A former Senior Special Assistant to the President on Financial Sector Development, Biodun Adedipe, has expressed misgivings about the Federal government’s assurances that the rehabilitation of the Ajaokuta Steel Company would soon be completed.
The steel plant has not been able to start operations because, according to Adedipe, it was a victim of international politics.
Adedipe, who spoke recently in a monitored broadcast, said Nigeria needed courageous leaders to actualise the rehabilitation of the foremost steel plant in Nigeria to stimulate wealth creation.
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The former Presidential aide, who recalled working with Federal Government and World Bank consultants on the company some years ago, regretted that the plant was yet to commence operations and impact the economy.
He said, “Incidentally, the Ajaokuta project is what I am involved in back in 1988 when we had the Federal Government and the World Bank do a study on the steel sub-sector in Nigeria.
“As far back as 2004, I recall clearly writing a memo to the Presidency that this project was over 90 per cent completed. What we had then was only $500 million, and this was the time we had external reserves of about fifty something billion dollars.
“I wrote a memo and said that if the management of that company pays the $500 required, it is to get feedstock, as they call it, that will last them for nine months within their cyclr. And once they get that, they don’t need support again and the plant will become independent.”
“Don’t also forget there’s an angle to international politics in it. The politics of it also is that you cannot afford to hand over Ajaokuta to a foreign company. Remember, the last foreign technology in Ajaokuta is from Russia.”
He stressed that until Ajaokuta was completed, Nigeria cannot get value in the steel sub-sector.
Nigeria is yearning to turn around its automotive sector with the National Automotive Policy. However, lack of a breakthrough in the steel sub-sector remains a major impediment.
Findings have shown that government’s failure to revive steel companies and equally develop indigenous petrochemical plants have stalled the local automotive development agenda, leading to loss of $10 billion yearly to large scale importation of fully-built motor vehicles and allied components used for local assembling.
Steel accounts for about 60 per cent of raw materials used in automobiles, while petrochemicals are used for plastics and foam used in vehicle interiors.
Nigeria’s imports of iron and steel was $1.18 billion in 2020, according to the United Nations COMTRADE database on international trade.
This amount of foreign exchange spent on import puts pressure on the scarce foreign exchange and weakens the naira, analysts say.
As a result, lack of a functional steel plant has seen manufacturers heavily dependent on imported spare parts, put at 80 per cent of the entire vehicle components and valued at over $10 (about N5 trillion) in capital flight yearly.
The Federal Government had introduced the National Automotive Industry Development Plan (NAIDP) in 2013 to revive local assembling and car manufacturing over a period of time.
But more than seven years after, the local manufacturing dream remains aspirational, as most notable automotive firms do assemblage of imported and completely knocked down and semi knocked down equipment in their vehicle firms.
Meanwhile, the Minister of Mines and Steel Development, Olamilekan Adegbite, recently stated that following President Muhammadu’s Buhari’s visit to Russia in 2019, all hope was not lost in reviving Ajaokuta Steel Company.
Giving updates in a recent Ministerial briefing in Abuja, Adegbite said, “In October 2019, Nigeria’s President Muhammadu Buhari and Russia’s Vladimir Putin met at the Russia-Africa Summit in Sochi and agreed to revive the uncompleted Ajaokuta steel mill.
He noted that constraints posed by the outbreak of the COVID-19 global pandemic delayed the take-off of the project.
The Minister, however, expressed concern that the steel company may not be fully revamped under the current administration, as earlier promised.
He said, “I’ve said it before, when we came back from Russia. Yes, I went to the public and said, ‘look we will deliver Ajaokuta before the end of this tenure.’ And I pray that I’ll have a chance to go back and apologize and explain what happened to the people before I leave office.
“It is due to no fault of ours. Everybody was ready to go, but unfortunately, COVID came in. So, it is a force majeure,” Adegbite said.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.