Impact of Nigeria Industrial development on Brew Industry

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Industrial development policy has greatest threat as a result of been inconsistent of the federal Nigerian Government policies, especially with respect to promoting and encouraging the cultivation of local raw materials for brew production.

The Policy reversals in this direction have helped to slow down the backward integration initiative of the Nigerian Government aimed at replacing imported barley with local sorghum as the main ingredient for brew production in the country.

The Nigerian Breweries plc (NB) with her partners have been helping to fund research into the development of high yield sorghum hybrids, the task of ensuring the widespread and proper use of such seeds by local farmers will depend on the existence of a supportive and effective national agricultural policy.

The development and operationalization of such a policy cannot be outsourced to multinational brew companies by the Nigerian Government.

Several attempts has been made to opts for local raw materials for the production; beer; barley; sorghum; Africa Introduction to increase its use of local raw materials for beer brewing.

For instance, since 1960s or there about when the company commenced its barley planting trials in Nigeria, took a dramatic turn in the late 1980s.

This was the direct consequence of the 1988 ban on the importation of barley – the major raw material for beer production in Nigeria at the time – by the Federal Government of Nigeria.

 

With its dwindling oil revenues and falling foreign exchange reserves, as at then, the Nigerian Government made reasoned not to continue to allow the importation of foreign raw materials, especially when there were local alternatives.

 

Initially, the Government announced that, effective from 1990, importation of barley malt would be banned. Amehnews recalls that Felix Ohewerei, was the Managing Director of NB at the time, ‘[i]n a fit of irrational policy summersaults [sic] for which Nigerian military regimes were renowned, the ban was brought forward by two years and decreed to take effect as from January 1, 1988’.

Some of the Government policy somersaults with respect to the development of the brewery industry in Nigeria forced NB to break with its tradition of using only imported barley for beer production in the country.

 

According to the source, since then, the company subsequently turned its attention to sorghum, a crop that is grown and consumed in several parts of Nigeria, which is also suitable for beer production.

It also adapted its production plants in Nigeria to become compatible with the use of sorghum for brewing beer and promoted the establishment of sorghum malting plants in the country. Malting involves essentially steeping, germinating and limiting cereal seedling growth after the production of enzymes required for degradation of starch and proteins in cereal grain.

When the NB gathered momentum to increase the investment level, here came another unfortunate policy, of reversed the ban on the importation of barley in 1998 and imposed an import duty of 20% on the product by the then Government.

In the same year, the Government also reversed the ban on the importation of beer and stout into the country and imposed an import duty of 100% on these products, causing a major setback for brewing beer with local grains in Nigeria.

‘The effort at backward integration was to later peter out following the policy reversal.’ This caused the Nigerian beer industry ‘to re-focus once again from the use of locally grown sorghum to imported malted barley.

Thus, the initial attempts at local cultivation of grains waned considerably’.

Matters were further complicated in 2008 when the Nigerian Government lifted the ban on the importation of sorghum, which it had banned two decades earlier, and imposed a 35% tariff on the product.

According to source revealed that the Nigerian Government lifted the ban at a time when sorghum production in the country was on the increase. Between 2002 and 2008, for instance, sorghum production in the country rose from 7.8 to 11 million metric tonnes.

You can then see how policy change has highlighted above, been counterproductive and has only benefitted major sorghum exporting countries to the detriment of its local production in Nigeria.

It was partly contributed to drop in domestic production of sorghum in Nigeria from 11 million metric tons in 2008 to 6.6 million metric tonnes in 2009.

The current Boko Haram insurgency in the north-eastern part of the country where served as a major sorghum belt will also played a role in curtailing sorghum production in Nigeria.

Domestic production of sorghum in Nigeria has been further discouraged by the decision of the Nigerian Government to reduce the duty on imported barley malt and barley concentrates to 5% in 2015. The result is that such imports from Western nations, some of which are known to subsidize such agricultural products, are now competing with their local substitutes in the Nigerian market. Also troubling is the fact that the malting capacity for local sorghum, which had been developed as a consequence of the 1988 imported barley ban, is now threatened.

Erratic and sometimes confusing policy reversals by the Nigerian government have helped ensure that NB, which at least for some time produced its beer in Nigeria only from locally produced grains, is now partly dependent on imported malted barley for its beer manufacturing in Nigeria in other words, a company that once produced its entire range of beers from local raw materials now aims to source 60% of its agricultural raw materials in the country by 2020.

Although NB is very visible in promoting research into the production of high-yield sorghum, the impact of such efforts will be limited in the absence of consistent government policies and support for the development of the sector.

The greatest threat to the use of local raw materials in beer brewing in Nigeria is the inconsistent Government policies, especially with respect to protecting and encouraging local agricultural production.

Policy reversals in this direction have simply encouraged the importation of agricultural products from Western countries into the Nigerian market to the detriment of the country’s economic development.


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