SIAKA MOMOH
Government policies, lack of protection of home industry and liberalisation policies, high interest rate, power crisis and high cost of fuel have caused so much upheaval.
The de-industrialisation of Nigeria is on and the Federal Government officials charged with issues of industrialisation do not appear to care about this national calamity. Or what else do will call it?
We have witnessed the demise of Michelin and that of Dunlop. We are watching the open onslaught on Nigerian farmers as typified in unfavourable government policies on agricultural commodities like cassava and palm oil. Michelin and Dunlop were killed by government’s punitive policies.
If we must recap, inconsistency in government policies, lack of protection of home industry due to globalisation and liberalisation policies, high interest rate, power crisis and high cost of fuel which have led to sharp rise in cost of production, are said to be responsible for the problem in Nigeria’s industrial sector. This is playing out across the industry.
Business Day found out that Dunlop has for long suffered from inconsistent government tariff policies some of which made nonsense of business plans predicated on production, a situation which made importers of tyres have an advantage over local manufacturers. Dunlop Nigeria Plc, which is now moribund, produced both car and truck tyres in its factory at Ikeja in Lagos State . The factory accounted for 15 per of tyre consumption in Nigeria . Importation of tyres into the country accounts for 85 per cent.
Now that the number of our textile plants has largely thinned out, we now depend almost wholly on the outside world for our clothing needs. Studies carried out on small scale traders in Nigeria by analysts show that we spend a minimum of about $158.4(N19 billion) annually on importation of fabrics and textiles from Dubai alone. This figure can be up-scaled six times if we consider imports from such countries as China , India , Turkey , Hong Kong , Malaysia and other textile producing countries analysts say.
This story does not end here. For instance Business Day investigation has revealed that some local plants engaged in the manufacture of foundry products have shut down and some are on the verge of being shut down as Chinese and Taiwanese manufactured foundry products flood Nigerian market unchecked.
Read Also: Dunlop expansion boosts Nigeria economy
The N10 billion investments that private developers have invested in the Nigerian palm oil industry in the last six years is currently being threatened by the Federal Government’s recent unbanning of importation of palm oil into the country, investigation has revealed.
It would be recalled that in 2003, when as a result of the recommendations of the Presidential Task Force on Vegetable Oil, the Federal Government concluded that the only way an enabling environment would be created for an uninhibited local and foreign investment of the private sector in oil palm development was to have a moratorium on the influx of cheap vegetable oil or their substitutes to the country. It was generally envisaged then that a period of 10 years would be needed from the first plantings beginning from 2003 to 2013 for an economic yield to be attained.
Investigation conducted recently has revealed that none of the farms developed since then has attained this age. As it is now, four more years would be needed for the first field planted since then to have attained this stage of development.
Records made available by the Plantation Owners Forum of Nigeria (POFON) show that private developers, encouraged and persuaded by the Federal Government on assurance of the ban on vegetable oil importation have developed between two and three thousand hectares each, with a high capital infusion of over N10 billion into oil palm plantation and mill facilities. The private developers in question include Okomu Oil Plc, A & Hatman Limited, Presco Plc and Real Oil Palm.
Said Muyi Ladoja, POFON’s chairman, The imperative of this is obvious. It is in the mutual interest of the Nigerian nation and we the investors to resuscitate and benefit from the potentials of the oil palm industry as a major contributor to the economic growth of the nation. This motivation would be undermined by the present action if not reversed.This writer’s visit to two of the farms that are members of POFON Presco Plc and Okomu Oil Plc revealed stalled projects and disturbing staff retrenchments. Similarly, other plantation owners, small holder farmers met said they have put a stop to their respective oil palm replanting and new planting programmes. They said they have already cancelled their orders for oil palm seedlings from NIFOR.Others will follow suit.
Presco and Okomu have put on hold further development works on their processing facilities including an upgrade of refining capacity from 100 tons to 150 tons and the establishment of the largest palm oil mill in Africa at 65tons FFB/Hr. This writer spoke to the operation manager and the managing director of these two companies respectively. Generally he found out that in order to continue to remain afloat, some plantation owners have already started and others are set to cut back on their workforce, mainly rural labour including harvesters and mill workers. The initial layoff of workers is envisaged at 30 per cent of the workforce in each plantation.
POFON, a body of corporate private investors in plantation crops, has therefore called on the Federal government to restore the ban and assure plantation owners of sustained policy regime to protect and grow the oil palm industry. POFON argued that the current level of 35 per cent import duty is inadequate to make any impact. Said Muyi Ladoja, The average cost of production now ranges from N118, 000 to N120, 000… For any meaningful rate of returns of 20 to 25 per cent any import duty of less than 90 per cent will be too tentative and a danger to the continued growth of the industry.
For him, The end users who agitate so loudly for the lifting of the ban on oil palm import are neither investing in the development of the local production of their raw materials nor are they willing to enter into joint partnership with us in this regard.
We make bold to suggest that external forces exist whose interests are better served if the local production of crude palm oil was denied the realisation of its full potentials to make Nigeria a big player in the international market, he said.
It is the same story for cassava. The Federal Government in a recent release of its Common External Tariff (CET) that will run from 2008-2012 has made a retreat from its resolve to promote and support cassava development as a national crop. According to schedule 3 which conveyed the approval of the Federal Executive Council (FEC) of the import prohibition list (trade) as well as fiscal policy measures with Ref No -12237/S.25/V172 and which expired October 2008, cassava products with H.S code 0714. 1000, 1106.9000, 1108. 1400 and 1903.0000 were included under the products in the import prohibition list. By this policy, it was criminal to import such products as cassava flour, starch, chips and other products of cassava into Nigeria . This created legitimate market for local cassava processors in addition to the 10 percent cassava inclusion policy. Also, importation of wheat flour with H.S code 1101.0000 was prohibited further creating strong local market for the cassava industry.
But an extract of the newly revised import prohibition list (trade) which will run from 2008-2012 only recognizes cassava tuber with H.S 0714. 0000 while the other products of cassava such as flour, chips, starch, garri etc could now be legitimately imported into Nigeria . This raises question on the commitment of the Federal Government to 10 percent cassava inclusion policy and the multiplier effects in the economy in terms of loss of employment that will greet the cassava industry as well as the faith of those who collected loans from banks to either expand farms or expand processing capacities.
Now we have the Western Metal Products Company Limited (WEMPCO) story. If anything, the WEMCO story represents a continuation of the now familiar Federal Government policy somersaults which, as we can see from the catalogue of the sad events above, amounts to a systematic marginalization of the Nigerian agriculture sector and the de-industrialisation of Nigeria .
What is this WEMPCO’s story? Contrary to its directive in 2007 that import duty waivers, concessions, incentives and other exemptions be suspended, the Federal Government granted exclusive import waivers amounting to three billion dollars (N351 billion) to WEMPCO, a Chinese company, for the establishment of a $250 million (N29.25 billion) Cold Rolled Steel Plant in the country.
However, the Yar’Adua government had insisted last year that although the special concessions were given by the Olusegun Obasanjo administration, the only justification he gave for its retainer-ship is the fact that validly approved ones by the previous administration would be honoured.
According to the government, in recognition of the continuity of government it was made clear that such waivers granted by the previous administration whose validity still subsisted as of the commencement date of the suspension, remained unaffected by the new measure.
