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| Kaduna Refinery Image: Supplied |
Bukola Adebayo writes on the effect of
importation of raw materials on Nigerian economy, especially the manufacturing
sector
Kudos to our
indefatigable manufacturers in Anambra State. One cannot help but marvel at the
ingenuity of finished goods that are churned out by designers and traders in
the industrial estate and market in Onitsha, the commercial capital of the
South-East.
Shoes and suits from the
Ariaria market in Aba can be found in closets of top Nigerian celebrities home
and abroad. North or South, local manufacturing of finished goods such as beverages,
clothing items and other consumers products have increased tremendously.
Apart from suits and
shoes, if one checks the labelling on many household goods and
confectioneries in most homes, one would see ‘Made-in-Nigeria’ or a
complimentary local address.
One is also likely to
find the addresses of local companies on many of the drugs used to treat
common ailments like diarrhoea, headache and malaria infections.
However, investigations revealed
that even though many of these products are said to be “Made-in-Nigeria”, they
are actually made abroad.
Manufacturers, who spoke
with our correspondent said due to unfavourable policies, lack of
infrastructure and investment and the moribund state of the petrochemical
and agricultural sector, more than 90% of the raw materials they use are
imported from Italy, Germany, China and other countries.
For instance, the only
raw material that is sourced locally in the production of sachet water,
popularly known as ‘pure water’, is the water itself.
According to the Managing
Director, El-Elyon Water, a producer of sachet water in Ibadan, Oyo State, Mr.
Tola Adeniyi, 80% of the chemicals used in purifying water and the
petrochemicals used in producing the sachet are imported.
Adeniyi said, “When
sachet water manufacturers increased their prices in January from ₦80
to ₦120 per bag, many thought it was informed by fuel scarcity. But the
increment came about because of scarcity of forex.
“You may wonder what
forex has got to do with sachet water. We import every other material used to
purify and package it. None of these chemicals are sourced locally.
“The raw material used to
produce the nylon and print materials are imported; the chlorine and other oxidizing
agents used to purify the water is imported. The prices of these raw materials
have increased by 30% and we can’t shoulder the cost alone.”
It is, indeed,
disheartening that Nigeria, the seventh largest producer of crude oil in the
world, is also one of the largest importers of petrochemicals, a byproduct
of crude oil.
Speaking on the
challenges posed by the lack of raw materials in the packaging industry, the
Marketing Manager, OAK Group of Companies, producers of Lasena water and
plastics, Mr. Eugune Osigwe, warned that the prices of bottled water might
increase, as the cost of importing preforms, the raw materials used to
produce plastic packaging for water and other drinks, has increased.
According to Osigwe, one
tonne of the preform, which is imported from China and was ₦450,000 last
year, is now ₦520,000.
Osigwe said, “The plastic
and paper industry in Nigeria is 90% dependent on importation. Yes, there are
factories producing them, but where are they getting the raw materials? For
instance, the pre-chemical form used to make plastics are got from
petrochemicals, a by-product of crude oil. How many of our refineries are
producing fuel not to talk of the petrochemical used to make plastics? If the
refineries were working optimally, we would have no reason to import plastic
preforms. We would rather be exporting them to other non-oil-producing
countries.”
Apart from exporting
crude oil, Osigwe said, if the refineries were functioning, Nigeria should
be exporting rather than importing leather, alcohol, fertilizers and other
carbon based products .
He said many tyre and
leather manufacturing companies left the country when the hope of getting raw
materials locally dimmed.
“Leather is a crucial
by-product of crude oil. It can be used to make chairs, tyres, shoes, bags and
upholstery just to mention a few. With the crude oil reserves that Nigeria has,
it should be one of the biggest players in tyre and leather industry in the
world, but we are still importing artificial leather from China and Brazil.
“It’s an open secret that
Nigeria imports fertilizers for its farmers, which is a disgrace. Nitrogen and
many chemicals that are used in making fertilizers are by-products of crude
oil. If the refineries were on, we should be exporting, not importing, fertilizers
to agric-based economies like Brazil and the United States. It would have been
be a source of forex which the country direly needs now.
“More than 40% of the
chemicals and raw materials used in paint and print industry can be sourced
from crude, but we are still importing them. Oil has been a curse rather than a
blessing to this country.”
Adeniyi and Osigwe have
every reason to be pained. Nigeria has indeed underutilized the resources that
abound in crude oil.
Apart from PMS, a
report compiled by Ranken Energy, a global manufacturer of petrochemical
products, states that over 5,999 items are made from petroleum by-products.
They include drugs,
cosmetics, detergents, perfume, insecticides, vitamin capsules, floor wax,
paints and dyes to mention a few.
A partial list of
products made from Petroleum (144 of 6000 items)
One 42-gallon barrel of oil creates 19.4 gallons
of gasoline. The rest (over half) is used to make things like:
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| Source: Ranken Energy |
70 % of
medicines are imported from India, China
Stakeholders were elated
when four pharmaceutical companies in Nigeria got the World Health Organization
pre-qualification to produce some essential drugs for West Africa and beyond.
Experts in the sector proclaimed
that the certification was a guarantee that Nigeria had the capacity to
manufacture and export lifesaving medicines to West African countries and
Africa at large.
But no one was more
surprised when the Chairman, Pharmaceutical Manufacturers Group of
Manufacturers Association of Nigeria, Mr. Okey Akpa, sent a warning to
Nigerians to prepare for scarcity of drugs.
Akpa said that the
lingering shortage of foreign exchange had prevented drug manufacturers from
importing raw materials and chemicals needed to produce essential medicines
into the country.
According to him, many
drug manufacturers have run out of their stock and are unable to replenish due
to dollar insufficiency.
Akpa said, “The only
thing to say at this time is to alert the nation to an impending risk and
threat to drug security in the country. This is going to happen if the current
level of scarcity of forex persists.
“There is going to be
absolute drought of raw materials. This time, we are talking about critical raw
materials, what we classify as active pharmaceutical ingredients. Nearly every
manufacturer is using about the last batch of raw materials and what we
see and foresee is scarcity of medicines – essential medicines. When they are
available, the cost will go up.”
Akpa had every reason to
raise the alarm. Nigeria, with a population of over 170 million people, depends
on India and China for its drug supply.
According to the former
President of the Pharmaceutical Society of Nigeria, Mr. Azubuike
Okwor, over 70% of medicines consumed in the country are imported.
He blamed the moribund
state of the refineries for this situation. Okwor said local pharmaceutical
companies need not import if active ingredients used to produce medicines if
the refineries were working.
He stated, “On local
manufacturing of drug, a greater percentage of the active ingredients for the
local initiatives are all imported, and this is why we call for the creation of
a pharmaceutical commission to drive Nigeria’s journey towards local
manufacturing of pharmaceuticals replicating the giant strides that China and
India have made in these areas.”
Much ado
about tomatoes
If you have had any cause
to buy tomato paste at the market because of the ongoing tomato scarcity, there
is a great possibility that you are consuming a product whose raw material was
sourced in an Asian or European country but packaged in Nigeria.
According to the
Director-General, Raw Materials Research and Development Council (RMRDC), Peter
Onwualu, Nigeria spends over ₦11bn on the importation of 65,809 tonnes of
processed tomatoes annually.
Though Nigeria is ranked
the second largest producer of tomato in Africa and 13th in the world, the
country is also the largest importer of tomato paste, the processed form of the
fruit from China and Italy.
According to the Chief
Executive Officer, Erisco Foods Limited, Ikeja, a local manufacturer of tomato
concentrates, Mr. Eric Umeofia, the Federal Government loses US$1bn to the
importation of tomato products.
Umeofia alleged that 80%
of imported tomato products in the market were sourced abroad, and they
were also adulterated.
He lamented that instead
of exporting packaged products, Nigeria was the destination for adulterated
tomato concentrates from Asian countries such as China.
Umeofia said, “More than
1,000 containers of packaged tomato paste come in through our porous ports and
borders every week. Nigeria is losing US$1bn to tomato paste importation
annually. These importers are mostly foreigners, and they have introduced
fake tomato concentrates into this country. Once you don’t produce and depend
on import, then you give room for fake items.
“Indian businessmen went
to China and asked them to produce tomato paste at a reduced cost. Of course,
the Chinese did so by reducing the content of tomato and filled it up with
starch and added colouring.
“Our research over two
years found out that much of the tomato paste they bring into Nigeria is
poison. In China, they can’t eat the tomato products that are being brought
into this country. So, why are the Indians bringing it here? Because some few
government officials and regulators are aiding and abetting these practices,
Nigerians will be dying?”
Umeofia described the
situation as unfortunate as 70% of tomatoes grown in the country waste due to lack
of storage facilities and infrastructure for processing.
“The tomato farmers in
Sokoto State suffer great losses every year because there is no facility to
store and process them; and the government supports importers rather than
helping local manufacturers.
“We decided to go into
tomato refining and set up a factory with a capacity of 250,000 tonnes to stop
importation but we have been running it at a loss because imported ones
are still coming in. By now, we are supposed to be exporting tomato paste from
Nigeria. We have the capacity and all it takes to achieve it, if government
provides the right policies,” he noted.
Umeofia called on
President Muhammed Buhari not to relent in his administration’s bid to ban the
importation of tomato products, which, he said, would encourage patronage of
local products.
According to him, many
local manufacturing companies have shut down due to unfriendly policies.
He said, “In 2015, we
almost closed down. We couldn’t sell our tomato products because the fake ones
were cheaper to buy. Because the President said no product that could be
made in Nigeria would have foreign exchange allocation, that was when our
business started to pick. Now, we have recalled all the workers we sent away
and we are now employing more. The import law is already having effect.
If Buhari bans the importation of tomato, we will be exporting tomatoes within
18 months.
“If the Federal
Government and regulators give manufacturers 20% of the support they give
foreign investors, we would become one of the biggest exporters of tomato
products in the world.
“Do you know that the
tomato paste industry can create over one million jobs, from the farmers to the
engineers, the processors to the marketers? We need foreign investment, but
it’s only on technology, not on practical goods. The Made-in-Nigeria campaign
can only survive if importation is discouraged entirely,” he added.
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This file photo taken on
January 15, 2016 shows a trader sorting baskets of tomatoes at the Yankaba
vegetables market in northern Nigerian city of Kano, on January 15, 2016. A
state government in northern Nigeria on May 24 declared a state of emergency
after moths destroyed swathes of tomato fields, threatening supplies of the
country’s leading staple food. Nigerian farmers describe the outbreak as
‘tomato Ebola’ after the deadly disease that devastated West Africa in 2014.
PHOTO: AFP
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The myth
called Made-in-Nigeria food
Before oil boom, Nigeria
was one of the highest producers of grains, vegetables and food crops in
Africa.
It was a taboo to eat
food products that were not grown in the country due to abundance of
agricultural produce.
The reverse is the case
nowadays. According to the Chief Executive Officer, Produce Extracts Limited,
Lagos, makers of locally produced wine, Mr. Linus Kotey, more than 80% of
locally produced soft drinks and beverages sold in Nigeria are made from
imported concentrates.
Kotey, a brewer of over
30 years of experience, spoke to our correspondent when she visited his brewing
company at the Lagos State Small Scale Industrial Estate at Matori. He
warned that manufacturers’ dependence on raw materials from abroad, especially
for food production, could collapse the Nigerian economy.
Kotey said, “Many of the
beverages and soft drinks sold in Nigeria are made from imported concentrates.
Manufacturers find it difficult to go through the chemical process of
converting fresh fruits grown in Nigeria into drinks. I use local pawpaw
and pineapple to make wine, but many brewers won’t do that.
“What the manufacturers
do is to add water and sugar to the imported concentrates, pack them and
millions of Nigerians consume them.
“That does not help the
foreign exchange and the backward integration of local contents. It is sad
because more than half of the fruits produced by farmers in the country go to
waste. Nigeria spends billions importing raw materials it can produce because
there is forex and manufacturers want to take the easy way. The truth is out
now because there is shortage of forex,”
Bread, noodles and wheat
flour products that Nigerians eat daily are said to be “Made-in-Nigeria”,
Kotey, a UK-trained biochemist says this label may be far from the reality.
According to the
industrialist, a significant proportion of the raw materials used in
manufacturing these food products are imported and poor manufacturing policies
from previous governments have allowed the trend to thrive.
Kotey said, “In the
brewery industry at the first regime of Buhari, the government banned the
importation of barley malt used to produce beverages because Nigeria had
sorghum, which is an alternative. The multinationals argued against it but the
government put its foot down.
“I was a brewer and I was
on the government panel, the companies had to implement it. Nigerians were
drinking beer from sorghum and they didn’t know the difference. The policy was
overturned by the government that took over, as local farmers who had
geared up to produce maize and sorghum lost huge sums of money.
“What the foreign companies
do now is that they use 5% sorghum from Nigerian farmers and import barley malt
for the rest and it is still called Made-in-Nigeria.”
Besides poor policies on
the part of government, Kotey said Nigerians had also stopped eating local foods;
they show preference for staple foods whose raw materials, according to him are
sourced abroad.
“There is ongoing food colonization
in Nigeria. I studied in Britain. Britons eat potatoes fried, mashed and baked.
They also grow wheat which they use to make pie or bread. They eat what they
grow. Why are we not eating what we grow? Now everybody is eating noodles,
wheat, semolina, bread and pastries. These are made from wheat that is
imported.
“We are promoting the
agricultural sector of another country. What is wrong with eating fufu, garri,
yam flour, amala and yam in different forms? If Nigeria stops the
importation of wheat today, I can assure you that the agricultural sector will
bounce back.”
Chinese
ankara dominates at Owambe parties
The Nigerian textile
business was one of the most vibrant industries in Africa in the 1960s.Traders
from Ghana, Mali, and Cote d’Ivoire, among others, came to Nigeria to export
the high-quality African print.
Today, the
once-flourishing industry has collapsed such that over 80 of the 100 textile
industries that used to dot the major cities of Kano, Katsina, Lagos and other
parts of the country no longer exist.
According to the Nigerian
Textile Manufacturers Association and the Nigerian Textile Garments and
Tailoring Employers Association (NTMA/NGTEA), China and Korea-made fabrics have
dominated Nigerian market.
The Director-General,
NTMA/NGTEA, Mr. Jaiyeola Olarewaju, stated that the policy by the previous
governments which lifted the ban on the importation of textiles led to the collapse
of over 70 textile companies.
He said that despite the ₦100bn
pumped into the textile industry by the Federal Government, the sector had
failed to recover from the lifting of the ban on importation of fabrics.
“The Chinese textile
manufacturers are squeezing the local industry. The Chinese fabrics have taken
over the market. About 80% of the printed fabrics in the country are imported.
So, it is Asian countries that are enjoying the boom in the use of African
prints, not Nigeria.
“In 1997, we had about
136,000 workers. Now we have less than 20,000. Now that the government has
lifted the ban on importation, what protection is there for local textile
industries?”
Way
forward
Nigeria is one of the
most attractive dumping grounds for exporters due to poor policies and porous
borders. The country still imports furniture, pencils, matches, tooth picks and
other consumer goods that it has the capacity to produce.
According to Kotey and
his colleagues, a majority of the products found in a Nigerian household are
imported.
Stakeholders who spoke to
the Punch correspondent called on the Federal Government to protect local
manufacturers by providing incentives.
According to Kotey, the
only way out is for the Buhari administration to ban the use of imported raw
materials for products that are available locally as it did in the 70s.
He said, “There was a
time that multinationals were using local flavours for their beverages. We
must go back to that. If the government can insist that no manufacturer should
bring in raw materials that can be sourced locally, the economy will thrive.
“Those who want to still import
must be made to pay heavy duties and taxes for this. Gradually, manufacturers
will seek alternatives locally and we can reduce the pressure on the foreign
exchange available.”
Originally published in
The Punch
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