Vanguard (Lagos)

Nigeria: State Can Outpace China, If... . - Dugad

interview

Tower Aluminum remains the only functional local aluminum manufacturer in Nigeria and it continues to retain its workforce despite challenges, which the company especially, its extrusion segment faces in the wake of uncompetitive environment created by the government policy that made it possible for finished aluminum products to be imported from China without incentives for locally produced ones.

Group Managing Director of the Tower, Chief (Dr.) Jinesh Chandra Dugad, said the implication of is that, "When you import finished products especially aluminum, you are exporting the jobs that should have helped ameliorate the unemployment situation that Nigeria has lived with over the years."

In this interview with Financial Vanguard, Dr. Dugad, who had February 2013 cried out to the government over the challenges that was dragging the nation's aluminum giant to comatose, however maintained that despite the harshness of Nigerian environment for manufacturing businesses, he was not willing to contribute to growing unemployment in Nigeria through retrenchment of staff. Excerpts:

February last year, you addressed a press conference lamenting the challenges facing the aluminum sector especially Tower Aluminum company that is the only surviving aluminum manufacturing company in the country. One year down the lane, has there been any policy change to ameliorate the problem?

Let me tell you, there is no policy change since we met. No policy change. We met February last year. Isn't it? There has not been any policy change since then, although we are expecting because the extrusion tariff and customs duty from the government which were to become effective since 2013 was deferred to 1st January 2014. This is 2014 and the 1st January has passed and they have pushed it again to 1st January 2015.

So, the Manufacturing Association of Nigeria, MAN, has taken up the matter with the government that we can only continue to suffer if the tariff is deferred for another one year; that is 2015, unless the government should do something. MAN has given the recommendations to the government on various sectors including the aluminum. I understand that government has looked into those recommendations and we are expecting something to happen concerning the tariff, which may come anytime, but that has not come to public domain so far.

So, if you ask me, I would say as at today, the situation is still the same and as we are getting the materials from China, we are exporting to China the jobs that should keep Nigerians in gainful employment. By importing those aluminum extrusions, colours and the rest, we are exporting jobs.

And the value is the game in business. I can only put my money in areas of business that will earn me more profit. If importing from China is more profitable area, why not? But if we continue to do that, what value is being added to the trading that people are encouraged to do in term of number of jobs created? By importing, the only thing you succeed in doing is trading to make money and so we are exporting jobs, which should by extension, help grow our economy to China.

I told you last time that the Aluminum Rolling Mills in Port Harcourt was not working; ours is the only rolling mills working now in Nigeria. We are not aware of any other functional rolling mill at the moment. We are working at full blast except that the only challenge we have is that we are operating at huge losses because it is impossible to compete with China.

And so, government has to protect us. Government has to protect not only aluminum, but all the sectors involved in manufacturing in this country because today, we are able to go to China and import the products from there because China had protected its own local manufacturers. That country first and foremost protected its manufacturers locally which then developed the economy. They developed their economy, developed their infrastructure and now when they became ready to compete with the world, you can see what China has become in the eyes of the world.

Nothing says that Nigeria cannot do more than China if the manufacturing sector can be protected by the government with all the incentives that are required.

So, if you really want development, to meet up with its requirements, you have to create the enabling environment and sometime you make provision for long-term and not only short-term policy. Go to India, every car they use there today are made there. They developed their technology and they have opened up the Indian economy now so that everybody is going to India.

Where do we go from here?

Generally speaking, we have to start preparing for how we can protect Nigerian industries because if you are not industrialised, how will you develop? In the whole of West Africa, there is no single extrusion plant because they don't want to protect it. But here in Nigeria, we have it. We have aluminum extrusion plant in Owerri, Abumed in Abuja, Kaduna aluminum in Kaduna. So, we have industry which can meet Nigerian demands but there is none in ECOWAS because they don't want to protect.

Part of the complaints in the manufacturing sector is that huge portion of their production cost goes into power generation. Now that the power sector has been privatised, what is the impact on your cost?

You are in Lagos; have you seen any improvement in your house or your area? Although the power sector has been privatised, it has not reflected in a way that you can say there is a change or improvement. Nothing has changed. Let me tell you, I feel it is so because these companies are still settling down. Even the power plants do not get supply because they cannot produce electricity.

But talking about privatisation of power sector, I can tell you that there is no impact yet because we still run on generators.

But because we are an industry, we have put up our own power plants. The cost of generating power to run our production is too high and so we have to put up a plant in Abeokuta and another in Ota.

Could you estimate the percentage of your cost that goes into power generation?

Percentage of cost on power varies from one industry to another. But, like ours, where the large volume of power is required, 40 percent of our cost goes into power generation.

At Ota, you said despite the challenges, you were neither willing to relocate to Ghana nor retrench your workforce. One year after, nothing has changed, what is the latest talking about your state of mind?

Let me tell you, in spite of everything, we are still investing. We are doing our best to improve our activities, improve our production and all that. We are not changing our minds about Nigeria but we are bleeding. This bleeding should not be allowed to continue. It has to be stopped so that death does not occur.

That is the reason we have been crying to the government that they should come to our aid in stopping this bleeding not only for our sake but for the sake of the good number of people in our employ and economic development of Nigeria. We read in the news that government is mopping up money from circulation. So, it is very important that government should provide different lending rates for different sectors.

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