July 22, 2013

Politicizing appointments in steel sector stunts growth, says Ugwu-Oju

Politicizing appointments in steel sector stunts growth, says Ugwu-Oju

EMEKA Ugwu-Oju


*Steel sector needs right policies to grow…
E meka Ugwu-Oju is the Deputy Chairman, Nigerian Association of Cold Rolled Steel Manufacturers, in this interview, he regretted that past government policies have aided in crippling the steel sector in Nigeria. He said that the Federal Government must as a matter of importance support the growth of indigenous industries, noting that the country should emulate the various developmental efforts that made China an economic power among other issues. The Excerpt:

The plan to develop the iron and steel sector began with Yakubu Gowon regime with the formation of National Steel Development Authority (NSDA) in 1971. Looking at the low level of steel production in this country, where and how do you think we missed it?

I think I should start by situating the context of steel development. In any productive economy, steel has a major role to play. For instance, the materials used in a lot of productive activities like car production and others are derived from steel. At a point in time, a country’s level of development will be gauged by the level of steel it consumes.  As at today, the foundation of any strong manufacturing economy is based on steel. It is under that concept that Nigeria wanted to have a strong steel sector and it was reflected in our earlier development plan, which led to where we had Ajaokuta Steel Mill and the other ones in Katsina and the rest.

The plan seemed okay, but some things went wrong and today, Ajaokuta Steel Mill has not delivered. Most of the steel rolling mills are either comatose or waiting for revival in one way or the other. We have not been able to achieve much based on our plan, maybe because it was public sector based. But I would not say it is just because of that, but the way things have turned out, I would not be too wrong in saying it has had a lot of impact in our not actualising our steel goal. That is the reality of how the public sector operates.

We lack continuity in governance; we have a situation whereby funding is not provided as at when due and we also have situations whereby appointments are politicised. Like making a person the Managing Director of Ajaokuta Steel Mill without looking at how effective the person can be. Such has hindered us from the ability to deliver a strong steel sector. But that was yesterday, we are here today saying we can turn things around and that is what we have started doing because at the end of the day, you show what you can do, not talk.

EMEKA Ugwu-Oju

EMEKA Ugwu-Oju

That is what WEMPCO STEEL MILLS (WSM) has done. That was why we invited the president and the whole Nigeria to come and see what the private sector can do so that there can be creation of enabling environment for us to continue to do what we want to do. We really want to do backward integration so that not later than 10 years from now, we would have done a lot more than Ajaokuta would have done once the correct policies are effected and correct tariff protection is provided.

At what stage did the private sector come into steel production in Nigeria, because we know that from inception, it was the Federal Government that was mainly involved in it?

If you follow the history of our development, you will know that the steel sector was one of the areas listed for privatisation. The government at a point saw that it could not do this alone, that was when they came up with the issue of setting up Committee on privatisation. The steel sector was one of the areas that was put forward for privatisation. This, of course, meant transferring the ownership to the private sector, but it looks like there have been a lot of challenges in that regard.

Ajaokuta has been in and out of court for some time, I cannot really say what the status is at the moment. Privatisation has not really gone the way it should. Be that as it may, it is still a step in the right direction. Some of us are starting because a conducive environment for it has been provided. There should be one or two government founded projects that we think we could turn around and position as part of our backward integration strategy.

Can you itemise the specific factors that worked against the public sector on steel production and what efforts you are making to stop them from reoccuring?

I tried to state that it was because of the governance structure we have in the public sector; It sometimes does not give room for meritocracy and continuity in projects implementation. Also there is lack of incentives, because one of the key things in the private sector is that of profit motive. You try to do your business to ensure that your income is more than your cost. But you found out that in government projects, because the amount is budgeted every year, some people do not really care whether the business is profitable. Then when you add that to the issue of federal character, some people would say “it is now our turn to run this company” and “our turn” means different thing to different people.

It might mean let us bring in our own people as employees, even if they are not the right calibre or not productive. Of course, you are laying the foundation of the death of that project. These are part of the hindrances in our public sectors. In the private sector, you are straight because you are in business to make profit. If you are not profitable, your will go out of business, and I do not think you will want to invest in a business you will not survive in, unless some external factors do not make it possible for you to survive. This is what we are saying when we ask the government to give us the right environment.

The government should also protect the interest of private sector even in policies that have to do with international trade. Suddenly, we found ourselves in a situation whereby people dump goods from foreign countries at the expense of our infant industries. We don’t have control over that and that is where the government should come in by ensuring that the private sector is protected in the international trade.

How indigenous is WEMPCO, does it have the capacity to produce other raw materials apart from steels like chemical, tar and others?

I think the history of WEMPCO is interesting. We have come a long way. A lot of the employees are Nigerians, while few of them are Chinese. The group is also sensitive about ensuring that as many Nigerians as possible are employed because it is more economical to employ a Nigerian than a Chinese, who will have to go home two or three times a year. We did not come here to run a charitable organisation; we are in business. Of course, at times, you must have to play by the rules, so you do not compromise.

Most of the technologies we use are from Germany, United States and China, so some of the nationals of these countries work with us in their different areas of specialisations. We are trying to ensure that Nigerians learn the requisite skills so that they can take over. We need to do what the Chinese are doing so we can take over the steel sector because this is more economical. We need to be ready to do what the Chinese are doing in terms of industralisation.

When President Jonathan came to commission the WEMPCO Steel Industry, he specifically said the sector is key to his administration’s transformation drive. With that statement, would you say the present administration has provided an enabling environment for the steel sector to thrive?

I think we got some support from the government, starting with the Coordinating Minister for Economy and Finance Minister, Ngozi Okonjo-Iweala, who did not only visit but also gave advice and we had some incentives when the company was undergoing construction in terms of exempting some of the materials used in the factory from duty and others. The Minister of Industry, Trade and Investment, Olusegun Aganga, has always tried to be supportive in ensuring that when we have challenges it is addressed.