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Charles Nwaoguji
To survive in a highly competitive world, industries need to effectively manage complexity, gain effectiveness and minimise costs by sourcing raw materials for their production locally.
One sure way manufacturing companies can survive the current economic hardships is to stop the importation of raw materials and invest in the local market by sourcing their raw materials locally.
Importation of items like as rice, cement, margarine, palm kernel/palm oil products/vegetables oils, meat and processed meat products, vegetables among other 41 items banned by the government were without knowing if we have enough of these items in the country. Although the importation of these items are not prohibited or banned, importers of these items are no longer qualified to get foreign exchange from the Central Bank of Nigeria (CBN) or the official market to buy from overseas.
Nigeria is known for its enormous raw materials and solid minerals endowments, but only 46.71 percent of raw materials is sourced within the country, with local manufacturers now outsource raw materials from other African countries , thereby creating a displacement which directly affects workers in the intermediate segments of the local economy.
Indeed the manufacturing sector has become Nigeria’s major economic driver, as it is witnessing growth which surpassed those of the oil and gas, telecommunications, and the agricultural sectors. This growth was significantly evident by the second half of 2010, when a 52.7 percent increase in manufacturing capacity utilisation was recorded. By the end of 2010, a subsequent increase of 58.58 percent was noticed in the area of locally sourced raw materials, further showing improvement in the manufacturing sector.
This 11.87 percent drop was attributed primarily to probable poor quality of raw materials and insufficient supply of them within the country, although the Manufacturing Association of Nigeria (MAN) attributed this decline to the lack of a functional petrochemical industry, citing that it constrains improvement in local sourcing of industrial input materials.
