Worried by the huge foreign exchange spent on importation of raw materials, the House of Representatives Committee on Industry, has charged the Bank of Industry to support genuine industrial firms that are willing to develop and add value to the nation’s local raw materials.
Lamenting over the low utilisation of the nation’s local raw materials, the Chairman of the Committee, Dr. Enitan Dolapo-Badru, noted that most industries in the country he has visited in the country have spent so much importing over 80 per cent of their raw materials for production, which he said was one of the reasons why the demand for dollars is high.
Badru at an oversight function to three companies supported by BoI in Lagos, stated the urgent need to reduce reliance on imported raw materials by 30 per cent in the next three years, adding that the current 80 per cent is unacceptable and unsustainable for economic development.
In his words, “We still need to do more. BoI must bridge the gap by paying attention to local material sourcing while companies must invest in research and development to drive local raw material sourcing while also adding value.”
“When you have about 70 per cent of the raw materials being imported, it affects the end product and the pricing of such product will be passed on to the consumers. It will also tell on the foreign exchange and if we can reduce this by 30 per cent, it would save lots of foreign exchange,” he said.
He commended the Development Finance Institution (DFI) for its timely intervention to support industries in the country, saying these companies cannot remain competitive and profitable without the single digit interest rate currently being offered to them by the bank.
He restated the Committee’s commitment to supporting BoI to industrialise the nation, saying that the manufacturing sector is critical for job and wealth creation.
During a visit to the bank earlier, the Managing Director, BoI, Olukayode Pitan, said the legislators’ visit would allow the bank to hint the House on areas of intervention in terms of legislation.
“The Bank has done well and we have been able to do more interventions and we have been urged to do well and we are going to work on it” he assured.
“This is the primary committee that oversees the Bank of Industry. We also have the Senate Committee on Industry. We are a licenced bank and we have the Central Bank of Nigeria also. We have Fitch Rating, we have Moody’s Rating and these are done annually. There is also KPMG, so there are many areas of control,” he stressed.
The Managing Director, Honeywell Flour Mills Plc, Lanre Jaiyeola, stated that his company is currently engaging wheat farmers in Nigeria to increase their yield as a way of looking inwards for sourcing some of its raw materials.
According to him, the total demand for wheat in Nigeria currently stands to about 5.2 million metric tonnes which is a far cry of the 800,000 metric tonnes of wheat produced locally on annual basis.
“This is why we are providing a number of supports to these farmers to boost their yields which are very low compared to overseas. We believe they can still do more and this is why we have a strong alliance with them recognizing that there is a huge gap in supply,” he said.
He said the visit is a confirmation of the federal government’s commitment to support the manufacturing sector, saying that manufacturers must pay attention to backward integration programme of the federal government.
The Finance Director, Honeywell Flour Mills Plc, Mobolaji Fakayode, said the company has repaid N3.5 billion out of the N6 billion facility it got from BoI, noting that it is looking forward to continue working with BOI even as it enters a new phase in its development; backward integration programme and other capacity expansion projects.
“BoI has been very supportive and we could not have achieved without their support. The two years moratorium period reinforces their support for the growth of the real sector,” he said.