Backward integration at the core of our import substitution strategy ― NB MD

The Managing Director of Nigerian Breweries Plc, Hans Essaadi, has said that the company’s adoption of backward integration as its primary strategy for import substitution has helped it to address the issue of forex scarcity.

Essaadi, who said this at a panel session during the 2022 Employers Summit organized by the Nigeria Employers’ Consultative Association (NECA), added that the strategy had helped the company to remain profitable in difficult times.

Speaking on the topic ‘Backward Integration and the Promotion of Made in Nigeria Goods’ Essaadi explained that Nigerian Breweries Plc, had invested heavily over the years in Research and Development (R&D) in the sorghum value chain and had delivered enormous gains, particularly with the local production of malted sorghum and malted syrup replacing the imported high maltose syrup since 2019.

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He explained that the company’s local cultivation of sorghum varieties had assisted a great deal in reducing the amount of foreign exchange expended on the importation of sorghum which had impacted the cost of production for both non-alcoholic and alcoholic products in the last few years.

He stated that the success story of the cultivation of sorghum varieties could be attributed to the level of support and collaboration between the research team and the farmers adding that the investment had gone a long way to support livelihoods in the entire agricultural value chain.

“I am happy to inform you that we now use more sorghum varieties in our non-alcoholic drinks than in our beer. This aligns with our goal to boost our position as the proud #1 Malt Beverages & Beyond Company in Nigeria and become a reference point in sustainability and responsibility”, he said.

Essaadi called on the Federal Government to offer more incentives to investors in the agricultural sector, particularly players in the manufacturing industries, to enhance backward Integration, promote locally-made goods, and invariably grow the country’s Gross Domestic Product (GDP)

He also urged policymakers to consider the creation of an excise discount policy to be tied to backward integration, particularly in agriculture. He stated that the policy would robustly encourage backward integration.

He noted that such policy is already in place in Sierra Leone, embedded in the country’s Finance Act 2019, and is now reaping the benefits of such incentivized investment in agriculture.