ABDULLAH BUKAR: THE NIGERIA’S STEEL INDUSTRY DREAM CAN BECOME A REALITY

Quietly since 2017, the People Expertise and Excellence Foundation (PEEF), a platform accommodating professionals, local and international, from a wide range of disciplines and backgrounds, have assiduously been playing an advocacy role, generating quality implementable ideas which it has continued to pass on to the relevant government quarters. Its strong belief is that when the right policies and delivery systems are in place, this would create the environment for proper utilisation of available human, cultural and natural resources, which would ultimately propel the country and Africa towards achieving the best quality of life for the citizens.

PEEF has organised six brainstorming sessions thus far with themes that address different strategic needs of the country. This year, its conference will focus on the development of the steel industry in Nigeria and how to make that dream come alive.

In the notes below, Engineer ABDULLAH BUKAR, chairman of the Board of Trustees of PEEF, throws more light on the activities of the foundation and the reasons for its focus on the still sector in its upcoming conference.

WHY THE FOCUS ON THE STILL INDUSTRY?

The steel industry is a strategic sector for technological and economic development in Nigeria. The industry is vital for developing linkages with all other sectors of the economy and serves as the backbone of industrialisation in Nigeria. The conference theme aims at facilitating the achievement of the following specific objectives in the industry:

1. Job creation: The steel industry has the potential to create a significant number of jobs in Nigeria. The industry requires a large workforce, from the mining of raw materials to the production of finished steel products. It also serves as a catalyst for many other productive enterprises for direct goods production for local consumption and export as well as import substitution. This is one of the reasons the then regional and federal governments understood the need to produce steel early in the first five years of the life of independent Nigeria. It is an absolute must if we are to become a self-sufficient nation.
2. Reduction in capital flight: Nigeria is blessed with major raw materials needed for the production of iron and steel, including iron ore, coal, limestone, and natural gas. However, the country still spends billions of naira annually on the importation of steel products. The development of a functional steel industry in Nigeria will reduce the country’s dependence on imported steel products and save foreign exchange.
3. Industrialisation: The steel industry is a key driver of industrialisation in Nigeria. The industry provides the base for Nigeria’s industrial take-off and will sustain spare parts and components of the industries that produce steel-based goods.
4. National pride: The development of a viable domestic steel industry is a matter of national pride and a reflection of industrial progress for Nigeria.
5. Contribution to GDP: According to Dr Fayemi’s Road Map for Development, the Ministry of Mines and Steel Development is capable of contributing $27 billion to the country’s GDP.
6. In summary, the Nigerian steel industry has the potential to create jobs, reduce capital flight, drive industrialisation, contribute to GDP, and is a matter of national pride.

VIEWS ON THE CURRENT CHALLENGES BEDEVILING THE DEVELOPMENT OF STEEL SECTOR IN NIGERIA?

The Nigerian steel industry faces several challenges that have hindered its growth and development. Some of the current challenges are:

1. Inadequate infrastructure: The steel industry requires a lot of infrastructure, including power, transportation, water supply and up and downstream partners to ensure rapid growth.
2. Dependence on imports: Nigeria spends about $3.3 billion importing steel every year. The country has 30 steel manufacturers, but they can only produce 2.2 million tons a year with scraps and billets imported mainly from China. This dependence on imports has made it difficult for the industry to grow and develop. Here, you can see directly where the local steel industry can help reduce imports of goods and services we can produce locally, increasing the local content of the GDP while minimising imports.
3. Inadequate funding: The Nigerian steel sector has faced a lot of operational challenges primarily due to poor planning, contracting strategy, design, funding, and political instability.
   The lack of proper integration with the rest of industrial development’s role in the evolution of the Nigerian economy towards regional dominance and international presence led to moribund industries, which are all in silos and unable to consolidate and support each other.
4. Poor management: Corruption, poor management, sponsored sabotage, and fake news have been barriers to Nigeria’s industrial initiatives, including the steel industry. The privatisation that was carried out in 2004-2005 did not revive the sector but transformed the companies into worse conditions. Moreover, nobody told the buyers what is expected of them from the national development level to ensure the roles are effectively discharged.
5. Technological challenges: Despite the abundance of iron ore in Nigeria, there are some technological challenges in using them for steel making. The country needs to invest in research and development to overcome these challenges. How can we improve the quality of the inputs to the steel-making process and avoid importing? Alternatively, can we develop a new steel-making process that fits the types of ore we have?
6. Policy and legal framework: The Nigerian steel sector has faced challenges due to poor planning, contracting strategy, design, funding, and political instability. The government needs to provide a favourable policy and legal framework to support the growth and development of the industry.

The policymakers should listen to advice and engage to make a better development basis for reviving this crucial part of our national growth plan.

THE WAY FORWARD IN ACHEIVING SUSTAINABLE STEEL INDUSTRY.

Achieving an effective, efficient, viable, and sustainable steel industry in Nigeria requires a multi-faceted approach. The subject matter experts at this year’s conference will speak more specifically about the thematic areas. The following are points to note:

1. Government support: The government needs to provide a favourable policy and legal framework to support the growth and development of industry. The government should also provide adequate funding for the industry, including alternative sources through industry-based partnerships.
2. Investment in infrastructure: The steel industry requires a lot of infrastructure, including power, transportation, and water supply. The government needs to invest in infrastructure to support the growth and development of the industry.
3. Reduction in dependence on imports: Nigeria needs to reduce its dependence on imported steel products. The country has 30 steel manufacturers, but they can only produce 2.2 million tons a year with scraps and billets imported mainly from China. The development of a functional Ajaokuta steel company, as the flagship of the Steel Making Industry, will reduce the country’s dependence on imported steel products and save foreign exchange. Once mature, this should be followed by a revival of the Delta Steel Complex at Aladja, the moribund steel rolling mills and future plants that will add to meeting national and regional demand.
4. Investment in research and development: Nigeria needs to invest in research and development to overcome the technological challenges associated with using iron ore for steel making. The government should also encourage collaboration between the steel industry and research institutions.
5. Effective management: The steel industry needs effective management to thrive. Corruption, poor management, sponsored sabotage, and fake news have been barriers to Nigeria’s industrial initiatives, including the steel industry. The government needs to ensure that the industry is well-managed by seasoned professionals and the same level of competence is upheld despite changes in ruling structure and affiliations.
6. Promotion of local content: The government should promote local content in the steel industry. As much as possible, all inputs should be locally-sourced at competitive prices. Similarly, steel, as input to other industries, should be managed to give a competitive edge to products from Nigeria to enable them to flourish on their merit. This will create jobs and reduce capital flight. The government should also give preference to domestic steel firms in infrastructure contract awards.

The national plan should recognise the need to ensure proper integration of our industries covering steel and steel products, the oil and gas industry, aluminum production from ALSCON and the minerals production plans currently under initiation in the Federal Ministry of Solid Minerals.

THE PLACE OF THE STEEL SECTOR IN THE “RENEWED HOPE AGENDA” THE CURRENT GOVERNMENT

The steel sector can positively support the “Renewed Hope Agenda” of the current federal administration for sustainable growth and development of Nigeria by creating jobs through youth empowerment, reducing insecurity, contributing to GDP, reducing capital flight, promoting industrialisation, and promoting local content. However, the government must provide adequate support and responsive management of all issues for the industry to achieve the desired goals.

Steel production should catalyse growth in many industries, prove import substitution and create new exports from Nigeria to neighbouring countries.

WHAT OF THE ISSUE PROCUREMENT FRAUD AND CORRUPTION ASSOCIATED WITH THE STEEL SECTOR SUPPLY CHAIN?

Yes, one of the topics at the conference is addressing that subject matter and how procurement fraud can be generally dealt with across the different sectors of government. Here are three examples to note which the subject matter experts would explain at the conference.

1. Appointment of a preferred single source contractor on preferential terms. No competition.
2. Selective Tendering. Politicians submit a list of contractors to be invited to bid on a project and collusion sets in. After the evaluation of bids, the final selection is still influenced by political forces.
3. Evaluation criteria intentionally designed and tailored to favour a preferred contractor and disqualify other bidders.
4. Lack of comparative analysis to see how others, locally or internationally, have addressed the same issue.

OTHER ASSOCIATED CHALLENGES

The industry’s dependence on imports and lack of adequate funding could affect its financial stability. Additionally, the steel industry requires a lot of infrastructure, including power, transportation, and water supply, which could be affected by climate change. The steel industry could also face financial risks if it fails to reduce emissions at the rate required to keep global warming below 2°C, as this could lead to carbon pricing and affect the industry’s profitability.

WHAT OF THE AJAOKUTA STEEL MILL?

I will address this in three tranches:

1. At the personal level. As a mechanical engineering undergraduate at Swansea University in the UK, in 1969, among other fellow students, I met four others who were sent to the University to learn steelmaking and Metallurgy. Segun Ogunsola was a postgraduate student sent by the Ministry of Mines and Power to study as he has been posted to Ajaokuta Steel. Justin Adigwe, Rahael Upaa and Abiodun Abe were sent there to study Metallurgy by Makeri Smelting Company, based in Jos. It shows the importance of hard Minerals to Nigeria and the efforts that were made to develop needed manpower. In those days Nigeria made more money from these hard minerals than oil and gas. We must revive this industry.
2. Again, as a facilities engineer at Shell, I worked at the Oben Gas Plant from 1979 to 1982 to deliver gas to Ajaokuta. NNPC built the gas pipeline in 1978, and it was fed with gas from associated gas facilities from Oben Field in Edo State. I also worked on the gas supply for the Aladja Steel Plant in Delta State and increased power generation to serve it from NEPA’s Delta IV Generating Plant. So, it showed we had good plants, which have been neglected and we must revive them to meet the needs of our dear nation and improve the quality of life of the citizens by productive enterprise.
3. As a professional Nigerian, who grew up in private industry, with work stints in other countries of the world, I would like to see my nation grow by making full use of its natural and human endowments to provide a good life for its citizens, other Africans and indeed to help the world be a better place for all. For this to happen, an active steel production sector using available natural resources, expertise and cooperation with countries that have passed through this way, we can do it. All the ingredients are available in abundance. We need a good chef to produce a splendid repast.
4. Our previous efforts to develop the steel sector of the economy did not work. We should hold a post-mortem of these misadventures to learn, not to castigate. We should not repeat these mistakes.

The management of the new steel sector of the economy must be given a clear set of targets and business results and goals to meet over a time scale. They must be allowed the freedom to set up a roadmap seek guidance in achieving what has been set and use their imagination and professional input to meet set targets. Let us go for it.

ABOUT PEEF

Vision: To be the leader and most respected organisation championing skills development in Africa.

Mission: To increase skills proficiency and productive work within the African workforce.

Core Values: Professionalism, Integrity, Productivity, Excellence, and Sincerity (PIPES).

PEEF is a platform of professionals, local and international, from a wide range of discipline backgrounds, assiduously seeking to advocate the right policy and delivery systems that will propel our country Nigeria, towards achieving the best quality of life for our citizens, and indeed all Africans by enabling proper utilisation of our available resources, human, natural and cultural.

Objectives:

a) Collate and disseminate relevant up-to-date information on skills management trends and challenges to facilitate critical discussions and proffer far-reaching practical solutions.
b) Develop and design high-impact techniques for enhanced productive work in Nigeria towards improving the Gross Domestic Product (GDP) of primarily Nigeria and Africa at large.
c) Increase/improve the level of skills management awareness within the workforce in Nigeria and Africa.
d) Support skills development initiatives for the workforce in Nigeria and Africa.
e) Promote Africa as a source for a valued skilled resource pool.

IMPACT OF PAST CONFERENCES

We have held six annual conferences in which strategic themes addressed issues critical to nation-building. PEEF recommended practical solutions to guide public policy formulation and implementation, which were shared with the relevant federal MDAs. The conference themes were:

a) Framing strategic skills management issues for accelerated development in the transport sector (2017).
b) Education vs Reality: Bridging the gap between the Education Systems and the Real World (2018).
c) Universal Health Coverage (UHC in Nigeria: Challenges and Expectations (2019).
d) Strategic Leadership for Economic Rejuvenation (2020).
e) Skills Readiness for Development of the African Economy (2021).
f) Universal Health Coverage (UHC) in Nigeria: NHIA Prospects and Challenges (2022).

PEEF organised virtual talks with subject matter experts to address development gaps in human capital management, technical vocational education training (TVET), agriculture, industry safety and financing housing deficit in Nigeria.

The communique from these events was discussed with relevant ministries and policymakers that attended and was published for all to avail themselves of the contents. We have seen parts of our recommendations taken in for example the former Secretary of NBTE (Masud Kazaure) was amongst us, and the revised technical cadre certification included some of our recommendations. Same with our recommendations on public health issues that were presented directly to Dr Osagie Ehanire, former Minister of Health.

We are working to seek a formal way to ensure advice from organisations like ours is published and properly articulated with both the Executive and National Assembly. As an NGO, we also seek to work with high-value and high-visibility individuals local or in the Diaspora and International organisations and personalities to provide a sound basis for development in our country Nigeria.

CHALLENGES ASSOCIATED WITH PEEF ANNUAL CONFERENCES

The PEEF Annual Conference (PAC) has held three times in-person attendees and three times virtual attendance with local and international audiences. Funding has been a major challenge to in-person conferences since, as a nonprofit organisation, the PEEF relies on donations from its members and well-wishers. The payment of membership dues has not been regular as the backlog of pending dues is long and growing.

The reliance on volunteering by members has also been a challenge as most initiatives were not supported to completion. The members are mostly subject matter experts in their respective disciplines/ professions.

Another challenge is the consideration of PEEF recommendations by federal MDAs, as there is no compulsion to listen to external advice, no matter how relevant. It requires a level of external and well-grounded competence to get the civil service and agencies to understand there is a huge wealth of knowledge, competence, and capability in Nigerians from all walks of life. There is experience in industries, international organisations and private sectors waiting to be tapped almost free of charge to help move this country forward on the right track. They only need to ask for it to be made available. When done, we will be happy to see such policy advice used effectively and feedback mechanisms given to enable improvements to be accepted.