Positioning Aba leather industry for global competitiveness

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Over the years, Aba, the industrial capital of Abia State, South-East Nigeria, has been a hub of creativity and manufacturing. The city is well-known for production of garments, shoes, bags and trunk boxes.

There are over 80,000 players in the leather industry, with some producing shoes, and others making bags and trunk boxes.

The industry is estimated at N120 billion, though key players think it is much more than that.

The Aba leather industry is made up of shoes, trunk boxes and belts. It provides employment for tens of thousands of people, with many specialising in different stages of production such as designing, patterning, cutting, skiving, stitching, peeling and finishing. It is made up of clusters such as Powerline, Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, and Ochendo Industrial Market, comprising input suppliers, among others.

Aba is indubitably a shoes’ paradise, producing 48 million pairs of shoes and slippers annually, according to BusinessDay calculations.

Available data show that China produces 12.6 billion pairs of leather shoes annually, while Vietnam produces 760 million pairs. Indonesia produces 660 million pairs, while Italy produces 205 million of the same commodity annually.

From 2013 to 2017 show that the top four leather shoe producing countries were China, India, Vietnam, Indonesia and Brazil, according to a research report conducted by Statista.

In the top ten global ranking of leather shoe producing countries, Italy occupies the tenth position. China, Vietnam and Indonesia make it to the top ten producing countries and top ten exporting countries.

The leading exporting countries of China, Italy, Vietnam, Germany and Indonesia have laid substantial foundations to the shoe production and exports industry a way of boosting their economies.

China exports shoes and leather valued at $9.1 billion annually, while Vietnam’s … Read More...

Nigerian pharmaceuticals eye 70% of local drug market

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Nigerian drug makers are planning to take 70 percent share of the local medicines market, leaving the remaining 30 percent for importers.

They are upgrading their production facilities and strengthening capacities to reverse the trend where 70 percent of the medicines market is controlled by importers while the remaining 30 percent is left for them.

“With strategic collaborations with local and international partners, we can reverse the trend of 70 percent:30 percent ratio of medicine importation against local manufacturing ,” Frank Muonemeh, executive secretary, Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), said at a press briefing in Lagos at the weekend.

Nigerian manufacturers have invested over N400 billion in the last 20 years in upgrading facilities to acquire the World Health Organisation(WHO)’s prequalification needed for international competition. Fidson Healthcare has pumped between N20 and N25 billion into its facilities in Lagos and Ogun states, said Fidelis Akhagboso Ayebae, founder and chief executive officer, who doubles as chairman of PMG-MAN.

Speaking at the press briefing, Ayebae said though the local pharmaceutical industry is challenged, it is doing its best to stay afloat.

“Nobody can make our lives so bad that we would want to sell,” he said.

He explained that the Nigerian manufacturing sector is the most challenged due to man-made, not-too-good conducive environment in which firms operate.

“Those of us that have the courage to set up manufacturing plants, produce and create jobs are the ones being punished by the system,” he said.

He said rent seekers—including foreign exchange dealers and portfolio investors— benefit more from the Nigeria while manufacturers, who invest directly in the economy, bear the brunt of harsh environment.

On the forthcoming 5th expo tagged ‘Strategic Collaboration for Medicine Security, Affordability and National Sufficiency’, which will take place on … Read More...

Negative margins show why Nigeria must protect palm oil makers

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It is bad times for palm oil makers as poor border policing hits the margins and prospects of industry players.

The government must now protect local players to save their huge investments and encourage more direct investments.

Okomu’s first-quarter (Q1) financial statement shows that revenue declined by 42.5 percent to N4.2 billion, from N7.3 billion in same period in 2018. Similarly, profit after tax declined sharply by 71 percent to N1 billion in Q1 2019 from N3.5 billion in Q1 of 2018. The loss is further reflected on the company’s shares on the exchange board as it dropped by four percent in trading during the course of last week and a year-to-date loss of 2.89 percent.

Presco has not released its result, but experts are not optimistic.  Smaller players are  also hard hit by the state of the market.

Romanus Oguegbu, managing director of a palm oil mill in Uburu, a community in Imo State, is cutting down production. He owns a machanised mill and usually produces 400 gallons (of 25 litres) each week. But this has dropped by half. This has also affected the number of workers he employs. The number of workers has fallen to eight, from over 15 during peak demand.

Santosh Pillai, managing director, PZ Wilmar, a big palm oil producer, told BusinessDay that there are illegal and questionable imports into the country, meaning that genuine investors do not have a level playing field.

“It discourages further investment by investors like us and creates unhealthy competition in the market,” Felix Nwabuko, managing director of Presco, said.

According to a report by the Food and Agriculture Organisation of the United Nations, “It is estimated that Nigeria has lost $10 billion in annual export opportunity from groundnut, palm oil, cocoa and cotton alone … Read More...

CBN targets revival of 20 textile companies before 2019 end

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The Central Bank of Nigeria (CBN) is targeting to revive at least 20 textile companies before the end of the year as it inaugurated a Textile Revival Implementation Committee on Thursday in Abuja. 

The committee would ensure the resuscitation of at least 50 textile firms by the end of 2023; collaborate with stakeholders to identify, name and shame textile smugglers in Nigeria as well as develop a framework for eradication of smuggling and dumping of textile products into Nigeria.

It would also facilitate the production of 200,000 hectares of cotton fields by 2020 and maintain an annual increase of 100,000 hectares over the next three years.

The committee was inaugurated by the CBN Governor, Godwin Emefiele and had Governor of Kano State Abdullahi Ganduje, as well as the Deputy Governors of Kaduna and Jigawa State among other stakeholders in the CTG sector in attendance.

Speaking at the event, Emefiele said the CTG sector within the last 20 years had suffered a lot of difficulties and listed the challenges confronting the sector   to include low cotton production, poor power and transport infrastructure, obsolete production lines, smuggling and counterfeiting, inadequate local patronage, high cost of production, and multiple taxation among others. 

For instance, he said the value of textiles  smuggled into the country has been estimated at over $2.2bn. 

The new committee is therefore also expected that the committee would work assiduously to deliver a minimum of 50 megawatts of captive power to CTG firms in the interested states by 2021, and facilitate the effective pricing and delivery of gas, black oil and diesel to CTG firms in Lagos and other interested states.

This is hoped would enhance their power generation and consumption.

According to Emefiele, “It’s no secret that the past 20 years have been very Read More...

Cheap steel threatens to shut down Qualitec Industries

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Qualitec Industries, a major producer of roofing sheets, is on the verge of shut-down as smuggled cheap steel hurts the company.

BusinessDay visited the aluminium maker to ascertain the impact of poor import policy on it and it was gathered that it has already cut down the number of workers significantly in the last five years.

It was gathered that the number of workers at the expansive factory is fewer than 50 from almost 300 in 2014.

Steel makers complain that importing full or plain aluminium is cheaper than bringing in inputs.

“When you import plain aluminium, for example, you pay five percent duty. But when you wish to import your input like galvanised sheets, for instance, you pay 35 to 45 percent duty,” a key player in the steel sector told BusinessDay.

Qualitec’s caster and rolling mills are still on. But its power plants run almost 24 hours. Coating lines and other sections are still on, but lack of patronage is slowing down activities in the factory.

BusinessDay had visited the factory at Ota, Ogun State, in 2014.

Oluyinka Kufile, chairman and chief executive of the company, was then optimistic. He had told BusinessDay that he had invested   $100 million in new plants, machinery, captive power plants and resuscitation of existing plants. A second production line was being installed, he had said, while machines that would be required, alongside technicians that would operate them, were expected to arrive in Nigeria from Turkey.

“We have made these investments because we believe that what is worth doing at all is worth doing well, “said Kufile had said, during a tour.

“We are in the forefront of production of aluminium in Nigeria and we are very proud of this,” he said.

“It is a huge investment that … Read More...