Alayide, Nigeria (Commonwealth Union)_From the pandemic to the Ukraine war to high inflation dampening retail markets and ensuing currency risk, the industry has been feeling the pinch. But while bottom lines have been eroding, big manufacturers have had to rethink strategy. Unilever decided to pivot and expand its roots in Africa, adding African suppliers into its supply chain and replacing some imported inputs with African ingredients.
This shift has a two-fold benefit. While Unilever will be able to drive down costs of production via locally sourced raw materials, it also heralds opportunities for African farmers and the local supply chain.  Unilever’s loss due to net material inflation in the last financial year amounted to USD 4 billion with a forecast of some commodities surging further in the first half of this year.
In the last two years since Unilever began making the shift, farmers growing cassava for instance have seen their harvest triple. Now farmers worry about meeting the supply required for the burgeoning demand rather than being concerned about the mounting losses which they faced earlier. There was always worry about too much supply, lack of demand, and spoilage. Cassava, a staple in Nigeria is used in the manufacture of toothpaste by the consumer goods giant. The farmers now plant as much as they want because they know there’s a market for it.
As of now, more than two-thirds of the ingredients that go into Unilever products sold in Africa are sourced from the continent including sorbitol and spices which were imported from India and China earlier, are now obtained from South Africa and Nigeria. Companies like Nestle and Danone are also following suit adding a larger sourcing footprint in Africa.
The supply chain disruptions faced by Unilever over the last three years including battling soaring costs, volatile energy prices, and raw materials as well as currency volatility pushed Unilever to expand its local sourcing in Africa, reducing its foreign exchange risk exposure. All these issues were exacerbated post the pandemic, with the war in Ukraine disrupting supply chain logistics and causing immense manufacturing challenges adding to its woes.
So what is being sourced internally from the continent? Just two examples: a smallholder farmer network in South Africa is growing coriander and chilies (previously sourced from India) for Roberstons spices, Rajah curry blends, and Knorr ox bouillon cubes. CloseUp and Pepsodent toothpaste uses sorbitol which was sourced from China, an ingredient extracted from Cassava now grown in Nigeria and other parts of Africa. Cassava extracts are also used by Nestle and Danone for a variety of their products.
