Lagos — Nigeria is losing $300 million on import duties every year, investigations into the steel sector have revealed. Industry sources attribute the huge loss to the skewed nature of the tariffs that operate in the steel sector.

Buoyed by a desire to rapidly grow its telecommunications sector, the government had sought to encourage rapid rollout of mobile phone networks by placing a low tariff of 10 percent on imports of telecoms towers. The same import duty was placed on transmission towers which are used in the power sector. This policy was introduced at a time when local capacity for making towers was puny.

Local capacity to produce telecommunications and transmission towers has grown since those tariffs favourable to imports were introduced, and the government is yet to review them.

Industry sources now argue that the prevailing import duty structure remains skewed against local manufacturers of towers, who pay up to 35 percent duty to import the steel raw materials they use to make their towers and other galvanised steel products.

"The consequence is that every tower manufactured by a local steel plant is already uncompetitive by the time it is made," a top executive at a steel manufacturer complained.

"There is no way something produced with inputs costing an extra 35 percent can be cheaper than a finished product paying only 10 percent duty," a financial analyst familiar with the steel industry noted.

Our investigations further revealed that government permits zero duty on certain towers. Contractors executing projects for the PHCN are allowed to import transmission towers without duty, in order to help manage the costs of power projects.