A key stakeholder in the Nigerian steel industry on Monday sounded a warning over imminent collapse of the sector which had attracted over N100 billion investments into the country in recent years.
Speaking at an interactive forum with journalists in Lagos, the CEO, Steel Business, African Industries Group, Mr. Sanjay Kumar noted that, the steel industry was at the verge of total collapse just like what happened to the textile Industry.
He said government must urgently come to the rescue of the sector as it would need about N60 billion intervention funds like government did in other sectors of the economy.
“Today there is over 30 private steel plants producing various steel products in Nigeria. This sector has invested over N100 billion into the Nigeria economy since inception. Our group (Africa Industries) alone has invested well over N20 billion in Nigeria,” he said.
“Already, about four steel plants have already completely shut down and more will follow soon because many are currently operating below 30% of production capacity. 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.”
He noted that steel consumption was largely driven by government initiative on infrastructure projects and for the government to rescue the sector it will have to make a definite policy on the need to patronize made in Nigeria steel products.
On his company’s contribution to the economic growth of Nigeria, Mr Sanjay Kumar explained that, “With the investment of over N20 billion in steel plants, African Industries Group has generated employment well over 7,000 people and is supporting livelihoods over 100,000 Nigerians. It has helped conserved precious foreign exchange by way of import substitution. It has contributed significantly to government revenue through various taxes. We are actively involved in various corporate social responsibilities an also engaged in increase of skill acquisition and training of Nigeria youths.
“African Foundries (AFL), the Flagship Company of African Industries Group is the only steel plant in Nigeria that is ISO 9001, ISO 14001 and OHSAS18001 complied. Also, it is one of the few steel companies in Nigeria producing iron rods meeting British standard (BS 4449-2005 Grade B500B). It has capacity to produce 0.5 million tons of BS 4449-2005 Grade B500B Iron rods. AFL has international standard testing laboratory equipped to mechanical and chemical properties of iron rods and automatically test its geometry done in European steel plants.”
The Group Executive Director, African Industries, Mr Uche Iwuamadi also highlighted areas that needed intervention by the government to include; create a local content policy of using made in Nigeria iron rods in all small and big government projects; prevent dumping of steel products; construction of road linking manufacturing sites; Create a special power tariff for the steel industry; make available an intervention fund at lower interest cost to prevent the immediate collapse of this private steel industry where many are operating below 30% capacity and overburdened with high interest costs; while waivers/ concession may not stop completely for certain infrastructural development, the portion of Iron rod importation in any waiver should be expunged; curtail multiple taxation imposed by the Federal, State and Local Government agencies; review the high cost of Gas considering that Nigeria has huge gas reserves- The cost of Gas in Nigeria is US$7.31/mmbtu as against US$4.2/mmbtu in USA.”
Also speaking at the forum, Director General, Manufacturers Association of Nigeria, Mr Remi Ogunmenfun, commended the African Industries Group for bringing the stakeholders together, noting that the industry had critical problems and we must continue to talk about it to get the attention of the government.
“Nigeria products are of good quality and it can stand anywhere in the world; for every product that is brought into Nigeria we are exporting Nigeria jobs,” he said.
He condemned the complete neglect of the involvement of the players in the steel sector in the formulation of the Nigeria industry policy, saying “Government should create policies that will encourage diversification.
“All over the world, due to the 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 the Oil or Financial Sectors, unfortunately in Nigeria, the steel sector has been left out all these years,” he stated.
On his part, Director Inspectorate and Compliance, Standard Organisation of Nigeria (SON), Mr Bede Obayi, commended African Industries. saying, “Steel produce by the company in Nigeria can compete at international standard because they comply with SON prescribed standard.”
He noted that the key issue in the industry was that of proper identification and quality, adding that the steel specification majorly produced in Nigeria is the reinforcement bar.
Obayi also encouraged the manufacturers on the need to diversify into the other specifications.
On the issue of dumping, he noted that Nigeria as a member of the World Trade Organisation (WTO), other products can come into the country if they meet the required standard.
He however agreed on the need to look into the local content policies for the reinforcement steel bar.
