In spite of the abundance of fruits like citrus, pineapple, mango and tomato for juice processing in the country, makers of fruit juice still depend on the importation of concentrates for their manufacturing processes.
Coca-Cola Nigeria Limited, one of the largest drink making companies, with the only concentrate supply plant in the country, has decided to shut down its factory located in Sango Otta, Ogun state and relocate it offshore.
Consequently, the company, like others, will now depend on the importation of concentrates from Swaziland for its operations.
Harsh operating environment
Coca-Cola blames the unfriendly manufacturing environment in the country for the decision. In a statement on Friday, the company explained that the Otta factory which was commissioned to manufacture concentrates for all Coca-Cola bottlers in the sub-region, had made little profits because of the high manufacturing costs.
The company said this rendered products from the country non-competitive for export to other Coca-Cola bottlers in the neighbouring West and Central African countries.
The company added that the development made the plant’s operations unsustainable in the light of the current global economic realities since it had been producing for the Nigerian market alone.
Manufacturers react
Bashir Borodo, the President, Manufacturers Association of Nigeria (MAN) told NEXT in a telephone interview that it was sad that Coca-Cola is planning to relocate the only concentrate factory due to the unfriendly business environment in the country.
“It is sad and we will keep hearing such bad news if the government does not act fast in restoring the power sector. Instead of companies to be moving in they are moving out .This will definitely affect the work force because more people will be losing their jobs as the companies move out,” he said.
Mr Borodo noted that the prevailing environment is not suitable for manufacturing as this affects production costs, which in turn hampers effective competition with goods from other world markets.
In the last nine years, he said, “about 820 companies have closed shops with most of them relocating to the neighboring countries. Some of those remaining in the country have also diversified most of their production unit to those countries making the nation more of a consumer nation than a manufacturing one.”
Mr. Borodo argued that the Coca-Cola case is pathetic, as relocating the concentrate factory out of the country will mean the company going back to importing the item for its drinks, especially as Nigeria is one of the biggest markets for Coca-Cola in Africa.
Effort to revive the drink company
The beverage manufacturing sub-sector had depended on the importation of fruit juices and wines sold in the Nigerian market until 2002, when former President Olusegun Obasanjo’s government placed a ban on it.
Apart from that, the government also lowered the tariff on concentrate to five per cent, to encourage local manufacturers take advantage of the highly lucrative industry to enhance the production of juice and wines in the country and discourage importation.
Most beverage manufacturers currently in operation started during this period, but with the bulk of the concentrates imported from the U.S., the Netherlands and other foreign countries.
A report from the U.S. department of agriculture shows that Nigeria is a huge market for U.S. exporters of fruit concentrates and despite 60 per cent growth in the industry in the last five years, use of concentrate increased from 1.5 million kilogrammes in 2002, to about 30 million kg in 2007.
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