Nigeria Must Boost Copper Investment and Mineral Processing — Coleman MD
Strategies for a Cable Manufacturer to Establish a Strong Foothold in the African Market
Nigeria's cable manufacturing industry has made some progress, but there is still significant room for growth. The country has managed to export to countries like Ghana, Chad, and the Niger Republic, yet these exports remain modest compared to what is possible. The potential for expansion exists, but it requires a shift in focus from exporting to building local capacity first.
To establish a strong foothold in the African market, manufacturers must prioritize meeting domestic demand before targeting international markets. This approach ensures that local needs are met, which is essential for sustainable growth. A key example of this strategy is Coleman Technical Industries Limited, which has taken steps to backward-integrate its operations by installing a copper line. This investment, costing between N20bn and N30bn, allows the company to process copper locally, reducing costs and increasing competitiveness.
The challenge lies in creating an environment where local manufacturers can thrive. Nigeria’s current production capacity is underutilized, with companies like Coleman running on a single eight-hour shift instead of a 24-hour cycle. This underutilization not only limits output but also hampers job creation. If fully operational, Coleman could generate up to N12tn to N15tn annually, with 50% of this revenue coming from exports.
The Importance of Backward Integration
Backward integration plays a crucial role in enhancing value creation. By processing raw materials locally, manufacturers can reduce dependency on imports and increase their profit margins. For instance, Nigeria has access to significant copper reserves in the Congo-Zambia region, but these resources are not being processed within the continent. Instead, they are exported, processed elsewhere, and then re-imported as finished products. This cycle is inefficient and costly.
To change this dynamic, Nigeria must adopt policies that encourage local processing. This includes providing duty-free access to raw materials and offering rebates on value-added products. Such measures would create a more competitive environment for local manufacturers and attract foreign investment.
The Role of Fiscal Policy
Fiscal policy is a critical enabler for the manufacturing sector. However, the absence of updated tariff guidelines has created uncertainty for businesses. The last fiscal policy measure was approved in 2023, and the 2024 document remains unsigned. This delay has hindered the ability of manufacturers to plan effectively and compete globally.
For industries like cable manufacturing, the right fiscal policies can make a significant difference. High tariffs on raw materials, such as those on fibre optics, have made it difficult for companies to operate profitably. Addressing these issues is essential for fostering a business-friendly environment.
Collaboration Across Africa
Collaboration among African countries can further enhance the manufacturing sector. By working together, nations can leverage their natural resources and expertise to create value-added products. For example, Nigeria could partner with Zambia and the Democratic Republic of the Congo to develop a regional copper processing network. This collaboration would not only benefit Nigeria but also strengthen the entire African market.
Challenges and Opportunities
Despite the challenges, there are clear opportunities for growth. The manufacturing sector is a major employer, and its success is vital for economic development. However, many manufacturers lack the political influence needed to advocate for their interests. This gap must be addressed to ensure that the voices of industry leaders are heard.
In conclusion, for Nigerian manufacturers to succeed in the African market, they must focus on building local capacity, embracing backward integration, and advocating for supportive fiscal policies. By doing so, they can unlock the full potential of Nigeria’s natural resources and contribute to the continent’s economic growth.
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