OPPORTUNITIES IN THE NIGERIAN MANUFACTURING …€¦ · Manufacturing Sector in Nigeria…/3 The...

OPPORTUNITIES IN THE NIGERIAN MANUFACTURING SECTOR

Omolara Akinfolarin

Head, MSME Banking

Sterling Bank PLC

Nigeria

www.nigeriamanufacturingexpo.com

About Sterling Bank …

Company

Sterling Bank is a full service national commercial

Bank with asset base above $4.4 billion (N842

billion) and shareholders’ funds in excess of

$446.1m (N88.4 billion).

Active Customers > 1,000,000

Headcount >3,000 professional employees

Channels 187 business offices; >840 ATMs; 5,000 POS

Ratings Agency Short Term Long Term

GCR A3 BBB

Brief on Manufacturing Sector in Nigeria


GDP N89.043trn (2014)

3.1% GDP Growth rate

(H1,2015)

9.4% Inflation Rate

(August,2015)

170m Population (48% under 15 years)

Over 250 ethnic groups

Nigeria at a glance


Global trends in Manufacturing

The manufacturing

sector contributes

18% of the US$70trn

global economy,

and accounts for

70% of global trade

Source: United Nations Statistics Division; US

Bureau of Economic Analysis (BEA):

McKinsey Global Institute Analysis

Manufacturing Sector in Nigeria…/1


The Food, Beverage and Tobacco Sub-sector has the largest market share in the

Manufacturing sub-sector, contributing 49% of the entire sector. It is followed closely

by Textile, Apparel & Footwear (21%) and Cement (7%)

385.82

604.61

4,241.78

1,815.73

238.55

59.93

154.62

259.28

221.95

5.76

195.76

67.14

434.50

Oil Refining

Cement

Food, Beverage and

Tobacco

Textile, Apparel and

Footwear

Wood and Wood Products

Pulp, Paper and Paper

Products

Chemical and

Pharmaceutical Products

Non-Metallic Products

Plastic and Rubber products

Electrical and Electronics

Basic metal , Iron and Steel

Motor vehicles & assembly

Other Manufacturing

Size of the Manufacturing Sub-Sectors (2014, N'bn)


• Non-metallic products

and chemical &

Pharmaceutical products

recorded the highest

growths in the sector in

2014

• This was followed closely

by Textile, Apparel &

Footwear, Plastic & rubber

products and Cement

• The oil and gas refining

sector which is the

mainstay of the Nigerian

economy contracted by

6% in 2014 from 2013.


-6%

34%

11%

39%

17%

18%

42%

42%

37%

10%

21%

31%

34%

-10% 0% 10% 20% 30% 40% 50%

Oil Refining

Cement

Food, Beverage and Tobacco

Textile, Apparel and Footwear


Pulp, Paper and Paper Products

Chemical and Pharmaceutical

Products

Non-Metallic Products

Plastic and Rubber products

Electrical and Electronics

Basic metal , Iron and Steel

Motor vehicles & assembly

Other Manufacturing


Breakdown of Sub-Sectors


Food & Beverage Food - Fish, Palm Kernel, groundnut oil, Palm

oil, Yogurt, Ice-Cream, Garri, Cornflakes, Rice, Starch, Animal Feed, Biscuit, Pastry and Cakes, Bread, Sugar, Chocolate; Beverages – Juice, Alcoholic Drink, Wine, Beer, Malt Drink, Water, Soft Drink

Textiles, Apparels and Footwear

Textiles – Sack, Sewing thread, Cotton, Other woven fabric, Blanket/rug, Window cloth, Tarpaulin, Apparels – Window cloth, Embroidery design, Men’s Wear, Women’s

Wear; Leather – Suit case/luggage, shoe

Chemical & Pharmaceutical

products

Chemicals – Engine Oil, Printing Ink, Zinc Oxide, Fertilizer, Insecticides, Paint, Soap

and Detergent, Cosmetics, Other chemical; Pharmaceuticals - Pharmaceuticals


Breakdown of Sub-Sectors


Plastic and Rubber Shoe (Plastic), Peeking Case, Nylon, Rubber tubes,

Arabic Gum, Plastic bag, Table Wire/Kitchen, Plastic product, Bucket

Non-Metallic Products Glass bottle, Ceramic mug/vase flower, Block ring, Block, Tiles, Ceiling, School chalks and crayons


Plank, Plywood

Pulp, Paper and Paper products

Paper – Corrugated Paper, Toilet Roll, Sanitary towels, Napkins and Diapers, Paper Label, Notebook/Account; Printing – Printing, Notebook/Account


The Nigerian Industrial Revolution master Plan (NIRP)


• The NIRP is a 5-yr plan to

accelerate the build-up of

capacity within Nigeria.

• It is Nigeria’s first strategic,

comprehensive, and integrated

roadmap to Industrialization.

• The NIRP aims at developing four

strategic Industry Groups (with

detailed sub-sectors) where the

country has comparative

advantage Source: Aspirations for economic contribution of Nigerian industry

(Fed. Min. of Trade & Commerce, 2013)


The Nigerian Industrial Revolution master Plan../2


Strategic Industry Groups

Agribusiness & Agro Allied

• Food processing (specifically beverages, packaged food products)

• Sugar

• Palm oil processing

• Cocoa Processing

• Leather & Leather products

• Rubber Products

• Textile & Garments

Solid Minerals & Metals

• Cement

• Basic Steel

• Aluminum

• Chemical

• Auto Assembly

Oil & Gas Related Industry

• Petrochemicals

• Fertilizers

• Methanol

• Plastics

• Refineries (with Oil & Gas Ministry)

Construction, Light

Manufacturing & Services

• Light Manufacturing (consumer and home goods)

• Services


Growth Drivers/ Opportunities

Expanding youthful

Population; Expanding

Markets

Urbanization; Increasing

Market Concentrati

on

Emerging middle class;

Increasing spending

power

Acquisitions and

expansions

Recent economic downturn



Products ban

Import substitution

Product packaging

and differentiation needs

Growing food

consumption -73%

spent on food

Low barrier to entry


Challenges


Funding Infrastructural

deficit Regulatory challenges

Reliance on crude oil

Preference for imported

goods

Lack of skilled manpower

Nigeria’s manufacturing sector’s share in the Gross Domestic Product (GDP)

remains minuscule at about 4.23% (CBN, 2013) with just 17% playing in the sector

Strong manufacturing sectors in other emerging economies contribute as high

as 20 percent of GDP in Brazil, 34 percent in China, 30 percent in Malaysia, 35

percent in Thailand and 28 percent in Indonesia (Ogbu, 2012)

Sterling Bank’s Intervention


CAPACITY BUILDING

BESPOKE FUNDING

SUSTAINABLE GROWTH IN THE

MANUFACTURING SECTOR

Financing Opportunities for

MSMEs in Sterling Bank Plc

• A holistic and integral

framework of value-add

offerings that will inspire,

nurture, mentor and

manage specific MSME

types from micro to

medium.

• This product is called

the SUPA Business

Proposition which comes

in three variants


Our SUPA offering: Financial


Unsecured overdraft

• One year facility of up to N2.5m with a 30 day clean upcycle

Secured Overdraft

• One year facility of up to N25mm with a 90 day clean upcycle

Term / Time loan

• Up to N20mm available over a tenor of up to 48months for asset acquisition and business expansion.

• Also covers invoice discounting, contract and LPO Financing

Our SUPA offering: Non Financial


e-Solution for inventory management, daily business operations and book-keeping (ERP)

Access to the MSME Capacity Building Workshop Academy

Access to Business Advisory services Helpdesk

Access to Market Arena

Meet the Executive Program to empower aspiring entrepreneurs

INTERVENTION FUND

N220 BILLION CBN MICRO, SMALL & MEDIUM ENTERPRISES DEVELOPMENT FUND (MSMEDF)


To enable Banks, existing SMEs and prospects access the MSMEDF funds in order

to increase their productivity, output,

employment and engender inclusive growth.

The fund is spread as follows: 60% (Women), 30% (Others) and 10% (For new

businesses).

To enhance and improve Bank’s access to increased

long term and low cost liquidity to support the SME

Business.

TERMS & CONDITIONS

• Only SMEs in Manufacturing,

Agricultural Value Chain activities,

Renewable energy/Energy efficient

product and Technologies,

Educational Institutions and income

generating Enterprises as advised by

CBN


Single Obligor Limit

• Minimum of N5 Million per customer

• Maximum of N50 Million per customer

• For working capital purpose: customer can only access 50% of average monthly credit turnover of the customer over a period of 12 months account statement

Tenor

• Maximum of 3 years for SME Working Capital

• Maximum of 5 years for SME term loan

• Moratorium of 12months

Pricing and Other Conditions

• All in pricing of 9%

• Funds must be disbursed within 5 days of receipt from CBN

• Max. 70% of the average monthly positive net credit turnover of the customer (over a period of 12 months account statement with the Bank or any other Bank) shall be required to service the loan rentals.

OTHER FINANCING SCHEMES

• Cluster financing e.g. ASBON, NASME etc.

• Distributor / value chain financing

• Asset Financing

• Sterling Alternative Financing


Success Factors

Success Factors Technology

Standardization, streamlining and

outsourcing

Innovation

Financials

Labor Force


CONTACT US


20 Marina, Lagos, Nigeria

Tel: 234-(01) 2600420-9; 234-(01) 4613152

Website: www.sterlingbankng.com

Omolara Akinfolarin

Head, MSME

+234 8055095588

[email protected]

[email protected]

http://www.sterlingbankng.com/

mailto:[email protected]



Thank You!


OPPORTUNITIES IN THE NIGERIAN MANUFACTURING …€¦ · Manufacturing Sector in Nigeria…/3 The...

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