How Backward Integration can impact the Nigerian economy.

The term 'backward integration' describes a situation in which a firm moves to produce certain segments of its supply chain. It involves the expansion of a firm towards producing specific inputs or raw materials that would eventually be used in the production of its core product. For instance, a sugar factory that expands its business and starts growing a sugar cane plantation has adopted backward integration. The Nigerian-American Chamber of Commerce (NACC), through its Vice-President, Ehi Braiman, has said that the implementation of the local content initiative in Nigeria would attract over $5b into the economy. He also added that it will create massive employment opportunities for youths as there's an abundance of natural and mineral resources in the country. 
Braiman posits that, Nigeria has already achieved a  significant level of backward integration in the cement sector as over 80% of its raw materials are sourced locally. He also said the policy is seen as a strategy to increase the participation of local firms in the value chain of various sectors. Although various moves have been made by the government in promoting local content initiative in Nigeria such as the forex ban on 41 items which promoted the production of tooth-picks using locally-sourced raw materials, the local content policy is currently adopted only in the oil sector. However, if sustainable economic development would be achieved in Nigeria the local content policy needs to be extended to other sectors of the economy by the Chamber

 

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