Olamilekan Adegbite was named minister of mines and steel development by President Muhammadu Buhari last Wednesday.
His deputy is Uchechukwu Ogar, founder of Masters Energy, who is also an industrialist. Adegbite, an architect, is the immediate past commissioner for works and infrastructure in Ogun State. Both ministers have their work cut out for them as they are coming into the steel sector when it is dire need of government intervention.
Their first task must be to liaise with the Central Bank of Nigeria (CBN) to remove some of the steel items that are on the list of 43 items barred from accessing foreign exchange. Some of the items are inputs for several manufacturing companies. A typical example is annealed cold rolled steel used in making wheel barrows and other aluminium products. The item is on the CBN’s list despite that no company is producing it locally.
Many aluminium firms such as Grif, Federated Steel, Universal Steel and several other wheel barrow and aluminium drum firms have exited the Nigerian market because they could not get inputs. Hundreds of jobs were lost as a result.
Other firms in the steel sector are struggling and are in need of salvation.
“We are really struggling. In the metals industry, the majority of the companies are dead,” Oluyinka Kufile, chairman of roofing sheets company, Qualitec Industries, said.
Others on the list are galvanised steel sheets, head pans, metal boxes and containers, wire mesh, and steel drums.
“The major problem is that there was no study on the Nigeria’s production capacities of these items before the restriction in 2015,” a steel sector player, who preferred to be anonymous, told BusinessDay on the phone.
“So, what happens is that we think, without data evidence, that because some companies are producing the items, Nigeria has achieved self-sufficiency in them. This does not reflect the true situation of things,” the industry player added.
Second, the ministers must find a solution to the problem of the behemoth known as Ajaokuta Steel Complex. Many manufacturers would not have been importing a number of essential inputs if this complex were in good shape.
The federal government has accepted the option of concessioning Ajaokuta whereby it would maintain some level of ownership while being funded and operated by a private player.
Already, the procurement processes to engage a transaction adviser is on hold following its delisting from the list of enterprises to be privatised by the National Assembly.
The National Assembly expects Nigeria to cough out $1 billion to revive the complex that has not produced a single sheet since it was established in 1971. This makes no sense, especially when the complex has gulped $8 billion from Nigeria’s coffers without producing any meaningful result. Moreover, it makes no sense that the federal government is budgeting billions annually for a complex that produces nothing substantial.
The federal government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the moribund complex, despite an earlier business case in the last administration showing that the complex could only work if properly privatised.
Hence industry players expect the ministers to convince legislators in the National Assembly to retrace their steps and jettison their socialist stance whose only achievement will be semblance of pouring water off the duck’s back.
At the moment, the economy is reeling under neo-socialist direction which is doing nobody any good.
Experts expect the ministers to quickly work towards concessioning the complex to kick-start Nigeria’s industrialisation journey.
“The minister must know that they cannot achieve this, including discussions with the CBN, without the minister of industry, trade and investment,” Ike Ibeabuchi, an Enugu State-based chemicals manufacturer, said.
“Inter-government collaboration is key,” he added.
Moreover, the ministers must ensure that the Aluminium Smelter Company of Nigeria (ALSCON) is handed to the right investor.
Ime Ekrikpo, director of ferrous metals at the Federal Ministry of Mines and Steel Development, recently said in Lagos that issues around the company have been resolved, as the National Council on Privatisation (NCP) has engaged with the warring parties and returned the facility to UC RUSAL.
Players in the aluminium sub-sector waiting to get ingots from ALSCON want the complex to kick-start immediately to enable them have their inputs without resorting to the foreign exchange market.
Fourth is the removal of every discriminatory waiver given to any firm in the steel sector. Industry players say there must be consultations before waivers are given and these must be sector-based. For instance, the aforementioned annealed cold-rolled steel was first put on the list because it was thought that one company could produce it enough to sell to wheel barrow and other aluminium/ downstream companies. But the company is not doing so, yet the product is restricted from accessing FX in the country.
Moreover, apart from issues around import and export policy, which also falls within the responsibilities of ministers of industry and finance, key players want the ministers to remove obstacles to productivity such as unfair competition, multiple taxation and lowering of standards for aluminium sheets.
Aluminium makers say cheap and low-quality Chinese products come into the Nigerian market unchecked, making it difficult for genuine manufacturers to survive.
ODINAKA ANUDU
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
