Reviving the Dying Paper Industry

Stakeholders bemoan the comatose state of the Nigerian paper industry and made case for its resuscitation because of the critical role of paper in the country’s economy, writes Dike Onwuamaeze

Industrialists, economists, academicians and other stakeholders that gathered at the Oriental Hotel, Lekki, Lagos State, on Thursday, April 16, for the Business Roundtable and Inauguration of the World Envelopes Day that was organized by the FAE Limited to mark its 50^th anniversary took time to brainstorm on the state of the paper industry in Nigeria and contemporary issues affecting the industry.

The Managing Director and CEO of FAE Limited, Mrs. Funlayo Bakare-Okeowo, observed that in recent years, the global push towards a paperless society, especially the rise of digital communication, has posed significant challenges to traditional mediums such as newspapers and postal agencies

She insisted that the world should not give up on paper because it is a bio-degradable product. In her welcome address, Bakare-Okeowo said that initiatives like the World Envelopes Day and business roundtable would “reaffirm our dedication to fostering collaboration, promoting best practices, and embracing the transformative power of technology to propel the paper industry to even greater heights.”  

On hand to set the tone for the day’s discussion was a notable economist and the Founder of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, who delivered the key note address on, “The Pivotal Role of the Paper Industry in the Nigerian Economy.” 

Yusuf stated that there is need address as a matter of urgency the collapse of the upstream segment of the industry in order to revive the Nigerian moribund paper industry.

He said:   “We should address as a matter of urgency the collapse of the upstream industries in the sector.  I am referring to the paper mills that have become moribund.

“The privatisation of the Jebba Paper Mill, Iwopin Pulp and Paper Company in Ogun State and the Nigeria Newsprint Manufacturing Company should be urgently revisited.

“This would make the raw materials for the downstream paper industries more accessible and more affordable.  It would also ease the pressure on our foreign exchange market.”

He also made case for the prioritisation of use of bamboo products in the paper industry. “Bamboo products are eco-friendly, sustainable, and responsibly sourced.  Bamboo plants grow very quickly even without the use of pesticides, excessive water or care and regenerates very fast,” he said.             

He also argued that major government’s agencies that have huge budgetary allocations for expenditure on papers, envelopes and other paper products should be compelled to patronise domestic paper products producers and service providers such as printers and publishers.

“In particular the idea of printing books, ballot papers, exercise books, currency and security documents outside the country should be discontinued.  We have enough domestic capacity to handle such printing jobs. Besides such practice is a violation of the Executive Orders 003 and 005 of the federal government.  Offshoring of printing jobs or contracts should be discontinued without any further delay,” he said.

Yusuf posited  that the practice of setting up printing press by states and federal governments is an anticompetitive practice that should be discontinued. 

He said, “I am proposing that we put an end to this practice in the interest of fair competition. Printing press currently owned by governments should be privatised. A printing press is not a social service or a strategic or security enterprise. There is, therefore, no compelling argument for governments to own printing press and creating unfair competition with private investors in the printing industry. 

“While private sector printers are sourcing funds at above 30 per cent, their competitors in government are enjoying massive subsidy and getting funding from government budget.  Such practice is in conflict with the principle of level playing field and fair competition.”

 NIGERIA PAPER INDUSTRY

Yusuf noted that the history of the Nigerian paper industry was that of a demonstration by the country’s founding fathers’ vision and exemplary commitment to resource-based industrialisation, backward integration and self-reliance. 

This vision birthed a vibrant pulp and paper industry between the late 1960s and early 1990s. These were upstream industries providing the intermediate inputs for the downstream segments of the industry.    

 Then, Nigeria was even exporting paper products to countries in the West African sub region and beyond.

The first paper mill, the Nigeria Paper Mill Jebba was commissioned in 1969.  The Iwopin Pulp and Paper Company (IPPC), Ogun State was commissioned in 1975.   The Nigeria Newsprint Manufacturing Company Oku Iboku (NNMC), Akwa Ibom State, was commissioned in 1986.  

For several years the Jebba Paper Mill was producing different varieties of paper and corrugated cartons of up to 65,000 metric tonnes annually. The same was true of IPPC and the NNMC.  These were great successes in backward integration, which made life easy for printing, paper, publishing and packaging companies.

Regrettably, by the early 1990s, all the paper mills have become moribund.  Soon after these paper mills were privatised, but the situation became worse as the privatisation could not save the situation. It actually accelerated the collapse of the mills, with allegations of asset stripping and other adverse developments post privatisation.

This development made the Nigerian paper industry to be entirely import dependent. This was the beginning of the numerous challenges of the sector, as the industry became highly vulnerable to exchange rate volatilities and foreign exchange market liquidity issues.

The foreign exchange crises made the situation even worse, within many papers industry investments going under.

The story of the paper industry underscored the reality of the shortcomings of the many privatisation processes in the country and the progressive decline in the quality our bureaucrats and political leadership.  Only very few of our privatisation schemes were really beneficial to the economy.

All these have whittled down the contribution of the paper industry to the country’s economy.

PAPER INDUSTRY AND ECONOMY

Yet, the paper industry has a profound economic impact across all sectors of the economy. The value chain is even more impactful with millions of jobs created in the paper industry value chain. This includes pulping, paper production, printing, marketing, logistics etc.

As at 2023, the value of the Nigerian paper industry was N398.8 billion, according to the National Bureau of Statistics. The value was N365 billion in 2022; and N363 billion in 2021; and N255 billion in 2020.  This is a significant contribution to our GDP.  However, when compared to the size of our economy which is estimated at N230 trillion as at 2023, it still very small.

The reality is that the growth in digital technology has greatly disrupted the sector, especially as a mode of communication.  Nonetheless the sector had remained resilient and critical to the economy across all sectors.

The paper industry has been largely in recession because of the digital technology disruptions and other macroeconomic headwinds, especially relating to exchange rate depreciation, forex liquidity crisis and high cost of fund and energy cost escalation. The sector contracted by 1.47 per cent in 2022; it contracted by 0.56 per cent in 2023.

“This data underscores the imperative of policy measures to fix the current challenges facing the industry, both from the monetary, fiscal policy, structural and regulatory perspectives.” Yusuf said.

The Director General of Manufacturers Association of Nigeria (MAN), Mr. Segun Ajayi-Kadir, stated that the paper industry has been operating on the margins and contributed only 0.17 per cent of Nigeria’s GDP.  

Even in Africa where Nigeria is the fifth largest producer of paper, the country only contribute three per cent while South Africa and Egypt are controlling 65 per cent and 20 per cent respectively of the industry.

“You can imagine that we have 200 million plus people, we have the forests, we have the capacity to grow the sector. But like the keynote speaker eloquently illustrated, we lost three mills and had to privatise but the process was skewed and did not favour continuity, resilience and productivity. It did not succeed like so many other government ventures,” Ajayi-Kadir said.  

According to him, it does not only take a good entrepreneurship to succeed. It also required strong institutions and leaders that are responsible and have the foresight for the private sector to thrive.

He said: ““The paper industry is a sector that have good prospect but it needs supportive policies to aid its growth.

“The environment in which we are operating does not have the macroeconomic and infrastructure support that is need for growth.  We need to start to look for an advocacy platform that will be able to engage and collaborate with government so that we will be able to place Nigeria where it should.”

Ajayi-Kadir noted that the issue of privatisation has always been a dilemma. “Everyone would assume that once the private sector steps in to take over a government owned enterprise it is going to bring in efficiency, effectiveness but our own story like in so many areas has always been that we have a way of messing it up.

“Either we sell to cronies that do not comprehend what the challenges are as we follow advices from international agencies that pressured us to take some of those actions in a hasty and incoherent manner that almost look like they are designed to fail.”

The director general of MAN also said that he heard a few years ago that there was going to be a probe of the privatisation of the paper mills by the National Assembly but is not aware of the outcome.

“I do not have any information about how it went. And you also know that when the National Assembly says that it wants to do something they will also its members will report to their constituencies, godfathers and pubic sentiments. So I do not know what must have submerged that conversation.

The Chairman of Biodiversity Mnagement, University of Ibadan, Professor Abiodun Oluwafemi Oluwadare, said that the process the paper industry was privatised was completely wrong. According to Oluwadare, experts were not involved in the process and government sold the paper mills to people who did not know anything about the industry.   

But a Professor of Leadership and Entrepreneurship, Professor Rotimi Oladare, said that revisiting the sale of the paper mills has been overtaking by time. “Investigating and reversing the sales of the mills are now belated steps. Iwopin has been moribund for almost 30 years. Are you probing the obsolete equipment that has rotten away? Or the trees that have grown and are not treated?” he asked.