By Omodele Adigun
“DO you know companies like Dunlop, Michelin? They still operate in Africa; in smaller economies. Why did they leave Nigeria? We sent them away quietly: they couldn’t compete with substandard products. When this happened, thousands of jobs are lost …”
This was the lamentation of Dr Joseph Odumodu, the Director General of Standards Organisation of Nigeria(SON) last Wednesday on Good Morning Nigeria, an early morning programme aired on the Nigerian Television Authority (NTA), while bemoaning Nigerians’ crave for imported goods, whether substandard or not.Is it tyre, shoe or engine oil? Electronics, iron rods or steel bar? The knack of Nigerians for these tokunbo products knows no bound.
Unfortunately, both the importers and the buyers are rarely aware of the dire consequences which their actions pose to the economy. To the importers, the bottomline is quick profit, even at the detriment of his or her compatriots; while the buyers think they have hit a boon in cheap ‘quality’ products.
Hardly do both parties know that companies producing similar items in the country are on the verge of collapse due to low patronage. Take the plight of steel manufacturers, for example. They had to cry out recently that over N100billion investments in the sector were going down the drain as lack of patronage, among other factors, was forcing 30 private steel firms out of business.
One of them, African Industries Group, had its Chief Executive Officer, Steel Business, Mr Sanjay Kumar , lamenting that four steel plants have already closed shop, warning that more may soon follow as they are currently operating below capacity.
“ Most of these steel plants are now operating two weeks a month and are closed for the remaining two weeks of the month due to lack of demand. The cost of restarting each time is very high and adds to the cost burden of the ailing steel companies. Already about four steel plants have completely shut down and more will follow soon because many are currently operating below 30 per cent of production capacity,” he said.
According to him, the African Industries alone has invested over N20billion in the country, adding that after Agriculture, the steel sector is the highest employer of labour.He pointed out that the livelihood of more than one million people depends on these private steel companies.
Kumar is not alone, even the Iron Rod Distributors Association of Nigeria(IRDAN) is on the same page wih him. Recently, they too urged the Federal Government to take urgent steps to rid the market of sub-standard iron rod products.
The Association noted the situation has become alarming that the fake products are now finding their ways directly to the construction sites.
According to its PRO, Alhaji Yisa Owolabi, the ugly trend might even be responsible for the surge in recent cases of building collapse, especially in Abuja and Lagos
“We have discovered that these fake products are finding their ways into the market because the companies that are involved in this unhealthy practice now bypass distributors and take these iron products directly to the buyers on construction sites. These fake iron rods being sold to the unsuspecting customers don’t carry the Standard Organization of Nigeria (SON) labels and receipts are also not issued to buyers so that it will be difficult to trace the source of these sub-standard products. For us the genuine distributors, we always insist on SON labels and receipts before we patronize any of these steel companies. And because of the shady deals they are involved in, these companies now by-pass us to enter the markets,”he said.
Commenting on the issue of low patronage of Made-in- Nigeria products, the Director General of the Manufacturers Association of Nigeria (MAN), Mr Remi Ogunmefun, said there is need to impress it on the government to ensure that the patronage of the local products is given top attention.
To drive home his point, Ogunmefun drew the attention of the buyers of foreign goods to the grim reality of their action: indirectly shipping millions of jobs away, from jobless Nigerians, to the nationals of those countries where the products come from. indirectly shipping millions of jobs
He explained: “For every product we import, we export jobs from this country. Jobs that should be for our teeming unemployed graduates, we give them out to the citizens of these countries from where we buy these products by keeping their industries running, while killing our own by not patronising them. Some plants have closed down. I know some on the verge of closure. Steel plants are producing, but no patronage. We need to put pressure on the government that we need to patronise the Made – in – Nigeria steel products.”
Wait a minute! Despite the fact that the nation can now produce some goods that are up to the world class standards, then how did we find ourselves in this sorry pass?
Mr Uche Iweamadi, the Group Executive Director, African Industries Limited,traced the root cause of low patronage to import waivers, poor infrastructure and dumping.
According to him, import waivers take away 30 per cent from the local market because holders of waivers can import tonnes and tonnes to crash the price and take over the market.
As for dumping, Iweamadi stated that most of the products from every where are dumped in the country as cheaper alternatives. “Even our poor roads are not helping matters. Most of the roads are in bad shape and cause traffic gridlock.A journey to our plant in Ikorodu from any part of Lagos that was about two hours in the past now takes a whole day because of the traffic.This discourages patronage from customers who come from far places like the Northern part of the country.”
On the area where the sector needs government intervention, Kumar explained that steel consumption is largely driven by government initiative on infrastructure projects.
He added: “The Federal Government under the present leadership can reverse the trend by enacting a local content policy which will make it mandatory to use made in Nigeria iron rods in all small and big government projects and, as well, prevent dumping of foreign steel products in the country.
“Government should also create a special power tariff for the steel Industry and make available an intervention fund at lower interest costs to prevent the immediate collapse of this private steel industry where many are operating below 30 per cent capacity and overburdened with high interest costs, while waivers/concession may not stop completely for certain infrastructural development, the portion of Iron rod importation in any waiver should be expunged. Government should consider curtail of the multiple taxation imposed by the federal, state and local government agencies and review the high cost of gas considering that Nigeria has huge gas reserves. The cost of gas in Nigeria is US$7.31/ mmbtu as against US$4.2/mmbtu in USA,” he said.
Source : SunOnline