Nigeria’s comatose paper mills

Nigeria owns three major paper and pulp mills. The three paper mills include Nigeria Paper Mill (NPM) Limited located in Jebba, Kwara State; Nigerian Newsprint Manufacturing Company (NNMC) Limited, Oku-Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Limited in Ogun State.

In the 1960s and 1970s, the federal government established the three paper mills for the purpose of producing bond paper. The NPM produced 40,480 tonnes of kraft paper by 1985 and 42,960 in 1986, representing 62.3 percent and 66.17 percent capacity utilization, respectively. The NNMC performed well and operated profitably, as the volume of newsprint in the company spiked from 28,927 tonnes in 1989 to 37,581 tonnes in 1990.

Owing to the optimal utilisation of the mill, importation of newsprint fell drastically to 17.5 percent in 1986 and 12.5 percent in 1987. But this was short-lived as the third mill, NNPMC, was abandoned in 1983 when the mill was at nearly 85 percent completion. Till the time it was shut down, it did not produce up to 5 percent capacity.    

Government’s massive investment in the mills could not save them from collapse. They have remained dead, even after their privatisation. Those who bought the mills, including the ones at Oku Iboku, Jebba and Iwopin, failed to resuscitate them. Nigeria continues to import newsprint and other paper products at a huge cost, to the detriment of the economy.

These three paper mills are enough to sustain the country’s paper needs. Just like most things in Nigeria, there is a big gulf between realities and resources. The reality is that 90 percent of papers used in Nigeria are imported.

This situation is an opportunity for industrialists, and other stakeholders in the paper industry, including the Newspaper Proprietors Association of Nigeria (NPAN), to find a way to bring the paper industry in Nigeria back to life. It is, indeed, embarrassing that the nation, with its massive consumption of paper in form of newsprint, books, cards, notebooks and other stationery, cannot boast of one successful paper and pulp manufacturing company. The entire scenario is a sad commentary on Nigeria’s failure to demonstrate leadership in Africa.

The cost for the non-performing paper mills has been enormous to the country. The federal government of Nigeria spends N50 billion on the import of papers annually. The non-performance of the mills also means that jobs that could have been created are lost to other countries.

According to Hussain Doko Ibrahim, director-general, Raw Materials Research and Development Council (RMRDC), the cost implication of non-performance of NPM in 2006, 2007 and 2008 to the Nigerian economy annually was N7.8 billion, which only reduced to N6.85 billion in 2009, resulting in four-year deficit turnover of N30.25 billion.

The cost implication of the comatose situation of NNMC between 2006 and 2009 to the economy was N18.76 billion, and within the four years considered, the deficit turnover to the economy equalled N74.8 billion.

The total cost of non-performance of the three mills to the economy within the four-year period was estimated at N153.05 billion in 2009, and this has been calculated to be about N180 billion before the end of 2015.

There is need for the revitalisation of the industry, which hitherto employed 300,000 people and had investments worth over N100 billion. With the gap between the recent technological developments in the sector and the obsolete pulp and paper production facilities in Nigeria, new investments are required in the sector if the country would become self-sufficient in pulp and paper production.

Furthermore, there must be a well-defined strategy to develop the struggling industry by the government, one of which, some experts say, could be by government establishing pulp and paper institute to save the country from these humongous losses.

Paper industries, today, are propping the economies of some countries, like Indonesia, but it is another area of wastage of scarce foreign exchange for us. The government must act now to reduce the capital flight to paper imports.