Aligning with government’s backward integration policy, Unilever Nigeria Plc has intensified efforts to improve its local sourcing of raw materials by partnering with farmers and intermediary companies.
Under its ‘Partner to Win’initiaive, Unilever will be investing in capabilities of intermediary companies to enable them to convert farm produce to usable goods that will be sourced by the company as part of its raw materials locally.The organization believes this will enable it to achieve a significant reduction in the importation of raw materials by working with local partners.
Speaking at the recently concluded Manufacturing and Equipment, Nigerian Raw Materials Expo, Unilever, West Africa, Procurement Director, Thomas Mwanza gave examples of steps taken by Unilever to achieve this drive in Packaging and agro-based materials.
“Already, Unilever has achieved over 90% in local sourcing of packaging materials. The aim is to achieve 100% by the end of 2019 and overcome the current challenges of local vendor’s capacity to meet up with global best standard. In agro-allied sector, Unilever is partnering with intermediary companies, for the supply of cassava and starch.”
Providing the motivation for this decision, Thomas said, “the backward integration programme of the Federal Government is a sound policy and as an organization we are committed to this initiative. We have found strong connections between this policy and our business model. This has spurred us to enhance our local sourcing capabilities that we have embarked on for about a decade.”
Speaking on the economic benefits of aligning with the government on this strategy, Thomas said, “by working with the intermediary companies to source these materials, we are contributing to up-scaling the technical skills required for sustainable commercial farming in Nigeria.
“We are also investing in the production of palm oil for use in BlueBand and soaps, and exploring local production of herbs and spice for our seasoning cubes. “
We believe that our partnership with these investors will not only create jobs within the agriculture sector but also provide support that will enhance their technical know-how and skills.”
The ability of the local suppliers to meet international standards for such materials and the possibility of locally produced goods being more expensive than imported goods are key challenges the company is facing. However, this is not a deterrent factor but an opportunity to help them scale up their skills and compete at the international level.
Thomas stated that “Our motivation and commitment to operate sustainably is far superior to these challenges. We are working with relevant authorities and local investors to ensure their produce meet the required standard for our products.”It would be recalled that the Federal Government of Nigeria designed the backward integration policy to deepen the economy and achieve robust growth.
As it currently stands, imports are still the dominant source of inputs into food, beverages and tobacco in Nigeria, accounting for more than 70% of all raw materials.The Economic Recovery and Growth Plan (ERGP) blueprint anticipates a strong backward-integration led growth in the agro-processing, food and manufacturing sector.