That the issue of cement production remains a central element of national development is, perhaps, the main message in the undignified incident that occurred yesterday in the House of Representatives. It also underscores a loss of faith and significant disconnect between local Nigerian investors and the government that is supposed to cater for the national interests. That House Representatives should engage in a shouting match to shut the Deputy Speaker down over the failure of government policy to protect local investors is indeed troubling and unacceptable to say the least.
It is however worrisome that the Federal Government is yet to vigorously pursue and implement the provisions of the cement backward integration policy which was initiated to encourage and protect local manufacturers from dumping of subsidized cement products imported into the country. This prevailing cement glut has forced the management of Dangote Cement Plc. to temporarily close down its Gboko Plant, which has an annual production capacity of four million metric tons. The corresponding loss of jobs and income to both the state and the federal government is obvious.
The, Group Head, Corporate Communication of Dangote Group, Anthony Chiejina explained in very unequivocal terms that the shutdown of the plant was caused by the excess supply of cement in the market, due to the increase in local production of cement and the continued importation of subsidized cement. “The production figure for the first 11 months of the year showed increased local production level with supply now surpassing demand,” he said. “Total supply of cement to the market at the end of November, when compared to the same period last year, has shown a record increase of 11.4 per cent, the highest ever.” These are very unedifying statistics.
A statement on the company’s website also noted that “…with the dumping of subsidized imported cement in the South eastern market, there is no way our Gboko Cement plant can survive. In fact, members of staff have been put on forced leave pending when the situation improves.” This precarious situation should worry all Nigerians, especially those with the onerous task of mid-wiving President Goodluck Jonathan’s transformation agenda.
Ostensibly to halt this trend, the Hon. Hassan Saleh tabled a motion on the floor of the House. The motion titled “Urgent need to investigate the non-implementation of the backward integration policy on local production of cement,” received the unanimous support of the House except the Deputy Speaker (Dis) Hon Emeka Ihedioha who tried to overrule the motion. Piqued by the Deputy Speaker’s apparent intransigence, House members abandoned all pretences to civility to shout down on the Speaker, who was forced to back down from his untenable position.
As an idea, the inability of the federal government to protect domestic producers by implementing the cement backward integration policy fails any test of reason or wisdom. The Deputy Speaker’s motive is suspect especially as he ignores the fact that the government used the policy to attract investments in the sector whose impact has been very visible. To claim otherwise will be moronic.
The are many risks that logically would be exacerbated by dumping including: risk of losing sales and market share by local companies, especially when competing with subsidized foreign enterprises; chronic fiscal and labor market imbalances and severe income disparity, perhaps leading to a backlash against investing in Nigeria. In addition to the direct negative impact on jobs and earnings, the government‘s laisser-faire attitude indirectly harms the Nigerian investor and by extrapolation, the Nigerian economy. Seeking often illusory savings by impetuously issuing cement importation licenses and other short-term tactics, that can lead to divestment; loss to shareholders and other citizens, by worsening employment, wage levels, government revenue and government expenditures.
The Deputy Speaker’s belated attempt to sweep such an important issue affecting millions of Nigerians under the carpet is not only regrettable, it is makes no economic sense and defies a moral one. This is a representative of the Nigerian people who refuses to entertain discussions by his colleagues to seek ways of stopping the production of sustaining jobs and creating wealth in other economies! If Nigeria needs to import cement from a foreign supplier, that presupposes enough purchasing power to demand that the supplier sets up a factory locally so that Nigerians may be employed, acquire skills, and the Nigerian economy can benefit.
Furthermore, on what basis was it established that there was a shortage in domestic production to warrant importation of cement in Nigeria and by what criteria were the importers selected? This is one example of why there is no faith in the Jonathan government. Against this backdrop, the federal government should stop the importation of cement with immediate effect; or move to subsidize locally manufactured cement and level the playing field in terms of prices. Subsidizing domestic cement production will be ipso facto tax payer money invested judiciously, transparently, and cost- beneficially on that sector. Nigeria needs revolution in its cement sector. Urgently. But the journey should begin with wisdom in thoughts and action.
