INVESTING IN NIGERIA & THE LOCAL MARKET TO BOOST NIGERIA MADE PRODUCTS & SERVICES — “Ask not what your country can do for you – ask what you can do for your country,” – JF KENNEDY
”Despite the focus by some on the unstable operating business environment in most African countries, investors are still being drawn to the African continent. ”This is due to the high returns on business investments in Africa when compared to returns on investments in the developed economies. ”Because the African continent has not made full use of the vast human and material resources vested in it by nature, there is a huge investment vacuum to be filled by any brave and adventurous entrepreneur”
TERRIFIC HEADLINES operates as a non–political, non-partisan organization, and are, therefore, conscious of our responsibility of ensuring fairness, justice and ethical responsibility. Several of our posts are influenced by patriotism and our desire to see Nigeria develop phenomenally. We are able to say with every sincerity that the whole world is our constituency, and we focus on youth development; Building a Greater Nigeria; promoting home made products and services; political & economic issues; particularly getting the Nigerians Diaspora to be committed to investment promotions, and encourage Investors generally (local and foreign) We promote the abundant untapped human and material resources available in Nigeria, particularly Agriculture and other critical sectors of the economy. Among others, we promote NIGERIA MADE PRODUCTS locally and abroad, given Nigeria’s Strategic place in the global economy. Part of our social responsibility is to encourage Nigerians to cohabit in peace and unity for the stability, and progress of Nigeria. Lately, we commenced publishing of refreshing information about FAMILY VALUES because of our belief that no society could move forward without paying particular attention to this very important issue. We are not involved in partisan politics and we believe that when it comes to issues pertaining to the growth and development of Nigeria, especially the well-being of the citizenry, religious faith , place of origin, and politics should take the back row. Only issues that could put food on tables of the masses should be encouraged.
NIGERIA MADE PRODUCTS: Our policy is that no matter which government is in place, our responsibility is to promote Nigeria and MADE IN NIGERIA products and services. Our patriotic instincts have challenged us on many occasions in the past. Today again, we promote a piece on this very important economic activity. This piece is being promoted because of its invaluable information on the profitability of developing Nigeria Made Products. An investment enthusiast and former envoy of the Federal Republic of Nigeria, Prof. Tunde Adeniran presented this paper a few years ago. Largely, the compilation deals with the local production and external marketing of Nigerian products, and promotion of Foreign Direct Investment (FDI) Such a topic should be of interest to all well-meaning Nigerians at home and in the Diaspora, following government’s policy of RIGHT OF FIRST REFUSAL granted Nigerians to encourage citizens to take more active interest in the development of the economy. This paper should have the impact of convincing potential investors in MADE IN NIGERIA products of the potential value of specific raw materials and products available in the largest market in Africa. It is not impossible for our brothers and sisters across the globe who are making their marks in foreign countries to develop interest in investing in NIGERIA MADE PRODUCTS; while also acting as good ambassadors of Nigeria, by encouraging potential investors to come and invest in Nigeria, the biggest economy in Africa with vast and limitless opportunities.
INVESTMENT POTENTIALS: Today Africa is fast emerging as the new investment destination for most investors. Despite the focus by some on the unstable operating business environment in most African countries, investors are still being drawn to the African continent. This is due to the high returns on business investments in Africa when compared to returns on investments in the developed economies. Because the African continent has not made full use of the vast human and material resources vested in it by nature, there is a huge investment vacuum to be filled by any brave and adventurous entrepreneur. The case of one of the richest men in the world, Nigeria’s Aliko Dangote, is a vivid example. What Dangote has done is simple. He has dared to tread where others are scared to go. In human endeavor, high risk usually accompanies high reward after a proper cost-benefit analysis.
At a time when Europeans and North Americans shied away from investing In Nigeria’s telecoms industry, MTN came to Nigeria and has been able to use their phenomenal returns on their investment in Nigeria to grow their businesses all over the continent. From this and related ventures, African leaders are beginning to realizes (albeit slowly) that their grip on power can only be sustained if they give their people the basics. This is the only way they can stave off agitation that usually threatens their positions, In this regard, the continent’s leaders seem to be moving away from state-controlled enterprises to giving those in the private sector the opportunity to control a big chunk of the economy. This new way of thinking has continued to create opportunities for people in the private sector to take advantage of the huge untapped potential/market that Africa possesses.
AGRICULTURE & THE CASE FOR DIVERSIFICATION: The bane of most economies in Africa has been the over-dependence on one major product as the source of revenue. For example, the discovery of oil in commercial quantity in Nigeria significantly distorted the structure of the economy by relegating agricultural products to the background. During the First Republic, the bulk of the resources accruing to the regions came from agricultural products. There were groundnuts in the· North, cocoa in the West and palm oil in the East. But the curse of the crude oil took attention away from agriculture and elevated crude oil exploitation as the main source of revenue. However, the vicissitudes in the international crude oil market and the advanced research by the United States in the search for alternative fuel once again points to the fact that the future of African economies may lie in agriculture. Agriculture certainly promises to be the next frontier for good investment returns for investors in Africa. Endowed by nature, there are four things that give Africa (especially sub-Saharan Africa) a huge advantage in agriculture. They include:
- Large uncultivated arable land.
- Large but unemployed labour force.
- Adequate sunshine/heat all year round.
- Abundant rainfall especially in tropical low lands.
- Large untapped internal market that can be protected by government trade policies.
- Possibilities of export.
Investment Opportunities in Africa’s Indigenous Stimulants: One of the potential investment opportunities lies in AFRICA’S INDIGENOUS STIMULANTS. Stimulants are substances that increase central nervous system activities in the human body. Most of these stimulants contain chemicals of the methylxanthine group. They increase alertness, heart rates and energy levels in man. Stimulants are also widely used because they produce a sense of euphoria that most people crave for. Examples of naturally occurring stimulants in Africa include the following:
- Khat (Catha edulis)
- Kola Nut (Cola nitida and Cola acuminate)
- Bitter Kola (Garcinia kola)
- Coffee (Coffee aarabica and Coffea canephora)
- Tobacco [Nicotianatabacum)
- Cocoa (Theobroma cacao)
- Moringa Oleifeira
The stimulants listed above can be grown with comparative advantage in parts of Africa especially sub-Saharan parts of the continent without recourse to irrigation or heavy use of fertilizers. The stimulant producing plants or trees are also not foreign to our culture in different parts of Africa. The stimulants listed above or their extracts are also used in the following industries:
- Food and beverage industry.
- Pharmaceutical industry.
- Cosmetics industry.
Apart from’ these industries, some of the stimulants are used’ in their natural form for recreational purposes while others are used in Africa for celebrating occasions and as symbols of tradition. Bitter kola and kolanuts are used lavishly at weddings, traditional ceremonies, community festivals, etc, with varying appeals and symbolism in diverse settings and to various cultural groups.
KHAT (Catha edulis) Khat is predominantly grown in the horn of Africa and recently in Kenya. It’s use as a social or recreational product in, countries like Ethiopia dates back over a thousand years. The leaves are chewed for the stimulant effect enjoyed by the users. Khat leaves contain an amphetamine-like substance Cathinone. This explains its physiological effect as a substance that also causes lossof appetite while giving a feeling of euphoria. Although it is legally used in some countries like Ethiopia, Yemen, Sudan and Ethiopia, Khat has been put on the controlled substances list in countries like Canada, Germany and the USA. Most of these countries frown on its potential for abuse. For now there exists only a relatively small world market for Khat. However work can be done to produce herbal drinks, which contains Khatleaves. This can be marketed for sale in the WEIGHT LOSS INDUSTRY because of the anorectic effects of Khat. Khat can also be usedas an ingredient of ENERGY DRINKS. The global ENERGY DRINKS market today is worth approximately $40.00 billion.
KOLA NUT (Cola nitida) As I mentioned earlier on, kolanuts, which are grown predominantly in West Africa, have traditional use in most African countries as a symbol of peace and friendship. They are also used for recreational purposes to combat fatigue, increase alertness and to suppress hunger. Kola nuts have also been exported to Europe and North America for use in pharmaceutical and food industries. In the beverage industry as a flavoring ingredient of soft drinks (e.g. Coke and Pepsi), and also for caffeine production for use in the pharmaceutical industry. Kolanuts are also used in the production of’ wine and chocolates. The caffeine content of Kolanuts ranges from 2.0-3.5% compared to coffee bean which has a caffeine content of 0.9-1.7%. Due to its high caffeine content this particular crop can be processed and placed as an alternative to coffee for use as a hot drink.
Most people drink coffee for the stimulant effects of its caffeine content. With its higher caffeine content, processing Kolanuts as a substitute for coffee represents a huge market opportunity. With a total Global market size of approximately $70.00 billion and an export component of about $23.5 billion in the coffee bean trade, Kolanuts can be positioned to tap into the coffee market. However a lot of marketing/promotion would have to be, done to position Kola as an alternative to Coffee. This can however be achieved by touting its higher caffeine content. About 1-2 teaspoons of dry pulverized Kolanuts can be dissolved in hot water as an alternative to hot coffee drinks. Because of its higher caffeine content the stimulant effect achieved through coffee drinking can also be enjoyed using Kola nuts.
With higher investment in Kolanut production, there is great promise in such investments to create thousands of jobs for African countries, since the coffee trade a few years ago employed about 125 million people worldwide. Certainly, with a liberal supply of water and fertile soil Kolanut trees start to fruit in 5 years. However, recent developments have thrown up a variety that fruits in 3 years using vegetative propagation techniques. By-products of Kola harvests include the Kola pod husk which can be used in liquid soap production and as a 50% substitute for maize in the production of feed formula for poultry. Most Kola trees (the two economically important varieties being kola nitridata and kola acuminata), if well maintained, will fruit for 50-80 years.
- Bitter Kola (Garcinia kola)
- Bitter kola (Garcinia kola) belongs to the family of Guittiferal. In Nigeria, the Hausas call, it “Namijin Gworo”, the Igbos call it “Agbilu”, “Adi” or “Akilu” while the Yorubas call it “Orogbo”. It is grown in different parts of West Africa and also in the Democratic Republic of Congo. Garcinia kola owes its stimulant effect to its content of a methylxanthine derivative, catechine-caffeine called colanine.
Traditionally used for medicinal purposes in Africa, Bitter Kola has found use in the treatment of throat infections and bronchitis because of the astringent and dilating properties. They have also been employed as a diuretic to treat renal diseases such as mild cardiac or renal edema. Bitter Kola possesses stimulant and appetite suppressing properties, hence its use in suppressing fatigue and hunger. Bitter Kola has .also found use’ in most traditional ceremonies in certain African, countries especially at naming ‘and wedding occasions. Bitter Kola contains antioxidants which, combined with its stimulant properties, have been touted as a stimulant for enhancing sex drive. With a liberal supply of water and manure, Garcinia kola trees start to ‘fruit in about 5 years though the average fruiting period is 7-10 years. The trees continue to fruit for 75-100 years if properly maintained.
SENSITIZATION: Most farmers shy away from the cultivation ‘of this tree because of the longer time before fruiting. Work can however be done to shorten its onset of maturity. More work also needs to be done to ascertain its sex drive enhancing properties since a huge market abounds for such products. The research work necessary in this regard should be such as to increase the exportable quality and quality beyond the present level by which the product is available in the market usually between March and November of each year. As a result of its use in preparation of herbal drugs either as supplements, nourishment or herbal remedy, there is a growing demand for it. In view of its health benefits such as the treatment of cold, fever, .cough, sneezing, diarrhea and bacterial infection, the demand will definitely continue to increase. Meanwhile, Bitter kola is in great demand in the USA, Britain, China and India. The African Growth and Opportunity Act (AGOA) has also opened up greater opportunity for the penetration of the American market.
COFFEE (Coffea Arabica and Coffe acanephora): Coffee beans owe its stimulant effect to its caffeine content. The caffeine content in Coffee beans ranges from 0.9-1.7% depending on the species. With an annual global production of 8-10 million metric tons this crop has been listed as the top agricultural export for about 1,2 countries and the world’s the largest argic-export as late as 2005. The green (unroasted} coffee bean is one of the most traded agricultural commodities in the world today. The global trade in coffee is valued at about $70.00 billion. The crop helps to contribute significantly to the GOP of countries like Brazil, Vietnam, Indonesia, Colombia, Ethiopia, Ivory Coast, ORC and. Uganda. Unfortunately, African countries are still fringe. players in the cultivation and trade of this commercially viable crop. This is despite the fact that the topography and weather of some African countries favour the cultivation of coffee. Coffee is used as a good source of caffeine for the pharmaceutical industry. However, its use is largely in the beverage industry for its stimulant properties. Vietnam tripled their exports of coffee between 1995 and 1999. Since a market already exists for coffee, investors in Africa can also take advantage of Africa’s under-utilized put cheap land, favorable weather conditions, cheaper labor, and closer access to the European market (when compared to some South American or Asian growers) to grab a bigger chunk of the coffee trade. The top Coffee importing countries in Europe are:
- Because of the addictive nature of Coffee the market will only grow bigger.
Moringa Oleifera: In the past few years many Nigerians have discovered Moringa to be one of the world’s most useful plants and nutritious crops. This drought resistant tree is said to have been brought to us from Southern India, Pakistan, Bangladesh and Afghanistan. Moringa is now grown in Africa and the Caribbean. In northern Nigeria, Moringa was originally grown essentially for fence making but, today, its potential as the “tree of life” has made Moringa a rich source of protein for both human being and animal and a source of revenue. But more than that, virtually all parts of the plant are valuable to man as food, medicine, and fuel. Parts of the health benefits of the Moringa tree are said to include its strong antioxidant effect against prostrate and skin cancers, tumor and its’ anti-aging substance. Moringa is also said to “modulate anemia, high blood pressure, diabetes, high serum or blood cholesterol, thyroid, liver and kidney problems”.
Moringa was first introduced to me at our Graceful Ageing Fellowship (GRAF) in Abuja some years ago and testimonies from various people have been amazing. A professional has also confirmed that “Moringa has strong anti-inflammatory properties and ameliorating rheumatism, joint pain, arthritis, oedema and lupus. The plant is effective against digestive disorder including colitis, diarrhea, flatulence (gas), ulcer or gastritis”; Itisto a great advantage that Moringa can grow in any part of the country given its low moisture requirement. It can be grown through seed planting, stem propagation or through existing plant anytime during the year. With the promises that Moringa holds in nutrition, medicine, manufacturing and cosmetic industry, there is a huge investments opportunity in this plant also called the “miracle plant” of the century.
Scholars and public commentators have been giving some publicity to the value of Moringa for quite some time. For instance, according to Olumakinde Oni in the BUSINESS DAY of Monday 14 February 2001, “Serious minded investors can be assisted in the establishment of plantations, including procurement of seeds’ and stem cuttings. Propagation by seed has proved more reliable than the stem cuttings. Moringa is ready for harvesting from the age of 6 months and can be harvested for over 50 years if the plantation is well maintained”. Further in his profitability analysis, Oni posits that flit is possible to make a sum of N20, 000 from a stand of Moringa plant by selling the seeds and the dried leaves. From five hectares of land, we have about 6,000 stands. This gives a gross income of N120 million annually. The maximum operating cost to maintain the plantation is not more than N5 million annually. This is no doubt a good source of income for Nigerians”.
Already, in Niger Republic, investments in Moringa plant have started yielding dividends by providing farmers prosperity and overall life transformation among the rural people. Under a programme termed “Moringa Value Chain approach”, testimonies are pouring in from local women: According to Karimou, a housewife, “it used to be that after the hot season, we were left empty handed,” … “now [with our Moringa production] we have food, clothes, and money for education and healthcare for our children. We have used the profits from selling Moringa to purchase animals, and even a new irrigation system for the garden to (further increase production).” (Quoted in Annette Frost, “Moringa: the Tree of Life”, www.huffingtonpost.com/annette-frost/mo)
Back home here in Nigeria, THISDAY newspaper of October 2013 has reported that Nigeria can earn a whopping $1 billion annually from herbal products. According to the Report, a pharmacist, Maurice Iwu, argued that “countries like South Africa, Kenya and Ghana’ that have developed their herbs, health food and natural products earn a whopping $3 million daily from the sector”. In addition to that, he said the herbs and dietary supplements and phyto-medicines are helping residents of the countries to effectively fight ailments. I don’t see why the nation cannot generate $1 billion annually from this. It ‘is just in terms of monetary value. The jobs that you create, the healthy nation that you have, the impact you have in the society are unquantifiable”, he stated.
CONCLUSION: Very encouraging Investment and Market Opportunities exist for Investors in Africa’s Indigenous Stimulants. There is an existing market for some of the stimulants in African Countries but export potential also exists for these stimulants. Potential return on investment in these stimulants is high because of easy access to arable land, favorable climatic conditions and cheaper, skilled and unskilled labor. About three decades ago two substances: Ginseng, a dietary supplement and Artemisinin, an anti-malaria drug, both from plant origin, had not found their way into mainstream use worldwide. Today the reverse is the case, because of a concerted effort by the Chinese to put them there. The same can be done for Africa’s indigenous stimulants. African stimulants can be produced and marketed to the world. African stimulants like kolanut, bitter kola and moringa hold even higher potentials in investment opportunity and all that is lacking is to unlock this huge wealth waiting to be tapped.
Finally, in this regard, there is also the need to tackle insect infestation, the major problem being faced by producers of these products while a good storage system to preserve quality and improve sales is a vital necessity. (Prof. Tunde Adeniran, OFR, delivered this paper at a conference on indigenous stimulants in Ibadan. (2013)
NEXT WEEK: WE SHALL FOCUS ON NIGERIA MADE FABRICS & THE IMPORTANCE OF USING NIGERIA MADE PRODUCTS & SERVICES IN THAT SUB-SECTOR.
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