Halifa Rabiu: Smuggled Imports, Tough Financing Threatening Nigerian Manufacturers

Nigeria’s manufacturing sector has continued to face significant challenges as local businesses struggle to compete with imported products, secure affordable financing and expand their operations in an increasingly demanding business environment. Managing Director Halba Foods, Halifa Bala Rabiu dissects the limitations in an interview with Olawale Ajimotokan

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he Managing Director of Halba Foods, Halifa Bala Rabiu, has decried the unchecked inflow of finished products into the country and the limited access of local investors to affordable credit.

He said the importation of finished products, particularly those that can be manufactured or packaged locally, is undermining local businesses, and he called for stronger protection and targeted support for small and medium-sized enterprises (SMEs).

Rabiu noted that many entrepreneurs are facing the difficulty of building sustainable businesses in a system where access to capital remains limited and locally manufactured goods face stiff competition from imported alternatives.

The Kano-born industrialist, who is into food processing and packaging, plastic recycling, rice milling and construction, said the situation highlights the need for a more supportive environment for Nigerian manufacturers, particularly SMEs seeking to establish themselves in the country’s industrial landscape.

He argued that the influx of imported goods through smuggling was placing additional pressure on local manufacturers and limiting their ability to compete effectively.

Rabiu maintained that businesses investing in local production need a fair opportunity to develop their capacity, create jobs and contribute to the economy without being undermined by cheaper finished products entering the market outside established import regulations.

“One of the challenges is allowing importation of finished products. This is the major challenge for everyone,” Rabiu said.

According to him, the problem is particularly significant in the edible oil market, where local businesses have the capacity to package products sourced from Nigerian extractors but face competition from finished products brought into the country.

He explained that Nigeria has local producers and extractors of edible oils from palm oil, soybeans, groundnuts and cottonseed, creating opportunities for businesses to add value through packaging and distribution.

However, he said the influx of imported finished products, particularly those entering through unofficial channels, could undermine investments in domestic processing and packaging.

Rabiu noted that while import duties and other regulatory measures may make certain finished products more expensive to bring into Nigeria legally, some traders still find ways to circumvent the rules.

He therefore called for stronger enforcement of existing regulations, stressing that the responsibility for addressing the problem extends beyond the government to include relevant enforcement agencies and other stakeholders.

“One of the major challenges facing local manufacturers is the continued importation of finished products into the country. Despite efforts by the authorities to curb this practice, some individuals still find ways to bring these products across the borders, sometimes in small quantities but repeatedly. This results in a significant volume of imported products entering the market, creating unfair competition and making it difficult for local manufacturers to operate freely. Strengthening border controls and enforcing restrictions on importation of finished products would provide local manufacturers with a more conducive environment to grow and compete effectively. I would not blame the government for this kind of issue. So many parties are involved. I am sure they are doing their best and they will see how they will tackle the problem,” he said.

His position reflects the dilemma confronting local manufacturers: businesses need a competitive market to grow, but they also require effective enforcement of trade regulations to ensure that companies operating within the law are not disadvantaged by those evading it.

Local investment, unequal competition

Rabiu’s concerns come as Halba Foods prepares to establish its presence in Nigeria’s food processing and packaging market, with plans to focus initially on rice milling, edible oil packaging and palm oil.

The company intends to introduce smaller packaging sizes for essential food products, including rice in 500-gram and one-kilogram packs, alongside smaller quantities of edible oil, to make them more accessible to low-income consumers.

Rather than compete directly with established businesses in the conventional 25-kilogram and 50-kilogram rice segments, Rabiu said the company intends to adopt a niche strategy centred on affordability and accessibility

The company’s rice mill in Kano has a stated capacity of 60 metric tonnes per day, while its edible oil packaging operation is designed to handle 20,000 litres daily.

He said the business plans to expand into maize flour milling and instant noodle production, while also exploring beverage manufacturing through potential partnerships with foreign investors.

The company is also considering opportunities to export rice, edible oil and palm oil to neighbouring West African countries, including Niger.

These ambitions, however, depend on the ability of local manufacturers to operate sustainably, secure reliable supplies of raw materials and compete with products entering the domestic market.

For businesses such as Halba Foods, the objective is not simply to sell products but to establish a production system capable of creating employment, adding value to locally sourced materials and supporting trade within the region.

Rabiu believes that effective regulation of imported finished goods would help create room for more domestic investment, although he acknowledges that enforcement remains a shared responsibility.

The financing hurdles

Beyond import competition, Rabiu identified access to affordable financing as another major obstacle to the growth of Nigerian businesses.

He argued that many SMEs possess viable ideas, market opportunities and the technical knowledge required to operate successfully but struggle to obtain loans because financial institutions place considerable emphasis on collateral.

According to him, the lending conditions offered to smaller businesses can make borrowing commercially unattractive, particularly when interest rates, additional charges and short repayment periods are considered.

He illustrated the problem with a hypothetical loan of N1 billion, arguing that a business could accumulate substantial financing costs before its machinery was installed, production commenced and revenue became sufficient to support repayment.

For manufacturers, the time required to establish operations and reach break-even point is particularly important. Businesses investing in equipment, facilities, raw materials and staff need adequate time to generate returns before facing substantial repayment obligations.

Rabiu said the emphasis on collateral often disadvantages emerging businesses that may have strong prospects but lack the assets required to secure large loans.

“If I have the collateral of N1 billion to give you to be able to access N600 million, then I don’t need you now. Why don’t I go and sell my property and do it?” he asked.

He also questioned why established companies often appear better positioned to secure financing than smaller businesses that need capital to expand their operations.

In his view, financial institutions should assess SMEs on a broader range of factors, including turnover, business plans, market demand, management capacity and repayment prospects, rather than relying predominantly on collateral.

He acknowledged that some businesses may fail because of poor management and misuse of funds. However, he argued that this should not prevent viable enterprises from accessing credit, provided that appropriate monitoring and accountability mechanisms are in place.