Nigeria’s N520bn steel importation

Nigeria’s $3.3 billion (N520 billion) spent yearly on importation of steel despite the abundance of iron ore in the country is one of the shocking pictures of the nation’s profligacy. Besides huge capital flight, the implication of steel importation is manifold. With $3.3 billion, more than the budget of many a country, Nigeria can provide jobs for her teeming youths or provide investment grant for her middle age. Interestingly, the revelation of this colossal waste was made recently by Minister of Industry, Trade and Investment, Mr Olusegun Aganga.

Speaking in Lagos at a one-day stakeholders’ forum on transformation of minerals, iron and steel subsector for industrial revolution in Nigeria, Aganga said that the federal government has concluded plans for the development and implementation of a comprehensive backward integration policy (BIP) for the iron and steel subsectors of Nigeria. The backward integration programme in iron is aimed at making Nigeria a net exporter of iron ore just as government has done with cement. Steps taken so far towards attaining success in the BIP in iron ore include the bringing together of all the stakeholders in the metal sector to look at how the country can attract more investors through the right policies and strategies.

The BIP in iron ore, coming shortly after the new automotive development plan was approved by the Federal Executive Council (FEC), is a welcome development in the automotive policy. The new automotive regime will bring upward review of old tariff in order to make imported cars more expensive, as part of measures to develop Nigeria’s automotive industry (NAI). With the new measures, the automotive industry should create employment and a wide range of technologically-advanced manufacturing opportunities.

Considering the large population of Nigeria, the country has the potential automobile market of about one million vehicles in a year. It is unacceptable for a country aiming at joining the top 20 economies in the world by the year 2020 through its vision 20:2020 to still rely on absolute imports of vehicles. In 2013 alone, Nigeria spent a staggering N1.2 trillion on the importation of various brands of vehicles into the country through the gateways and boarders. More surprising, these vehicles comprising used cars, popularly called “Tokunbo” or “Belgium”, and brand new cars, were cleared at the ports through waivers thereby depriving government of revenue generation.

The breakdown of the 2013 importation shows that N550 billion worth of vehicles, N550 billion spare parts and N150 billion worth of tyres were imported by the three tiers of government, private organisations and individuals. Three decades ago, assembly plants in the country were doing well and employing thousands of artisans, engineers and administrators. The nation’s dwindling fortune in automobile industry has been blamed on Nigerian’s penchant for jettisoning home-made products. Most government officials are guilty of this preference for foreign-made goods and vehicles. In 2013, the National Assembly paid heavily for imported cars. Each of the 109 senators got a Toyota Prado SUV while each of the 360 representatives was given a Toyota Camry car.

Supreme Court justices are chauffeur-driven in foreign-made Mercedes Benz cars, just as some ministers are addicted to different brands of foreign-made armoured luxury cars. While top government officials and the Customs often boast of high revenue generated from imported cars, they fail to realise that in a market-driven economy, the nation must insist on manufacturing its own cars. We urge the federal government to intensify efforts to make the automobile self-sufficiency a reality in the next one year. However, this can only be achieved if the cars to be produced in Nigeria are affordable and of high quality.

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