Nigeria’s gradual shift from heavy import-dependence


February 19, 2015 | 12:15 am
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Despite economic, social and political challenges, Nigeria has made some strides targeted at moving the country out of the class of heavy importers within the last 15 years.

Across the world, clear policy definitions and implementations have been key drivers of economies.

For instance, vertical integration was the key driver of the Molinos Nacionales sorghum project in Venezula (1964 to 1966); the Dez agribusiness programme in Iran (1968 to mid-1970s); Projeto de Jari forest and rice project in Brazil (1967 to the present); the Philippine Corporate Farming Project (started in 1974); and the Hershey’s Hummingbird Farm in Belize (1976 to 1992).

Vertical integration is defined as the combination in one firm of two or more stages of production normally operated by separate firms. It can either be forward or backward. While backward integration involves a company buying its suppliers (of raw materials), forward integration happens when the same firm buys its distributors.

Nigeria had been among world’s largest cement importers before 2002. But the then government toed the path of backward integration, which made product importers establish local plants and obtain import quotas and licenses.

Thirteen years down the line, Nigeria is a net exporter of cement, while domestic capacity has reached over 43 million metric tonnes (MT), according to BusinessDay calculations. Dangote Cement, the largest in the industry, produces 29 million tonnes, while Lafarge Africa has 8.5 million capacity. Similarly, UniCem’s capacity is 2.5 million tonnes, while Bua and Ashaka have 2.5 million and one million capacities respectively. 

Rennaisance Capital’s  2013 analysis of the cement industry said,” The Nigerian cement market has changed significantly over the past five years, driven by favourable government regulation, rising demand, and increased investment on the back of aggressive economic growth. Over the medium term we continue to see opportunities for those players who are able to invest in additional capacity and grow distribution networks in the country.”

In sugar industry, Nigeria is likely to achieve self-sufficiency by 2017, owing to this same backward integration policy. The policy, introduced in 2013, has already attracted $2.6 billion worth of investments from Dangote, Golden Sugar, Crystal Sugar, McNichols and Locke, among others. 

Data from the National Sugar Development Council (NSDC)  said total national sugar demand rose to 2 million metric tons (MT) at end of 2013, from 1.5 million tonnes in 2012; while refining capacity utilisation rose to 75 percent, from 60 per cent to 75 percent. Raw sugar imports dropped to 800,000 MT,  from 1.4 million MT, just as  refined sugar imports nosedived to 0.67 percent, from 1.88 percent reported in 2012.

In 2010, while consumption was 985,675 MT, local production was merely 30,000 MT. Importation was 955,675, but this came with a huge cost of $482.6 million to the economy. In 2011, consumption rose to 1.13 million MT,  while production was merely 35,000 MT.

Incidentally, importation totalled 1.10 million MT as cost of these imports reached $657.12 million.  In 2012 consumption became 1.11 million MT, whereas production fell abysmally to 10,843 MT. Importation during this year was 1.098 million MT as this cost the country a total of $517.22 million.

Similarly, while per capita consumption was 7.1 MT in 2010, it was 7.6 MT in 2011 and 6.6 MT in 2012, the data from NSDC has shown. But all these have currently been reversed as the country no longer depends so much on Brazil for sugar.

“Apart from the 12,500 hectare Sunti BIP project which is rated the fastest growing among ongoing projects, Golden Sugar Company is also exploring new sitesin Kogi and Niger for bigger sugar projects,” said Latif Busari, executive secretary, NSDC, during a media chat held recently in Abuja.

Similarly, the same policy has brought in a number of players as investors. Unlike before, there are already indications that the country will achieve self-sufficiency in 2017. The current FG has turned many importers to local producers. Dangote’s 150,000 hectares of rice fields in various states and Elephant Group’s 76,000MT/annum ($300 million investment) are visible.

The policy, which is in line with the Agricultural Transformation Agenda (ATA) has led to the growth in paddy production from 4.5MT in 2012 to 10.7MT in 2014, while also ramping up the number of integrated mills from one to twenty between 2010 and today, with a combined capacity of 700,000MT/annum.



February 19, 2015 | 12:15 am
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