Dying paper mills and industrialization plan

WILL 2 APP ADVERTISEMENTS

Nigeria spends about 60 billion naira a year on paper imports, according to data from the Raw Materials Research and Development Council (RMRDC). Papers are raw materials that stimulate production in the real sector to increase gross domestic product (GDP). These include manufacturing, packaging and publishing activities. Small and medium-sized enterprises (SMEs) also engage in the consumption of the commodity, including light industry for paper processing.

Nigeria once had vibrant paper mills. As part of its strategic plan to produce pulp and paper for domestic and export markets, previous governments commissioned Nigeria’s paper mill, Jebba, Kwara State, in 1969; Iwopin Pulp and Paper Company (IPPC), Ogun State in 1975 and the Nigeria Newsprint Manufacturing Company (NNMC) in Oku-Iboku, Akwa Ibom in 1986.

The original plan was for the three pulp and paper mills to supply tons of different papers in the thousands each year. The overall performance of paper mills is encouraging.

In 1985, the Jebba plant produced 65,000 tons of kraft paper, liners and particle board, kraft bags and corrugated cardboard per year. The Iwopin facility, which was expected to produce 38,000 metric tons of bleached short fiber and 65,000 metric tons of fine writing and printing papers per year, produced more than 96%, according to Enterprise Bureau data. public (BPE).

Similarly, the Oku-Iboku mill, which had an installed capacity of 100,000 metric tons of newsprint per year, produced an average of 25,440.5 metric tons between 1988 and 1992. During those years, the NNMC produced international standard newsprint which was exported to the United States of America, Canada, Ghana, Sierra Leone and many other countries. The company reduced newsprint imports from Nigeria by up to 12.5% ​​in 1987.

However, by 2002 all three factories had ceased to operate. They were killed by mismanagement and corruption – the main virus attacking public companies. Compounded by the lack of funds to import raw materials, machine parts and pay workers’ wages, the facilities began to crumble until they eventually turned into liabilities.

In an effort to revive struggling companies, the federal government took steps to privatize them through the Bureau of Public Enterprises (BPE), beginning in the mid-2000s. But the exercise ended in a failure.

For example, the government sold 90% of Oku-Iboku’s shares to Negris Holding Ltd, an indigenous engineering company and subsidiary of the Energy Company of Nigeria (ENCO) in 2008. The Asset Management Corporation of Nigeria ( AMCON) eventually took over the installation. de Negris, who was heavily indebted to a Nigerian custodian bank.

Similarly, the BPE formally handed over the Iwopin plant to Beulah Technical Company Ltd (BETCO) as lead investor in March 2014, offering it 100% of the company’s shares. It turned out that the privatization process was flawed and did not yield the expected results. The companies that acquired the facilities have been accused of engaging in asset stripping without government intervention.

The National Development Plan (NDP) 2021-2025 recently inaugurated by President Muhammadu Buhari, which aims to propel Nigeria into the league of highly industrialized nations of the world, calls for urgent attention for the paper mill industry. Nigeria prints over 1.2 million books a year. Experts estimate that the country loses about 800 billion naira every year when taking into account smuggling and imported finished paper products in the form of books, election materials and packaging.

The plan recognized that the Nigerian manufacturing sector is one of the largest in Africa, with many opportunities. However, the sector had continuously faced several structural challenges, which had led to the closure of many manufacturing companies, limiting growth and investment flows in the industry.

Indeed, the Plan argues that issues such as electricity supply, logistical bottlenecks, limited availability of credit and scarcity of foreign exchange have all affected sector performance over time. As a result, growth in the manufacturing sector stagnated (average -0.6% between 2015 and 2019), while capacity utilization remained poor.

The manufacturing industry is key to Nigeria’s industrialization and progression to become a leading global economy in the decades to come. Previous national development plans recognized the potential of the manufacturing sector not only as a major source of economic growth, but also as an important driver of concentric economic diversification and structural change.

The NDP and the African Continental Free Trade Agreement (AfCFTA) offer opportunities to embark on a strategy for a robust paper industry. We therefore urge the federal government to create an environment conducive to the revival of paper mills. This includes a critical review of the post-privatization status of former paper mills with a view to rehabilitating those that can still be salvaged or opening up another prospect that will attract competent investors.

There will be huge business opportunities in printing, publishing, packaging, converting, pulp and paper manufacturing. The various government intervention programs aimed at empowering SME operators are said to involve high paper consumption, especially for export.

The earlier success of the now moribund paper mills testifies to Nigeria’s huge opportunity for the paper mill business. A revival of paper mills will strengthen the ability of exporters to access specific export markets in the EU, US, Asia and Africa.

We urge the National Assembly and the Senate Committee on Privatization to expedite the investigation into the activities and operations of the paper mills and advise the government accordingly. The Ministry of Industry, Trade and Investment and the Bureau of Public Enterprises (BPE) should engage relevant stakeholders for the same purpose.

Depending entirely on imported paper to grow the economy will not only aggravate costs, but also hinder the goal of the country’s industrialization plan.

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