The Nation Newspaper

Category: Industry

  • Plateau plans technology centres’ revival to create jobs, boost IGR

    The Plateau State Government will revive technology centres to enhance technology-related entrepreneurship skills to create jobs and boost Internally Generated Revenue (IGR), the  Deputy Governor, Prof. Sonni Tyoden, has said.

    He spoke on Tuesday when he inspected the Relevant Technology Centre and the Science Equipment Production Centre, both in Jos, the Plateau State capital.

    He said the visit was predicated on government’s resolve to rehabilitate the centres because of their potential to create skilled manpower that would be on their own and also employ others.

    “It is disheartening that centres like the Relevant Technology Centre and the Science Equipment Production Centre both in Jos with all the benefits that could accrue to the state have been allowed to go down.

    “One of the focal areas of this administration as we have always stated is industrialisation and entrepreneurship and we will definitely reactivate the centres. Government will give the centres the necessary support, including funding and recruitment of staff to enable them to operate optimally and contribute their quota to the economy of the state,” he said.

    Tyoden said the state needed to do this now that the mainstay of the economy has taken a downward turn. “We will use these kind of places to diversify the economy of Plateau and boost the state’s IGR,” he said.

    The deputy governor, who is also the Commissioner for Higher Education, Science and Technology, said the state government is determined to engage its teeming youths meaningfully.

    Earlier, Mr. Simon Bonnap, the Executive Secretary, Relevant Technology Centre Jos, had told the deputy governor that the Centre could generate the needed revenue for the state if resuscitated.

    Bonnap said: “The Centre trains able and disabled youths in leather works, welding and fabrication, electrical works, home economics, automobile, as well as building. We have fabricated a motorised tricycle for disabled persons that can be used both as tricycle or wheel chair.”

    He, however, regretted that the state does not have the funds to mass produce the motorised tricycle in commercial quantity that can be sold to hospitals and persons that need them.

    According to him, the centre was established in 1974 by a Netherlands-based Non-Governmental Organisation (NGO) to teach youths different skills to enable them to be self-reliant and also employ others.

    He decried the neglect of the centre, pointing out that machines that were installed by the NGO in 1974 were still the ones being used at the centre in spite of the takeover of the centre by the state government in the 1990s.

    Bonnap told Tyoden that “the centre does not have a functional project vehicle to aid its movement and supervision of its other centres in six different local governments of the state.

    “We used to have over 200 staff, but now we only have 62; the equipment we have are obsolete and funds to even run the centre properly are not available,” he said.

    The Chief Production Officer, Science Equipment Production Centre, Jos, Mr. Obed Dimka, also decried the neglect of the centre which was established in 1986.

    Dimka said the centre could produce almost all the science equipment for secondary schools in the state but the staff to carry out the task is not available.

    “We have only two skilled staff and six unskilled staff. Incidentally we have the raw materials, but there is no staff to make use of them,” he said.

  • ‘Access to finance major threat to SME’s’

    A major threat to the growth and development of Small and Medium Enterprises (SMEs) is that of funding, the Director General, Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. Emmanuel Cobham, has said.

    He commended government for setting up a number of institutions  to strengthen SMEs, noting that what is required is to strengthen such institutions put in place by the government.

    “We need to implement the various policies of government and  ensure that government intervention funds actually get to the SMEs, knowing that as at date the N220 billion Federal Government  Intervention Fund for SMEs as administered by the apex  bank through the commercial banks and State Governments has not been fully utilized,” Cobham said.

    The NACCIMA DG called for an enabling environment where proper financing of SMEs’operations is taken seriously,  and where manufacturing thrives and production capacities of companies radically improved.

    “Currently we have more than enough policies and initiatives by the government for the development of the manufacturing and SMEs sector. All we need now is the harnessing and positive redirection to make the process work – we need the political will to ensure that all the initiatives work,” he said.

    On measures put in place by government to develop the non-oil sector and spur substantial development of the solid mineral sector, Cobham maintained that over dependence on one revenue source is detrimental to the economy hence the need to develop other sources of revenue.

    As part of strategy to make a success of the non-oil sector of the economy, the NACCIMA chief urged the Federal Ministry of Agriculture to evolve a systemic policy aimed at deliberately reducing the number of peasant farmers through aggressive empowerment.

    “Government should increase the budget for agriculture to at least 10 percent of the national budget; evolve a policy frame work that would encourage commercial farming in order to have an easy transition from peasant farming to commercial farming,” he advised.

    He also said government should encourage farmers by buying their farm produce to reduce the attendant waste associated with that level of production. He said under  this proposed arrangement, buyers would be compelled to buy directly from the government or its agency.

    Cobham also encouraged the adoption of the One-State-One mineral policy earlier adopted by the Ministry of Solid Minerals. He said this will increase the generation capacity to cushion the nation’s foreign exchange needs and address salient export trade mechanisms.

    He said government can also help the sector by giving special directives to banks to finance this sector; supply equipments, and guarantee the income of the farmers by buying directly from them.

    On the issue of  high interest rate for manufacturers, he said: “There is no denying the fact that currently many businesses are groaning under the high cost of doing business in the country and this coupled with the issue of high interest rate gives a very wrong signal to the local business man. I believe that tough times call for extra precautionary measures.

    “Given that most businesses are financed by bank loan, equity and the active involvement of most financial institutions at an agreeable interest rate which presently hovers between 18-30 per cent, what we need to do therefore, is join hands with the regulatory agencies to strengthen the Naira as against other international currencies, increase our export for better foreign exchange earnings, and reduce our import of commodities that have local substitutes. “

  • Why push for review of power privatisation is gathering momentum

    Why push for review of power privatisation is gathering momentum

    Two years after the privatisation of the power sector, Nigerians, especially manufacturers, are yet to enjoy improved electricity supply. They are being slapped with arbitrary tariff increases and unwarranted disconnections. Disengaged electricity workers are agonising over non-payment of their gratuity, severance allowance and other entitlements. These have prompted calls for a review of the exercise, Assistant Editor CHIKODI OKEREOCHA reports.

    The Chairman, Economic Policy Committee (EPC), Manufacturers Association of Nigeria (MAN), Mr Reginald Ike Odiah, is angry.

    He does not hide his anger and frustration over the huge toll irregular electricity supply is taking on manufacturers and others operators in the economy. Odiah, the Managing Director/Chief Executive Officer, Bennett Industries Limited, was forced, at a forum, to raise the alarm that despite the handover of the power sector to private investors under privatisation, two years ago, manufacturers still spend a whopping N500 billion yearly for running and maintaining their power plants.

    The forum was the 48th Annual General Meeting (AGM) of MAN Ikeja branch, Lagos. Presenting a paper titled: ‘Serious constraints to sustainability of the real sector (From a manufacturer’s perspective),’ he expressed regrets that the handover of the 18 successor companies of the defunct Power Holding Company of Nigeria (PHCN) to new core investors has failed to provide the anticipated reprieve in the form of improved electricity supply to Nigerians especially manufacturers. He said the huge cost of providing alternative electricity is largely responsible for the high production cost for manufacturers.

    Giving details of the unsavoury consequences of skyrocketing cost of production to manufacturers as a result of irregular power supply, Odiah said: “Manufacturing cost in Nigeria is twice that of Ghana, four times that of South Africa and Europe, and nine times that of China and Malaysia.”

    He listed other crippling effects of high production cost to include low Gross Domestic Product (GDP) contribution by the real sector, especially manufacturing to the economy; lack of interest in investing in Nigeria by both local and foreign investors; closure of factories and migration of surviving ones to greener pastures and others.

    For instance, while Nigeria’s real sector contribution to GDP, according to Odiah, currently stands at 9.5 per cent, those of the United States (U.S) and China stand at 35.6 per cent and 49.5 per cent  respectively. Also, Japan, India and Germany boast of 38.2 per cent, 38.4 per cent and 35.9 per cent real sector contribution to GDP, respectively. He said the sector’s low GDP contribution to the local economy caused by lack of basic infrastructure, especially electricity, is also responsible for the huge losses in tax revenue for the government as well as the high unemployment rate.

    Indeed, manufacturers’ productivity and competitiveness have continued to nosedive despite the power sector privatisation. MAN President, Dr. Frank Udemba Jacobs admitted this much when he said a survey by MAN on manufacturers’ energy consumption in 2014 showed that on monthly average, manufacturers expended over N73.12 million on alternative sources of energy.

    Speaking during an interactive session between the Nigeria Electricity Regulatory Commission (NERC) and MAN, he said the share of energy cost to total cost of production in the sector was about 40 per cent.

    The Federal Government had in November 2013 unbundled PHCN into 18 successor companies and subsequently handed over the power assets of the successor companies to private investors. The exercise was expected to set the stage for a major transformation of the power sector to guarantee uninterrupted electricity supply to the manufacturing sector and Nigerians in general. But two years after, this has not happened. Rather than enjoy significant improvement in electricity supply, Nigeria’s electricity generation capacity has been wobbling between 3, 500 Megawatts (Mw) and 4, 000 Mw in the last two years, leaving sour taste in the mouth of consumers.

    While Nigerians, in their usual never-say-die-disposition, would probably have taken the deplorable and unfortunate situation in their stride, the arbitrary and startling increase in tariff and other discomforting developments such as fixed charges and unwarranted disconnections by electricity distribution companies (DisCos) have continued to rob salt to injury. The fixed charge is that component of the tariff that commits electricity consumers to paying an certain amount of money mostly on a monthly basis, irrespective of whether electricity is consumed during the billing period or not.

    The DisCos have been clamouring for tariff increase even before privatisation. They however, had their way penultimate week when Federal Government, in what could pass as ‘Christmas gift’ to DisCos, approved new electricity tariffs in the country. The new tariff regime increased tariff by about 45 per cent.

    According to NERC Chief Executive Officer (CEO), Dr. Sam Amadi, electricity consumers would no longer pay the contentious and vexatious fixed charge included in the monthly electricity bills issued by the 11 DisCos in the country. Consumers would now only pay for what they consume monthly (pay-as-you-consume).

    But it is doubtful if Amadi’s explanation doused growing public outcry that Nigerians are being short-changed by DisCos while NERC allegedly looked the other way.

    For Mr Henry Boyo, an economic analyst, the most worrisome of the shoddy privatisation exercise was the fact that despite not getting improvement in power supply, Nigeria ended up with a loss of N400 billion after selling the DisCos. “The same group of people to whom we sold the distribution and generation companies and made a loss of N400 billion incurred from the allowances and outstanding payments to contractors and all that, suddenly find that they don’t have the money to run the companies efficiently,” he said.

    Boyo told The Nation that it was curious that in spite of the fact that Nigeria ended up with N400 billion in debts as a result of selling the DisCos, government still went ahead to give the private investors soft loan to enable them run supposedly privatised entities.

    “In view of the abysmal performance in the power sector, President Muhammadu Buhari should take a closer look at how Nigerians were left with over N400billion debt after the privatisation of the distribution network of the former PHCN.

    “It is equally curious that two years thereafter, government continues to breastfeed the DisCos with selective interest waivers, which have not guaranteed low tariffs or improved performance,” Boyo said.

    For electricity workers, privatisation of the power sector was the height of shoddiness. They are, therefore, advocating a review. Acting under the aegis of National Union of Electricity Employees (NUEE), the workers insist that the review was necessary in view of the fact that the new core investors have failed to make significant investment in the growth and development of the sector.

    Speaking with The Nation at the its  fifth Quadrennial/10th Delegates Conference in Lafia, the Nasarawa State capital, its immediate past National President Comrade Mansur Muhammed Musa said apart from the investment the Federal Government made in the sector before the sale, the investors have not considered it expedient to invest in the sector’s growth. This, he said, was why despite the privatisation, Nigerians still groan in darkness, lack of metres, dearth of power infrastructure and high tariff, among other issues.

    While accusing the investors of smiling to the bank at the expense of Nigerians, especially workers who have little or nothing to show for their hard work, Musa pointed out that the investors have failed to meet most of the Key Performance Indicators (KPIs), which the Bureau of Public Enterprises (BPE) spelt out to them before privatisation. “I strongly advocate for a review of the privatisation exercise,” Musa emphasised, noting that the terrain and industrial climate of the sector has been gloomy after the handover of the sector to the investors about two years ago.

    “If you look at what is happening in the power sector, you will see that nothing has changed. The proponents of privatisation, that is government as the leader, said there would be foreign direct investment inflow into the sector, and that there will be efficiency.

    “But two years after, we have not seen investments and the owners of the new companies do not have the competence to run the power sector. All of them did not run any power sector before they came to buy,” he told The Nation.

    Musa said what Nigerians are experiencing is tariff review or adjustment in collaboration with NERC despite the fact that power production is still wobbling at between 3, 00 and 4, 000 Mw while tariff keeps rising.

    “NERC was to cap the ceiling of estimation; they will tell the investors or the companies that they cannot charge an estimated bill beyond certain amount. That would have encouraged the companies to supply metres to the customers, but they did not do that.

    “So, what the companies are doing now is that they give estimated bills. So, you find out that you don’t have electricity, but you must pay higher bills,” he lamented.

    It is not electricity workers’ grouse that is fuelling the call for a review, disengaged workers of the power firm have one complain or the other aginst the process.

    At the last count, over 5, 000 disengaged staff of PHCN’s 50, 000 workforce are yet to be paid their gratuity, severance and other entitlements two years after privatisation.

    NUEE General Secretary, Joe Ajaero, lamented that the government reneged on its promise to pay the gratuity and pension arrears of the workers. “The government has not fulfilled its obligation to pay the gratuity and pension of PHCN workers because each of the about 50, 000 staff of PHCN has one case or the other,” he said.

    Ajaero said, for instance, over 1, 000 death benefits were yet to be paid to the next-of-kin of workers who died in service, while many former PHCN workers are yet to be paid their leave bonuses by the government. Others are also yet to get their bulk housing rent, which, before privatisation, was usually paid once a year.

    “We pay bulk housing once in a year. So, if your monthly housing is N10, 000,  nobody will pay you the N10, 000 at the end of the month; they will pay you N120, 000 either at the beginning or at the end of the year depending on the category you fall into to enable people pay house rent in bulk. So, many people fall under this category and they have not paid them,” he  said.

    He expressed regrets that the government failed to meet its obligation on the payment of workers’ entitlements despite signing agreement with the union around June 2012. He said workers’ entitlements were calculated up to that month. “By that time, if you had worked for 10 years up to June 2012, government did not pay this entitlement till October/November 2013, and there was a period of 16 months in-between. You now pay the person for those 10 years when there is additional 16 months entitlement and even pension contribution.”

    He said though the union insisted that the additional 16 months cannot be national service, the government, at a stage, said it was going to pay only pension, which is 7.5 per cent, leaving the gratuity and severance component.

    Ajaero, who described the power sector privatisation as an ‘arrangee’, argued that before liquidating a company, the liquidator must address the issue of creditors, and the first in the issue of creditors is employee creditors. “Under the Company and Allied Matters Act (CAMA), employee creditors are paramount,” he said.

    Ajaero pointed out that the Nigeria Electricity Liability Management Company (NEMCO) Limited, which was set up to take over PHCN’s core assets, ought to have known that since PHCN has an old workforce and a pool of retirees, their pension is supposed to continue.

     

    NERC’s position

    Amid growing agitation for review of the power privatisation, NERC says it believes in the sanctity of the privatisation process. Dr Amadi said his commitment to the on-going privatisation of the power sector remains unwavering. He also reassured investors, both within and outside the country, of the regulator’s commitment to drive the reform process to a conclusive end.

    On the new tariff regime, the Commission said: “It was the result of a transparent, rigorous and credible rate review process that will lead to greater reliability in the provision of electricity. It added that with the review, “more people will progressively have access to the grid, more meters will be deployed and the need for self generation would be gradually reduced.”

    NERC said it expects DisCos to provide better customer service in all aspects of their operations and would hold them responsible for their service level agreements.

  • Establish labour unemployment centres, Oshiomhole advises govt

    The Federal Government has been urged to establish labour unemployment centres across the country.

    Edo State Governor Adams Oshiomhole  made the call in Abuja when he visited the Minister of Labour and Employment,  Dr Chris Ngige.

    He said the call was necessary to enable the ministry have comprehensive database of qualified but unemployed Nigerian youths.

    The governor noted that the administration of President Muhamadu Buhari made it clear that its primary purpose was to improve the welfare of the people. He said that only way to achieve this objective was through job creation.

    Oshiomhole said he benefited from the services provided by labour unemployment centres when he was in his early 20s. “The re-introduction of labour unemployment centres for the unemployed will create opportunity for employers of labour to contact and recruit people who registered.

    “It will also provide opportunity to those who registered to acquire training and also enroll in one form of apprenticeship or the other.

    The centres will also give employers the opportunity to carry out regular trade test, do proper grading of skilled and semi-skilled test among others,” he explained.

    Oshiomhole stated that this is one area the country has neglected over the years and that given the present circumstance, there is need to re-establish these centres.’

    He called on employers to inform the Ministry of Labour and Employment whenever they employ, dismiss and retrench members of staff in their various establishments.

    He also called for the review of expatriate quota for firms and industries operating in Nigeria.

    In his response, the minister told the governor that under his leadership, the ministry would experience turn around.

    He said the ministry would ensure that the aspirations of unemployed youths were met.

    James Ocholi, the Minister of State in the ministry, who praised the governor for his instructive suggestion, promising that the ministry would heed the advice.

  • Group targets N80b from cashew export

    •Committees to achieve target inaugurated

    The National Cashew Association of Nigeria (NCAN) is targeting about N80 billion from cashew export this year, its spokesman, Mr. Sotonye Anga, has said.

    Anga told News Agency of Nigeria (NAN) on the sideline of the ‘Second Annual Cashew Logistics Meeting’ in Lagos that shipping lines had recognised cashew as revenue generating cash crop and contributor to the country’s economy.

    Noting that shipping firms account for more than 80 per cent of exported cargoes from Nigeria, he said: “There is need for improvement in the handling of cashew, which will propel significant improvement in the country’s economic performance.

    “Shipping lines have recognised the economic relevance of cashew and that is why you can see their chief executives and decision makers represented at this meeting. “The meeting will afford the association opportunity to take steps to advance Nigeria’s cashew export to destinations like India, Vietnam, China, Middle East, Europe, U.S. and others.”

    The NCAN spokesman, who said the association believed in strong bond between it and the shipping lines, stated that “We expect that Nigeria should generate about N80 billion from cashew export in 2016 season and trade in a manner that will impact on the value chain.”

    He said NCAN would leverage on this relationship to ensure that  the year cashew exports is hitch-free. “We will have zero claims because of damages to cashew cargo when containers are well dressed with adequate number of desiccants and Kraft papers,” he said.

    The Export Manager of Safmarine, Mrs. Maureen Okojie, said decisions on shipping services were time bound. She stressed the need to look at shipment schedule between February and July, this year for cashew shipments.

    An official of COSCO Shipping Company, Mr. Paulinius Effiong, advised forwarding agents to reject containers with holes.

    To realise the association’s target of raking in N80b from cashew export this year, its President, Tola Faseru, inaugurated two committees to ensure a hitch-free 2016 cashew season. He named the committees as the Cashew Logistics Committee and the Cashew Improvement Committee.

    The committees are saddled with  implementing programmes for the the season.

    Cashew shipping firms, exporters, forwarders and shipping lines were represented at the conference.

  • Govt must establish courts to fight sub-standard products, says SON DG

    Govt must establish courts to fight sub-standard products, says SON DG

    The Director-General of Standards Organisation of Nigeria (SON), Dr. Joseph Odumodu, has said the fight against sub-standard and fake products in the country will be better tackled with the creation of a special high court that will try importers engaged in such activities.

    He said though the country has lots of laws meant to deal with those who bring in fake and sub-standard products, a special court will be of great help in the fight against fake products in the country.

    Speaking with reporters in Lagos, during a review meeting with International Accredited Firms (IAFs), the SON boss said: “We have enough laws to jail those importers, what I am also lobbying for now is to have a special court, a federal high court that will handle these cases expeditiously, because when people see that it is not going to take five years, but two months to get cases done with, they will have to think twice.”

    While revealing that SON is working with the Chinese government on how to reduce importation of fake products into the country, Odumodu said they are working on product liability and repatriation. He said: “In the last four years, SON has entered into agreement with the Chinese Government, which never happened but there is a renewed commitment coming from the Chinese government, but we need to see this in action.”

    He stressed that such agreement will actually help SON to clean up the market of fake products.

    “If I walk into a shop to get a product and it is substandard, it is the person who sold that product that has the liability and until we are able to trace the product to the original owner, the seller of that product will be in our custody. What we are also saying is that we are putting some responsibility on the retailers and wholesalers. We have told them to ask for documentation before buying a product because they need to protect themselves,” he said.

    Odumodu added that SON’s system going forward must be evidence-driven.

    “If you sell a product to someone and it does not work, you will pay. People should demand their rights. If you buy a product and it does not work, you must return the product and get your full value and if you do not get it, you have a right to respond. If you have a product in the market, it must be registered to enable us capture it into our database so that when the product fails to conform to standards, we will know where to trace it to,” he explained.

  • How Nnewi factory fire exposed Nigeria’s infrastructure gap

    How Nnewi factory fire exposed Nigeria’s infrastructure gap

    Nnewi, the industrial and commercial capital of Anambra State, was  on Christmas eve, thrown into confusion and mourning when an LPG gas plant operated by Inter Corp Oil Ltd, a subsidiary of Chicason Group, exploded.

    The explosion, which occurred around 11 am, reportedly resulted from a leak when a consignment of gas was being uploaded to the company’s dump. Some of the  people at the plant were said to have been burnt. Others who were in the neighbourhood and passersby were caught in the inferno.

    The victims were rushed to Nnamdi Azikwe University Teaching Hospital (NAUTH), Nnewi. The fire did not allow rescue workers access into the factory where the majority of the victims were trapped. Sadly, all efforts to get the attention of the Anambra State Fire Service failed, according to an eye witness who spoke with The Nation.

    An eye witness, who escaped death by the whiskers, said a fire officer, Mrs Mary Ofia, excused fire service personnel when she claimed that the fire truck was vandalised by a mob when they went for an operation at Nkpor, a community in Anambra. He said apart from the fact that the Fire Service’s equipment were non-functional, it took them time to get to the factory. He said by the time they retreated and came back, the inferno had done  incalculable damage.

    Apart from lives lost to the inferno and buildings razed, over 50 vehicles around the gas plant were equally affected. Some dead victims were actually recovered in their homes.

    However, while the company and family members of the victims are still struggling to come to terms with the reality of what hit them, attempts by people to shift the blame for what happened to the wrong place may have added to their sorrows.

    Rather than commiserating with the people and coming up with new strategies to avert such occurrences, The Nation learnt, government agencies seem to be adding salt to the injury of the people who lost relations, friends and business by accusing the company of unsubstantiated claim of operating  substandard facilities.

    A report exclusively obtained by The Nation confirmed that some industry operators who toured what was left of the factory after the fire confirmed that the business was run on what could have met industrial standards anywhere in the world. Relevant industry regulatory bodies, according to the report, also approved the facility.

    One of the members of the tour team who declined to be  because he was not authorised to speak, said the fire was one of many industrial accidents that confront businesses daily, and necessitates government standing up for the citizenry, both individual and corporate.

    He said rather than shift blame, the question should be: How did government agencies respond to this particular incident? Could some of the lost lives have been saved had the government responded better? What is the hope of better response from the Fire Service and emergency management arms of government for the various businesses that operate in the same vicinity in the face of similar happenstance?

    He said the explosion was a sad reminder of the need for the government to walk its talk in the provision of necessary infrastructure and equipping its relevant emergency response agencies, particularly the Fire Service. He said it was curious that Nnewi despite being home to many manufacturing outfits cannot boast of an efficient and effective fire service.

    The first locally made automobile in Nigeria was produced by INNOSON with its factory in Nnewi employing thousands of people. The industrial city has over 30 major factories, 50 cottage industries, 10 major hotels with over 10, 000 direct work force. Its contribution to the nation’s Gross Domestic Product (GDP) has yet to attract any special treatment from either the Federal or State Government.

    The thriving industrial town boasts of companies with billions of naira as turn over yearly. Yet, the lack of an efficient fire service has continued to pose serious risk to billions of naira worth of investments made by private investors.

    However, Minister of Interior, Abdulrahman Danbazau, has assured that more proactive measures will be taken to prevent future re-occurence.

    The Minister said this when he  visited the state  on Wednesday to sympathise with the government and people of Anambra State. He was accompanied by the Comptroller-General of Fire Service and his counterpart at Civil Defence.

  • Rescind ban on crude palm oil, stakeholders urge Minister

    Rescind ban on crude palm oil, stakeholders urge Minister

    Stakeholders in the agric and manufacturing industry have called on the Minister of Agriculture, Chief Audu Ogbeh, to intervene by encouraging the Central Bank of Nigeria (CBN) to reverse its foreign exchange (forex) policy that included one of their most important raw materials, Crude Palm Oil (CPO) on the ‘not valid for forex’ list.

    Speaking in a forum with industrialists in Lagos, MAN President, Dr. Frank Udemba Jacobs, said forex should be made available for genuine manufacturers that use CPO as a major raw material for production of end products such as noodles, biscuits, cosmetics, etc.

    According to him, this singular decision by the apex bank threatened the existence of several manufacturing companies who rely heavily on crude palm oil as a major raw material for production. “These companies have invested heavily in plants and machinery worth several billions of dollars in the country and what the CBN is indirectly telling them is that it could not be bothered with the challenges this policy is posing to our members,” he said.

    The MAN boss noted that affected companies have leaned towards the agricultural sector as part of their backward integration programme, creating more jobs and strengthening the nation’s ability to be self-sufficient in food, beverage and cosmetic production.

    He hailed the administration of President Muhammadu Buhari on its move to revive local industries through this policy, but insisted that there are certain indices that must be taken into consideration before full implementation of the policy.

    Jacobs explained that while the policy is a welcome development, there should be no sudden obstruction to importation of the raw material that is needed for local production, especially when demand for such material cannot be met locally.

    According to IndexMundi, a data portal, the domestic palm oil produced in Nigeria totalled 930,000 metric tonnes (MT) in 2014. The consumption of palm oil in Nigeria amounts to 2.0 million MT per year. Official figures estimate the shortage in oil palm industry at 900,000 MT yearly. This poses a very precarious situation for the manufacturing sector that depends largely on CPO as a major source of raw material.

    Experts say if the gap is not filled with the massive importation of high quality food grade palm oil, the economy will lose further investment in the manufacturing sector as companies would be forced to shut down and relocate their business outside the country, like it happened in the past.

    Some analysts are already predicting the mass movement of manufacturing companies to friendly West African countries with robust manufacturing policies if the government insists on going ahead with policies that are inimical to manufacturing.

  • Dangote buys ex-subsidiary to save over 3,000 jobs

    Dangote buys ex-subsidiary to save over 3,000 jobs

    Dangote Industries Limited (DIL) has explained why it bought back its former subsidiary, Tiger Branded Consumer Goods (TBCG). It said its action is to prevent the company from dying and also save the job of over 3,000 Nigerians.

    DIL was approached by Tiger Brands to acquire its 65.7 per cent shares of TBCG Limited. While some stakeholders have questioned the rationale behind the investment decision by DIL, sources close to the Dangote Group said the company had to consider the repurchase of TBCG so as to keep the company as a going concern, which preserves value for the minority retail shareholders. The move also secured direct employment for over 3,000 employees.

    “Going by every indication, the future of the company was very doubtful and that was risky for the employees, which are over 3,000 Nigerians apart from others who benefit from the company’s services through other ancillary services. The return of DIL is therefore, a big relief and good decision to save the jobs of the staff of TBCG,” a market operator, who declined to be named, said.

  • Unscrupulous businessmen hijack auto policy

    Unscrupulous businessmen hijack auto policy

    The Federal Government’s hope of riding on the crest of the automotive policy to achieve its strategic objective of encouraging local manufacturing of vehicles and halting the estimated $6.7 billion sunk into the importation of vehicles yearly has come under serious threat. Some phony auto dealers/firms may have hijacked the policy with the intention of benefitting from the government’s zero tariff to companies genuinely assembling cars locally. CHIKODI OKEREOCHA reports.

    When the Federal Government introduced the New Auto Industry Development Plan (NAIDP) around 2013, not a few operators and stakeholders lauded the policy as a lofty initiative.Their expectation was that the policy would promote the local assembly and production of vehicles, and increased employment opportunities for Nigerians. It was also hoped that the policy would conserve scarce foreign exchange, accelerate technological development of the local economy, standardise and rationalise the automotive industry, among other positive spin-offs.

    The former Minister of Industry, Trade & Investment, Dr. Olusegun Aganga, articulated the collective hope and aspirations of Nigerians that the policy would  turn around the fortunes of the auto industry and, by extension, the economy. He said the policy would halt the huge capital flight expended on the importation of vehicles into the country. He said, for instance, that Nigeria spends on the average, $3billion to import new cars and another $3.7billion to import fairly used cars and parts.

    Aganga, who warned that the figure would continue to grow if nothing significant was done, added that it is only Nigeria and Bangladesh that do not have auto policies. He said Nigeria cannot afford to be neutral on the issue because it is a big employer of labour. The auto sector, according to him, accounts for about nine million jobs globally and accounts for five per cent of manufacturing.

    However, two years down the line, the policy is yet to meet its strategic objectives. Rather than do so, the policy has been hijacked by some unscrupulous businessmen in the auto industry.

    These unpatriotic and phony vehicle manufacturers, The Nation learnt, are benefitting from the zero tariff given by government to companies who are genuinely assembling cars locally. Their modus operandi is simple: Rather than implementing the auto policy, the phoney local vehicle manufacturers and assemblers allegedly go abroad to purchase fully built cars, pay an extra cost to partially dismember these cars and then ship them into the country as knocked down components of the cars for assembly in-country.

    A reliable industry source, who spoke to The Nation after extracting a commitment not to be named, said the unscrupulous vehicle manufacturers have found a way of hiding their activities under the immunity provided by the Federal Government for genuine companies that are effectively implementing the policy. The source,  a member of a group in the auto industry, lamented that the manufacturers are reaping the country off in the process. “The government is losing billions of naira for nothing. These people are actually not assembling cars in Nigeria,” he said.

    According to him, setting up an actual assembly plant requires enormous investments, which some of the manufacturers are not prepared to commit themselves to. “What do you think they are doing? Try to enter their so-called assembly plants, you will see that they will not allow you because what they are doing is go abroad, buy fully built cars, take off the side mirrors, the bumper, head and rear lights and so on. They ship these parts into the country, avoid paying any tariffs, then couple these removed parts at their so-called assembly plants, sell to Nigerians and smile to the bank,” the source said.

    Continuing, he said the international partners of the affected manufacturers have even refused to sell completely knocked down (CKD) parts to them for fear that they may compromise the standards of their cars, a development that would rub off negatively on the image of their brands.

    According to him, the businessmen are merely denying Nigeria of tariff revenue that should have accrued to government. It also means that government hope of riding on the strength of the policy to create jobs locally may not be realised.

    Asked whether this is not just a phase in the process of getting these companies to eventually begin to assemble actual CKDs in Nigeria, the source said it was nothing but another way of depleting the country’s badly-needed revenue for individual benefit.

    The quest to make profits at the detriment of government, he said, was why so many companies and groups applied for licences to become auto manufacturers. The avalanche of applications, at a point, forced government to stop accepting applications.

     Experts in the auto industry said to run a profitable vehicle assembly plant, there had to be a given number of cars to be produced and sold annually. But with several companies claiming to be assembling cars locally, there was no way each of them could achieve that threshold production and remain sustainable.