‘Govt policies killing cement investors’ greenfield dream’
The Cement Producers Association of Nigeria (CPAN), is not happy with the way, the government is treating its members. In this interview with OKWY IROEGBU-CHIKEZIE, its Secretary and Chairman, Reagan Cement Limited, Chief Reagan Ufomba, accuses the government of killing the much-touted backward integration policy.
What is your impression about the backward integration policy, especially in the cement sector? Will you say it has met all govenment’s original intentions?
The truth is that it has been rough and tough not just for our members but for the generality of investors and investment in the country. The investment and economic climate in general has been very hostile, especially in our clime where unfortunately the concept of investment seems to have been reinvented. The backward integration policy on cement initiated by the late President Umoru Yar’Adua is laudable; but unfortunately it seems to have died with him. It was the first of its kind, but regrettably, it suffered still birth.
Precisely, what went wrong with the policy?
Without any fear of contradiction, I will say it was hijacked. Those in government after Yar’Adua knocked it down, and the Central Bank of Nigeria (CBN) dollarisation policy laid it prostrate. The late President Yar’Adua was the best president Nigeria ever had. He was the only person in this country who criticised the election that brought him to power as irregular. He took another bold step to end impunity and monopoly in the cement sector by licensing six additional companies in 2008, known as the New Entrants but unfortunately, he did not live to see it through.
What happened after his death?
The summary is that government identified demand and supply gap as well as high cost of transportation as major causes of high cost of cement and decided to fill it by laying emphasis on regional licensing. Some of the companies were BUA-Northwest; Nica-Northeast; Manlababidi-Southwest; Madewel-Southsouth; Minaj-Southeast; Reagan Cement-Southeast/Southsouth. Remember we already had Dangote in Obajana and Gboko Cement in Northcentral and other terminals. In addition, Ibeto was operating in Port Harcourt and entrenching himself in Nkalagu. Larfarge was in other locations, while Calcemco was transformed to Unicem and others like that. The import licences were tied to backward integration. All licensees had fully complied with the policy by signing strategic trade and investment contracts and acquired quarry and mining leases with the Cadestre office. Then Yar’Adua died, and like everything Nigerian, his laudable dreams for this country died with him.
What has been the position of the policy since his death?
The backward integration died as far as we are concerned. A major player in the industry petitioned the government and huge investments of Nigerians running into billions of naira went down the drain.
It is clear that government’s attention shifted from imports to local production. Do you have anything against that?
There is nowhere in the world where diversification or change in government policy would mean destruction of existing investments. We must quickly overcome this old fashioned military psyche and automatic-alacrity syndrome if we must grow. Government is a continuum and to attract investment; government must not be seen to be setting up its investors and citizens through policy summersaults, favouritisms and the likes. I can tell you that the fire brigade approach to investment drive would not work. Our greed precludes us from seeing and knowing that the solid minerals and natural resources would someday finish and we will go back to imports. So rationing is the name of the game if we must leave something behind for our upcoming generations. Planning is the only way out. Government must not behave like it is only when we saturate the market with locally produced goods that cannot be sold or bought that Nigeria would be better. Every policy has its pros and cons. There should be a level playing ground for every law abiding citizen in this country.
What are your expectations from government?
Cement Producers Association of Nigeria (CPAN) is asking for an enabling environment that would accommodate all investors. We expect sound and durable policies, adequate infrastructure, constant electricity supply, single-digit interest rate, funding, single taxation and minimum meddlesomeness of government agencies and parastatals. Most Nigerians may not be aware that a particular agency of government charges as high as N20 million to register a contract agreement, this is after registering with the Corporate Affairs Commission (CAC) and allied agencies. Doing business in Nigeria is like jumping into the boxing ring with a professional boxer such as Mike Tyson. The Tyson syndrome accounts for the level of dead investments than upcoming ones. We must regulate investment with a clear objective in mind and to take care of the unborn generation. Our greed must not allow us to destroy their tomorrow for our today. We must have the necessary funding at the right interest rate; we must allow competition by setting in motion a backward integration policy in all sectors of the economy that is currently import-dependent.
You seem to be opposed to local industrialisation?
I am not. I am that man who sees tomorrow; that man who knows that someday our mineral resources would be gone and we return to square one. Rationalisation and common sense are the names of the game. I am totally against open-ended regulation. There should be no half measures. If government must regulate import, it must as well regulate local investments. Government policies must be stable and durable and for Nigerians, not for a few. For whatever reason,government has allowed some companies to be larger than the state. It is a serious political and economic threat to the well-being of the nation. It is difficult to invest in an economy where you cannot accurately forecast; where individuals drop prices in bad faith; where you cannot predict government’s next move. Unfortunately, here losses are never mitigated for entrepreneurs; if anything goes wrong with your investment, only you alone will bear the loss. That is exactly what happened to my members in the Greenfield Project.
What is the state of the Greenfield Project?
My members lost over N200 billion in the misadventure. Government owes my company N16.2 billion as we speak. All the big names in the industry were once toddlers so why kill upcoming ones? There are several litigations in court bordering on contract breach against the Federal Government. I would advise the government to stop these unnecessary litigations and distractions and settle out of court with our members. Nigeria cannot continue to be a nation where government pulls down the ladder once some people climb. You would be amazed to learn that Nigeria imported about 21.8 million metric tonnes of cement between 2008 and 2009. Out of this figure, the big boys of the industry imported over 90 per cent. They are the same people crying wolf now. In other climes, over-investment is a crime under the anti-trust law but here, we clap and hail. Foreign investors and partners want to know your market share, track record, brand and stability of government policy. I will advise that we do the right thing for once in this administration.
What is the situation now with your members?
You know we have two groups, Cement Manufacturers Association of Nigeria (CMAN) and CPAN. But we are all Nigerians. The National Assembly should help this nation; they should justify their huge pay by promulgating laws that would see us out of the dark alleys. Not mundane issues such as the recent one on social media and such. In any case, the disagreement between the two groups can be settled with a sound investment policy.
In your own understanding, what is the way forward?
Government must redress all injustices meted out to our members. Out-of-court settlement is recommended. There should be bail-out and regular consultation between us and the government because we contribute to the GDP of this country and we are also huge employers of labour. Healthy competition should be encouraged while stiff penalties for sabotage and unhealthy competition should be enforced. Impunity, especially by government such that government issues licenses to its citizens and disallows such goods and services from entering the country must be condemned by all and immediate compensation mechanism put in place for the wronged parties.
What is your take on CBN’s forex policy?
This particular policy is the worst l have seen in recent times. There was no consultation across board, making it unpopular and without the much desired result. Let me give you an example, between the 80s and 90s, oil sold for less than $50 per barrel, the naira never fell to as low as N260. The CBN forex policy tensed the economy because it is not well thought off. We advise the CBN Governor, Mr. Godwin Emefiele, to rethink this policy; it is detrimental to the growth and development of the economy.
What would your members have preferred?
We would have preferred the pegging of dollar sales and allowance of foreign currency inflow into domiciliary accounts. You cannot shut your door to what you don’t have; it is commonsensical. That several intermediate goods were ousted from foreign exchange procurement showed how irrational we can be in a country. This has led to the current social upheavals resulting from unprecedented unemployment.
Will this policy have any effect on the government as it were?
Yes it will, no doubt Internally Generated Revenue (IGR) will certainly fall with less imports and mass retrenchment will follow. The truth is that the nation is largely import dependent. The current unemployment figure will be a child’s play except something is done urgently to this policy.
THE NATION