The Nation Newspaper

Category: Industry

  • LCCI urges CBN governor to reduce interest rate

    The Lagos Chamber of Commerce and Industry (LCCI), has called on the new Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, to focus on the reduction of the high interest rate to stimulate growth and job creation.

    Commending the governor on his appointment, LCCI President, Alhaji Remi Bello noted that the adverse consequences of persistent credit squeeze and high interest rate on private sector performance cannot be over-emphasised.

    In a release by the Director-General of LCCI, Mr. Muda Yusuf the chamber asked for the adoption of employment numbers as a key parameter in determining the direction of monetary policy and the deepening of the role of the apex bank in development finance to promote the development of agriculture, industry, Small and medium Enterprises (SMEs), and the power sector.

    The LCCI Council urged the CBN to unveil its implementation guidelines on new policy direction to allow for a more robust conversation and engagement.

    LCCI, however, expressed concern at the slow pace of the power sector reform and stressed the need to manage expectations.

    “We acknowledged the progress so far in the power sector reform, but the weak links in the power delivery chain should be identified and fixed.  Where necessary, the Federal Government should support the power sector investors to tackle the current challenges. This has become necessary because of the strategic nature of the power sector in the economy,” the release said.

    The chamber welcomed the global coalition against insurgency and advised the Federal Government and security agencies to take maximum advantage of the backing to put an end to the menace of terrorism in the country, noting that if not contained, it would have dire consequences on the economy and job creation.

  • Cement war gets messier

    Cement war gets messier

    A new policy by the Standards Organisation of Nigeria (SON) restricting certain categories of cement to specific uses has set cement manufacturers on a war path. Dangote Cement Plc endorsed the new classification, insisting that adopting the higher 42.5 grade cement as the standard product will reduce buildings collapse. But other manufacturers are literally up in arms against the policy. CHIKODI OKEREOCHA and OKWY IROEGBU-CHIKEZIE write on the raging controversy.

    IS THERE any yet link between poor quality cement and the increasing menace of buildings collapse in Nigeria? The answer is neither here nor there. But experts and stakeholders in the industry believe that making the higher 42.5 grade of cement the standard product in Nigeria would, at least, narrow the search for the causes of building collapse to other factors. However, attempts by the regulatory authorities to do so by coming out with a policy that reviewed the standard of cement, classified it into three grades and stipulated their exclusive uses, has pitched cement manufacturers against one another.

    The new policy classified cement into three grades: 32.5, 42.5 and 52.5. Essentially, the policy announced recently by the government, through the Standards Organisation of Nigeria (SON), restricted the use of the 32.5 grade cement to plastering of structures only while 42.5 grade is recommended for the construction of buildings, beams, load bearing columns, pillars, block moulding and others. The 52.5 grade cement, on the other hand, is recommended for the construction of bigger projects, such as bridges, flyovers, and high-rise buildings. But, the classification has become a subject of controversy and litigation among cement manufacturers.

    While Dangote Cement Plc, citing patriotism and the need to halt the rising incidence of structure collapse, endorsed the policy and even went a notch higher to produce the product to specification, the policy has not gone down well with other manufacturers.

    Dangote Cement, at a briefing, said the review and the classification were over delayed. Citing the harrowing experience of loss of lives and property that has trailed the country following the rising cases of collapsed structures, the company urged the regulatory body to enforce the implementation of the new standard.

    As a Director in the company, Ekanem Etim, put it: “It is only economic saboteurs and profiteers that would kick against the new standard for cement production as other countries of the world have moved up beyond the level and the low grade cement being canvassed by some of the manufacturers opposed to the new standard.”

    He said the Technical Committee of SON, which comprised all stakeholders in the building and construction industry and cement manufacturers, had in the wake of wide-spread protests against the collapse of structures across the country, fingered low quality of cement as a key factor

    According to him, the committee at the end of the meeting came up with a review of the standard and classified cement into three grade, stipulating their exclusive uses to guide against misapplication and adulteration.

    “A report on the reviewed standard was adopted and forwarded to the SON Governing Council, which looked at the reviewed standard approved it before sending it to the Minister of Investment, Trade and Industry for final approval for implementation,” he said.

    Etim argued that several countries had phased out the 32.5 grade of cement, pointing out that what Dangote Cement has done is to set a minimum standard of 42.5 and will educate the people on the uses of the different grades of cement.

    “If any manufacturer wants to continue to produce 32.5 grade or even below and canvassing it as being for multi-purpose use, that is their problem with the authorities. As for Dangote, we have already complied even before the authorities came out to set the new standard. We are committed to the SON standard, which is in line with global best practices and we call on SON to begin enforcement immediately. We hold the lives of the people so dear, the more we delay, the more we endanger the lives of the people,” he said.

    Etim said the company was insisting on the 42.5 cement grade for altruistic reasons. Hear him: “We can’t open our eyes as indigenous company to allow economic saboteurs to put the lives of our people at risk.”

    He noted that SON had always set 42.5 as the minimum standard when the preponderance of cement consumption was being serviced with imports and all were importing 42.5 grade, with the little local production being 32.5 grade.

    “Now that production has been domesticated, what SON has only done is to extend the 42.5 to cover local production and we wonder why any manufacturer would find it difficult to switch to 42.5,” he said, adding that though the switch to 42.5 might cost more, it is in the interest of the people and the country.

    By insisting on the new grade of cement, experts said Dangote was only trying to be in tune with the changing dynamics in the global cement industry with most of the advanced countries migrating from the lower 32.5 grade of cement to the higher 42.5 specification and even 52.5, with a uniform standard set by the government, manufacturers and importers. For instance, 92 per cent of Portland cement produced in the United States (US) is in 52.5 and 42.5 grades, while other imported cement from China, Japan, Denmark and Paris are all 42.5 grade. Also, China, the number one producer of cement in the world, will phase out the entire 32.5 grade by July, India, the second largest producer of cement phased out 32.5 grade cement 12 years ago.

    SON recognises this much, and as the standard enforcement agency, urged manufacturers to commence the production of the high-grade 42.5. It pointed out that those who continue to produce 32.5 low grade do so for profiteering. SON also 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.

    Its Director-General, Dr. Joseph Odumodu, was, however, quick to clarify that although there are no substandard cement in the country, the challenge was more of misapplication rather than the quality of cement.

    But some cement manufacturers are not impressed by SON’s classification, insisting 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 meet 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 amounts to an indirect ban on the product, adding that this is unacceptable.

    For instance, the Managing Director/Chief Executive Officer (CEO), Lafarge WAPCO, Mr. Joe Hudson, argued that the 32.5 grade cement is not the cause of building collapse in Nigeria. He said the grade is the best multipurpose cement, which has been in use in many counties for many years. “The new policy to restrict the 32.5 grade will affect investment on cement. There will be a big impact on the capacity because it will reduce the production of cement. The policy is capable of causing confusion,” he argued, adding that the 32.5 grade has served serving manufacturers, builders and corporate organisations well.

    As far as Hudson is concerned, placing the blame of building collapse at the doorstep of the inferior quality of 32.5 grade of cement is tantamount to throwing punches in the wrong direction. He said SON should instead focus on how to implement the building code of 2006, deal with cement application and the use of unqualified engineers, among others. He described the argument that the 32.5 grade of cement is being produced for profiteering as untrue and unfair. “We have been in this business for more than 40 years and for someone to now come and tell us that 32.5 are of less grade is unprofessional. The claim that the grade has been banned in some countries, or that it is the cause of building collapse is absurd,” the Managing Director, Ashaka Cement, Leonard Palka, said.

    However, argument being advanced by the trio that restricting the 32.5 grade cement to specific uses will lead to increase in the price of cement does not stand. Despite the high quality 42.5 grade, which Dangote Cement churns out from its three production plants, the price of the products remain the same. Dangote Cement had not increased its price for the product.The hike in price of cement, The Nation learnt, is the handiwork of middlemen. For instance, from the factory gate to the retailers’ shops, there is a chain that soar the price of cement from N1, 545 to over N2, 000. Already, Dangote Cement has commenced the recruitment of more distributors across the country to cut down on the number of middlemen whose activities result to hike in the price of cement.

    However, as the claims and counter claims continue, it remains to be seen how far the regulatory authorities would go in putting their foot down and compel compliance on the new cement standard.

  • Manufacturers’ unending woes

    The Boko Haram insurgency has added to the economy’s problem.  It has killed local manufacturing, especially Small and Medium Scale Enterprises (SMEs). There are fears over its consequences for investment and job creation. CHIKODI OKEREOCHA and OKWY IROEGBU-CHIKEZIE report 

    For the Managing Director, Spectra Industries Limited, makers of Suco beverages, Mr. Duro Kuteyi, these are trying times. The industrialist and National Vice Chairman of Nigeria Association of Small Scale Industrialists (NASSI) is worried that  Boko Haram’s insurgency is taking a toll on his company.

    He told The Nation that because his company’s distributors are in the Northeast and Northcentral – the expicentre of the sect’s activities – the fortunes of his company have dwindled.

    The  industrialist said: “Our core business is in the North, and our distributors complain of low sales as people are scared of visiting the markets or big malls; customers take their time to shop because of bomb scare.”

    Customers, he said, were skeptical about the safety of doing business or even doing their personal shopping, so the situation has affected his company’s profitability. “The security situation, especially the bombings and kidnappings are affecting our business,”he emphasised, adding that as a result thedistribution of locally manufactured goods has been hampered.

    Also, the Chairman, Export Group of Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. Oluyenuwo Olabisi, is disturbed over the effects of the prevailing insecurity on businesses and the manufacturing sector.

    He said the insurgency has created so much fear in people that nobody wants to risk his life for anything. He some people prefer to  move from one place to the other for safety. He said people from the south and west no longer go to the north to buy anything, especially produce because of the risks.

    According to Olabisi, what obtains is that northerners bring the produce down to the south, a situation which makes the products more expensive, as there are more middle men than ever. He said, for instance, since the crisis escalated, the price of produce, such as sesame seed, cotton, ginger, and cashew, among others, has gone up thereby, constituting a drag on commodity export business.

    He said: “People don’t want to go to the North anymore for any reason. This is affecting the distributive trade sector of the economy. The worse hit in this restriction in movement are operators in the small and medium scale enterprises (SMEs) sector due to their limited space, branch network and available funds.”

    The agonies of Kuteyi and Olabisi echo those of other manufacturers and members of the Organised Private Sector (OPS).Last week,the Lagos Chamber of Commerce and Industry (LCCI) lamented that Boko Haram activities are affecting investor’ confidence and limiting the economy’s potential in the wake of the rebased Gross Domestic Product (GDP).

    Its President, Alhaji Remi Bello, lamented that it is difficult to attract investors because the risk of long-term investments had become enormous. “The tempo of economic activities in the Nort has declined, access to markets by companies in the south has reduced, resulting in loss of sales; while many enterprises have relocated,” he said.

    Bello argued that security of lives and property is crucial to investment. Noting that investment growth is imperative for job creation, poverty reduction and social stability, he said persistent insecurity impacts negatively on the economy, while declining private sector performance could result in job losses, which could aggravate the state of insecurity.

    The Chamber’s Director-General (DG), Muda Yusuf, agrees with him. He noted that the security situation  has become a major challenge for investors, stressing that the economy of many of the affected states is on the verge of collapse with implication for investments and job losses.

    The DG spoke in Lagos while explaining the outcome of an evidence-based account of experiences of members of the Chamber and the larger business community on investment climate in the second quarter business report.

    Yusuf said the challenges of the operating environment for business intensified in the second quarter across all sectors, and there were concerns over weak consumer demand reflecting the downturn in the economy. He said while the hospitality industry in the volatile states has been paralysed, many operators, especially SMEs, were relocating to other states with the attendant challenges.

    He also said many firms have lost about 30 per cent of their sales, as they could no longer access most part of the northern market.

    “Our report shows that manufacturing firms sourcing raw materials from the North are facing serious challenges, while projects funded by banks in the affected states are now at risk,” Yusuf said, adding that serious perception problem has been created for the country, as many bank branches have been closed, while sales representatives of many companies have fled the affected states, and many projects under construction in the North abandoned.

    Yusuf said the way the country’s investment climate is, it is more attractive to invest in government securities than invest in ventures that would create jobs. He said banks  prefer to buy treasury bills and government bonds than give loans to investors, adding that the credit and interest rate structure would continue to create distortions in the economy, which will only perpetuate the phenomenon of jobless growth and further depress the stock market.

    The DG of Nigeria Economic Summit Group (NESG), Mr. Frank Nweke (Jnr.), is no less worried over the implications of the security situation. To him, the administration’s efforts to attract the much-needed foreign investment (FDI) and transform the economy would not yield the desired result if such attacks do not cease. He said no foreign investor would invest in an insecure environment. “We are talking of bringing in more investors. While it is a nice thing to do, we also have to see the link between security and investment. Even local investors will not go to places that are not secure,” he said.

    For local investors and manufacturers, the prevailing insecurity is an unfortunate addition to their long list of woes. For instance, manufacturers have been complaining of various challenges of doing business, such as high lending rates, lack of long-term credit facilities, and lack of infrastructure, particularly electricity, inconsistent government policies, and multiple taxation.

    Such challenges combine to make the cost of business high. And in most cases, consumers, ultimately, bear the burden in form of high cost of goods and services. Many manufacturing firms who could not cope with the rising cost of production have either closed shop or relocated to neighbouring countries were the business environment is considered friendly. This exacerbated the unemployment situation in the country.

    The cost of insecurity could also be seen on the percentage of yearly budget allocation to the security sector since 2009 when the crisis started. Much of the votes that would have been channelled into bridging the wide infrastructure gap that has been a pain in the neck of manufacturers are allocated to security. For instance, out of the N3,049 trillion budget for 2009, a total of N176 billion was allocated to security, that is, six per cent of the budget.

    By the following year, security vote increased to N448 billion, representing 11 per cent of N4, 239 trillion was budgeted.

    By 2011, security got N1, 040 billion from the N4, 972 trillion budget, a 21 per cent increase in vote. The security sector was apportioned the lion’s share of N922 billion from the N4, 888 trillion for that year, a 19 per cent increase. Yet power, which constitutes the single critical infrastructure to rev the manufacturing sector and create jobs got a paltry N161.42 billion. Even agriculture, which holds the key to unlocking the potential in the economy got N78.98 billion.

    Other critical sectors, such as education, health aviation, and transport got smaller allocation. The situation did not change much in the 2013 budget where security got N668 billion out of the total N4, 987trillion budget.

    The consensus of experts is that there are no criteria to quantify the loss to the economy considering the almost daily loss of lives and property to insecurity. Beyond the psychological trauma, industry operators say where manufacturing companies are closing in the north and relocating to other African countries for fear of bomb attacks, leaving the few remaining ones operating at below capacity, does not augur well for Nigeria where youth unemployment is put at 24 per cent.

    For Bello, the government must intensify efforts to eliminate local factors that predispose the citizens to extremism. He listed the conditions to include poverty, inequality unemployment and illiteracy.

  • Should Nigeria quit AGOA?

    Should Nigeria quit AGOA?

    The African Growth and Opportunity Act (AGOA) under which benefiting  countries can export  products  to the  United States (US) duty free for 15 years  will expire in September, next year. As Nigeria joins other qualified Sub-Saharan African countries to push for the extension, experts warn that unless certain steps are taken, Nigeria may yet again fail to benefit optimally from AGOA. Chikodi Okereocha and Okwy Iroegbu-Chikezie report

    The Director-General (DG) of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, is one of those who subscribes to the Federal Government’s plan to promote the non-oil sector, especially agriculture, to diversify the economy.

    However,  Yusuf regrets that Nigeria has failed to ride on the crest of the African Growth and Opportunity Act (AGOA) to boost the non-oil sector and stimulate growth.

    AGOA is a United States Trade Act enacted on May 18, 2000 to encourage Nigeria and other qualified sub-Saharan African countries to export non-oil products to the US duty free. The Act enhances access to the US market for Sub-Saharan African countries. It allows countries to export over 6,000 products to the US duty free.

    To qualify for AGOA, each country must improve its rule of law, human rights, and respect for core labour standards.

    But Yusuf said Nigeria has not benefited much from AGOA. This, he said, was because Nigeria’s capacity in export, especially non-oil, is weak. “As far as the export business is concerned, our capacity is weak because of our poor operating environment and weak infrastructure,” the LCCI chief told The Nation, adding: “We can only benefit in future if we improve on our competitiveness.”

    The future, which Yusuf hinged Nigeria’s hope of possible improvement in the competitiveness of her export business, refers to the 15-year extension being sought by the African Union (AU) after the expiration of AGOA on September 30, 2015. Initially, the Act covered eight-years – October 2000 to September 2008, but  amendments signed by former US President George Bush in July 2004  extended AGOA to 2015.

    In other words, the legislation, which extends duty-free preferences to about 40 Sub-Saharan African beneficiary countries (the actual number fluctuates yearly, in line with the US Presidential determinations), will expire on September 30, next year. While African countries, including Nigeria, are pushing for the extension of the Act for another 15 years, it will be up to the US Congress to accede to their request.

    At an Extra-Ordinary Session of the African Union (AU) Trade Ministers,  the ministers agreed that Africa should push for the extension because most countries, including Nigeria, have not fully gained from AGOA.

    If the extension gets the nod of the US Congress, the LCCI chief argues,  the only wayNigeria can benefit from the programme, “is for us to export finished products to the US”. He advised that Nigeria should improve on her poor business environment and weak infrastructure to build a robust non-oil sector.

    This, he said, should not be like  the oil sector where the nation exports over 90 per cent of her crude oil and imports refined petroleum products at high rate. “As long as we continue exporting a few raw materials, such as raw cocoa, hide and skin with low capacity utilisation due to harsh operating environment and inadequate infrastructure, the nation cannot enjoy any benefits from AGOA,” he said.

    Yusuf insisted that Nigeria can only benefit from the programme if local production of raw materials into finished goods improves.

    The Director-General of Nigeria Association of Chamber of Commerce, Industry, Mines & Agriculture (NACCIMA), Dr. John Isemede,said Nigeriaand other African countriesshould work out their own economic salvation. He said after achieving independence a wise nation should take its independence in her hands and not depend on hand-outs and foreign policies to exist.

    The NACCIMA chief said there was not much to gain from AGOA, because it was not meant to benefit African countries.

    “AGOA is not an African agenda. Unfortunately, African governments have signed a lot of agreements and treaties with other nations but none has benefited her because from the beginning, they are not designed to benefit them,” he said.

    Dr. Isemede recalled that before AGOA, there was the Lome Convention, which was designed to get produce from Africa and transport them to Europe. “They (AGOA) instituted all manner of standards and quality that no African nation can meet except Ghana that said they have created over 200 jobs from it. As far as our nation is concerned, we have not gained anything from it so its continuation will not make any difference,” he said, claiming that AGOA was set up to counter the Lome Convention.

    He said this was why under AGOA, Americans buy products, such as cashew nuts, sesame seeds, and cocoa from their agents in Ghana and send them to the biggest crushing plant in Netherland and the biggest chocolate factory in the world in Switzerland without any benefits to African countries.

    “AGOA is modern day slavery,”  Isemede alleged, urging Nigerian ambassadors  to market the nation’s products, such as Gum Arabic, sesame seeds, cashew nuts and cocoa, which are found in Japan and the Far East without any trace that they are from Nigeria.

    Insisting that “our government should work hard to ensure that our produce exported albeit indirectly to the advanced economies is traced and documented,” the NACCIMA chief said rather than hoping on benefiting from AGOA if the Act is extended, African nations should make the New Partnership for African Development (NEPAD) a success.

    He said apart from Ghana and a few others, no country has praised AGOA.

    He listed those which gained as Mauritania, Gambia, Lesotho, South Africa, Mozambique and Kenya.

    According to the Nigerian Consul-General to Atlanta, US, Mr. Geoffrey Teneilabe, “The only export product from Nigeria that the US has largely encouraged is crude oil. This is not in line with the advocacy of the Nigerian Government to focus on the non-oil sector, especially agriculture.”

    He said Nigerian exporters ferry their goods to neighbouring countries to take them to the US because restrictions are less in those countries.

    He said Nigeria had not benefited  from AGOA because the US Government had not encouraged the import of non-oil commodities from Nigeria, hinting that AGOA could be extended next year.

    Obiora Akabogu, a lawyer, said: “Nigeria has not benefited significantly from AGOA,” blaming the Federal Government for its “uncoordinated diplomacy that places more emphasis on playing the ‘Big Brother’ role in Africa instead of tapping into AGOA”.

    He blamed the President’s foreign policy advisers, who he accused of encouraging him to continue with former President Olusegun Obasanjo’s shuttle diplomacy to woo foreign investors instead of tapping from the benefits of AGOA.

    The Minister of Industry, Trade and Investment, Dr. Olusegun Aganga, also admitted that African countries, including Nigeria were not utilising the opportunity provided by AGOA. “We believe that Nigeria can do far more than it is  doing under AGOA. Although Nigeria exports some agricultural products to US under AGOA, some of the products do not meet the required standards for export to the United States market,” he said.

    The Minister, who spoke at the recently concluded World Economic Forum for Africa (WEFA) in Abuja, however, added that the Federal Government was partnering with the US government to boost the export of Nigerian products to US.

    “To address the challenges militating against Nigeria’s quest towards taking full advantage of the AGOA initiative, we are working on a new strategy that will enable increase in Nigeria’s volume of export to US,” he said, adding that as part of measures to enhance access to the US market, there was the need to develop and deepen private equity and venture capital.

    Indeed, the issue of products not meeting the required standards has been a thorn in the flesh of manufacturers, especially the Small and Medium Enterprises (SMEs).

    Experts said Nigeria is not making progress under AGOA because of poor standards arising from poor packaging, which makes it difficult for SMEs to penetrate the US markets.

    To solve the problem, Dr Aganga said the government hopes to work with the Nigeria Stock Exchange (NSE) to ensure that SMEs raise money from the second tier market and then get private equity players who can come in and build skills and help with their businesses.

    At moment, he said, the ministry was looking at areas where it could have clusters for SMEs to make it easier for them to have shared facilities to boost their productivity. “The SMEs sector is one area that we want to grow as much as possible because, naturally, Nigerians are entrepreneurs. They know how to work hard to make money. Moreover, the return on investment in the country is quite high because there are so many opportunities that are yet to be fully explored,” Aganga said.

    Also, the US Ambassador to Nigeria, James F. Entwistle has assured thatthe US Diplomatic Mission  would partner stakeholders in the US and Africa, and in particular with the Congress, on AGOA.

    Entwistle, who spoke at the recent ‘Borderless Conference’ in Lagos, added  the AGOA is the cornerstone of US trade and investment in Africa.

    The renewal and extension of the AGOA is expected to give African countries ample time to build capacity in global markets.

    For Nigeria to key into it this time,  Akabogu said the nation must readjust her economic transformation agenda to gain from AGOA.

    “Even the on-going fight against insurgency must not distract Nigeria from lobbying for an extension of AGOA,” he added.

     

  • Waiting for national quality policy

    To many, the  proposed National Quality Policy (NQP) will end the preponderance of fake and sub-standard products and position made-in-Nigeria goods for global competitiveness. Assistant Editor Chikodi Okereocha reports.

    The statistics are unflattering: Between 80 and 85 per cent of products manufactured in Nigeria are substandard, according to a survey by the Standards Organisation of Nigeria (SON).

    Although the level of substandard products dropped from 85 per cent to 50 per cent about two years ago, following the aggressive campaign against fake and substandard products  by the SON, the figure is considered a drop in the ocean, compared with the situation in other climes. For instance, while 40 per cent of products in Egypt and Kenya was regarded as substandard, South Africa’s was less than 30 per cent.

    For SON and industry stakeholders, the prevalence of fake and substandard products brought about by the absence of a National Quality Policy (NQP) is unacceptable and must be reversed if indigenous goods are to be globally competitive and make the nation a respectable member of the international community. SON has said it is determined to further reduce the prevalence of substandard goods to 30 per cent, and in collaboration with stakeholders, it has renewed the campaign to establish a NQP.

    Already, a National Steering Committee (NSC) has been inaugurated by the Federal Government to drive the process. The NQP national steering committee is mandated to review and harmonise  quality policies in Nigeria, identify the national quality infrastructure needs and the best model for economic growth, and develop the roadmap for NQP implementation.

    The Minister of Trade and Investment, Dr Olusegun Aganga, is the committee’s chairman; SON Director-General, Dr Joseph Odumodu is the secretary.

    Aganga explained that the NQP would produce a broad-based system that would provide quality specifications for all manufactured products in the country. At the inaugural meeting of the committee in Abuja, he said the policy would re-engineer the quality infrastructure and the technical regulation regimes and help the Federal Government exeute its economic plans.

    The Minister of State for Industry, Trade and Investment, Dr. Samuel Ortom, explained that a NQP is vital for national development because of its role in facilitating international trade. He said it enables nations to define bold and courageous initiatives to address quality related issues, such as performance, conformance, reliability, durability and safety.

    According to him, these features are the drivers of domestic as well as international trade with the provision of adequate quality infrastructure to drive competitiveness, economic growth and development.

    “A quality policy built on reliable human resources and infrastructure constitutes the fundamental means of assessing, planning, managing developmental changes and achieving sustainable growth and global competitiveness,” Ortom, who doubles as the supervising Minister for Aviation,  said, adding that the inauguration of the NSC for the formulation of a NQP was an expression of Federal Government’s commitment to re-engineering, strengthening, upgrading and maintaining the national regulatory, standardisation, metrology, accreditation and conformity assessment infrastructure to facilitate trade, enhance exports, accelerate economic development and reduce poverty.

    For Odumodu, the inauguration of the committee was a shot in the arm of the agency in the campaign to stamp out fake and substandard products. According to him, the need for such policy cannot be over-emphasised because it has long been overdue. He explained that the lack of policy had over the years made harmonisation of the available quality infrastructure difficult thereby limiting the benefits, particularly in driving competitiveness and international market access.

    Dr. Odumodu said Nigeria’s standard operation was faced with many challenges with the attendant overlap of interests and activities, which sometimes result to disagreements. The cause of this, according to him, was the lack of NQP to hold the system and make it functional and efficient enough to earn global confidence. In other words, a NQP policy would set bases and rules for the players, harmonise the role of various players, and provide a commitment to complying with international standards.

    Over time, operations of government agencies set up to regulate and ensure good standards, such as SON, the National Agency for Food, Drug Administration and Control (NAFDAC), Nigerian Communications Commission (NCC), National Universities Commission (NUC), National Judicial Council (NJC), Police, and Public Service Commission, among others, have been uncoordinated because of the lack of a framework or a NQP. Each of the agencies operates independently and, in some cases, on ad hoc.

    The SON chief said until now, the determined efforts of the agency to curb the menace of substandard products have been marred by the absence of a national quality policy, noting that the policy would bring sanity to a system that is highly profitable to the actors. He noted that the new policy would  act as a catalyst for local productivity and quick adaptation of best global standards and practices to enthrone quality culture, improved management and process systems and work environments, in addition  to  attaining efficiency and products competitiveness, reduce importation and increase exports.

    Not a few stakeholders agree with him, which is why most of them are upbeat that a new dawn is in the offing for Nigeria-made products. For instance, the Enugu Chamber of Commerce, Industry, Mines, and Agriculture (ECCIMA) described the NQP as ‘timely and necessary’ to enable the country achieve its economic goals.

    Its Chairman, Dr. Ifeanyi Okoye, assured the steering committee of its support. Dr. Okoye, who is the Managing Director, Juhel Nigeria Limited, a pharmaceutical manufacturing company, expressed optimism that with the blue- print for quality expected from the committee, technical barriers to global trade would be removed for indigenous goods.

    He said the establishment of NQP, which include a national accreditation body, a national metrology institute, internationally recognised test laboratories, standardisation of goods and services offered in all sectors and quality assurance would be catalysed to usher the economy into a new phase of growth and development.

    The Champions of Development Nigeria (CDN) also expressed delight with the inauguration of the NQP Steering Committee. In a statement by its President, Mr. Jonas Yomi, the group described the committee’s inauguration as timely and could enthron the quality culture in Nigeria.It decried the lack of an integrated approach to quality management in Nigeria, saying that the harmonisation of regulatory agencies and quality policies was overdue if Nigeria was determined to establish national quality infrastructure, which is an important tool for implementing NQP.

    The group also lamented the non-existence or insignificant number of accredited laboratories in Nigeria, noting that accredited labs are the backbone of valid testing results without which products or services cannot be said to be certified or conforming to requirements. “These unacceptable deficiencies of the present approach to standardisation highly recommend NQP. Without NQP Nigeria’s standardisation efforts will continue to look uncoordinated and unclear. NQP’s objective is to make quality the way of life in Nigeria. It will define the apex standardisation institution in the country; clarify the boundaries for each of the regulatory agencies; minimise conflict between them; enhance cooperation between them; and identify existing as well as needed infrastructure as well as chart its own implementation,” the statement said.

    The group, however, urged the committee to ensure that all stakeholders are carried along in the process of the policy drafting and evaluation since only an all-inclusive policy will gain the needed broad-based support.

    “There is need to reach out across the whole spectrum of stakeholders. This can be done through road shows as well as sustained mass media campaign. Within the framework of national interest, the diversity of views should be considered,” the group advised, urging the committee to see ahead and make only recommendations that will stand the test of time.

    However, there are misconceptions about NQP. For instance, while the essential quality custom targets industries and the public, the reality is that every segment of the economy and national life is part of the standards regime. In the business community, for instance, small and medium scale businesses will take their rightful positions as the backbone of an emerging economy. That will be a departure from a situation where many homes in the urban and semi-urban areas are turning every  space to a factory.

    This is more prevalent in the sachet water production business, an industry that has blossomed with potential danger of water borne diseases. In education, makeshift structures that serve as school buildings with horrendous toilet and other basic facilities will give way for standard structures that are fit for human beings. “Quality is all encompassing,” a marketing communication consultant, Joe Anatune, said.

    He pointed out that everyone has a role to play. “Users have duty to demand quality otherwise they end up with substandard products. The law and its enforcement must be properly and promptly applied. Manufacturers, transporters, sellers and civil society organisations are all part of the quality control chain, hence the NQP,” he said.

  • ‘How Nigeria can utilise $68b WEF vote’

    Experts have  advised the Federal Government on  how it can deploy the $68billion from the World Economic Forum (WEF) to boost economic growth and development.

    A Professor of Environmental Sciences at the University of Lagos, Omotayo Adeluwa, urged  the government to use the money to train professionals.

    The WEF attracted over $68 billion (about N12.9 trillion) in investments to Africa, the Managing Director of the Forum, Dr Philipp Rosler, said.

    He said the funds were in form of Foreign Direct Investments (FDI) as well as private and public investments across Africa, which would continue to yield results in future.

    Rosler said the funds were targeted at investments in projects that would foster the development of the agricultural sector, improve infrastructure, such as roads, railways, hospitals, education, skill development and Information Communication Technology (ICT).

    Adeluwa said the government should use the fund to develop the country technologically. He said the country must move from taking ‘hand-outs’ from the international community to having  a development road map where skills will be developed through technology transfer or exchange programmes so that Nigerians could be trained in the latest technologies.

    He added that Nigeria has no business being a mono economy, as there are many untapped mineral resources in the country.

    Citing his research, Adeluwa said Niger State has a huge deposit of kaolin. However, he regretted, a government hospital was built in the area where the mineral is. He said his suggestions to the government to relocate the hospital and tap the kaolin that could last about 100 years were rebuffed. He said such attitude smacks of ignorance on the part of decision makers.

    Also, the don called on the government to tighten its monetary policy, and have more control over money and the Central Bank of Nigeria (CBN) to discourage capital flight.

    The Chairman, Campaign for Democracy (CD), Southwest, Mr Goodluck Obi, said the donors of the cash were monitoring it to ensure that there is transparency and equity in its deployment.

    He said: “Africa has a history of misappropriation of funds, from the beginning the mangers of the fund should identify which areas the funds are needed most to achieve real development and evaluate it at some part to identify its success rate.”

    An area the fund should be channelled, he said, is in addressing the inequality between the rich and the poor. He lamented that while some people live in affluence, others live in abject poverty.

  • Raising the ante in iron, steel production

    Raising the ante in iron, steel production

    Nigeria’s near-moribund steel sector may soon bounce back. The Standards Organisation of Nigeria (SON), in partnership with steel manufacturers, is set to boost local production and standardise the product.  Is this goodbye to imported iron and steel? Assistant Editor Chikodi Okereocha writes.

    The Minister of Industry, Trade and Investment, Dr. Olusegun Aganga, rekindled hopes of a possible turnaround in the fortunes of the steel sector.

    At an interactive session with leaders of the Organised Private Sector (OPS), he said the government was considering a new paradigm that would boost the industry’s development.

    He said the government would implement a backward integration policy that will enable the country explore its abundant iron ore deposits to support industrial growth.

    Aganga said: “There is no country that has been industrialised without growing its iron and steel industry. In Nigeria, we import raw materials for the steel industry yet we have a lot. As part of our industrial revolution, we need to embark on big strategies, working with the Ministry of Solid Minerals and Steel Development, to process the raw materials used in the steel industry. This means that we need to look at the overall structure, including the current pricing, availability and affordability, in addition to developing an export strategy for the sector.”

    The strategy is in tandem with President Goodluck Jonathan’s administration’s desire to re-position the industry for sustainable growth.

    The president in 2011 noted that the Ministry of Industry, in conjunction with other ministries, departments and agencies (MDAs,)  developed an Industrial Revolution Plan, which identified the iron and steel industry as a focal sector. The plan, he said, aims to develop the complete ecosystem of the sub-sector.

    The President said: “I would like to assure existing and prospective investors of the government’s support as we collectively strive for self-sufficiency in local steel production. I strongly believe that self-sufficiency will open major downstream sector activities with the attendant massive job opportunities and economic empowerment for our engineers, technicians, artisans, and fabricators alike.”

    To realise the President’s dream for the sector, the Standards Organisation of Nigeria (SON) is to regulate the activities of the sector to encourage local companies. Specifically, SON,in partnership with manufacturers, hopes to boost local production of steel. The ultimate objective of the partnership is to stop importation of steel products and drive the nation’s industrialisation.

    During a tour of some steel factories, SON Director-General Dr. Joseph Odumodu praised the local steel companies for consistently meeting the specifications of the Nigerian Industrial Standards (NIS). He said locally produced steel was becoming the first choice for foreign and indigenous construction companies. He said despite the challenges faced by steel operators, some have been able to do things the right way.

    “My visit is a way to express my profound appreciation and share the successes of companies that have done well in the steel sector,” he said.

    Odumodu said the yearly requirement for reinforcement bars in Nigeria was about 1.8 million metric tonnes, and the industry’s installed capacity can meet the demand.

    “The operators are saying they have a challenge of using only 75 per cent of this number. As a result of this, we have an opportunity to import some of these products; but what we are saying is that the locally produced ones have a set of criteria like the identification marks. But some of the products imported do not have identification marks, making traceability difficult,” he said.

    He said in 2010, a directive was given that there should be a code on every reinforcement bar in the country and that the agency even gave enough extension to manufacturers.

    “What we are saying now is that there is no room for further extension; every reinforcement bar, irrespective of where it comes from, must have identification marks acceptable to SON,” he said, adding that it would help trace the products to the manufacturers at any point in time whether in a failed building or market.

    He expressed optimism that the new industrial policy of the government would give steel operators a  comparative advantage in the global market. He said the government was interested in backward integration and providing incentives for steel operators to thrive.

    “Our mandate is to ensure that locally manufactured goods in Nigeria give the required satisfaction to consumers through compliance with government policies on standardisation and conformity assessment. We also make sure that goods imported into Nigeria meet the minimum requirements of the NIS or any other international standards,” he said.

    According to SON and the steel manufacturers, there is no need to import iron and steel materials anymore, as local manufacture of the product has improved with capacity to meet annual demand. They also noted that a vibrant steel industry is the driver of a nation’s industrial and technological advancement. Countries that have attained industrial growth or are seeking to do so strive to become self-sufficient in steel production, which experts say has a ripple effect on the economy.

    The Managing Director of Real Infrastructure Nigeria Limited, Mr. Subhash Gupta,  said steel and cement are the basic raw materials for infrastructural development of a nation. Noting that the future of Nigeria’s steel industry is bright because of constructions going on. He said his company makes international quality reinforcement bars to meet the consumers’ need.

    Gupta said SON’s regulatory and supervisory role has created a positive impact on steel production, making manufacturers to adhere to international standards.This, he stressed, led to expansion in terms of output. “Three years ago, we were very small but presently, we have grown about four times bigger than before,” he said, adding that one of the major challenges facing the industry is power. He said the required amount of electricity needed to boost local operations is still low.

    The Managing Director, Monarch Steel Limited, Mr. Gupta Prakash, also noted that, despite the potential of the sector, electricity remained a major setback and must be addressed urgently.

    According to him, the huge production cost of local operators because of unreliable power supply created unhealthy competition between the local industry and its foreign counterparts.

  • LCCI: World Economic Forum not for SMEs

    WHAT does the World Economic Forum (WEF), which began in Abuja yesterday, have for small and medium enterprises (SMEs)?  Nothing, says the Lagos Chamber of Commerce and Industry (LCCI), which described the forum as an elitist jamboree that is not structured to promote  SMEs.

    Though it has the potential to drive the  economy, it has nothing special for the SMEs, LCCI Director-General Mr. Muda Yusuf told The Nation. According to him, it is an exclusive preserve of the multinationals and some privileged business concerns.

    Stating that the Chamber’s efforts  to get an invitation to the forum failed, Yusuf said: “The rebasing has generated renewed interest in the country and more investors would be interested in doing business in the country. They will want to come here to see what advantage they can take with the size of our market. It will present opportunities for the world to come close to us. The forum, though a private sector initiative also presents a huge opportunity for strategic investors to rob minds with our policy makers to explore further investment opportunities. No doubt, it’s an opportunity for us to showcase what we have to foreign investors but unfortunately there is nothing there for the small business owner.”

    He said the forum was a brand for big players which policy makers could tap into, to build SMEs and other level businesses.

    The standard of living of the people did not reflect the huge size of the rebased the economy.

    Yusuf said: “The United States of America (USA) has a GDP of over $16 trillion as the largest economy in the world. And if you check out their development standards it is the most developed economy with a high standard of living. The same can be said of China which is the second largest economy in the world though with  a lower standard of living than USA because of their huge population, as their wealth is spread over a larger number of people with a population of  about 1.3 billion people. The same goes for Japan as the third largest economy with a high standard of living too.”

    Yusuf said in Nigeria’s case, there is a disconnect between the size of the GDP and development. “This shows that there is a huge gap in the quality of governance. It also means that there is high inequality in the system.

    “The way out is for the citizens to engage those in charge of governance. The government has failed to redistribute the wealth of the country equitably,”he said.

    He advised policy makers to craft policies to ensure that the benefits of the rebased GDP trickled down.

    Yusuf said the government should institute a mechanism to ensure the rich are taxed to support the poor.

    Many rich people, he noted, were  not paying tax commensurate to  their  income.

  • Why textile mills are still down

    The N100 billion fund to revive the textile sector seems not to have achieved its purpose. Many ailing firms expected to benefit from the fund are folding up, reports OKWY IROEGBU-CHIKEZIE.

    There is no respite yet for the ailing textile sector. Despite the N100 billion intervention fund by the Federal Government to revive the  sector, acknowledged as one of the highest employers after the government, it has remained in coma.

    Instead of getting back on stream, many of the ailing companies are folding up,  causing apprehension among operators and stakeholders because of its economic implications.

    When Nigerians were expecting a noticeable turnaround in the fortunes of the companies, Arewa Textiles Plc, arguably one of the biggest in Kaduna, was offered for sale.

    The factory, occupying 178,208.81 square meters, is now under receivership and has been advertised  for  sale through  two  firms,  D.E Ogona & Co (Chartered Accountants) and Bola Fabola & Co (Legal Advisers). The asking price for the textile company is N7billion.

    Its proposed sale, to many operators and stakeholders indicate failure of the stimulus package, which  was expected would breathe life into the textile companies.

    Apart from Arewa Textiles, other firms on their way out are, Afprint Plc, Enpee, Five Star, Gaskiya, Aba Textiles, Specomills, Zamfara Textiles, Finetex and Northex in Kaduna.

    Except, Stallion Textiles and United Textiles Limited (UNTL) in Kaduna that are currently operating  below installed capacity, most of the big textile companies have leased their premises to other business concerns.

    Others premises have been  taken over by religious worshippers.

    Why are the fortunes of the textile companies sliding despite the huge capital injection? The answer is not far fetched. The Director-General of Kaduna Chamber of Commerce, Mr. Usman G. Saulawa, said government put the wrong foot forward when it came up with the stimulus package at six per cent interest without first addressing the lack of critical infrastructure, such as regular electricity supply.

    “The N100 billion lifeline for the sector is like putting the cart before the horse,” Saulawa argued, noting that apart from the fact that the machines must run  24 hours, scarcity of black oil and processed cotton, which add to the cost of production, make the finished materials uncompetitive. The Vice President, Kaduna Chamber of Commerce, Dr. Roland Ogbonna, said except the poor energy supply is fixed, no stimulus package  will  work.

    The intervention fund was conceived during the regime of  former President Olusegun Obasanjo. It was  handled by the Bank of Industry (BoI). But the fund, according to thePresident, Nigerian Union of Textile and Garment Workers of Nigeria (NUTGWN), Mr. Oladele Hunsu, has failed to put the textile sector back on track. He blamed the failure on poor infrastructure and policy somersaults.

    “Only a few textile industries across the country like, the UNTL in Kaduna and some other popular ones have accessed the fund. Unfortunately, some others that are trying to access the funds could not due to the new policies regarding importation of textile products,” he said.

    He said many companies had turned their factories to warehouses because the textile sector has not experienced the desired change. “Some textile manufacturers have resorted to importing ready-made textile materials from Asia and other countries. While some materials are original, some are sub-standard. Also, smuggling has choked the market and discouraged potential manufacturers,” he stated.

    The National Chairman, Nigerian Textile Manufacturers Association (NTMA), Ibrahim Igomu,  identified massive smuggling and faking of existing trademarks and intellectual property infringementas some of the problems confronting the industry.

    He said: “Some unpatriotic businessmen fake trademarks of textile materials; they imitate them and dump them on unsuspecting consumers. Our borders have become so porous that market shares of genuine products have been eroded. When you smuggle these things, you don’t pay import duty. You can see that it is a major challenge. These unpatriotic Nigerians together with their collaborators smuggle sub standard textiles into the Nigerian market.”

    Igomu said  between 80 and 90 per cent of consumers with purchasing power are in Nigeria, noting that this is why the negative effects of the Economic Community of West African States (ECOWAS) Common External Tariff (CET) is felt more in Nigeria, as neighbouring countries of Togo, Benin Republic and Ghana have  become grounds for smuggling textiles into Nigeria. “This is an area we have made representation to the government,” he said.

    Igomu recalls:“ In the glorious years (between 1975 and 1991), the Nigerian textile industry had 125 active textile industries. We were contributing about 45 per cent to the Gross Domestic Product (GDP) of the real sector, generating about $7billion in the non-oil export sector, and employing close to 450,000 Nigerians, which made us the largest employer of labour outside the government.” All of these have changed because of unfavourable government policies and lack of infrastructure.

    The textile sector was once the second largest in sub-Saharan Africa, behind South Africa and represented about 63 per cent of textile capacity in the ECOWAS sub region. Its decline in fortunes led to the reduction in the number of viable textile mills from 175 in the mid-1990s to less than 25 in 2010. Employment shrank from about 137, 000 to 60, 000 in 2002 and a further reduction of the workforce by 36,000 as at 2010. Similarly, capacity utilisation in the industry went down to 20.14 per cent in 2010 from over 50 per cent in 2003. The bad tale still threatens the continued operations of the few surviving textile companies.

    Experts blame government’s inconsistent policies for the sector’s fall. The government, they said, failed to prptect local industries by curtailing the unbridled dumping of highly subsidised and sub-standard textile materials from China and other Asian countries. Smuggled counterfeit fabrics, particularly from Asia are said to account for over 85 per cent of the Nigerian textile market. The imported fabrics are poor imitations of the old “Hollandis,” which used to be of very high quality and durability.

    The imitations, which flood the market come in cheap with  the full complement of the design and colours of the original brands. Other challenges are the absence of long term, low interest funds, obsolete machinery, infrastructure deficit, especially irregular supply of electricity and poor transportation system, among others.

    Despite all these,Saulawa says there is light at the end of the tunnel. Some Pakistani investors are waiting in the wings to take over the empty factories particularly those in Kaduna, once known as home of textile industry.

    The industry had its highest concentration of firms in Kaduna. But Saulawa said although all the companies are moribund, most of them would soon roar back to life, courtesy of the Pakistan investors.

    He said that the Pakistani business men confirmed that the same machines in the moribund factories are used in their country.

    Can the  investors replicate the Pakistani magic in Nigeria? While operators and stakeholders are waiting to see how they intend to pull this through, government says it is looking at resuscitating the sector via a multi-faceted approach. The Minister of Trade, Commerce and Industry, Dr. Olusegun Aganga, said: “We are looking at it from cotton producers to ginners, to textile manufacturers and then to the fashion designers. This was why government offered the whooping N100billion intervention fund to the sector.”

    Aganga identified massive influx of textiles and apparels from Asia, particularly after the Multi Fibre Agreement (MFA) expired in 2005 and epileptic power supply as some of the factors that led to the  sector’s crash. Others, he said, were global economic challenges, massive smuggling of cheaper textiles with lower quality, changing consumer tastes and habits and huge debt burden on producers in the value chain, amongst others.

    The minister however, noted that the sector holds strong potential due to its natural cotton endowments, large market size and legacy sector knowledge, adding that Nigeria’s population of over 167 million people represents a natural market for basic textiles and apparel related goods.

    The potential to export to regional and select developed markets (such as the United States under the African growth and opportunity Act (AGOA) tariff regime) attractive, adding that the existing textile infrastructure and skill base provides the industry with a pool of knowledgeable workforce particularly in Northern Nigeria.

    These realities, the minister said, make the sector too important for the government to ignore. Will the government  summon the  political will to address all the issues that have continued to hold the sector down despite the injection of the intervention fund? Time will tell.

  • Manufacturers’ unending power headache

    power supply has yet to improve, six months after the coming of the distribution and generation companies (DISCOs) and (GENCOs). Companies are still battling to survive on their own power steam. They are considering some options to remain in business, reports Assistant Editor Chikodi Okereocha

    FOR the manufacturing sector, things have not changed despite the coming of the Power Holding Company of Nigeria (PHCN) successor companies. Hopes were high that once they came on board, power will improve and firm will return to life. It has not been so, some six months after their emergence. What is the problem?

    A drop in gas supply has been blamed for the poor power output under the new regime. But for things not to remain like this some are canvassing for embedded power generation as a way out.

    Embedded generation, also called distributed generation, on-site generation, dispersed generation, or decentralised generation, generates electricity from many small energy sources. Most countries in the world generate electricity in large centralised facilities, such as fossil fuel (coal, gas powered), nuclear, large solar power plants or hydropower plants. Embedded or distributed generation allows collection of energy from many sources and may give lower environmental impacts and improved security of supply. It is a term used for any electricity generating plant that is connected to the regional electricity distribution networks

    At present, Nigeria’s peak grid power generation hovers between 3,000 and 3,849 megawatts (MW), down from about 4, 000 MW when the power assets were handed over to private investors. Yet, under the power reform agenda, the target was that the country would attain 10,000 MW by the end of last month. With support from the independent power projects (IPPs) of state’s private investors and oil companies, the combined power supply is expected to inch up to over 14,000 MW by 2015. The power reform agenda ultimatey set a generation capacity target of 40,000 MW by 2020.

    Among proponent of embedded power generation are Lagos State Governor Babatunde Fashola, former Minister of power Prof. Barth Nnaji and some leading industrialist in Ikeja.

    Speaking at the 5th Manufacturers Association of Nigeria (MAN) Ekeje consultative forum , the Managing Director/Chief Executive Officer (CEO), Bennett Industries Limited, Mr. Reginald Ike Odiah, an engineer said there is need to take advantage of embedded power generation by utilising existing excess power generated by small plants.

    Odiah, who is also chairman, Infrastructure Committee of MAN, said some members of MAN have excess capacity from their plants, which they could offer to the Distribution Companies (DISCOSs).

    Speaking on “The manufacturing sector postprivatisation challenges and implication on the,” he said embracing embedded power had become necessary because of the acute electricity problem where “demand for electricity far outstrips the supply and the supply is unreliable and epileptic for domestic and industrial use.” He said the manufacturing sector contributes a mere four per cent to the nation’s gross domestic product (GDP) because of epileptic electricity supply.

    At the just-concluded 7th Lagos Economic Summit tagged “Ehingbeti 2014”, Prof Nnaji acknowledged that there is a wide gap between electricity supply and demand. He suggested a short- term emergency solution in embedded generation using the ring-fencing method whereby some areas are divided into economic clusters.

    Fashola who also spoke at the summit said: “The regulatory regime for power limits our intervention to embedded generation for self use”. He said between the last economic summit and now, the state has added two independent power projects to the existing one at Akute. The two power plants fired by gas are on Lagos Island and Alausa.

    “At the moment, progress is being made at two additional power plants in Ikeja and Lekki, which would come on stream in the third and fourth quarters of this year, to bring the total number of state-owned government initiated embedded power projects to five,” he said at the summit.

    The Eko and Ikeja DISCOs, which serve Lagos, are set to embark on embedded generation of power to boost supplies to consumers.

    “We have started the process of improving power generation to Lagos by doing embedded generation,” said Charles Momoh, Chairman, West Power & Gas, which acquired Eko DISCO. He said the company had identified 45 companies it hopes to work with and is talking to two of them. According to him, the long-term plan is to bring in 500 MW into the company’s local grid for distribution.

    The Managing Director/Chief Executive, Ikeja Electricity Distribution Company (IKEDC), Mr. Abiodun Ajifowobaje, said the company had come out with a plan to source power from Egbin power station, aside embracing embedded generation whereby power is supplied directly to most industries in IKEDC network without necessarily waiting for supply from the national grid.

    “We are trying to look at embedded generation where people can generate power and sell to us,” the IKEDC boss said.

    He justified the option thus: “In other countries, people generate power from other sources. In Sweden, people generate power from sawdust, cow dung, and wind turbine; you can generate from solar so that we don’t depend so much on gas because we have oil. Egbin power plant has capacity for 1,500MW, but generates only 500MW because of lack of gas.”

    The Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, represented at the summit by the Commissioner in charge of Market Rates and Competition, Mr. Eyo Ekpo, said: “The DISCOs are working on doing embedded generation.”

    He said residents of Lagos would soon begin to enjoy steady electricity supply, promising that the problems bedevilling the power sector would be addressed soon.

    Experts are also canvassing Demand Side Energy Management (DSM), which encourages electricity consumers to ensure that power is used only when needed. To achieve this, Odiah said smart meters would be introduced. He said if meters are available on demand, it would be easy for consumers to practise DSM which not only saves electricity but also allows consumers to control cost.

    “Smart meters would allow consumers have total control of their electricity consumption,” he argued.

    For instance, only about 35 per cent of IKEDC customers have meters. The company, however, said it has identified the problem and is coming out with a robust metering plan with its technical partner, Korean Electricity Power Company (KEPCO). Beside adequate metering, Odiah spoke of timely replacement of obsolete electrical appliances.

    compact florescent lamps (CFLs).

    “The replacement of about one million 60 watts incandescent lamps (ILs) with same number of 11 watts compact florescent lamps (CFLs) will automatically free 49,000 KWs or 4.9 MWs of electricity for use by others. Use of LED lamps can also play a major role in freeing a lot of power without physical investment on power plants,” he explained.

    Some of these stop-gap measures, experts saidy, should appeal more to manufacturers who seem to be worst hit by the epileptic power supply. At present, over 75 per cent of the electricity needs of manufacturers are generated in-house, with a mere 25 per cent from the utility power supply. This is because of fear of unannounced power outages and surges from the utility companies, which often damages machines, tools and raw materials. They also result in man-hour losses and disruption of production. Manufacturers estimate the loss to between eight per cent and 10 per cent of their annual sales.

    With these grim statistics, “Nigeria is, perhaps, the most expensive country to do business of manufacturing in the world. Cost of manufacturing in Nigeria is about nine times that of China, four times that of South Africa and about two times that of Ghana,” said Odiah. He said one of the viable alternatives for manufacturers, for now, is the delineation of members into clusters and provision of power plants to serve each cluster. He reasoned that this would not only eliminate running individual power plants at unnecessarily high cost, but also allow manufacturers concentrate on their core business of manufacturing.

    That is not the only benefit. The option would also substantially reduce cost of production for which power alone gulps between 35 per cent and 40 per cent of manufacturing cost, aside reducing industrial pollution/green house effect on the environment. Incidently, MAN has a blueprint with 28 clusters already identified nationwide.

    “We could take advantage of this and effectively develop these clusters,” Odiah said, noting that 25 per cent and 15 per cent of investment cost for small and medium size manufacturers and large manufacturers go into provision of in-house power plants, which shouldn’t be if electricity supply was steady and guaranteed.

    The DISCOs and generation companies (GENCOs) who spoke at the summit, said fixing the decay in the power sector would not happen overnight, adding that they were facing challenges in their quest to ensure stable power supply. They said Nigerians should not expect stable electricity supply in the near term because of challenges around power generation, infrastructure, revenue collection, appropriate pricing and gas supply.

    The Chief Executive Officer of Benin Electricity Distribution Company (BEDC), Mrs. Funke Osibodu, said fixing the problems in the power sector is not only capital intensive, but also a long haul, requiring about five years before returns could be made.

    While noting that operators are aware that Nigerians wanted a change, she argued that there are leakages that must be plugged. “A lot of us steal or divert power. There are too many vested interests, from the Presidency to politicians, labour, and legislators who do not want things to change. The public wants result but it doesn’t understand the issues. Nigerians should understand that infrastructure is not power. The government and some politicians will donate transformers to a community and they will think their power problems are over. We should know that transformer is not power. Power has to be generated first before the transformer and other equipment can distribute.”