Afolabi Idowu writes on the need for manufacturers to encourage locally sourced raw materials to save foreign exchange and by extension boost industrialisation.
It is high time the investors and manufacturers begin to source most of the raw materials needed in their various companies locally as most of these are readily available in the country. Leaving of the country’s economy to the vagaries of the international market forces through excessive importation poses a threat to the development of industry in the country. The Director General of the Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf attest to this recently when he said that Nigeria has left its economic fortunes to the vagaries of the international market forces through excessive importation, and that it was high time private investors latched in on this situation and helped the government out through agriculture and manufacturing.
When the Federal Government banned the use of barley and malt extract in the food and beverage sector in the 1980s, the expectation was that the use of sorghum, developed by the Raw Material Research and Development Council (RMRDC), would be embraced by manufacturers. This would have saved the nation an estimated N100 billion spent on the importation of malt extract yearly. However, this has not been the case. Rather than embrace the alternative and the immense benefit from local content in manufacturing as initiated by RMRDC, the manufacturers especially the multinationals, who, as it were, are compelled by their home countries to import malt extract instead of patronising the locally produced, high maltose syrup. Before RMRDC came out with the alternative, the challenge for the sector, which is one of the largest under the Manufacturers’ Association of Nigeria (MAN), has been the availability of alternative local raw materials.
To bridge the gap, the Federal Government banned the importation of malt extract, having developed sorghum, an acclaimed richer alternative through research and development, in line with its backward integration policy. But as it turned out, the government has not made any headway in convincing some local manufacturers, especially the multinationals, who, as it were, are compelled by their home countries to import malt extract instead of patronising the locally produced, high maltose syrup.
This, according to experts, is at the expense of Nigeria’s industrialisation policy.The Managing Director of Food Agro & Allied Industries Limited, Mr. Sudhansu Sinha, admitted that importation of malt syrup from countries such as China, India and Turkey is costing the country huge losses in foreign exchange, especially with the devaluation of the naira. He said that government must discourage massive importation of malt extract from these countries where farmers are subsidised by their governments.
He said this is in addition to other waivers that make their products cheaper for Nigerian importers and consumers, who have unhealthy appetite for anything foreign even when the quality does not match that of local alternatives. However, few companies such as Food Agro & Allied Industries Limited still operating with locally source maltose syrup. Confirming this, the managing director of the company had this to say “Our company is the sole indigenous manufacturer of high quality maltose syrup and extract from sorghum in the country with an installed capacity of 100,000 tons of high malt syrup and sugar per day,” Sinha pointed out that his company is poised to meet at least, 50 per cent local demand, To encourage the use of locally source material, Nigeria Breweries Plc made inroad into sorghum processing with a factory in Aba, Abia State.
It is the largest sorghum factory in Africa. Its Managing Director, Mr Nicolaas Vervelde, said that the company’s use of sorghum has supported an N8.8 billion value added and N110 billion tax payments. This, he said, is in addition to local purchase support of 85,000 jobs through 100 per cent local content. Also, recently Transcorp Corporation of Nigeria Plc partners Tenagro Commodities Limited, the MOU represents an expansion of Tenagro’s current operations in Benue State, which have previously been focused in Makurdi. Teragro has been functioning as an industrial operation processing oranges and mangoes into concentrates for local consumption.
Over time, Tenagro has grown and expanded its footprint and now produces concentrate that meets the most rigorous global standards for purchase by multinational corporations, including a leading international beverage manufacturer. Tenagro to contribute to the growth of a diversified economy, saying, “The untapped opportunities in agriculture are huge and we are committed to ensuring that Nigeria can once again generate high revenues from agriculture as it did before the discovery of oil. The new farming land will ensure we can do our part to bring those untapped opportunities to fruition.” In the whole process, the government needs to protect the local industries from the overwhelming influence of foreign interest, who insists on buying raw materials from their factories abroad rather than patronising firms like theirs with the requisite technology and competitive production process.
Also, farmers need to be empowered and there should be subsidy on agriculture like the European countries that protect their farmers. Lagos State RMRDC Coordinator, Mr. Tokunbo Habeeb, said his agency was set up to ensure that industries are fed with raw materials that have local substitutes so that importation of locally available products will be discouraged. He decried the huge sums spent on foreign exchange to import malt extract, encouraging food and beverage manufacturing companies to patronise local companies some of which, according to him, deploy the highest level of production skill that is globally competitive. Habeeb said the country will be saving over $25 million annually from banning the importation of malt extract, while encouraging the local production of high quality maltose syrup and extract from sorghum.
He said: “Patronage of local content is crucial to our economy; our local production meets world class standards. Sorghum has a higher shelf life than barley extracts and more nutritious, as it is gluten free, which makes it healthier and more acceptable in the advanced economies.” He reiterated the fact that high maltose syrup extract is used in alcoholic and non alcoholic beverage production and is evidently a healthy replacement for sugar and syrup in the production of quality beer, malt drinks, soft drinks, milk and malt preparations. He revealed that it is used in leavening and conditioning of dough, moisture retention and softening of bakery crumbs. He, therefore, urged food and beverages manufacturers to patronise locally made products certified by the RMDC for best quality and competitive production process.