* Nestle ramps up sourcing in Nigeria, other African countries* Nigeria last week allowed naira currency to drop as much as 36%* Nestle has given loca
* Nestle ramps up sourcing in Nigeria, other African
countries
* Nigeria last week allowed naira currency to drop as much
as 36%
* Nestle has given local suppliers letters of intent
* Provides technical expertise, financial support
LONDON, June 26 (Reuters) – Food giant Nestle’s
businesses in Nigeria and other African countries are ramping up
sourcing of local raw materials like starch and turmeric, a move
that may help reduce foreign exchange exposure that has been a
headache for the sector.
In the wake of the COVID-19 pandemic and the supply chain
problems it wrought across the world, consumer goods companies
have stepped up efforts to bring production and raw material
sourcing closer to their consumer markets.
Growing debt in many African nations has put pressure on
foreign reserves and created currency volatility that makes it
harder and more expensive to import inputs. Last week, for
instance, Nigeria’s central bank allowed the naira currency to
drop as much as 36% on the official market.
Nestle, which is replacing imported corn starch in Nigeria
with cassava starch, told Reuters it has helped seven local
suppliers to boost capacity to meet the company’s supply needs.
“(The) next step is to expand the localization journey
across the region: Cote d’Ivoire, Cameroon and Senegal,” the
world’s biggest packaged food maker said in an emailed statement
in response to questions.
The Swiss company, which makes Kit Kat candy bars and
Nescafe coffee, has more than 2,000 brands including Maggi stock
cubes and Nesquik milkshakes.
ONION POWDER AND TURMERIC
Nestle said it was working to develop local suppliers of
vegetables and spices used in Maggi products, for instance onion
powder in Nigeria and Senegal, and turmeric powder in Nigeria.
“In the area of grains, we have successfully developed local
farmers and processors … this has been achieved through (a lot
of) training in good agricultural practices, harvesting,
warehousing and cleaning practices.
“We are now taking this next step to introduce these farmers
to regenerative agriculture as part of our sustainability
journey and commitment.”
Regenerative agriculture generally involves protecting and
restoring soil health, which in turn helps capture more carbon
from the atmosphere to reduce greenhouse gas emissions.
Nestle said it has in some cases given suppliers letters of
intent, provided technical know-how, engaged with local
authorities to set standards, and provided financial support
through advance payments to resolve working capital challenges.
Last month, Nestle rival Unilever told Reuters that
managing foreign exchange costs is largely what is driving its
own shift to African suppliers from Asia, even though sourcing
from the continent can cost more than buying from parts of Asia.
Nestle did not comment on whether its position in Nigeria
would help insulate it from foreign exchange volatility, neither
did it give an indication of the economic impact of the local
sourcing.
Nestle’s sales from the Middle East and Africa grew about 6%
to 5.25 billion Swiss francs ($5.9 billion) last year,
accounting for about 6% of group annual sales of 94.4 billion
francs.
($1 = 0.8967 Swiss francs)
(Reporting by Richa Naidu; Editing by Emelia Sithole-Matarise)
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