Nigerian manufacturers invested N4.43 trillion between January 2013 and June 2018, despite borrowing at a double-digit interest rate of between 20 and 21 percent within the period, according to a survey done by the Manufacturers Association of Nigeria (MAN).
The investments were made mostly in agro processing, cement, metals, steel, plastics, vehicle assembly, textile, among others. The biggest beneficiaries of these investments are Ogun, and Lagos comprising Ikeja and Apapa industrial zones.
The survey shows that in the first six months of 2018, manufacturing investment stood at N305.56 billion, which is a 7.2 percent decline from N329.28 billion recorded in the corresponding half of 2017. But when viewed against the second half of 2017, the figure represents a 72.9 percent rise from N176.69 billion obtained within the period.
Manufacturers have been bullish on the Nigerian economy despite tough business environment and high production costs. Forty percent of manufacturing expenditure goes to the provision of alternative energy, with about 30 percent spent on logistics, manufacturers say. They have asked for 5 percent to 9 percent interest to mark up their investments. They add that the Bank of Industry should be recapitalised to make more money available for investments.
Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, is 14 percent. But deposit money banks lend as high as 30-35 percent, according to BusinessDay checks. Manufacturers say they were charged 22.9 percent in the first half of 2018, representing 0.25 percentage point higher than 22.65 percent recorded in the corresponding half of 2017.
The Nigerian economy emerged from recession in 2017, which led to the shutting down of over 50 firms and crippling of many others, according to MAN. Inflation rate remains high at 11.28 percent.
“We need to know that there is a strong nexus between political stability and economic progress. We should not create a situation where citizens and investors (domestic and foreign) lose confidence in the state institutions,” Babatunde Paul Ruwase, president of the Lagos Chamber of Commerce and Industry, said in 2018, while analysing the impact of elections on investments.
In 2014 alone, new investors such as Shongai Technologies Limited, Ijako in Sango-Otta, Apples and Pears Limited, Ceplas Farms Limited, Greenlife Bliss Healthcare Limited, and Sumo Steel Limited berthed in Ogun.
Even Procter &Gamble (P&G) set up a diaper plant in Agbara within that year, but shut down in 2018 owing to high production costs.
Fidson Healthcare, May & Baker, Pure Chemicals, Eagle Packaging, Nycil Limited, and Dufil made significant investments in the Nigerian economy within the period.
Less than six months after commissioning its 1.5 million metric tonnes per annum (mtpa) Kalambaina Cement Plant in Sokoto State, BUA Cement has completed its newest Obu plant in Edo State, which has a capacity to churn out 3 million mtpa of cement.
This brings the total capacity of BUA Obu cement operations to 6 million tonnes and moves the entire group’s installed capacity to 8 million mtpa.
“We have built a 32-megawatt multi-fuel captive power plant and a coal mill. To put this in perspective, this new plant will be generating more power than is currently generated by the entire Sokoto State,” Abdul Samad Rabiu, chairman and CEO of BUA Group, said in Sokoto in 2018.
Beloxxi, on February 9, 2018, launched the second and third phases of its biscuit lines in Agbara, Ogun State. Beloxxi Industries is one of the largest biscuit makers in Nigeria with a capacity to produce 40,000 metric tons (MT) per annum, amounting to 28 million cartons.
The biscuit firm in 2016 closed an $80 million deal with a consortium of 8 Miles (London), African Capital Alliance (Nigeria) and KFW DEG Bank (Germany). The investment is raising the company’s capacity from 40,000MT to 80,000MT while the staff strength is over 3,700.
Similarly, Nestlé also pumped N4.1 billion into its Milo Ready-to-Drink (RTD) beverage plant in Agbara last year. The plant manufactures Nestlé Milo Ready-To-Drink (RTD) beverage in 180ml cartons and has a yearly production capacity above 8,000 tonnes.
“This new production plant is a true reflection of how Nestlé creates shared value for all, by providing good jobs, sourcing 80 percent of our inputs with local farmers and investing in the development of rural communities,” said Mauricio Alarcon, managing director and CEO of Nestlé Nigeria.
Equally, a new 30,000-metric tonnes per annum cocoa processing plant in Ikom, Cross River State, is over 60 percent completed and may be commissioned in December, according to BusinessDay checks.
In March 2018, Dangote Group inaugurated a multi-billion naira rice processing mill in Hadin, Jigawa State. The mill has the capacity to process 16 metric tonnes of paddy rice per hour as well as N14 billion worth of rice annually directly from the famers in Jigawa at market rate.
In the last four years, PZ Wilmar has pumped almost $150 million into oil palm plantations and palm oil mills, Santosh Pillai, managing director of PZ Wilmar, told BusinessDay.
“We are determined to continue with these investments and looking for opportunities to expand our plantations in the state,” he said.
Similarly, Presco has so far invested N75 billion into the palm oil industry, Felix Nwabuko, the managing director, said, adding that the company also plans a capital expenditure investment of N46 billion over a five-year period (2018-2022).
ODINAKA ANUDU & GBEMI FAMINU
