osinbajo commissioned the Edo State Fertilizer And Chemical Company Limited in Auchi, Edo State, a public-private venture with capacity to produce about 60,000 metric tonnes of fertilizer per annum.
Same day, BUA’s second cement line, located at Okpella, Edo State, capable of producing 3 million metric tonnes, was commissioned by the vice president.
“It is engineered to be the most environmentally friendly cement plant in Africa with the most advanced duct emission systems. Our technology has the latest filtration with capacity of less than 10 milligram per normal cubic meter. We use natural gas, which is a very clean energy for both our kiln as well as the power plant in addition to having a very green environment,” Abdulsamad Rabiu, chairman of BUA Group, said.
In June this year, Dangote Sugar signed a $700 million deal with Nasarawa State government for the establishment of sugar plantations in the state.
In August, Dangote Group penned another $450 million deal with Niger State for the establishment of fully integrated sugar complex.
“The integrated sugar mills will have the capacity to produce 160,000MT of raw sugar. We are developing a sugar backward integration plan through the production of 1.5MT/PA in ten years in Nasarawa, Adamawa, Kogi, Kwara, Taraba and Niger states respectively,” said Abdullahi Sule, group managing director of Dangote Sugar Plc, on August 24.
The first three quarters of 2016 saw manufacturers withdraw from making sizeable investments due to foreign exchange crunch that forestalled importation of raw materials, machinery and spare parts.
The Central Bank of Nigeria (CBN) eventually created a special window in August 2016, which allowed manufacturers and agro processors to access 60 percent of all the foreign exchange in the official market.
The CBN has, since February this year, introduced other windows for exporters and small businesses which, according to Frank Jacobs, president, Manufacturers Association of Nigeria (MAN), has eased dollar crunch for manufacturers and forced new investments.
The 2nd Quarter GDP report released recently by the Nigeria Bureau of Statistics (NBS) indicates a positive GDP growth rate of 0.55 percent, signalling that the nation’s economy is technically out of recession after five consecutive quarters of negative growth of the nation’s economy.
The data show that manufacturing and agriculture are among the four sectors that pulled the economy out of recession.
“Our members have been able to source their raw materials and machinery, and foreign exchange has been readily available to them,” Jacobs said, attributing investments in the sector to foreign exchange availability and stability.
“We believe that the Nigeria’s Economic Recovery and Growth Plan, which is a government policy with a full consultation with the private sector, has actually done the magic in pulling Nigeria out of recession. If that policy is sustained and improved upon and well implemented, the country’s growth out of recession would be sustained and become all inclusive,” Udemba said.
At the annual general meeting of MAN, Jacobs said efforts made to make more dollars available for manufacturers and SMEs, Federal Government Executive Order which now supports local contents in public procurement by the Federal Government MDAs, lifting of ban on Export Expansion Grant (EEG), and re-admission of 36 items (out of 95 items prohibited from the FX market) are some of the steps taken by the government that has lifted investor confidence in the manufacturing sector.
“We started importing equipment and building a new facility last month. We took that decision because we know we are better off that we were by this time last year,” said Francis Okeleke, executive director of Kenfrancis Farms, an integrated agro processing farm.
Big Read |