Nestle (NESN.S) is increasing sourcing of indigenous raw materials like starch and turmeric in Nigeria and other African nations to decrease foreign exchange risk.
Consumer goods businesses have increased attempts to shift production and raw material sourcing closer to their consumer markets following the COVID-19 epidemic and supply chain issues.
Many African nations’ rising debt has depleted foreign reserves and caused currency instability, making imports more expensive. Nigeria’s central bank allowed the official market naira to plunge 36% last week.
Nestle, which is replacing imported maize starch in Nigeria with cassava starch, told Reuters it has helped seven local suppliers increase production to suit its demands.
“(The) next step is to expand the localization journey across the region: Cote d’Ivoire, Cameroon and Senegal,” the
in answer to queries.
The Swiss corporation creates Kit Kat confectionery bars, Nescafe coffee, and Maggi stock cubes.
Onions and turmeric
Nestle was developing local suppliers of vegetables and spices used in Maggi products, such as onion powder in Nigeria and Senegal and turmeric powder in Nigeria.
We have trained local farmers and processors in proper farming, harvesting, storage, and cleaning procedures to develop grains.
“We are now taking this next step to introduce these farmers to regenerative agriculture as part of our sustainability journey and commitment.”
Regenerative agriculture protects and restores soil health, capturing more carbon from the atmosphere to minimize greenhouse gas emissions.
Nestle said it had offered suppliers memoranda of intent, technical know-how, collaborated with local authorities to develop standards, and provided financial help through advance payments to manage working capital difficulties.
Last month, Nestle competitor Unilever (ULVR.L) told Reuters that controlling foreign exchange costs 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 address whether its presence in Nigeria would protect it from foreign exchange volatility or the economic impact of local sourcing.
Last year, Nestle’s Middle East and Africa sales climbed 6% to 5.25 billion Swiss francs ($5.9 billion), accounting for 6% of company sales of 94.4 billion.