NB deepens partnership with local entrepreneurs on backward integration
As part of efforts for sustainable development in the manufacturing sector and expanding local ancillary business activities in Nigeria, particularly in the local procurement of raw materials like starch-based inputs, the Nigerian Breweries Plc, has deepened its partnership with local entrepreneurs and farmers to harness huge value chain from its backward integration policy.
Mr. Patrick Olowokere, the company’s Corporate Communications and Brand Public Relations Manager, told The Daily Times that the company was consolidating its local sourcing of inputs for its operations and has fast-tracked its plan to attain 60 per cent local input sourcing to 2018 as against the initial 2020 target.
During a tour of Psaltry International Limited, one of Nigerian Breweries’ major raw material suppliers in Alayide village, Ado Awaiye near Iseyin, Oyo State, Olowokere said that the strategy was to identify organisations that could produce raw materials and ancillary products as inputs for its business.
These organisations, he explained, would be supported and provided the guarantee of a ready market for their products. These value chain models, according to him, have been experimented with successfully in the areas of Packaging Material, Sorghum and Cassava development models.
Olowokere revealed that the company has also made progress in increasing the supply of sorghum used for some of its beverages as more than 100,000 metric tonnes of the cereal is annually sourced locally. “Over 250,000 farmers spread across several agronomic zones in the North have been impacted by our Sorghum value chain program as at 2013,” he said.
Currently, the company’s brands are packaged, using locally sourced packaging materials such as bottles, cans, crates, cartons, crown corks, and labels among others. As at 2016, 99 percent of these packaging materials were locally sourced, opening wide opportunity to clusters of local entrepreneurs.
Similarly, the company had, since 2015, been working with Psaltry International Limited, a local cassava processing company to optimise the cassava value chain in the country by providing industrial quality cassava starch to extract maltose syrup for use in its brewing process.
Supplier of Cassava Starch
The cassava processing firm has today become the biggest revelation coming out of the backward integration story. Mrs. Oluyemisi Iranloye, MD/CEO of the firm, informed journalists last week that the firm has created a supply chain involving up to 5,000 farm families which included more than 2,000 registered and unregistered out-grower farm families, marketers, transporters and retail input suppliers.
She added that the company has saved the nation more than $7million in foreign exchange in the past two years through local provision of processed cassava starch for industrial use.
“NB is one of our major client off-taking 60 per cent of our Food Grade Starch used as binding agents in producing most beverages, foods, cosmetics and pharmaceuticals.
According to her, the country has started benefiting from its investment as the import substitution policy of the Federal Government in cassava starch has earned it some $4 million in the 2016 financial year. “Farmers in the community have been empowered over the years to increase production to 500 hectares through the Credit Agric Scheme of the CBN driven by us, and in the first year remitted 95 per cent.”
However, she commended Nigerian Breweries, saying, “One of the good things NB did is that they give us advance payment so that our cash flow can be better and we are able to pay farmers as they supply raw materials. We needed the money to come in quickly so that we can meet up in paying the farmers.
“What really steered my coming to this community was the fact that haven had experiences in the system, I understood the huddles farmers go through to transport their produce to urban cities.
“Most of the time, the cassava would have gone bad and farmers would be at a loss because the companies will not pay them, now we have been able to solve that problem,” she concluded.
The partnership between corporate giants like NB and local entrepreneurs like Psaltry International Limited is also impacting socio-economic development of small scale farming communities in Nigeria. Chief Busari Amusa, Baale of Alayide, the host community of Psaltry International Limited, was full of gratitude for the new infrastructural transformation that has come to his community. “It is a dream come true. We have electricity, boreholes for water and the roads are also opening up for accessibility between our farms and the factory. My story has changed today. Less than two years of this cassava business, I have a new house, a car and four of my children are in higher institutions of learning. This is unbelievable,” he said, and he is not the only beneficiary.
