With the announcement last week that it will begin producing polypropylene, a petrochemical by-product that is highly sought-after by players in the global manufacturing, automotive, healthcare, and food packaging industries, Dangote Petrochemical Plant is poised to increase Nigeria’s non-oil export earnings. The $2 billion petrochemical plant, which is part of the Dangote Refinery Complex in Ibeju-Lekki, Lagos State, Nigeria’s economic hub, will create the industrial materials.
Devakumar Edwin, group executive director, strategy, capital projects & portfolio development, Dangote Industries Limited, made the announcement last week in Lagos. He stated that the petrochemical plant would produce 77 different high-performance grades of polypropylene in Nigeria.
Alongside the refinery, the Dangote Petrochemical Plant is being constructed. The factory will primarily make polypropylene products. We can make 77 various varieties of polypropylene in our petrochemical plant, which can be used for a variety of purposes. At this time, the factory can produce 900,000 tonnes of polypropylene annually. The largest petrochemical facility in Africa should be ours, Edwin declared.
The statement was positively received by participants in the country’s manufacturing sector who had been struggling to get foreign currencies to import raw materials over the previous two years due to the forex market’s lack of liquidity. Some of them believe that the announcement means that local producers would easily be able to obtain polypropylene, which will spare them from the difficulties presented by FX volatility and market illiquidity.
The announcement also came at a time when Zainab Usman, Nigeria’s minister of finance, budget, and national planning, recently revealed the country’s dire financial situation. She said that while spending N4.72 trillion in the first four months of 2022, Nigeria only generated N1.23 trillion in revenue.
Non-oil exports have been predicted to improve the government’s budgetary condition for almost ten years as a result of the diversification effort. This dream has not come true, though. Nigeria’s failure to achieve the desired revenue from oil and non-oil exports not only resulted in the country running a deficit of N3.09 trillion between January and April 2022, but the pressure on the naira, the country’s currency, was too great, causing it to depreciate against major international currencies as a result of market illiquidity.
From January 2018 to March 2022, Nigeria’s non-oil exports as a share of overall exports were 10% on a monthly average. This suggests that non-oil exports contributed $100 per month to every $1,000 in monthly foreign earnings that Nigeria realized during that time. Even worse, Nigeria’s inability to profit from the increase in the price of crude oil due to theft, subsidy payments, and debt servicing.
Some stakeholders claim that the Dangote Petrochemical Plant to the list of semi-manufactured non-oil export products will improve Nigeria’s non-oil export structure as well as ease the stress that manufacturers currently experience when sourcing foreign exchange and increase liquidity and external reserves.
“This is good news for Nigeria and welcome development. Until now, the Dangote Petrochemical Plant would have complimented the production of the Warri Refinery and Petrochemicals Plant when it was fully operational. To increase our reserves and bolster our currency, we must earn foreign currency.
Ade Adefeko, the head of NACCIMA Export Group, stated that the growth in exports is advantageous for the AFCFTA and the 1.2 billion Africans it will benefit.
According to data that was available and predictions by Grandview Research, Future Market Insights, and Fortune Insights, the size of the worldwide polypropylene market was expected to increase on average from $96.46 billion in 2020 to $130.19 billion in 2028.
According to the Observatory of Economic Complexities, as of 2018, commerce in polypropylene was valued at $27.5 billion, or 0.14 percent of all trade worldwide (OEC).
With sales of polypropylene materials to overseas clients totaling $5.94 billion, Saudi Arabia topped the list of exporters. South Korea came in second with $2.39 billion, followed by Germany with $1.77 billion, Belgium with $1.75 billion, and the United States with $1.62 billion.
China topped the list of polypropylene material importers with purchases of $3.47 billion. Turkey came in second with $2.07 billion, followed by Italy with $1.31 billion, Germany with $1.23 billion, and Vietnam with $1.15 billion.
According to OEC, 18 African nations traded polypropylene as of 2018. Their total trade values, including imports and exports, came to $2.49 billion. Egypt, South Africa, Nigeria, Kenya, and Morocco topped the list of nations.
Nigeria, however, has the largest trade deficit in polypropylene, at roughly $300 million, or 128 billion Naira. As of 2018, it was followed by Morocco and Kenya, each with $170 million, Tanzania with $87 million, Egypt with $64 million, Cote d’Ivoire with $64 million, and Ghana with $50 million.
“Many local firms are having trouble importing polypropylene materials due to currency volatility. Nigeria is in this scenario as a result of malfunctioning refineries. Adewale Olalekan, a chemical engineer, stated, “Mind you, we have very good specialists who can create polypropylene in Nigeria that will be of global standards.