Steps towards industrialisation

On the back of the recently concluded African Export-Import Bank 2018 annual meetings held in Abuja, we visited a multipurpose manufacturing factory at the Idu Industrial Park last week. The park is designed to accommodate about 200 plots of industrial land; we understand that 84 plots have been fully developed. The multipurpose factory we visited can produce galvanized wire panels, building accessories, sculptures, and disposable foodservice products amongst others, using polystyrene as the primary input.

  • An injection of US$8m (private investment) was used to set up the factory. This sum covers the cost of land, machinery as well as the training of employees. The initial primary focus of the factory was the fabrication of building material using polystyrene technology.
  • The cost of building housing units using this technology is significantly lower than typical methods of construction. For instance, a studio apartment can be purchased at N5m compared with an average cost of N15m (in Lagos). Furthermore, delivery speed is faster, making it an efficient solution to affordable mass housing projects.
  • The polystyrene technology is widely adopted in Dubai to construct buildings.  We learnt that Bayelsa State government intends to deliver 3,000 housing units using this technology. This would empower builders in its local communities given that about 35% of the construction will be done at the delivery location.
  • Beyond housing, Nigeria’s culture and tourism sector could benefit from the creation of polystyrene monumental art (sculptures) which showcase the country’s cultural heritage in urban centers. An example is the newly installed Kano monument. The duration of the project was three months; six artists were engaged. The arm of the factory responsible for this project was created to diversify output and increase utilisation of machinery.
  • On the naira exchange rate, one member called for the CBN to pursue the convergence of the different segments of the market. Such a trend is not evident on NAFEX or from the CBN’s rate for preferential transactions (of c. N305) although it could be discerned from the rates at the CBN’s wholesale auctions. We still do not see the unification of rates anytime soon.
  • The storage and packaging sectors are also being targeted: cooler boxes for perishable agricultural products such as fruits, vegetables and fish are being produced. Additionally, medical boxes for pharmaceutical products are manufactured and supplied to local end-users. As for the quick-service meal industry, sourcing food package trays, packs and disposable cups produced from the factory could reduce their cost of imports considerably.
  • Structural issues such as power shortages are a major challenge as self-generation of energy gulps N40m per year. Furthermore, fx is largely sourced at the parallel market to secure imported inputs for production. There are also issues faced at the port with regards to final clearance of new machinery. As such, the current business environment limits the expansion potential of this sort of factory, slowing down the country’s industrialisation process.
  • Locally sourced polystyrene should be more readily available once the Dangote petrochemical plant becomes operational in a few years’ time. The economic benefits of an industrialised economy include a reduction in its import bill, job creation and a boost to inclusive growth.


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