We will work with SA to develop sustainable automotive policy for Nigeria – Aganga
Recently, the Ministry of Trade and Investment organised a two-day workshop for journalists covering the sector where the Minister, Olusegun Aganga, spoke on the ministry’s achievements in the last one year and some of its plans for 2013 and beyond. He specifically said that he intends to develop the automotive industry to reflect the success story recorded by South Africa in that area. BABAJIDE KOMOLAFE, FRANKLIN ALLI & NKIRUKA NNOROM were there and captured the interview for Vanguard
Tell us why you’ve decided to sustain this bi-annual seminar for journalists?
Given our mandates as a ministry, it is pertinent that there is need to support and partner with the media in order to achieve our targets. This is in view of the fact that when you consider the number of media that are available and the continued demand for more by the people.
A recent survey by the Nigeria Communications Commission, NCC, indicated that Nigeria now has over nine million active mobile subscribers. As a result, people now have the latest information at their fingertips. These people could be local or foreign investors and they could be Nigerians or Foreign nationals.
As you are aware, the world is a global village and there is no country that is exempted from the flow of information. Because of the mandate of the ministry, we are identifying with the media because of the crucial roles of the flow of information dissemination, ideas, agenda setting and discussions, given the transformation agenda that has been set by the federal government.
Although both local and international investors rely heavily on data to make an informed trading and investment decision, in doing this, they look at countries where there is free media. It is on this note that we deemed it necessary to grow and to strengthen this relationship between the ministry and the media. It is the right thing to do for the development of this sector and for our country.
With 16 parastatals under your ministry, how will you describe the people working with you?
This is a ministry that doesn’t do contract. We don’t have money; what we have is people; people with intellect, people that are exposed because most of their jobs are for policy making and interacting with the private sector. They are creative and innovative people; they don’t wait for government financing before they do what they are supposed to do.
So, our asset is our people. Our assets are our leaders – the director generals of each of these parastatals, Chief executive officers and executive secretaries. Those assets have to be guided properly so that they can make a difference in the country.
When you look at the ministry closely, we are the interface between the government and the private sector. It’s important that the private sector is fully aware of what the government is doing and what the government wants the private sector to do and the only way they can be fully aware is if the press is fully used
What are the main mandates of the ministry?
As regards the mandate of the ministry, today, it is to promote economic growth, create jobs, and how do we do that? We do this by formulating and implementing policies. That is why I said earlier what we need is people; what we need is brains and training, so that people can formulate the right policies and programmes to attract investments into the economy, to boost industrialisation, to boost trade and develop enterprises.
So, what we need in the ministry is quality and capable hands that can deliver our mandates. In summary, our mandates are in four broad areas: to create an enabling environment to stimulate domestic and international investment into all sectors of the economy; to encourage domestic, regional and international trade.
It’s about industrialisation, fostering the micro, small and medium enterprises, and making sure that businesses grow and are adding values to our economic growth and development while creating jobs. I have always been a believer that for an organisation or even any individual to succeed, it is important that it is based on solid values.
Companies that do well have strong culture and values, and what should the values of the ministry be? They all agree that integrity and team work are important. I can’t over-emphasize the importance of team work because there is a reason why this ministry is supervising 16 parastatals.
The idea is that if they work together as a team, they will do a better job, instead of working as separate departments. The idea is to encourage team work and to help one another do better as against what they suppose to do. Service delivery, transparency and discipline are important.
If you look at the mandates of the old Ministry of Commerce and the new Ministry of Trade and Investment, there is a difference. The Manufacturers Association of Nigeria had argued over the new name since last year, and the argument was that the name of the ministry should actually be changed to the Ministry of Industry, Trade and Investment. Industry is parts of the mandates of the ministry.
We recognise the need for industry because if the country is to grow, it needs to industrialise. It is very similar to other countries. In Japan for example, it is called the Ministry of Economy, Trade and Industry. I just came back from Finland and Sweden. In Sweden it is called the Ministry of Economy and it combines trade and industry.
In Germany, it is called the Ministry of Economy and Technology, and what they do is technology and SMEs development and trade. In UK, it is called BIS, Business Innovation and Skills, and what they do is enterprises development.
In Russia, it is called the Ministry of Industry and Trade, while in Korea, it is called the Ministry of Knowledge Economy. If you ask the common man on the street about the economy, he will either tell you the economy is doing well or not. Economy is about job creation, SMEs development, it’s about trade investments and industries.
Really, when you do that, you are opening up all activities around the economy. Agriculture, for instance, produces raw materials for industries; as well as mines produce iron-ore which you can sell locally and internationally to iron and steel industry- that is manufacturing.
The same is petroleum which produces crude oil which is sold to petrochemical industries. I don’t know if anyone can explain to me today why over the last 50 years, we have been a net exporter of raw materials but we have not been able to add value for 50 years.
Why do we sell crude oil that adds value somewhere else? They pay their staff, import it and sell it to you and you pay tax. Clearly, it’s obvious there is mistake somewhere. It is because the right policies were not in place. It’s because the economy focuses more on contract. That is why there is a paradigm shift in this ministry as per what it is supposed to do.
So what are the achievements of the ministry since you took over office?
The Ministry of Trade and Investment has made significant achievements within the last one year. In terms of investment inflow, in spite of insecurity, we attracted about $8.9 billion new investments into the country. That made Nigeria one of the number one investment destinations in Africa.
The increase in net inflow was about 46 percent which is higher than the West Africa. We have done far better than the rest of West Africa and the rest of the world, and as of today, we are told that 50 percent of the investment coming into Africa is coming into Nigeria.
When you look at it, 30 percent of the investment comes into the real sector of the economy. In fact, since 1999 to 2011, we have been having a high rate of investments into the country. From 2005 to 2008 it was high but it came down, but since 2009, it had continued to be higher because the investment climate has continued to be better.
Also, we were able to attain 24 hours start- to- finish business registration service by the Corporate Affairs Commission, CAC. I actually went to Lagos to open the office they have in Ikeja and Yaba. The idea is that people in Lagos don’t have to travel to Abuja anymore to have their businesses registered.
You talked about introducing weights and measures law in other sectors of the economy. Can you shed more light on this?
It is something that has been in the economy for many years, but it was never noticed. It is called legal metrology. When you buy something or get a service, whatever you get is accurate measure.When you go to the market and you buy rice, if they are selling a module to you, the measurement must be accurate and not false scale.
If it is oil, one litre must be one litre; and if PHCN comes to you and say you used X amount, it must be accurate. If the oil and gas for example is taking oil out of the country, there has to be meter at the point to make sure they register the quantity or volume going out and coming in.
There has been a lot of leakages because the metering is not working or they are not installed. For GSM, how are you sure that you are paying for the quantity of calls you are making. It’s for this reason that government deemed it necessary to introduce the law across all sectors of the economy, and we have started with oil /gas, telecom and power sector. Through this measure, we will save nothing less than $3 billion and also generate N17.4 billion per annum.
What is the current status of the textile sector?
The industrial capacity utilisation which is what we use to measure whether our industries are doing well has increased from 29.1 percent in 2010 to 52 percent in 2011. That is a big leap and that tells you that the policies are working and jobs are being created. That tells you that we are increasing our roles in terms of industrial contribution.
I went to Kano and Kaduna sometime ago to look at all these industries particularly the textile companies and we have some of them in Lagos, too. The figure I gave is not my number; the number was given to me by the Manufacturers Association of Nigeria.
The increment in the capacity utilisation was because of the injection of Federal Government’s N100 billion Cotton, Textile and Garment Revival Fund. It was created and made available to the sector through the Bank of Industry at reasonable interest rate. It has started attracting other investors into the sector. Capacity utilisation in the automobile sector has gone up, too. This is being driven by Innoson Vehicles Manufacturing.
What are some new policies that will shape the industrial sector in the New Year?
Well, to start with, the Federal Government is going to ban the importation of raw sugar with effect from January. The ban is in line with the implementation of the National Sugar Master Plan. Currently, there are two major investors in sugar industry which are Dangote Sugar Refinery and Bua Sugar Refinery.
The objectives of the National Sugar Master Plan include raising local sugar production to attain self sufficiency, stemming the tide of high level importation, creation of huge number of job opportunities, as well as contributing to the production of ethanol and generation of electricity.
Currently, 98 percent of brown sugar which are refined into white sugar is imported into the country from Brazil. All these are going to change this year as only investors who are committed to backward integration in the sugar sector will be given licenses to import certain quotas into the country in order to augment local production.
The idea is that we want to replicate the success story of backward integration policy in the cement industry in the sugar industry. We won’t allow the importation of brown sugar again in 2013. The National Sugar Development Council has been mandated to draft high graduated tariff structure on sugar importation, mandatory backward integration programme for refineries, and provision of investors-specific incentives to discourage importation of raw brown sugar and attract investors into the sector.
Other strategies to be introduced by the Council will include regulation of the entire regime of sugar importation through quota allocation benchmark on local production, robust monitoring and evaluation framework to ensure compliance with milestones and time-lines and enlargement of the sugarcane value chain players.
The ban is expected to attract an estimated $3.1 billion foreign direct investment into the country, deepen banking sector via increased loan syndication, savings of foreign exchange on sugar imports and earnings on sugar exports to be deployed to other critical sector.
With backward integration in sugar, 1.8 million tonnes of sugar and 161.2 million litres of ethanol annually would be locally produced per annum. It is also expected to create 37,378 permanent jobs and 79,803 seasonal jobs, save $65.8 million in foreign exchange on fuel imports annually, and $350 to $500 million in foreign exchange on sugar imports annually.
In addition to this, we are also coming out with a sustainable policy for the local automotive industry. Out of the ten automobile producing countries in the world, only two does not have automobile plants – Bangladesh and Nigeria. We attempted it in the 70s but things went wrong because we didn’t look at it holistically and from the point of ecosystem.
We are going to come up with a sustainable policy for the automobile sector. The policy will come up in the 2014 budget. In Africa, only South Africa has the most successful automobile sector. We are going to work with the people who designed the South African policy so that we can have a sustainable automobile policy for this country.
I don’t intend to finish everything before the end of this administration, but we will set the direction for the incoming governments. We are also going to focus on cement, petrochemical industries and Aluminum industries.