Like textile, foreign influx drives Nigeria’s steel sector to the brink

CEO, AFL, Kumar

Director of Inspection and Compliance, SON, Obayi;

LIKE most sectors in the manufacturing industry, the steel sector is facing huge challenges that require urgent attention from government as a result of influx of foreign steel. Apart from the job loses likely to result, a country’s steel sector is at the heart of its industrial revolution, an area where Nigeria is grossly lacking both in capacity and efficiency.

Currently, over 7000 people in the employment of Africa Foundries Limited and an estimated 13,000 other employees scattered in other existing private steel producing companies across the country are threatened. This has prompted a call on the Federal Government to urgently prevent the industry from collapse going by the challenges confronting it.

During a recent media parley in Lagos, stakeholders in the sector were strongly of the opinion that President Muhammadu Buhari and the National Assembly should, and as a matter of urgency, take a critical look into some of the factors besetting steel manufacturing industry in the country, with the aim of adjusting government policies towards saving it from imminent collapse. The industry currently employs not less than 20,000 people with an estimated N100 billion investment. It also has the capacity to offer more if provided with the enabling environment and necessary protection by strong government policies.

Leading the campaign to ‘save the soul’ of the private steel manufacturing industry in the country, African Industries Group, Nigeria’s leading steel manufacturer said unless and until the Federal Government urgently intervened in the steel sector, a major backbone and main thrust of any economy in the world, the country would face hard times in its quest for development.

While describing the current challenges facing steel manufacturers in the country, Chief Operating Officer (CEO), African Industries Group, Mr. Sanjay Kumar, said there are over 30 private steel plants producing different steel products in Nigeria with an investment that is well over N100 billion since inception “but the investment is in danger if nothing meaningful is done by government to address the serious threats facing the sector.”

In appealing to Buhari to ensure the survival and resuscitation of steel manufacturing industry, Kumar averred that Nigeria steel products rank among the best in the world. He, however, said the influx of foreign steel was threatening locally made steel products. This, he blamed on the waiver/concession policy of the government that has given room for Nigeria as a dumping ground for foreign steel.

He said measures like creation of a local content policy, which would ensure the use of made-in-Nigeria iron rods in all small and big government projects and prevention of dumping of steel products in the country would be a step in the right direction to sustain the industry.

He also urged government to create special power tariff for the steel industry and to also make available an intervention fund at lower interest costs to prevent the immediate collapse of private steel industry. According to him, “Many companies are currently operating below 30 per cent capacity and overburdened with high interest costs.”

He further suggested the need for the Federal Government to review its waivers/concession, which must be reconsidered for certain infrastructural development. He was of the view that the portion of iron rod importation in any waiver should be expunged and that the government should consider curtailing multiple taxation imposed by the federal, state and local government agencies and also review the high cost of gas considering that Nigeria has huge gas reserves.

Kumar posited that African Industries alone had invested well over N20 billion in steel manufacturing in Nigeria. He noted that after agriculture, “The steel sector is the highest employer of labour in the country. The livelihood of more than one million people depends on these private steel companies but it is currently at the verge of total collapse just like what happened to the textile industry, if the government does not come to her rescue urgently.”

He disclosed that about four steel plants have completely shut down and more are likely to follow soon because many are currently operating below 30 per cent of production capacity.

According to him, “Most of these steel plants are now operating two weeks a month and are closed for the remaining two weeks of the month due to lack of demand. Dumping is actually drawing demand below supply, which is a serious threat to us.”

He explained that the cost of restarting each time is very high and adds to the cost burden of the ailing steel companies. To him steel consumption could only be driven by government, adding, “Government should make a definite policy of patronizing made-in-Nigeria steel products (iron rods) for all government projects and give specific directive to all their contractors to buy made-in-Nigeria iron”.

Also of importance is the involvement of players in the steel sector in the formulation of Nigeria’s industrial policy.

He said, “All over the world, due to importance of steel in the development of the economy, the views and opinions of the key players from steel industry are usually sought and obtained by the government in the formulation of economic policies as being done for oil or financial sectors. Unfortunately in Nigeria, the steel sector has been left out all these years.”

African Industries, Kumar said, has contributed immensely to the Nigeria economy. It’s located at Ogijo in Ogun State, Ikorodu, Lagos and Suleja Niger State.

“African Foundries (AFL), the flagship company of African Industries Group, is one of the few steel companies in Nigeria producing  iron rods meeting the British standard (BS 4449-2005 Grade B500B). It has capacity to produce 0.5 million tons of BS 4449-2005 Grade B500B iron rods.

“The company also has international standard testing laboratory equipped to measure mechanical and chemical properties of Iron rods and automatically test its geometry done in European steel plants.”

According to Kumar, AFL started operation in 1999, noting, “At that point in time the government started with the rebuilding of infrastructure and there was a clarion call for direct foreign investment. There was confidence in the Federal Republic of Nigeria for foreign investors to invest because of the democratic ideals. Furthermore, we wanted to be part of the foundation of the industrial policy of Nigeria knowing too well there would not be any concrete industrial revolution without steel”.

In his remark, the Director General, Manufacturing Association of Nigeria (MAN), Mr. RemiOgunmefun called on the government to prevent dumping of steel products in the country. He emphasised protecting local industries in the country because “the Nigerian steel, as certified by the Standard Organisation Nigeria (SON) could compete with any other across the world.

Ogunmefun tasked government to create special power tariff for the steel industry. He said government should also look into the challenges of road infrastructure and power as they affect the steel industry.

He also urged government to address the issue of communities interfering with the daily activities of steel manufacturers in the country, saying: “It is again painful that most chieftains and land grabbers in most of the communities where these steel companies are located interfere, with the aim to extorting money from the companies. This also is a big issue that must be addressed apart from the multiple taxation that the companies are exposed to.”

Also, the DG of MAN harped on the need to protect steel manufacturing companies. Director of Inspection and Compliance, SON, Mr. Bebe Obayi said SON had successfully carried out a classification exercise of all the private steel producers in Nigeria, which had enabled SON have proper identification of each product in case of disaster, adding, “This we cannot do in case of foreign steel products.”

He said one of the dangers of dumping is that most foreign steels brought into the country are not better than locally produced ones.