Flour Mills of Nigeria Shares Plan for Expansion of Sugar, Other Operations in 4 Years
- Over the next four years, Flour Mills of Nigeria Plc plans to invest up to $1 billion for expansion and restructure
- According to Chairman John Coumantaros, the goal of the new funds is to boost investment in Nigeria
- He asked the administration to think about lowering loan rates to encourage regional development and investment
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
Following an offer from its majority shareholder to take it private, Flour Mills of Nigeria Plc, the country's largest miller, intends to invest up to $1 billion over the next four years to expand its facilities and restructure.
Source: Getty Images
In an interview, Chairman John Coumantaros stated that the new funding is about increasing investment in Nigeria.
At a time when several companies, including as Diageo Plc and Unilever Plc, are leaving or lowering their exposure to the West African country, Bloomberg reported that the investment will support President Bola Tinubu's reform initiatives.
Tinubu has implemented a number of measures since taking office in May 2023 which include free floating the naira and reducing petrol subsidies, in an effort to attract foreign investment and save the nation from fiscal collapse.
Flour Mills to invest millions
According to Coumantaros, Flour Mills intends to invest at least $500 million in its sugar operations in Niger state in order to boost output from the current level of 100,000 tons annually to over 400,000 tons.
In order to stop importing the starch form of the tuber into the nation, an additional $100 million will be spent to construct a cassava processing plant, and its breakfast cereal selection will be increased, he said.
Following Excelsior Shipping Company Ltd.'s offer last month to buy out minorities at 70 naira a share, the 64-year-old business will undergo a reorganization.
The company wants to restructure its more than 22 units into five individual companies, Coumantaros said. “We want to be able to attract partners — technical and financial partners — to help us grow our sugar operations and our food business. We have a lot of ambitious plans for investment and expansion.”
Most of the funding will be sourced internally, according to Coumantaros. “The requirement for capital is going to be very, very large. And of course we will be backing the majority of that,” he said.
Still, he urged the government to consider supporting local investment and development with lower interest rates. “We understand the high interest rates are necessary at this point in time, but it’s very difficult to build industries and invest in new things if interest rates are 30%,” he said.
The central bank has more than doubled the key rate to 27.25% in just over two years to crush inflation that remains sticky at 32.7%
Flour Mills is looking to expand across the continent, starting in West Africa, and will leverage on the African Continental Free Trade Area — which when fully operational will be the largest single market by area since the formation of the World Trade Organization.
Nine companies to make first export under AfCFTA
Legit.ng earlier reported that the African Continental Free Trade Area (AfCFTA) gave the go-ahead for nine companies to make their first exports. The companies include Dangote Group, Flour Mills of Nigeria (FMN), and Tolaram.
Other businesses that took advantage of the initial AfCFTA opportunity are Hwani Industry Nigeria Limited, Le Look Nigeria Limited, Secure ID Limited, Avila Naturalle, Craft Methods Limited, and Ruchim Limited.
Nigeria formally launched intra-African commerce on Tuesday, July 16, under the AfCFTA protocol five years after officially assenting to the pact in Niamey, Niger.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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