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Bullish manufacturers pump billions to tap opportunities in Nigerian economy

...interest rate, FX still big issues




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MANUFACTURERS are taking a long position about Nigeria and pumping billions of naira to leverage opportunities in the economy.

They are overlooking poor policies of Muhammadu Buhari’s administration, investing in critical industries where there are huge supply gaps.

While many of them are investing in raw materials sourcing, also known as backward integration, others are pumping billions in new production lines.

PZ Wilmar, a subsidiary of PZ Cussons, has acquired 26,500 hectares of palm oil plantations in Cross River State.  About 5,549 hectares of oil palm plantation are located in Calaro Estate, while 2,369 hectares are situated in an area known as Calaro Extension. The firm also has Ibiae plantations with 5,595 hectares; Ibad plantations in Akampa with 7,805 hectares; Kwa Falls in Akampa Akpabuyo with 2,014 hectares, and Oban plantations, also in Akampa, with 2,986 hectares.

PZ Wilmar oil palm production plant during construction in 2018 Source: BusinessDay
PZ Wilmar oil palm production plant during construction in 2018 Source: BusinessDay

PZ Wilmar has completed two palm oil processing plants in the Calaro Estate and one in Lagos.

Nigeria has a palm oil supply gap of 800,000 metric tonnes and PZ Wilmar and other players are eyeing a large chunk of the market.

Managing Director of PZ Wilmar Santosh Pillai told this reporter that PZ Wilmar had invested $150 million in palm oil plantations in Cross River State and was committed to pumping more money in the economy.

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Presco, another palm oil maker, told this reporter recently that it had invested N75 billion to bolster the industry.

Okomu and Presco, two largest palm oil makers, recorded a revenue increase of 67 percent year-on-year in the first half of 2021.

Their revenue was N45.09 billion, from N26.98 billion in 2020. The profit rose from N8.4 billion in the first half of 2020 to N19.7 billion in the year under review.


Nigeria has an infrastructure deficit and a housing shortages of over 18 million units annually.

Cement makers are leveraging the situation, investing heavily to tap the opportunity. BUA Cement’s revenue rose from N209.4 billion in 2020 full year to N257.3 billion recorded in 2021. Dangote Cement’s revenue in the third quarter of 2021 was N331.64 billion, from N284.59 billion in the corresponding period of 2020.

In 2020, BUA Cement signed an agreement with Sinoma CBMI of China for the construction of three new cement plants in Edo, Sokoto and Adamawa states of Nigeria.  The investment was estimated at $1.05 billion.

BUA Cement plant in Sokoto
BUA Cement plant in Sokoto
Source: BUA

In January 2022, the manufacturer commissioned a three-million-metric-tonne Sokoto Line.

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“In the past six years, we have completed 4 plants – two in Obu, Edo State and two in Sokoto (of which this sokoto line 4 is the fourth) with BUA’s total production capacity now standing at 11million tonnes with the completion of this plant,” BUA Group Chairman Abdul Samad Rabiu  said during his address of welcome.

Rabiu said that in 2023, the group would continue to invest more in the cement industry until Nigeria was self-sufficient and cement was available, accessible, and affordable for all Nigerians.

In a recent statement sent by the company to The ICIR, BUA said it signed an agreement with Wartsila OY of Finland for the construction of a 70-megawatts dual-fuel power plant for the BUA Cement Sokoto Line 4 in Sokoto State.


The Food and Agricultural Organization (FOA) said in a  July 2021 report that Nigeria had 19 million cattle and 500,000 metric tons milk production. There is, however, a huge supply gap of 1,200,000 metric tonnes, which need to be filled.

A Dutch dairy maker FrieslandCampina WAMCO is leveraging the situation. It has invested into local dairy production and milk processing plants in communities in Oyo and Niger states.

The company told The ICIR reporter it had assisted 20 firms in Oyo State to set up ranches to cross-breed exotic and indigenous breeds with a view to producing genetically strong cattle that could adapt to the Nigerian environment and produce sufficient milk.

Women milk producers funded by FrieslandCampina WAMCO Source: BusinessDay
Women milk producers funded by FrieslandCampina WAMCO Source: BusinessDay

The firm works with a number of farmers who produce raw milk which serves as a raw material for it.

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General Manager for  Dairy Development Programme  Olayiwola Adekunle John told The ICIR that the company was interested in developing dairy production in Nigeria by increasing local sourcing of raw milk, which is used for production of Peak Milk and Three Crowns.

“We train farmers on how to treat their cows and other processes,” he said, noting that the company’s extension workers were always visiting farmers to train them on modern dairy trends.

Apart from the $19 billion refinery and petrochemical plants in Lagos, Dangote Group has pumped billions in cement production, foods and other products.

It is investing $1 billion in rice production and the group is pumping another $1 billion in sugar production, including in plantations .

Nigeria’s has up to three million supply gap in rice, according to a KPMG report.

Food and snack production is also a big business. In 2016, Beloxxi Industries, an Agbara, Ogun State-based biscuit maker, closed an $80 million deal with a consortium of investors. Three years later, the company commissioned two new lines,  expanding its capacity from 40,000 metric tons (MT) to 80,000MT.

Managing Director of Beloxxi Biscuits Obi Ezeude, who spoke during the commissioning of the second and third lines  witnessed by this reporter, said he was optimistic about the Nigerian economy.

Also, Olam announced in October 2021 that its subsidiary Crown Flour Mill Limited (CFM) had launched a N300 million (US $750,000) 10-year project to set up community seed enterprises for Nigerian farmers to increase their wheat production. Olam has invested in rice, tomato, palm oil, among other food products. Huge gap exits on each of the crops.

Flour Mills of Nigeria told The ICIR reporter that it had invested N50 billion in its sugar estate in Sunti, Niger State. Nigeria imports 1.3 million to 1.5 million tonnes of sugar each year, according to the National Sugar Development Council’s data.

“The sugar estate at Sunti, near Mokwa, in Niger State, is situated on 17,000 hectares of irrigable farmland, and a sugar mill that processes 4,500 metric tons of sugar cane per day,” the company said.

Flour Mills of Nigeria's Sunti sugar plant, Niger State, Source: The Sun Nigeria
Flour Mills of Nigeria’s Sunti sugar plant, Niger State, Source: The Sun Nigeria

At full capacity, the mill can produce one million tons of sugarcane, which roughly translates into 100,000 metric tons of sugar yearly, it added.

Managing Director of Kenfrancis Farms Limited Ifeanyi Okeleke said the the huge investments were a testament that manufacturers were overlooking the Nigerian environment to leverage opportunities in the economy.

The Nigerian economic environment is tough, nonetheless. Manufacturers borrowed at an average of 21 per cent in 2020, the Manufacturers Association of Nigeria (MAN) said in an economic review emailed to The ICIR reporter.

The benchmark interest rate in the economy is 11.5 per cent.

Policies of the Federal Government have not helped…

Policies of the Federal Government have not helped. The government, in 2019, slashed import duties for vehicles, putting a six-year automotive policy and several investments in the sector in jeopardy.  Foreign exchange policies of the central bank have focused on demand, making supply to manufacturers, who need dollars to import raw materials, difficult.  About 46 items are still barred from the FX by the Central Bank of Nigeria (CBN).

The apex bank has allowed big companies in sectors from milk to maize to have access to FX and import the items they produce, leaving out smaller firms.  This has attracted criticisms from players in the sector.

Despite all these, Nigeria has an attractive demography made up of over 210 million people who are mostly young people below the age of 25.

It is the continent’s biggest economy with a size of $432.294 billion in 2020, according to the World Bank. 

It is hard hit by insecurity and instability, but that has not deterred investors. Nigeria was the third most attractive country in Africa for foreign investment in 2021, according to the Absa Africa Financial Markets Index 2021 (AAFMI) report.

“Nigeria continues to make strides in creating an enabling investment environment for foreign investors, with the necessary regulatory developments and policy initiatives.” the report said.

The Nigerian Investment Promotion Commission (NIPC) said the country had a total of $23.30 billion in investment announcements for the year 2021. The manufacturing sector had the highest number of projects (20) with  $10.5 billion, representing 45 per cent of investment announcements

Manufacturing investment totalled N118.52 billion in 2020 as against N496.11 billion  in 2019, according to MAN.

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