Dr. Kamoru Yusuf (MON), the Vice President of the Manufacturers Association of Nigeria (MAN), South West Zone as well as Chairman of Basic Metal, Iron and Steel and Fabricated Metal Products Sector and Group Managing Director of KAM Holdings Limited, in this interview with newsmen speaks on the implications and dangers envisaged on the reversal of the 43 items on the prohibition list of the Central Bank of Nigeria as well as possible solutions. Excerpts:
Genesis of the ban of 43 items by previous administration
There is no doubt that the Nigerian economy is facing challenges just like every other nation of the world, especially developing countries or what we regard as third world nations. All efforts put in place by successive governments are always met with numerous challenges, especially when a new administration is inaugurated. There are always errors in decision making techniques of new administrations due to lack of far reaching consultation and non-inclusion of appropriate stakeholders that can further provide genuine working ideas and templates for the good of the nation. However, for the sake of emphasis, I make bold to take Nigerians back memory lane on the 43 items that were banned by the previous administration under the Muhammadu Buhari-led government. It would be recalled that the Nigerian Government called for the service of one of the big four audit and advisory firm in Nigeria, KPMG, to work with the Ministry of Industry, Trade and Investment, which final result was advocacy on the Industrial Revolution Plan on Backward Integration as well as Ministry of Finance working with a firm called Makinson in order to bridge the gap of our economy, which solely relies on crude oil. The policy was to encourage the non-oil sector and manufacturers to increase the GDP and to create jobs, which drive many investors to inject energy into backward integration. In 2015 when the global recession started, which Nigeria was not spared, the economic team, led by the former Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, and the Minister of Industry, Trade and Investment, Dr. Olusegun Aganga, as well as other Ministers, authorities of Nigeria Customs Service, Presidential Committee on Trade Malpractices, the Governor of the Central Bank Nigeria, all the CBN Deputy Governors and their Directors, the Secretary to the Government of the Federation and some captains of industries and Bureau of Statistics come together to analyse some items that are putting pressure of demand from the apex bank weekly and some of the items that the nation has capacity to do away with. In total, about 100 items were listed and later streamlined to 43 items by all the committees and their Board of Trustees.
- EFCC arrests 23 suspected internet fraudsters in Ibadan
- Energy, solid minerals remain top priority for stimulating Nigeria’s economy, Tinubu tells German businessmen
- Chrisland: Agege stadium workers not interviewed during investigation – Witness
- We’ll handle return of Mali, Niger, Burkina Faso to ECOWAS with wisdom – Tinubu
- US gives $400,000 to preserve ancient Nigerian earthworks
Can you speak to us about some of the banned products and their peculiarities
Of course, yes. Some of these items are very critical to the Nigerian economy. For instance, let me highlight some of the items as:
Cement Production
It was discovered that we have mineral resources for production of cement and there are existing investors who have 10 years backward integration plan in order to increase the capacity yearly as they already have the capacity to make it happen, which is the major reason why they are listed so that other investors will be encouraged to join the backward integration plan.
Rice Production
Statistics showed that billions of dollars FX demand was required from the apex bank for importation of rice from Thailand annually. The FX is what the government of Thailand was relying on for their yearly budget. These made the government to announce the rice policy in order to encourage local manufacturers of rice in order to install rice mills across the country to enhance padding from local farmers. Unfortunately, COVID-19 distracted the policy. All the paddy available in storage that was meant to be used in order to control the rice price and quantity was what the rice mills across the country used to survive during the pandemic period when people were restricted from going out and farmers were also restricted from going about their farming activities. This, in turn, put pressure on rice production, which created shortages on padding.
Steel Sector
There are sufficient steel plants in Nigeria. The government discovered that the current local capacity was sufficient for our local demand in the area of 11 to 23 as listed in the restricted items. It can be deduced from statistics that since 2017, the importation of item 20, 21 and 23 has reduced to about 3 percent, which makes the demand on FX for the apex bank to be at almost zero. I want the Federal Government to know that the major problem at the moment is the demand that is higher than the supply in the FX market. Therefore, reversal of the 43 items is a policy summersault, which is not only dangerous, but also very poisonous to our nation’s economy.
What are the likely ways out from the predicaments?
Nigeria is currently at a very dangerous state. Her economy is posed to numerous challenges and risks and there is no gainsaying that the effect of the reversal and removal of ban on the 43 items will cause serious setback on the production sector, thereby impacting negatively on virtually all other critical facets of human endeavours such as unemployment, youth restiveness, wrong declaration at the ports, importation and flooding Nigerian markets with substandard products and among all proliferation of the nation with arms and ammunitions. As I speak with you, most financial institutions are really confused. And this policy, if not quickly reversed, may lead to the distress of some banks, while massive loss of jobs is looming. The CBN can seek the opinion of banks in Nigeria individually on this.
Free Trade Zone, lost tax and revenue
Part of the possible solution is the immediate review of the policy surrounding the Free Trade Zone in Nigeria, which had been abused seriously and which adds little or no value to our economy in generating FX rather than destroying it. Government needs to investigate and harvest the comprehensive list of the companies who register under the Free Trade Zone inclusive of the value of their investments. It is observed that 60 percent of the goods coming into the country from Asian continent are finished products, which can be valued around $800 million, of which some of them are substandard. As a result of this, the Nigeria Customs Service is losing about N300 billion, which was supposed to be generated through Duty Revenues every month, which some of the aforementioned products were imported under the disguise of the Free Trade Zone. Moreover, the law governing the Free Trade Zone prevents the Federal Inland Revenue Service from generating taxes on all the goods brought in through the Free Trade Zones. It is worthy to note that these goods will be sold in naira and the importers want to repatriate the money back to their country in dollars and they have no other source of getting the money than to go to the black market window because the goods were brought into the country “dishonestly”. Therefore, they can afford to buy the dollar at any rate because they already have export rebates from their country for the finished goods exported to Nigeria.
However, Nigeria’s President, His Excellency, Asiwaju Bola Ahmed Tinubu, is hereby advised to give the Minister of Trade and Investment the mandate to appoint an agency to look into the statistics and number of companies registered under the Free Trade Zone, conduct audit into what they are doing and what they claimed they want to do as well as obtain data from Nigeria Customs for the value of goods coming into the country through the FTZ, which is expected to serve as part of their KPI in the Ministry within a time frame as decided by Mr. President. All the importers claiming to be manufacturers/investors in the Free Trade Zone are the biggest scammers in Nigeria and causing problem in the FX black market as they are bringing the products of their parent companies into Nigeria under the guise of Free Trade Zone without taxes and duties, while all the goods end up being sold within Customs territories.
Nigeria Customs Service
Also, I want recommend that President Tinubu should order the Nigeria Customs Service, which has a robust platform, to submit the list of importers who have been bringing goods into the country in the name of Free Trade Zone and their respective value(s) since 2018 till date in order to justify the amount they have repatriated out of Nigeria in the name of Free Trade Zone without payment of duty or any form of taxes to the Nigerian Government. Even those expatriates that produce in the Free Trade Zone using our local mineral resources are not bringing dollars nor are they paying appropriate taxes to the Nigerian Government. Instead, what they are doing is repatriating dollars out of the country.
Declaration of State of Emergency in the mining sector
The President should make it as part of the KPI of the Ministry of Solid Minerals to list all the companies that are mining our minerals such as Gold, Lithium and Tantalum among others and exporting them out of the country. They cannot make Nigeria the country of shipment and make their countries as the beneficiary of the FX because what we need is the proceeds of what they mined and they are to return back to our country in dollars. As at today, the unverified data has indicated that end users of Lithium abroad have brought in their machines and heavy equipment for mining of our Lithium in Nigeria. This implies that they will mine $1 billion worth of minerals monthly and only $50,000 royalty will be paid to the government. Can you justify why Nigerian indigenes that are supposed to carry out these mining activities sell to abroad and bring the proceeds back into Nigeria do not have access to mining rights? For example, a country like India, who discovered a large quantity of Lithium made a policy to generate FX through Lithium. Many gold/lithium miners and commodity exporters in Nigeria are keeping about 70 percent FOREX of their sales proceeds in foreign bank accounts because there is no law in Nigeria that controls the value of the FX earning on their exports vis-a-vis the money that comes back to Nigeria’s apex bank. The Federal Government of Nigeria as a matter of priority needs to put in place the same policy used for the sale of crude oil per barrel into the sale of gold, lithium and other minerals per ton through the database of the Nigeria Export Promotion Council.
Revolutionist and Junta
There is urgent and serious need for the Nigerian Government to take lessons from what is happening in the Republic of Niger wherein there’s in-fighting on the issues surrounding mining activities. The proceed of the resources being mined are exported out of their country as the dollars they have in exchange does not come back to the Republic of Niger since miners in that country are not Nigeriens, which means their country does not have sufficient means of foreign exchange and in turn it will have great impact on the inflation on foreign currency. Therefore, the Federal Government might need to initiate a policy that will ensure total ban of exportation of raw metals in the mining sector except wherein values additions have been created before exportations is allowed.
Need for urgent intervention in the Steel Sector
Steel sector plays similar role as that of Cement, Sugar, fertilizer and Petrochemical industries, all of which can provide the needed tripod support for the development of other light industries in the country. The incremental and progressive results being witnessed by them was the outcome of the success story of the indigenous players in the cement industry over the past nine years and with reduced stake from the offshore investors. The best model is to indigenise and empower Nigerians and ensure that the strategy as encapsulated in the Nigeria Industrialisation Revolution Plan creates avenues for whosoever wishes to partner with the local giants who have verifiable track record in the industry to do so.
Ajaokuta Steel Rolling Mill and what to be done
Another point of urgent attention is for Mr. President to make as part of the Minister’s KPI (performance bond) to make sure that Ajaokuta Steel, which is a great national asset, is not in the hand of a foreigner because if this happens, all its benefit will be repatriated out of the country whereas there are capable Nigerians who can make Ajaokuta Steel to run in full capacity in the same way it is done in the cement, which as at now they have started its replication into petrochemical. All accruing benefits will remain in our country without having to repatriate FOREX out of the country. All that is required is for the government to identify some patriotic Nigerians that will make this happen within a very short time and maximum support from the government. By this, the investment will remain in Nigeria and with Nigerians with more productivity and reward for the nation. It is also expected to be remembered that the first bitter lesson that the government experienced with over 10 years setback during the concession of Ajaokuta Steel to foreigners without adding any meaningful value(s) and in turn ended in litigation and at the end of the day, half a billion dollars was claimed from the Nigerian Government. This is so sad because such money could have been injected into the nation’s economy to provide infrastructures, create more jobs and used to further stabilise the economy. Another bitter lesson is Delta Steel, which was sold to foreigners at a token value of N31 billion. Despite that, they could not make us proud of such a giant steel plant. So what magic can they perform in Ajaokuta that we the indigenes cannot do? Let me remind you that skill acquisition is the same all over the world. Only skin colour is different. Another way that could be easily employed is for the government to urgently channel the Comprehensive Import Supervisory Scheme charges paid to the Nigeria Customs Service over the years to providing bailout and support to the steel sector. Such money should be utilised to drive the industrial revolution process that will galvanise national industrial development. There will be no reason for the government to be worried about bringing Ajaokuta back to life. We have the resources as a nation and we also have expertise, those who can make it work. We don’t need foreign investors to do it. Ajaokuta can be back again to produce automobile cars and other associated raw materials for downstream industries. You will agree with me that with the gigantic size of Ajaokuta, the complex should not focus on middle steel production, which are massively available around Nigeria and West Africa. Rather, it should focus on the configuration of a high class production of steel products such as Slab Caster, Hot Rolled Coils and Plates, and Foundry for the production of required machinery and tools in the country since 50 percent of the requirement for these high-class configuration are already available in Ajaokuta. But we can still welcome more opinions and contributions towards developing our sector for better performance to the benefit of our dear country and humanity at large. There are lots of patriotic Nigerians who are dedicated and ready to serve their country truthfully in their respective sectors and expertise such as our great mentor, Alhaji Aliko Dangote (GCON), Alhaji Abdulsamad Rabiu (CON), Kam Holdings, Innoson, Enricson to mention a few. These individuals are owners of fully established business brands in Nigeria that can be trusted with deliverables on state of the art, which will have positive impacts on the nation’s economy.
Export Promotion Council
The President or the supervisory agency needs to have monthly reports of the export proceeds with the accrued revenue generated from the exports from the raw materials such that the proceed won’t be stashed away into individual/corporate foreign bank accounts abroad instead of the Central Bank of Nigeria. The Presidency needs to look into this, especially with many unethical practices being played in the mining sector of the economy.
Federal Inland Revenue Service
It might be necessary that the FIRS should have field offices within FTZ (Free Trade Zones) across the country as many of the investors are importing finished goods instead of following the Free Trade Zone Acts of the percentages of the “value additions”. Where mining/extraction of natural resources are taking place, 70 percent to 80 percent of such exported goods/shipments are done in this zone areas “undocumented” by Nigeria Customs Service at the exit ports. Therefore, actions need to be taken in this direction if the government wants to come out of the “woods of this FX maladies”. Any investor(s) coming into Nigeria should be asked to submit their business plan certified by an international advisory firm because many investors that come into the country usually “over-state” their investment portfolios with the intention of “fooling” our government because there is no demand for the verification, which calls for audit and proper monitoring as some of them will come into the country with just $10 million and build up same in the documentations with the supervisory agency of the government at $100 million since there is no proper monitoring or organisations that checkmate them. The government of Nigeria needs an all-inclusive review of the 43 items restricted from accessing FX in the I&E window as this will put further pressure on the official market with an indirect impact on the parallel market as well. The current Price Verification Systems recently launched by the apex bank, that is CBN, as this will checkmate round tripping in its own objectives as well as curb price inflation. Also, the platform is having technical issues of uploading line items using XML format. Wherein the XLS format is utilised, there are missing items on the uploaded items. The approval/rejections time/period needs review as some take more than two to three weeks before approval or rejection notice is received. These observed challenges need to be looked into for adequate enhancement and engagements of the platforms in tandem with the set objectives it’s set out to achieve. The Federal Government needs to continue with the bold steps it has already taken in the liberalisation of the FX market and the eventual subsidy removals on petroleum products, which in the long terms, if these suggestions are followed religiously with further attendant consultations, will yield a greater impact and turn around the country’s economy for the good of all.
Nigeria’s economy and African Continental Free Trade Area
The only way Nigeria can participate successfully in the African Continental Free Trade Area and successfully compete among countries in the continent is to develop our giant industries. We can look at China, which always underwrites their capital projects under Sinosure (China Credit Insurance Corporation). The Federal Government should also borrow a leaf from other developed nations as well as some African countries by creating platforms for Credit Insurance Underwriters in order to reduce the huge risks involved in capital projects. Government also needs to create more funding windows and other support infrastructure to elicit rapid industrial development. There cannot be significant growth in the sector without the intervention of the Federal Government where and when necessary. Government should be the driving force behind the steel industry, which has the capacity and potential to resolve part of our social unrest by getting thousands of unemployed youths off the streets through direct and indirect job opportunities.
Follow The Eagle Online Channel on WhatsApp
