4 December 2012

Nigeria: Failed Steel Sector, Failed Industrial Sector


Crusoe Osagie looks at the theory of the direct relationship between the steel and the industrial sectors, and states that unless Nigeria's Iron and Steel industry is rapidly revived industrialisation will remain elusive.

Any nation that plans to achieve the status of industrialisation without a well-developed iron and steel sector is in pursuit of a fleeting illusion that is unattainable.

This is the very reason why Nigerian leaders, who have constantly made declarations of their commitment to the development of the nation's manufacturing sector, are mere jesters and empty boasters.

As long as the nation's annual iron and steel output hovers around the current 3,000 metric tonnes the target of making the country industrialised is a pipe dream.

In the year 2011, global crude steel production was 1,518 million metric tonnes. This was an increase of 6 per cent over the 2010 figure and a new record for global crude steel production. China produced 684 million tonnes of this global output and that is why it ranks among the most industrialised nations in the world.

India produced 71 million tonnes, South Korea 68 million, Japan 108 million, Germany 44 million, USA 86 million, Ukraine 35 million, Brazil 35 million, Russia 69 million and Turkey 34 million. All these nations are successful industrial nations and Nigeria cannot stand in their league with its paltry 3,000 metric tonnes per annum.

The dream to develop the Iron and Steel sector in Nigeria was started by the Yakubu Gowon regime with the formation of National Steel Development Authority (NSDA) in 1971 with the mandate to create and develop the sector as a linchpin towards the development of the nation's industrial and economic capacity.

It was from here that all the various steel companies were formed during the General Murtala Mohammed/Obasanjo regime. These companies started realising their potentials during the Shagari regime.

These companies are Katsina Steel Rolling Company, Katsina State, Jos Steel Rolling Company, Jos Plateau State, Delta Steel Company Ovwian Aladja, Delta Steel, Osogbo Steel Rolling Company, Osun State, Ajaokuta Steel Company, Kogi State, National Iron Ore Mining Company Itakpe, Kogi State, National Steel Raw Materials Exploration Agency, Kaduna State, National Metallurgical Development Centre, Jos, Plateau State, and Metallurgical Training Institute Onitsha, Anambra State.

Unfortunately, these outfits never realised their target potentials. There is the conspiracy theory that the Western World, through their institutions, the World Bank and International Monetary Fund (IMF) have always campaigned against the development of the steel industry in third world countries, which include Nigeria.

The theorists have always quoted David Ricardo that due to comparative cost advantage Africa should not develop steel industry but should export their raw materials to the developed West and buy finished steel from them.

However, whether the conspiracy theory is true or not, the fact that the nation's steel sector and the companies therein have been mismanaged, particularly when they were being operated by government, cannot be discountenanced.

MAN Calls for Action

The Manufacturing Association of Nigeria, MAN, recently charged the federal government to complete the outstanding projects and investments in iron and steel industry because of its capacity of enlarging the country's industrial base.

MAN President, Dr. Kola Jamodu, said that lack of political will to bring all pending projects to completion has been the major hindrance in the sector.

Specifically, he said there was need for the federal government to urgently complete the reactivation of Ajaokuta Steel Complex, and ensure that all other component shops are made to function optimally.

According to him, "Urgent but realistic programmes should be put in place to complete investments in the core industries, which Nigeria has ventured into albeit haphazardly but which have huge potentials for providing great linkages to other parts of the manufacturing sector.

"The Petrochemical and Iron and Steel industries have the potentials of spin-offs that would enlarge the industrial base of the country. The government should conclude investments in these industries."

He observed that despite enormous presence of iron ore in the country, the government was yet to fully develop capacity utilisation in the sector.

According to him, "investments in the sector is over N125 billion, with over 3500 factories in operation and employing 280,000 people directly. Jamodu said that the approach of MAN in the implementation of its mandate now rests fully on evidence-based advocacy.

"Our action is in tune with global best practice as a Membership Business Organisation. Secondly, MAN advocacy stance is not about persons but organisations."

New Entrants Attempt to Change Fortunes

The Federal Government has restated its commitment to the development of the mining and steel sector in the country as part of an overall strategy to reposition the nation's real economy.

Minister of Mines and Steel Development, Mr. Muhammed Musa Sada, disclosed this at last weekend during the inauguration and test run of the Western Metal Products Company Limited (WEMPCO) steel Plant at Magboro, Ogun State.

He said the government is committed to creating an enabling environment that will make the mining and the steel sector thrive and boost the nation's economic development.

Sada explained that there is no country in the world that can achieve industrialisation without a developed steel sector because of the inextricable link between the steel sector and the manufacturing and industrial sector.

"We need to encourage any investor because no country can industrialise without steel. There is nothing you see that cannot go with steel"

He noted further that with what is going on at WEMPCO plant, there is hope that the country is on the right track in its effort to attract both foreign and local investment to the sector.

"The leadership of the country will not rest on its oars, we will give all it takes to make the sector work for economic gains," Sada stressed.

Continuing, he pointed out that out of the government's 3 million metric tonnes production capacity of the steel sector, the new WEMPC plant is already producing 700,000 metric tonnes and buttressed that if fully supported, it will be able to achieve its set target.

"We can build automobile bodies, roofing sheets, iron containers and electrical appliances amongst others," he said.

Sada maintained that wealth is always being generated anywhere people are given the opportunity to acquire the right skills.

On Ajaokuta Iron and Steel Company, he hinted that the government is ready to enter into discussion with anybody who comes in to take over the facility for its development as well as others in the country.

Meanwhile, the WEMPCO Group Managing Director, Mr. Lewis Tung, during the event, said steel is the basic metal and backbone of all industries and can help facilitate infrastructural development as well as promote creation of employment opportunities.

"In any country, all aspects of industrialisation require steel. These include building, civil and road construction, automobile manufacturing as well as fabrication and production of engineering machineries," he said.

While stating that steel is crucial and fundamental to any industrial development, he stressed that all advanced countries in the world such as United State of America, United Kingdom, Russia, France, Japan and others started their industrial revolutions through development of steel.

Tung further observed that developing countries like China, India, and Brazil amongst others laid the foundation of their development through steel development.

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