The Nation Newspaper

Category: Industry

  • N100b textile fund: How solution became problem

    N100b textile fund: How solution became problem

    Despite the challenge of unbridled importation of cheap and substandard textile materials and the infrastructural deficit in the country, the Federal Government went ahead disbursing the N100b Cotton, Textile and Garment (CTG) Revival Fund. Stakeholders say the government may have put the cart before the horse thus nailing the coffin of the ailing textile industry, reports Assist. Editor CHIKODI OKEREOCHA.  

    It a generous interest rate of six per cent and a repayment period of five years, operators in the textile industry ought to be falling over themselves to access the N100 billion Cotton, Textile, and Garment (CTG) Revival Fund. But this has not been the case. Rather than scramble for the loan, most textile companies are said to be avoiding it like plague. Only about 20 textile firms have so far accessed the loan, according to the Director General, Nigeria Textile Manufacturers Association (NTMA), Mr. Jaiyeola Olarewaju. He also disclosed that very few cotton and garment firms have taken the loan, which sought to revitalise the CTG industry along the entire value chain, including textile, cotton, and garment production.

    Olarewaju told The Nation that the fund introduced in 2010, and currently managed by Bank of Industry (BoI), recorded some noticeable improvements in the fortunes of the CTG industry such as the re-opening of United Nigeria Textiles Limited in Kaduna, and Arewa Textiles, which indicated interest to come back. Besides, the industry, he said, recorded relatively less factory closures and redundancies, as some of the 20 textile companies who took the loan deployed it either as working capital or used it to refurbish their machines.

    Olarewaju however, expressed regrets that those who took the loan got their fingers burnt when they discovered, shortly after accessing the loan, that over 80 per cent of the market has been taken over by cheap imports from Asian countries. According to him, the influx of foreign textiles into the country made locally produced textiles less competitive, as they are often costlier than imported or smuggled ones. The result, he said, was that other companies yet to access the loan chose to avoid it. Most of them became afraid that they may not be able to repay the loan considering the prevailing unfriendly operating environment particularly with regards to lack of infrastructure.

    As far as the textile firms are concerned, government put the wrong foot forward when it failed to first reduce smuggling and address the more fundamental challenge of lack of infrastructure particularly power supply before coming out with the bailout fund. Because of Nigeria’s huge infrastructure deficit particularly, inadequate and unreliable electricity supply, manufacturers, including textile companies, are forced to rely on generators at huge cost, resulting in rising cost of production.

    Cost of manufacturing textiles in Nigeria is considered too high partly because of high energy cost. For instance, the price of gas was increased by 15 per cent from January 2014 and price of black oil, which is an important input in the production process, remains high due to scarcity. In textile production, companies either use gas or black oil. But in a state like Kaduna, there is complete absence of gas. What is found is black oil, which is often in low quantity. Besides, the insecurity situation in the country especially in the Northeast made nonsense of the intervention fund, as most textile companies in that part of the country could not operate.

    “We are stagnated now; the problem goes beyond money,” says President, National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), Comrade Oladele Hunsu. Hunsu toldThe Nation that although, there was a significant improvement in the industry, as 1, 500 jobs have been saved through the intervention, efforts to put the industry back on track have been frustrated by government’s policy inconsistency. He said before the introduction of the fund, government had banned the importation of textiles into the country, which was why operators hailed the initiative and also embraced it. He however, lamented that the same government pulled the rug off the feet of operators when it again unbanned the importation of textiles, thus opening the floodgate for cheaper textiles to come in from Asia.

    Comrade Hunsu lamented that the situation is regrettable considering the fact that the real sector rather than the service sector remains the real growth diver. He said the textile industry is the second largest employer of labour after government, which is why government must put necessary measures and policies in place to salvage the industry. His position was in line with the communiqué issued at the end of a three-day workshop for union organisers and self-employed tailors and small scale garment makers organised recently by his union in collaboration with Friedrich Ebert Stiftung in Ilorin, Kwara State.

    The communiqué noted, for instance, that the performance of the Nigerian textile industry remained at low ebb in the first half of 2014 due to lack of an enabling environment and inconsistency in government policy. NUTGTWN observed that there are 25 textile mills employing about 24,000 workers, while capacity utilisation in the industry remains below 50 per cent, with growth remaining stagnant since 2012. The communiqué noted that government had talked about a new textile policy in February 2013, but regretted that there has been no progress. It therefore, argued that unless government takes effective steps to revive the industry, gains achieved in 2010 when the revival fund came on stream would be lost, resulting in job losses, which would aggravate the unemployment situation.

    One of the effective steps the union is canvassing to breathe life into the comatose textile industry is to immediately checkmate the influx of smuggled goods, which the union insistsoccupy over 90 per cent of the market. “It is estimated that Nigeria ‘imports’ N300 billion worth of textiles and garments annually, most of which are illegally imported without paying any duties and taxes. The total amount of revenue loss on account of Customs duty and Value Added Tax (VAT) on this volume is estimated at N75 billion. Such rampant evasion of taxes lost to smuggling when the government is running from pillar to post to mobilise revenue should be an eye opener,” the communiqué read.

    The communiqué further noted that the huge backlog of Negotiable Duty Credit certificates (NDCCs) accumulated over last two yearsunder the Export Expansion Grant (EEG) has thrown the CTG industry into serious financial crisis, which the N100 billion funds has so far failed to resolve. “This has been caused by an arbitrary suspension imposed by the Federal Ministry of Finance on utilisation of the certificates, issued by the same ministry, for duty payment. Textile manufacturers who exported their goods by factoring the grant in their price are facing a severe liquidity crisis,” the union observed.

    However, textile companies are not the only ones lamenting over liquidity crisis induced by the backlog of unutilised NDCC. Earlier, manufacturers under their umbrella association, Manufacturers Association of Nigeria (MAN) had cried out that the same issue had virtually paralysed their operations and simultaneously affected their image as reliable international partners. MAN said the shoddy implementation of the EEG, a Federal Government’s incentive introduced to help manufacturers for export compete favourably with their counterparts in the international market, created continued reluctance in the acceptance of NDCC for duty payment since 2010.

    The Nation learnt that under the EEG, benefitting exporters are entitled to some claims based on the value of export proceeds received, duly certified by the Central Bank of Nigeria (CBN), while the approved claims are paid to them by government through the use of a negotiable instrument known as the NDCC, which entitles the exporter to offset part or whole of subsequent Customs and Excise duties payable to the government.

    But members of MAN and NUTGTWN have been expressing concern over the administration of the EEG scheme, which they say created challenges for their members who are actively involved in the export business. They associations therefore, called for timely policy pronouncement on rendering the backlog of unutilised NDCC by the Federal Government. “This will go a long way to stem the frustrations of majority of the genuine exporters who are desirous of growing their businesses and creating  value addition in the economy. It will also address the issue of leakages in government revenue and bring sanity into the administration of the scheme,” MAN argued, for instance.

    In the case of textile companies, the liquidity crisis caused by the backlog of NDCCs made it extremely difficult for them to pay the interests on the loan from BOI due to low capacity utilisation. The tenure of the loan matures in 2016. Already, the textile companies, in the communiqué, jointly signed by Hunsu and General Secretary of NUTGTWN, Comrade Issa Aremu,appealed to BOI to extend the repayment period of the loan by 10 years. They also requested flexibility to redeem the EEG certificates in lieu of loan instalment.

    These, NUTGTWN noted, became necessary due partly to the havoc wreaked on the industry by smuggling and partly due to lack of patronage of made in Nigeria textiles as a result of lack of effective policy enforcement. The union observed that most government ministries, departments and agencies (MDAs) such as police, customs, immigration and army still prefer to use imported fabrics rather than those locally made.

    While emphasising that there is need for some sort of protection for the CTG industry, Hunsu told The Nation  that Nigeria should borrow a leaf from developed countries of the world including some African countries that have been highly supportive of their textile industry to improve their competitiveness. He cited the United States of America, which he said dished out a whopping $75 million to bail out General Motors. Also, while Ghana has three large textile mills and allows import of all raw materials, dyes & chemicals and spare parts at zero per cent duty, Kenya continues to be a hub for readymade garment exports.

    Curiously, while textile manufacturers are groaning that the N100 billion CTG revival fund has not significantly improved their lot, BOI’s records appear to paint a picture of an industry on its way to recovery. For instance, BOI says that over 60 per cent of the fund has been committed to 52 companies in the CTG industry as at March, 2013. The bank cited the re-opening of United Nigeria Textiles Limited in Kaduna as one of the numerous positive impacts of the scheme.

    BoI also said that a mid-term evaluation of the CTG industry commissioned by BOI/UNIDO to evaluate the impact of the scheme reveals that over 8,070 jobs had been saved through the intervention, while capacity utilisation for most beneficiaries increased from below 40 per cent to about 61 per cent. Besides, over 50 per cent of those making losses has started reporting profits.

    But the textile companies are not swayed by BOI’s statistics. While saying that “BOI must be commended for the way it has so far managed the fund, Hunsu however, pointed out that the figures churned out by the bank indicating the success of the fund do not reflect the reality on ground. He said while only about 1, 500 jobs have been saved through the intervention, capacity utilisation remained very low. He reiterated that financing is just one out of the numerous challenges facing the textile industry in particular and manufacturing industries in general.

    The textile industry was once the bride of the nation’s industrial sector. In its heyday, around the1980s, the textile market was acknowledged as third largest in Africa, with over 160 vibrant textile mills and over 500,000 direct and indirect jobs. By 1985, the number of textile mills had increased to about 180, engaging about one million workers. The country’s textile capacity accounted for 60 per cent in West Africa.

    However, the fortunes of the industry started nose-diving in  early  1994 when most of the textile firms started caving in under the weight of smuggling, unstable business and political climate, and high production costs due to poor infrastructure. By 1995, government, according to experts, plunged the industry into deeper crisis when it pushed the country into the World Trade Organisation (WTO).

    The WTO adopted Agreements on Textile and Clothing, which states that all quotas on textile and clothing will be removed among WTO member countries. For Nigeria whose industrial base was considered as very weak, the agreement was seen by many as a fundamental error, as it opened the floodgate for the importation of inferior and cheap textiles in Nigeria.

  • LCCI canvasses PPP collaboration with govt

    LCCI canvasses PPP collaboration with govt

    • Chamber decries double taxation

    President of Lagos Chamber of Commerce and Industry (LCCI), Alhaji ‘Remi Bello, has canvassed the need for collaboration between the private sector and government. He stressed that public-private dialogue is critical to the progress of the state, the welfare of the citizens and the prosperity of businesses.

    He spoke at a meeting held in Lagos last week, between LCCI and Lagos State Governor Babatunde Fashola. He noted that the chamber and the state government have the collective duty to continue to promote and strengthen Lagos as the commercial nerve centre of the country and indeed, the West African Sub region and as a model megacity on the African continent.

    Bello acknowledged the impact made by the governor in areas such as security of lives, environmental improvement and beautification, and huge investment in drainage improvement. Others are infrastructural development, massive railway project on the Lagos Mile-2 corridor, traffic management, industrial parks and enterprise zones.

    He further praised Fashola on investments in the power sector, urban renewal projects and intervention in the traffic gridlock created by the heavy duty trucks and tankers along the Mile 2-Apapa axis.

    He said: “It is widely acknowledged that private sector productivity is a function of the quality of the investment climate. The Lagos State government is working in tandem with this realisation. We however, will like to draw attention to some issues of concern to the business community in the state such as multiplicity and arbitrariness of levies by local government councils

    Bello further said: “We have issues with the manner in which the local government councils manage this aspect of their functions. There are concerns about the method, the process and level of transparency. There are several instances of arbitrariness in the imposition of levies. Most often, these are at variance with approved rates.”

    The LCCI president said many organisations have suffered embarrassment following demand by local council officials for radio and television permit, for instance, which come with a lot of arbitrariness with rates ranging from  N50,000 per annum to N200,000 per annum. “Only recently, a local government council sealed up the premises of a company for failure to pay N200,000 for radio and television permit whereas the approved rate is N10,000. It took the intervention of the office of the Special Adviser on Taxation and Revenue to unseal the premises,” he said.

    He also identified parking permit where he said many organisations have been served with various charges for parking permit ranging from N100,000 per annum to  N500,000 per annum depending on the locations and number of parking lots. According to him, there are instances where both local and state officials make demands on the same companies for parking fees. “For companies in the small and medium enterprise categories, these demands could be very burdensome,” he said.

    Bello called on the governor to prevail on the officials and the agencies to moderate the fees and streamline the levies/permits. He also called for proper coordination between the state and local councils.

    While lauding the setting up of  the  Lagos State  Environmental Protection Agency  (LASEPA) and the need to protect the environment and ensure adherence to best practices in the operations of  entrepreneurs, he criticised the seeming greater emphasis on revenue drive than the core mandate of protecting the environment. The use of consultants for this purpose, he said, has further worsened the process.

    He berated the numerous charges imposed on manufacturers most of which are small businesses. A typical payment request by LASEPA, he revealed, could be as high as N500,000, which consists of the following: environmental development charge, chemical storage permit, laboratory analysis fee, submission fees for environment assessment and submission fees for environmental audit report.

  • ‘How African businesses can create new opportunities’

    ‘How African businesses can create new opportunities’

    New opportunities await African businesses if they can align with global business development ideals,the Institute of Business Development (IBD), the leading global professional body for business development professionals, has said. And to underscore its resolve in helping African businesses position themselves to create new opportunities, the institute chose the theme; ‘Business Development in Africa: Emerging Issues for Strategic Actions’ for its ‘2014 Business Development Week’ slated to hold in Lagos, Nigeria, from November 12 to 14.

    “The summit will demonstrate in real terms how companies can align their core business with the global business development initiative to bring about poverty alleviation at the Base of the Pyramid. By utilising their resource capabilities, companies can improve the lives of people in our continent through increasing investment, creating jobs, increasing skills, and developing and providing goods, technologies and innovations,” the Registrar/Chief Executive Officer (CEO), IBD, Paul Ikele, said, in a statement made available to The Nation.

    Ikele said as companies do so, they will be able to penetrate the marketplace. He added that: “Above and beyond marketplace expansion, aligning your business with the initiative will contribute positively to your company in several ways such as improved supply chain, improved corporate culture, staff retention and morale, increased license to operate, improved investor attractiveness, global corporate reputation, as well as make you become an employer of choice, among others.”

    The registrar noted that a commitment to do business with low-income communities provides the greatest contribution to regional prosperity and to the achievement of the Millennium Development Goals (MDGs). He said the Institute chose to engage in the summit becausethe overwhelming characteristic of emerging markets is that they exist in a large majority of low income communities that have come to be defined as the Base of the Pyramid (BoP), which is those living on less than $1500 annually.

    “Four billion people make up the BoP and hold $5 trillion in purchasing power. Asia is home to the biggest BoP market with 2.86 billion people on an income of $3.47 trillion. That reflects 82 per cent of the region’s population and 42 per cent of the region’s purchasing power,” he explained.

    According to him, “The BoP concept champions new thinking and new ways of doing business in the world’s poor markets. While this high-level aspiration is not necessarily new, the current concept, also known as B24B (business-to-4-billion), was coined by influential business academics.

    “Africa is and conducts most of its international trade with emerging markets; this means that African companies should be well placed to broaden operations, supply and procurement to involve the Base of the Pyramid. To successfully engage with the BoP market place, new and innovative strategies will be required in order to respond to the unique obstacles and infrastructural development to position African business group to take a chunk from the global market considering our population.”

    Ikele announced that the summit has been endorsed by top business moguls, key government officials and the leading royal fathers in the African sub region. He said it will begin with a keynote address, which will be followed by a series of thought-provoking and engaging sessions covering topical issues on the theme. Each session will be launched with an address by a recognised industry leader, and conclude with a highly stimulating open forum discussion.

    He also disclosed that the summit is set to become an annual forum of knowledge sharing, showcasing, networking and initiating successful emerging market business ventures, which have a positive social impact and are aligned with the global business development ideals.

    Attendance is open to interested persons in the public and private sectors including business development professionals in Research and Development (R&D), top executives, project managers and all stakeholders in the business sphere.

  • Agric’s contribution to GDP low, says BOA MD

    Agric’s contribution to GDP low, says BOA MD

    Despite Nigeria’s highly diversified agro-ecological condition with a production possibility of a wide range of agricultural products, the agric sector’s contribution to the Gross Domestic Product (GDP) and export revenue earnings remains low, the Managing Director, Bank of Agriculture, Mr. Mohammed San Turaki, has said.

    San Turaki expressed regrets that despite the nation’s resource endowment, the agricultural sector has been growing at a very low rate with the smallholder farmers constrained by many problems including poor access to modern inputs and credit, poor infrastructure, inadequate access to markets, land and environmental degradation, and inadequate research and extension services.

    He spoke at a one-day conference with the  theme: “National Dialogue on Agricultural Value Chain: Enhancing Agricultural Export Through Adequate Financing, organised by the Nigerian Association of Chambers of Commerce, Industry, Mines & Agriculture (NACCIMA).

    He said the economy can only grow if agriculture is treated as a business where farmers produce what the market needs and can process for export.

    He said: “Unfortunately, no significant success has been achieved due to the several persistent constraints inhibiting the performance of the sector. From the perspective of sustainable agricultural growth and development in Nigeria, the most fundamental constraint is the peasant nature of the production system, with its low productivity, poor access to funding which ultimately leads to poor response to technology adoption strategies, and poor returns on investment.”

    The Bank of Agriculture boss stressed that agricultural commercialisation and investment are the key strategies for promoting accelerated modernisation, sustainable growth and development and, hence, poverty reduction in the sector. He said to attract investment into the agric sector, it is imperative that those constraints inhibiting the performance of the sector are first identified with a view to unlocking them and creating a conducive investment climate.

    He argued that it is only when Nigeria focuses on the whole agricultural value chain that the country can start exporting. He insisted that government needs to regulate the environment, land tenure system, research and development, marketing and consumers needs. The BoA boss regretted that banks will rather pay penalty than fund agriculture because of its high risk, noting that except this is addressed its contribution to the GDP will remain abysmal.

    He further stated that economic growth achieved through agriculture is three times more effective than other sectors of the economy.

    Director General, Federal Institute of Industrial Research, Dr. Gloria Elemo frowned at the weak infrastructure and budgetary provision to agric, insisting that such cannot encourage competitiveness of the sector. She also criticised the exportation of primary products at a cheap rate and importing it at a very high cost due to a little value added.

    Earlier, in his welcome address, President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Alhaji Mohammed Badaru Abubakar said agricultural value chain is an important option for agricultural development, as higher financial returns can be realised through value enhancing inputs.

    Abubakar further said the value chain concept creates opportunities for farmers, agribusiness and entrepreneurs along the agricultural value chain to transform commodities into higher value products- a process that can play an important role in poverty reduction; creation of employment, provision of raw materials for industrial growth and generate income.

  • Cement standardisation: What’s in it for consumers?

    Cement standardisation: What’s in it for consumers?

    Even before the dust raised by the new standard for cement finally settles down, the policy, which pitched the regulatory authorities against some manufacturers, has opened more latitude and prerogative of choice to consumers. It has also drawn attention to grey areas hitherto neglected in the nation’s quest to find lasting solution to construction failures and building collapse, Okwy Iroegbu-Chikezie reports.

    Until recently, the level of consumer awareness in Nigeria’s burgeoning building and construction industry remained abysmally low. It could not have been otherwise. The industry was an all-comers affair, parading mostly non-professionals in building and construction. Low quality building materials were also common place, while the right application of vital raw materials was disregarded. In most cases, materials particularly cement, are misapplied. Yet, cement is the binding agent, constituting over 60 per cent of the components in building and construction, according to experts.

    Because of the low level of awareness of builders, block moulders, masons, artisans, and others directly involved in building and construction, knowledge of the various grades of cement and their application was not a priority. As far as some of the builders are concerned, cement is cement, no matter the grade. The fact that there were no means of identification of the various grades of cement in the market compounded their problem.

    Consumers of cement products were no less confused. Most of them were not even aware of the variety in grades, standards and specific applications of cement. What most people are aware of are the brand names, whereas the grades or standards are equally important.Using a lower grade of cement where a higher grade ought to have been used was common place due to ignorance on the part of consumers and artisans as well as greed. “This ignorance has led to the misapplication of cement by many users and for reasons of personal gain, some people may just utilise one bag when more bags are actually required,” the Director General of Standard Organisation of Nigeria (SON), Dr. Joseph Odumodu, noted, at a recent forum.

    But things are changing, and quickly too. Today, consumers know what grade of cement they are buying, its most appropriate application, average shelf life, who manufactured it, and how it should be stored. They know that each grade of cement is used for a specific purpose, depending largely on the compressive strength they desire. For instance, while the 32.5 grade is exclusively for plastering, the 42.5 grade is used for casting of beams, slabs, and block moulding. The 52.5 grade, on the other hand, is used for construction of hard infrastructure projects like bridges, flyovers, high rise buildings, and other specialised applications. The increasing consumer awareness is believed to be one of the dividends of the recent review of cement standard by SON.

    The standard regulatory/enforcement agency recently came out with a policy that reviewed the standard of cement, classified it into three grades of 32.5, 42.5 and 52.5 and stipulated their exclusive uses. The move was part of efforts towards eliminating the menace of building collapse. In coming out with the new policy, SON’s technical committee consulted widely with stakeholders from all sectors including the Nigeria Society of Engineers (COREN), Universities, researchers, builders, block makers towards fashioning a suitable cement standard regime. The stakeholders agreed to streamline cement types, with the aforementioned grades.

    Consequently, SON warned members of the public to adhere strictly to the stipulated application of cement types and save the nation the embarrassment of incessant structure failures. In handing down the warning, Odumodu however, clarified that there are no substandard cements in the country. He said the challenge was more of misapplication of cement rather than the quality of cement used. The DG informed audience at a recent ‘Stakeholders Forum’ in Abuja that the agency was determined to ensure standards because the several incidences of building collapse in the country has gotten to an embarrassing level.

    “A recent test conducted on cement blocks in Nigeria, especially the load bearing ones, made a revelation that only five per cent of the blocks met the specifications of the Nigerian Industrial Standards (NIS 587 of 2007). “We believe that any factor that contributed in any way to building collapse should be addressed. Load bearing blocks happen to be one of them and that is what we are addressing”, Odumodu said.

    Although, there is no compelling evidence yet linking poor quality cement to the increasing menace of building collapse, the consensus of industry experts is that sticking to the new classification of cement based on their exclusive uses would, at least, narrow the search for the causes of building collapse to other factors. What SON is doing therefore, is to eliminate any possibility of building collapse that might arise from the misapplication of cement.

    The agency took the campaign to eliminate opportunity for product misuse by giving cement manufacturers 60-days window to ensure that cement bags carry proper product information such as batch number, expiry date, and colour code. Today, consumers can differentiate the various grades of cement by their unique colour stripes, namely blue for 32.5 grade; yellow for 42.5 grade and red for 52.5. Unlike in the past when there were no means of identification, the review mandates manufacturers to clearly label the grade on the cement bags and their applications before they get to the market.

    While the batch number was to enhance product traceability, the expiry date was necessary because components of are chemicals that do expire. For one, this has boosted consumers’ confidence, even as the increased patronage is expected to lead to increased capacity utilisation. Experts also say that expansion in commercial activities with regards to cement manufacturing will lead to job creation. Besides, the new regime would enhance the cement industry’s global competitiveness. Apart from providing export opportunities to cement produced locally, it will enhance foreign exchange earning in addition to boosting Foreign Direct Investment (FDI).

    Despite the obvious positive spin-offs of cement standardisation, the policy has not gone down well with some manufacturers, most of who argue that the move would not only lead to increase in the price of cement, but also result in its scarcity. Some of them argue that it would be difficult for some manufacturers to respond to the new requirement in the production lines. Those advancing this position include Lafarge WAPCO, United Cement Company of Nigeria (UNICEM) and Ashaka Cement. They are kicking that restricting the use of 32.5 grade of cement to plastering only amounts to an indirect ban on the product, which they say, is unacceptable.

    However, while some manufacturers are kicking, cement giant Dangote Cement has since announced its readiness to comply 100 per cent with SON’s new regulation. The companyonly produced the higher grades of 42.5 and 52.5 from all its three plants in Obajana, Kogi state; Gboko, Benue state; and Ibese in Ogun state. while Dangote has 42.5 as its lower grade, some other competitors only produce 32.5 grade and sold at almost the same price as Dangote’s higher grade. This prompted the company’s distributors and customers who have been enjoying its top range products to clamour for more range of products.

    Partly in a bid to offer consumers alternatives for various construction needs, and partly in full compliance with the directive of SON on the various grades of cement and their prescribed uses, Dangote cement announced plans to launch its brand of the premium 32.5 cement grade. According to the Group Managing Director, Dangote Cement, Devakumar Edwin, the 32.5 grade, which has the lowest strength among the various cement products will be priced lower than the others and will be selling at N200 lower than the price of the higher strength 42.5 grade. “This in addition offers our numerous customers and end users the prerogative of choice and its appropriate application,” he said, at a media briefing in Lagos.

    The new product, which has been branded ‘Dangote Cement 1X’, Edwin stated, was in response to popular demand from the customers as well as in full compliance with the SON directive encouraging production of all grades of cement but with clear labelling on the use. He noted that the entrance of the 32.5 cement grade from Dangote would ensure that the consumer pays the appropriate price for the right value rather than paying more for lower grade as is presently the case in the market. He said the 32.5 cement grade would be clearly marked in the colour prescribed by SON with the uses for which it should be applied, which is purely for plastering.

    The company also announced that it was significantly increasing the supply of cement to the market. This must be music in the ears of consumers. For one, the enhancement in supply of the product to the market is expected to result to a reasonable reduction in the price of the product. Dangote cement also raised the adrenalin of consumers following Edwin’s disclosure that its nationwide campaign and capacity building, which it initiated and has sustained for the past three years to ensure that the different grades of cement are easily identified by users and used only for their prescribed purposes, would be intensified.

    It was not an empty promise. The cement giant had since embarked on an aggressive enlightenment programme on several radio stations across the country  to educate and inform the public on the benefits of using  Dangote 42.5 3X Cement in their construction works. The enlightenment programme and public awareness campaign, according to the Director, Sales & Marketing, Dangote cement, Mr. Chux Mogbolu had become necessary as research has shown that most cement users in Nigeria cannot differentiate between the various grades of cement and their uses hence leading to application of lower cement grade where higher grade cement  should have been used. Mogbolu said that because of the abysmal level of knowledge among artisans, block makers, masons and other craftsmen in the building industry, use of 32.5 grade cement in block making and house building has resulted in several cases of building collapse. He insisted that 32.5 be restricted to plastering and finishing. The Director enjoined the public to always buy Dangote cement, as they will be buying peace of mind and will build with peace of mind. He added that the quality of products from the cement company ensures that customers always come back why the goods do not come back. On its part, SON has also intensified its enlightenment programme. The agency has been organising workshops to sensitize builders, block moulders, artisans etc on acceptable practices such as use of the right type and quality of building materials. Formal trainings are being organised block moulders and artisans to orient them on quality practice and safety standards in the industry, while equipping them with requisite skills and knowledge. Consumers and members of the public are also benefiting from the agency’s active engagement of the media, as well as collaboration with industry groups, trade associations, and partner agencies.

  • ‘Nigeria lost over $140b to illicit financial flows in nine years’

    ‘Nigeria lost over $140b to illicit financial flows in nine years’

    Nigeria lost over $140 billion, about N22.81 trillion, to illicit financial flows between 2002 and 2011, a period of nine years, the Director General (DG) of Securities and Exchange Commission (SEC), Ms. Arunma Oteh has said.

    In her presentation as keynote speaker at the 2nd Christopher Kolade Lecture on business integrity held in Lagos, Oteh said: “Nigeria has lost more to illicit financial flows than any other African country between 2002 and 2011, even being listed in the top 10 globally. Within a nine-year period we lost over $140 billion to illicit financial flows.”

    The DG of SEC disclosed thatpoor countries are losing an estimated $1 trillion yearly to such illegal financial activities as money laundering, tax evasion, transfer pricing and embezzlement. “This is money desperately needed for the Millennium Development Goals (MDGs) and could prevent as much as 3.6 million deaths annually in the world’s poorest countries,” she said, adding that in the case of Nigeria, an estimated $50 billion investment is required to ensure stable electricity supply. She said a lot of the illicit outflows was through the illicit commercial activities of multinational companies.

    She said because of such huge illicit outflows, “We now have a situation where these illicit outflows are not only depriving our country of desperately needed capital but are also being used to finance terrorism abroad and within our shores,” she added,  “A security expert who trained my staff at the SEC recently shared some pieces of intelligence with us indicating that Boko Haram received over $70 million between 2006 and 2011 through shady activities like money laundering, oil bunkering, kidnapping and dealing in drugs.”

    Oteh noted that illicit financial flows and corruption are two issues that countries have been battling with. She said Nigeria suffers greatly from both issues. “Corruption has been identified as the second most problematic factor to doing business in Nigeria ahead of factors including access to finance and terrorism,” she stated, adding that this year, the G-20 is focusing on combating illicit financial flows especially considering the fact that poor countries are losing a lot to such illegal activities.

    The DG of SEC however, said thatconsidering the impact of corruption and anti-money laundering violations on Nigeria, efforts have been made to strengthen the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regime in Nigeria.“Other countries are also implementing reforms to make it harder for wrongdoers to find a hiding place. The United Kingdom (UK) has the Anti-Bribery Act 2010 that requires companies with any link to the UK to have robust structures to forestall shady dealings. The United States has long had the Foreign Corrupt Practices Act of 1977, which provides for up to $25 million in fines and 20-year jail term,” she said.

  • MAN appoints president

    Manufacturers Association of Nigeria (MAN) has elected Dr. Frank Jacobs as its president. He was elected as the association’s ninth president at its 42nd Annual General Meeting (AGM) held in Lagos. He succeeds Chief Kola Jamodu, who was elected for a four-year term in 2010. Prior to this position, Dr. Jacobs was MAN Vice president (Enugu Zone).

    He has served in various positions in the administration. He was formally Chairman, Imo-Abia branch of the association. He was also member, MAN Corporate Affairs and Strategic Planning Committee from 2010-2014. He is the founder and chairman, Jacob Wines Limited based in Imo State. Dr. Jacobs studied at the Incarnate Word College, Santonio, Texas USA where he graduated in 1978 with B.A Chemistry (Magna Cum Laude).

    In 1982, he was awarded PhD (Analytical Chemistry) by the Washington State University, Pullman, Washington, USA. He is a fellow of the Institute of Chartered Chemists of Nigeria (FICCON) and a fellow of the Chemical Society of Nigeria (FCSN).In recognition of his contribution to the development of Nigeria, Dr. Jacobs was honoured in 2007 by President Olusegun Obasanjo with the National Honours Award of Member, Order of the Niger (MON). He also received the national Merit Award for local materials Utilisation in 1994.

  • ‘Multiple taxation hurting industrialists, businesses’

    ‘Multiple taxation hurting industrialists, businesses’

    Industrialists are lamenting that the un-coordinated nature of Nigeria’s tax administration, which results to multiple taxation, is taking a toll on businesses and reducing the global competitiveness of the industrial sector. The industrialist, at a business luncheon organised by Manufacturers Association of Nigeria (MAN) for Chief Executive Officers/Managing Directors of member-companies, called for a more business-friendly tax regime, reports Assistant Editor Chikodi Okereocha.

    It was a business luncheon organised by the Manufacturers Association of Nigeria (MAN) exclusively for chief executive officers/managing directors of its member-companies, but the razzmatazz and camaraderie barely covered the worries in the minds of the participants over the state of the industrial sector.

    At the luncheon, which held last week at MAN Centre Complex, Ikeja, Lagos, the captains of industry could not hide their displeasure over what they described as Nigeria’s un-coordinated tax system, which, according to them, led leads to what is referred to as multiple taxation.

    To the industrialists, multiple taxation, which is a direct result of the nation’s shoddy tax administration, now verges on overkill and is one of the greatest disincentives to business. Specifically, the industrialists consider the tax environment, particularly in Lagos State, as unfriendly and a major factor for the increasing cost of doing business in the country, which in turn reduces the industrial sector’s global competitiveness. For them therefore, the fear of multiple taxation is the beginning of wisdom. This was why the theme of the luncheon ‘Multiple Taxation: A Disincentive to Industrialists” was considered apt and timely.

    Chairman, Ikeja branch of MAN, Prince Oba Okojie, set the ball rolling, lamenting that the incidence of multiple taxation and astronomical increase in taxes and levies has led to disruption of businesses in the state. He noted, for instance, that in addition to the taxes paid/payable to state government under Act CAP.T2 Laws of the Federation of Nigeria 2004, a total of 10 other taxes/levies are being collected by the Lagos State Government. Okojie listed some of the taxes that have been giving industrialists sleepless nights to include environmental development levy/charge, environment impact assessment levy/charge, and land use charge.

    Others are Lagos State Environmental Protection Agency (LASEPA) levy (laboratory analysis), Ministry of Transport (MOT) road worthiness charge, LASEPA petroleum storage charge for tanks above 10,000 litres, solid waste charge, chemical storage permit, Lagos State Waste Management Authority (LAWMA) levy for waste disposal, and Lagos State fire service charge. Okojie said multiple taxation has added to the growing list of challenges facing industrialists such as insecurity, high lending and exchange rates, high handedness of some regulatory agencies, and multiple inspections/visitations from Ministries, Departments and Agencies (MDAs), amongst others.

    The MAN Ikeja branch chairman pointed out that the application of multiple taxes/levies impact negatively on companies. Apart from restricting business expansion and reducing profit, he said the situation creates unemployment, retards economic development and growth, discourages both local and foreign investments, and breed corruption. Besides, multiple taxation, he said, does not allow local products to compete with imported ones. According to him, these factors are responsible for stunting the growth of the Nigerian economy.

    He argued that in order to encourage investments within and outside the state,it must  create new jobs and engender high economic growth; government must put in place an acceptable tax system, and outlaw the use of unorthodox means of collecting taxes and levies. Also, government, he insisted, must educate the public and facilitate compliance on the published list of approved or authorised taxes and levies in the state, local governments and its MDAs. 

    To the worries expressed by industrialists over multiple taxation, the Lagos State Government, through itsCommissioner for Economic Planning & Budget, Ben Akabueze,made a number of clarifications. Akabueze, who was guest speaker at the occasion,said because Nigeria is a federation made up of federal, state and local governments, each tier of government is saddled with the responsibility of providing certain services to the citizens and is also granted the funding source through the imposition and administration of assigned taxes and levies.

    Akabueze however, said there is need to distinguish between taxes, levies, penalties and user charges. According to him, generally, a tax is a compulsory financial charge or levy imposed by governmental authority, and for which no direct benefit is derived by the taxpayer. On the other hand, payments required for services rendered by the government are basically user charges. “Strictly therefore, multiple taxation can only be said to exist where different tiers of governments are levying taxes on the same activity/income,” he clarified.

    As the commissioner explained, modern governance is premised on a social contract that obligates the citizens to pay taxes to the government and in turn mandates government to provide certain goods and services for the well-being of the citizens. While noting that governance of Lagos State should not be on a different basis, he said MAN should assist in sensitising its members towards a tax compliance culture. He also said it is essential for MAN to censure and sanction members when they act in defiance of well established laws.

    “Voluntary compliance with tax regulations is the way forward as it is a win-win situation for all parties concerned. To the government, it reduces cost of administration, increases tax revenue, and ensures good governance. On the part of the tax payer, it leads to certainty of tax obligation, prevents disruption of businesses with its attendant legal cost and bad publicity. It therefore, behoves members of MAN and other tax payers in general to ensure, among other things, that taxes deducted  are remitted as and when due, and that necessary books of accounts and other documents/information are made available for inspection whenever the need arise,” he stated.

    The commissioner added that taxpayers should refer grey areas to the tax authorities for clarification, and where they  disagree they should utilise dispute resolution procedures available in the tax laws, as well as  keep in focus that payment of tax is obligatory and not optional and that there are sanctions for non compliance with statutory provisions. He also harped on the need to maintain international best practice in tax compliance and build a reservoir of credibility.

    Akabueze however, said the state government, on its part, will continue to operate a proactive, responsive, transparent, efficient and effective revenue service. “The Lagos State Government will continue to provide the enabling environment for economic growth and development by passing appropriate legislation, and implementation of citizen-focused policies and programmes,” he said.

    While noting that the bulk of these projects/programmes are financed from Internally Generated Revenue (IGR), he promised that government will pursue further reforms of the tax administration system in the state with a view to further simplification of the assessment and payment process, transparency and elimination of power of discretion in the hand of revenue officers, harmonisation of taxes and levies collectible, reduction in the cost of compliance, voluntary compliance and increase in IGR.

    The commissioner listed key aspects of the tax reforms in Lagos to include the Lagos revenue administration law, simplification of the tax assessment and payment procedure, tax education and enlightenment, expansion of the Lagos State Internal Revenue Service (LIRS), establishment of presence in all the major markets, and consultations with tax payer groups. Others  are: enforcement of statutory provisions, harmonisation of local government levies and rate, consolidation of charges, and the setting up of revenue complaints  unit.

    President of MAN, Dr. Frank S.U Jacob, expressed confidence that the luncheon would further evolve additional road map germane to the effective implementation of the ongoing tax reform, strengthen the existing cordial public-private sector relationship, and further deepen government efforts geared towards transforming the manufacturing sector.

    He said on its part, MAN under his leadership, has unfolded plans aimed at reducing the cost of manufacturing and improving the business environment for manufacturers in the country. “MAN will continue to work towards an environment that will enhance the sustenance of existing manufacturing outfits and attract new investments,” he promised.

    The MAN President listed the new Council’s plan for the next four years to include greater interface with government at all levels to enhance MAN’s advocacy platform, creating a more robust data bank, strengthening the economics and research department, and improving the collaboration between MAN and research institutes and tertiary institutions, among others.

    He said he has no doubt that the luncheon would promote a business friendly tax environment critical to the competitiveness of Made in Nigeria products and the continued survival of industrialists.

  • Abia govt to resuscitate ailing industries

    Abia govt to resuscitate ailing industries

    A wind of change is sweeping across the industrial landscape of Abia State, Southeast Nigeria. This is coming on the wings of an aggressive industrial revolution programme embarked upon by the state government under Governor Theodore Orji. The programme, The Nation learnt, has already raised hopes of possible rebound of most of the moribund flagship industries that once epitomised the entrepreneurial and can-do spirit of indigenes of the state.

    Already, most residents of the state, described as ‘God’s own State,’ are upbeat over the return of flagship industries such as Modern Ceramics, Golden Guinea Brewery, (both in Umuahia, the state capital), as well as Aba Glass Industry. For instance, repair work have since started at Golden Guinea Breweries. The exercise would see the company’s obsolete machines replaced with new ones imported from Germany. This was sequel to the setting up of a committee by the state government to revive the abandoned firms.

    According to the governor, government set up the committee following its discovery that the company, which was earlier said to have been sold to a private company was not actually sold to anybody. He said the new committee is already discussing with the management of the breweries with a view to finding a lasting solution to the problems of the company established by the administration of Dr Michael Okpara as premier of the defunct Eastern Region in 1960.

    In its heyday, Golden Guinea Breweries was the toast of the beer industry in the country. The company offered thousands of employment to indigenes of Abia State  in particular and Nigerians in general, until it was abandoned by previous governments. Then the company was engaged in the brewing, bottling and marketing of Golden Guinea lager beer and Eagle Stout, as well as producing and marketing Bergedorf premium Lager beer and Bergedorf Malta under a franchise from Holsten Brauerei AG of Hamburg.

    Governor Orji, The Nation leant, had earlier promised to revive the breweries during his first term in office as one of the avenues to provide jobs to the people, but the promise was not fulfilled because, according to him, government was not told the truth about the actual problems of the company. As he explained: “What happened was that when the company had financial problem, it was bailed out by the people now occupying the place because the management of the brewery was unable to re-repay the loan, warranting the new management to take over the place although they could not move the company forward.

    “It has been a problem to us. It is time for me to tell the people the real truth about Golden Guinea Breweries. Golden Guinea had a problem before I came on board, but nobody told me. I was misinformed that the place was bought. I looked for the person who supposedly bought it and encouraged him to revive it.”

    The governor further explained that the supposed buyer went to Germany and brought investors, but it was later discovered that the man was playing games. “However, the General Manager explained that the man rescued them when they were in financial crisis, but the man now claims to have bought it. That was why the German investors ran away,” he said, adding, “We want to sort it out, we have put up a committee to look into the problem and advise the government. That was the problem we had, otherwise we would have gone far with the project.”

    Modern Ceramics Industries Limited in Umuahia is also staging a come back, courtesy of the state government’s industrial revival programme. After 14 years of inaction, the flagship firm, the first in Africa, has been handed over to a private firm, UCL Resources & Investment  Limited, to reposition it. This followed the signing of a Memorandum of Understanding (MoU) between the new core investor in the project and the state government for the reactivation of the state-owned ceramics company. Abia State Commissioner for Commerce, Industries and Technology, Chief Otuu Irunkwu signed on behalf of the government, while Reverend Father Mike Okoronkwo, Managing Director of UCL Ltd, signed for the company.

    The foreign partners of the core investors visited the company recently and accepted to invest $120 million to resuscitate the company, which stopped production in 1996 following a major breakdown in the company. Although, the signing ceremony was done during the administration of former Governor Orji Uzor Kalu, Government Theodore Orji has renewed the commitment of his administration to breath life into the company.The firm, when fully operational, will employ about 1,000 people directly while proving thousands of jobs indirectly. The governor said the company now has the required expertise  and financial wherewithal courtesy of the private sector buy-in to help turn around the fortunes of the state’s economy.

    He said his government is focused on the industrialisation of the state through the promotion of Public-Private Partnership (PPP) arrangement. He said the revival of the Aba Glass industries boasts robust employment possibilities that will take the youth off the streets. “Our goal is to build at least one operational industry in each of the 17 local government areas of our State, with a major focus on agricultural services, food packaging, energy production, and hospitality industries. While we also intend to recover old and ailing industries in our state, it is our goal to expand and develop new cities beyond Aba and Umuahia through industrialisation and creation of new markets, the Governor said.

    The state’s power sector is also set to experience a major boost following the recent invitation of a Chinese trade and investment company, JMET Corporation, which has indicated its willingness to invest in the power sector in Abia. This was to aid the industrialisation process. According to the National Coordinator/Chief Executive Officer of Nigeria-China Business Council (NCBC), Chief Matthew Uwaekwe, the corporation, a subsidiary of Jiangsu Sainty International Group, would build and operate industrial power projects of various capacities to serve the emerging industrial clusters in the state.

    He also said the corporation would embark on the manufacturing of pre-paid meters and recharge cards, and also invest in recreation parks. Other areas of investment, he disclosed, include exploration of oil and gas potential in the state, and development of estate for mass housing. Uwaekwe gave the assurance that the group would bankroll any selected investment in the state. “The Chinese group will provide full and adequate finance for suitable, consequential and people-friendly projects in Abia,’’ he said.

    During the visit of the Chinese businessmen, the leader of the team, Mr. Juan Qiangjing, praised the governor for the rapid transformation going on in the state, promising that Chinese investors would take advantage of the prevailing friendly atmosphere in Abia to invest in the area.

    The state government is also  involved in providing support to the Geometric Power Incorporated and the National Integrated Power Project of the Federal Government, located in Ala-Oji, so that they can achieve their projected dateline to deliver un-interrupted 24 hours power supply to Abia State and its environs.

    When this happens, “many of our Small and Medium Scale Industries in the state will grow and create jobs. It will also boost our plan to build an Industrial Park in Aba City, to encourage the pulling together of resources, to support the sagging entrepreneurship of Aba-made goods, and their return to international fame,” Governor Orji said.

  • NACCIMA reiterates commitment to auto policy

    NACCIMA reiterates commitment to auto policy

    The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) haspraised the Federal Government for coming up with the auto policy, which is expected to reduce importation and boost local production of motor vehicles.

    According to the association’s National President, Alhaji Mohammed Abubakar, the effort of government has started yielding results as assembly plants such as Innoson Motors and NISAN have begun  operations in the country to boost supply of automobiles for the citizens.

    The auto policy, according to him, in the long term will create jobs as there will be off shoot of companies to produce auto accessories like windscreen and glasses, car seats, etc. This will gradually lead to complete auto production in the country, thereby fulfilling the long term auto plan of government.  Also, learning from Nigeria’s past failure, an emphasis on developing dynamic and innovative assembly plants is the best way to ensure the industry will be sustainable. This ensures that Nigerians can purchase modern cars, which will eliminate the desire for foreign cars.

    However, to ensure that the good intention of government on the policy  will become a reality if it is well harnessed and implemented and probity brought to bear in the overall interest of all stakeholders.  NACCIMA applauded the government for the extension of the levy to next year, adding that it will no doubt, enable the assembly line to produce the right quality at the required quantity at the right time.