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The Managing Director of Flour Mills of Nigeria, Paul Gbededo, said that the ongoing foreign currency shortages in the country has resulted in increased demand for the company’s products.

Speaking during a Bloomberg interview published on Wednesday, Gbedebo said consumers are now buying locally-made products as FX scarcity has cut demand for imported goods.

“Everyone is trying to see how to source locally and that is good for Nigerian farmers and processors,” Gbededo said. “We have almost tripled production in refinery of palm oil, palm kernel and soy bean.”

Nigeria has been facing severe FX shortages over the past two years due to the fall in global oil prices. Faced with dwindling forex reserves and increased pressure on the local currency, the Central Bank of Nigeria imposed stiff capital controls in a futile attempt to defend the naira. Even though the apex bank later devalued the naira in June this year in an effort to boost forex liquidity, FX scarcity still remains leading to wide disparities between the official interbank exchange rate and the parallel market (black market) rate.   

However, the current situation has been a boon for large local manufacturers, like Flour Mills and Nestle Nigeria, which source most of their raw materials locally. Gbedebo said that besides increased demand, prices have also increased due to high inflation.

“Fifteen months ago, one ton of corn was sold for 60,000 naira ($190). Today it is 125,000 naira,’’ he said.

For the six-month period ended September 30th this year, Flour Mills reported that revenues rose by 44 percent to N255 billion although after-tax profit fell 72 percent to N6.5 billion due to FX losses.

Flour Mills is the largest wheat milling company in Nigeria, with a milling capacity of 12,000 tonnes per day. The company also imports about 1.7 million tonnes of wheat per annum. But Gbedebo said Flour Mills is trying to grow more of the grain locally as well as use other local alternatives such as sorghum in a bid to reduce the company’s dependence on imported wheat. The Flour Mills boss said the company plans to start sorghum plant next year, with a capacity to mill 75,000 tonnes of sorghum flour.

“Our goal is to depend less on the import of food into the country,” he said. “I want imports to end today, but it will take time.’’

Gbedebo told Bloomberg that Flour Mills is expanding its local cultivation and processing of “six key crops” including sugarcane, cassava and maize to sell locally and export to markets in Africa and Europe. “We are talking with equity and technical partners for expansion in those crops,’’ he said, without disclosing the partners.

Founded in 1960, Flour Mills is the manufacturer of Golden Penny brand of products. The company has operations in flour milling, pasta production, fertilizer distribution, and polypropylene bag manufacturing. The company owns Apapa Bulk Terminal Limited, the operator of Terminals A and B of the Apapa Ports, Lagos. George Coumantaros, an American of Greek origin, and his family own 52.18 percent of Flour Mills through a holding company, Excelsior Shipping Company Limited.