Need for more sector-specific policies

Nigeria’s cement industry has in the last few years made giant strides in terms of capacity, local input content, investments and employment. Capacity utilisation in the non-metallic products sector, which is largely dominated by cement, jumped 16 points to 70 percent by the second half of 2013, from 54 percent reported in the first half of the same year, according to data from the Manufacturers Association of Nigeria (MAN). This is better appreciated when viewed from capacity utilisation in the corresponding period of 2012, which only stood at 52 percent.

Output in the sector rose to N215.8 billion in the second half of 2013, from N144 billion in the first half and N8.5 billion in the corresponding period of 2012. The sector also ramped up raw materials sourcing to 91 percent in the second half of 2013, from 80 percent in the first half of the same year and 63 percent in the corresponding period of 2012.

Currently, the Nigerian cement industry’s capacity is about 43.5 million metric tonnes per annum. Dangote Cement has already achieved 29 million metric tonnes capacity, while the new Lafarge Africa, comprising its South African cement business, WAPCO, the United Cement Company of Nigeria (UniCem), Ashaka and Atlas, now has 12 million metric tonnes capacity. Bua Group has capacity close to 2.5 million metric tonnes.

These firms are also ramping up investments. For instance, Dangote Cement is hoping to add several million tonnes to its 29 million capacity, while Lafarge Africa could add 5.5 million tonnes by 2017. Bua has also invested over $500 million in a green-field cement plant in Okpella, Edo State, to add additional 3 million tonnes per annum to the Nigerian cement market.

All these laudable achievements in the industry are easily ascribed to the Federal Government’s backward integration policy (BIP). The policy has also been extended to the sugar industry, and has already brought in about $2.6 billion investments within a short time, according to the National Sugar Development Council. Dangote Sugar, Golden Sugar (a division of Flour Mills), HoneyGold and Confluence Sugar, among others, are ramping up sugar investments and empowering cane farmers.

With a clearly-defined policy in the automobile industry, Nigeria will soon join the league of nations with virile assembly plants as about 21 firms have already shown interest to tap into the sector.

Recent Gross Domestic Product (GDP) series released by the National Bureau of Statistics (NBS) shows that the Nigerian economy is currently driven by manufacturing. The GDP contribution of the sector has jumped from about 4 percent reported last year to 9 percent.

Heavy investments are ongoing in the sector. Procter & Gamble (P&G) has already set up a $300 million plant at Agbara. Unilever has also in three years invested $200 million in the country. A number of other investments have been made and are still being made by Dangote, Flour Mills, Honeywell, SABMiller and West African Ceramics Limited, among others.

Nigeria is an attraction to both multinationals and conglomerates because of its demography, which provides easy market for finished and semi-finished products. The growth of the middle-class, rise in retail chain stores and hyper markets are also appealing to manufacturers.

Given the progress recorded so far in the cement and sugar industries, plus on-going activities in the automobile industry, we believe that more clear-cut sector-specific incentives and policies need to be directed to salt, textile, aluminium, furniture, iron and steel, paints and varnishes, chemicals, rubber/plastic, ceramics, electronics and glass, among others to prop them.

Where there are already latent policies, governments at various levels, especially federal, should review same to encourage investors to move in. But again, we emphasise that incentives should not be given to an individual company but to players in the sector.