NESTLE INCREASES ITS SOURCING OF NIGERIAN RAW MATERIALS AS THE FOREX CRUNCH HITS

· Nestle increases its sourcing from Nigeria and other African nations

· Nigeria allowed the naira to decline by as much as 36% last week.

· Nestle has provided letters of intent to nearby suppliers.

· provides financial assistance and technical help

Reuters, on June 26, in London: The companies of food giant Nestle (NESN.S) in Nigeria and other African nations are increasing their sourcing of indigenous raw materials like starch and turmeric, a move that could help lessen the sector's problematic vulnerability to foreign exchange.

Companies that manufacture consumer goods have increased their attempts to bring production and raw material sourcing closer to their target consumer markets in the wake of the COVID-19 outbreak and the supply chain issues it caused around the world.

The pressure on foreign reserves and the resulting currency instability in many African countries due to growing debt has made it increasingly difficult and expensive to buy inputs. For example, Nigeria's central bank permitted the naira to decline by as much as 36% on the official market last week.

Cassava starch will replace imported maize starch in Nigeria, according to Nestle, which told Reuters it had assisted seven local suppliers in expanding output to meet demand.

“(The) next step is to expand the localization journey across the region: Cote d'Ivoire, Cameroon, and Senegal,” the

In response to inquiries, the largest manufacturer of packaged foods in the world said in an email statement.

More than 2,000 products, including Maggi stock cubes and Nesquik milkshakes, are produced by the Swiss firm that also produces Nescafe coffee and Kit Kat candy bars.

POWDERED ONION AND TURMERIC

According to Nestle, it is attempting to establish local vendors for the vegetables and spices used in Maggi products, such as turmeric powder in Nigeria and Senegal and onion powder in Nigeria.

In the grain sector, we have effectively established local farmers and processors; this has been made possible by (a lot of) training in appropriate farming methods, harvesting, warehousing, and cleaning practices.

“As part of our journey and commitment to sustainability, we are now taking this next step to introduce these farmers to regenerative agriculture.”

Protecting and rebuilding soil health is a common component of regenerative agriculture, which in turn aids in capturing more carbon from the atmosphere to lower greenhouse gas emissions.

According to Nestle, it has occasionally supplied letters of intent, technical know-how, collaborated with regional authorities to establish standards, and financial support through advance payments to suppliers to address working capital issues.

Unilever, a competitor of Nestle, said last month that managing foreign exchange costs is essentially what is motivating its own shift from Asian suppliers to African ones, even though sourcing from the continent can be more expensive than doing so in some regions of Asia.

Nestle did not address whether its location in Nigeria would protect it from fluctuations in foreign exchange rates, nor did it provide information on the economic significance of the local sourcing.

The Middle East and Africa region's sales for Nestle increased by roughly 6% last year to 5.25 billion Swiss francs ($5.9 billion), or about 6% of the whole group's annual sales of 94.4 billion francs.