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You are here:Home>>Strategic Research & Analysis>>Joblessness, bane of mismanagement of Public industries
Saturday, 01 October 2011 15:23

Joblessness, bane of mismanagement of Public industries

Written by Uduma Kalu

Nigeria, the collapse of infrastructure and pubic sector industries

PRESIDENT Goodluck Jonathan on August 5 inaugurated a council to look into public companies acquired but mismanaged by private investors. The president had frowned at the way the privatised companies were being mismanaged, saying, “these enterprises have been privatised and over the period, some of them over 10 years, are still dead”, even though government spent huge amount of resources on setting up the enterprises.

The idea was not just meant to make money for the government but to create jobs and wealth for the people. Earlier in July, a motion was moved at Senate to probe the Bureau of Public Enterprises, BPE, over its failure to turn around the fortunes of privatised federal government-owned companies.

The motion said,”… there are massive loss of jobs and colossal loss of economic returns to the Nigerian economy. For example, the privatised steel sector that used to employ up to 20,000 workers, now have less than 4,000 after the exercise. The Electricity Meter Company of Nigeria, Zaria that was privatised in December 2002, recently fired about 90 per cent of its workforce.”

The senators listed The Daily Times Plc; the Electricity Meter Company of Nigeria, Zaria, the Peugeot Automobile of Nigeria, PAN as some of the companies that are not working. But this trend began 113 years ago, with the electricity industry. There are also companies, some not even privatised and are also not doing well. They range from agriculture to manufacture, transport, steel, telecommunications etc. Below are some of the industries.

Nigeria Airways

Nigeria Airways Ltd., more commonly known as Nigeria Airways, was founded in 1958 after the dissolution of West African Airways Corporation. It was wholly owned by the Government of Nigeria, and served as the country’s flag carrier.

The airline was headquartered in Abuja. It had its heyday in the early 1980s, just after a KLM team two-year-management period; at that time, its fleet comprised about 30 aircraft. It ceased operations in 2003. Plagued of mis-management, corruption, and overstaffing, at the time of closure, the airline had debts for more than US$ 60 million, a poor safety record, and its operative fleet comprised a single aircraft flying domestic routes as well as two leased aircraft operating the international network. It was succeeded by Virgin Nigeria.

Initially, the airline was a tripartite entity in which the Nigerian government, BOAC, and Elder Dempster Line all had a participation. The Nigerian Government held a controlling interest of 51% of the shares that was boosted to a 100% on 1 May 1959. On 22 January 1971, the company was rebranded as Nigeria Airways.

Nigerian National Shipping Line

Nigeria formed the NNSL in 1957. At first, 33% of the capital was held by the Elder Dempster Line and 16% by the Palm Line, both British companies, while the Nigerian government held 51%. In 1961, the Nigerian government acquired all the shares. The NNSL started operations in 1959 with three vessels. By 1964, it had grown to a total of 16 vessels.

The public company was assisted by private businessmen. The tycoon Sir Louis Ojukwu was an early member of the board, dying in 1966.

Decline

In 1988, the National Maritime Authority granted six Nigerian shipping lines “national carrier” status, including the state-owned Nigerian National Shipping Line. The NMA planned to extend this status to more domestic companies so as to reduce control of trade by foreign-owned lines.The Shipping Policy Decree of 1987, which established the NMA, gave approval for a 50-50 share between foreign and domestic lines for non-conference cargos.

However, in 1988, the 24 ships of Nigerian national carriers including the NNSL took only 11% of the cargoes at Nigerian ports. The NNSL and the private companies suffered from financial problems and lacked the facilities needed to attract cargoes. In the 1990s, several of the company’s vessels were seized in different parts of the world for alleged breach of contract and unpaid bills.

The NNSL was liquidated in September 1995. Its assets were assumed by the newly formed National Unity Line (NUL). The NUL, fully owned by the Nigeria Maritime Authority, began commercial operations in July 1996 as Nigeria’s national flag carrier.

The NUL had just one ship, MV Abuja. In August 2005, the government put the NUL up for sale. The company now had no vessels, but owns a shipping licence. In July 2010, it was reported that the Nigerian Maritime Administration and Safety Agency, the successor to the NMA, had completed arrangements to establish a new national shipping line for Nigeria. A fresh attempt was made to relaunch and sell the NUL in 2011.

Nigerian Railway Corporation

The Nigerian Railway Corporation is 112 years old and it runs a unilaterally designed track system of 1067mm cape gauge. Railway construction was started by the British colonial government in Nigeria in 1898 from Lagos in the Southern Protectorate. The Nigerian Railway Corporation (NRC) was established by an Act of Parliament in 1955 for the main purpose of carriage of passengers and freight in a cost-manner.

In 1983, NRC carried 15.11 million passengers, generating more than N29 million (80 naira = US$1), but the levels had nose-dived by 1993 to about 1.50 million passengers, generating less than N15 million. In 1993, NRC hauled only 106,000 tonnes of freight to earn N25. 84 million.

This disheartening downward trend, which reached an all-time low in 1993, was the result of government neglect—almost no government funds were released to the railways during this period. Operations were paralysed and NRC was forced to prune its workforce from 40,000 staff in 1984 to 23,800 in December 1992, but even this smaller number of staff was owed 9 months salary.

The system was on the verge of total collapse, NRC properties depreciated greatly in value and some were vandalized beyond repair. This marked the beginning of the end of an effective railway network. Presently, NRC has a staff strength of about 14,000.

Similarly, at independence in 1960, NRC had 257 locomotives, 339 carriages and 3885 freight wagons to serve an estimated population of about 21 million people over 3505 route_km. However, by 1995, the rolling stock levels had dropped to 70 locomotives (with 50% daily availability from 1995–96), 150 carriages and 1500 freight wagons to serve an estimated population of about 88.5 million people.

NRC went more than once into bankruptcy during the last 20 years. Lack of maintenance on infrastructure and rolling stock and a high number of employees the railway produced huge deficits, not taken over by the state.

CCECC and NRC Rehabilitation Project 1995–99

With a $6-million contract, NRC now with 41 locomotives has resumed Jos–Port Harcourt, Abeokuta–Kano, Lagos–Idogo services, as well as Lagos mass transit and other suburban commuter services that had been abandoned for the past 15 years.

However, the impact of this project on train speeds is yet to be noticed.

Youths seeking for jobs

Ajaokuta Steel Company

Decree No. 19 of 14th April, 1971 gave legal backing to the establishment of erstwhile National Steel Development Authority (NSDA) that was charged with developing iron and steel production for the country. Report says since Shagari’s ouster from office, no reasonable progress has taken place in the steel sector. Russians facilitated the Ajaokuta steel project, which has gulped $4.6billion. Today, it is in ruins and remains a shadow of its potentials.

In a chat with journalists in Lokoja recently, Minister of Information and Communication, described the Ajaokuta project as a protracted national problem. “It is an example of how a national leadership that lacks direction can ruin its own nation. You award contract in Ajaokuta, and the power plant is executed by Russians; the civil work done by France and so on. From there, you would know there is a problem. Ajaokuta is a problem we have inherited and we are looking at it.”

A recent visit to the site revealed that virtually all the implements, plants and the various departments in the company located at the bank of River Niger in Kogi State are 100 per cent ready for full production; yet, it has never been put into active use. During a recent visit of the Presidential Projects Assessment Committee (PPAC), which was led by former FCT Minister, Architect Ibrahim Bunu, Architect Yomi Awoniyi, Mrs. Funmilayo Oyeyipo and other members of the committee, it was identified that about $580million was required to give it a new lease of life and bring the ‘sleeping giant’ to attain the 1.3 million tones production capacity, for which only the first phase was built. Delta Steel Company (DSC) i also in comatose.

Nigerian Paper Mills, Iwopin, Oku Iboku

The multi-billion naira Nigerian Pulp and Paper Mill, Iwopin, Ogun State, may soo be consigned to the waste bin. The paper mill was established by the Murtala/Obasanjo administration in 1976 while the Nigerian Newsprint Manufacturing Company, Oku–Iboku, Akwa Ibom State, was established by the Babangida regime but all have gone comatose. Balogun urged the Federal Government to resuscitate the paper mill in the interest of creating jobs. The mills were to cushion the effect of over dependence on imported papers especially by the media industry. The project had suffered so many setbacks and neglect by subsequent administrations in the country.

Peugeot Automobile Nigeria Limited

Even though there is the National Automotive Council, charged with the duty of ensuring the survival, growth and development of the Nigerian automotive industry using local human and material resources, Nigerian roads are littered with imported second_hand cars. Yet, Automobile Nigeria Limited, PAN, was incorporated in December 15, 1972 as a Limited Liability Company with an authorized share capital of N3m.

Twenty_seven months after incorporation, then head of State, General Yakubu Gowon, commissioned the assembly plant on March 14, 1975, though full operations had commenced on March 2, 1975. In 2009, reports said PAN, in danger of collapse due to lack of government patronage, and the high cost of doing business, planned to lay off 5,000 of its workers. From a record production of 264 cars per day in the 80s and great strides made in developing local content, and producing/assembling cars fit for Nigerian roads, PAN went down to the production of a mere 22 cars per day. Its production lines are under-utilised, they are deteriorating.

ANAMMCO

Anambra Motor Manufacturing Company (ANAMMCO) , once jointly owned by the Nigerian Government and the Mercedes Benz of Germany, South Eastern states and some Nigerians, used to assemble Mercedes Benz trucks, creating jobs for many, but today, the company has since closed shop. By 2008 it could not even pay the retirement benefits of its workers.

The Volkswagen of Nigeria

This company became a strong symbol of Nigerian industry and enterprise in the 70s. Nigerians embraced Volkswagen models -the unbeatable Volkswagen Beetle, the Igala, LADA and other brands, and like ANAMMCO, Volkswagen provided employment for thousands. Now owned by Barbados Ventures Ltd, following privatization in 2006, VWoN is moribund. It no longer assembles any car; it is reduced to the importation of fully built-up vehicles from Europe and Asia.

Agriculture

Nigeria’s agricultural import is over $4.2billion annually. This is for local consumption. The Group Managing Director of Oceanic Bank International Plc, Mr. John Aboh, in a lecture at the Private Sector Lectures Series of the Faculty of Management Sciences of the Benue State University in Makurdi, said Nigeria, “By the 2000s, Nigeria’s global share of exports of these crops was five per cent or less; today, Nigeria is a net importer of agricultural produce with imports (including wheat, fish, rice, sugar and others) totalling $4.2billion.” Also, Nigeria imports 1m tonnes of rice, valued at $700m or aboutN106 billion, from the Peoples Republic of Thailand every year. Nigeria is the second largest importer of Thai rice in Africa. What is the role of FADAMA, the river basin authorities, the ADP, the reasearch centres such as NIFORS said to be in its shadows, World Bank agricultural projects? Why the huge expenses on agriculture?

Daily Times

The Daily Times of Nigeria is a newspaper with headquarters in Lagos, Nigeria. At its peak, in the 1970s, it was one of the most successful locally owned businesses in Africa. The paper went into decline after it was purchased by the government in 1975. What was left was sold to a private investor in 2004. Operations were suspended in 2007. As of April 2011 the fate of the paper was uncertain, being the subject of various lawsuits.

The Daily Times of Nigeria was incorporated on 6 June 1925 by Richard Barrow, Adeyemo Alakija and others. They printed the first copy as The Nigerian Daily Times on 1 June 1926.

The Federal Government of Nigeria acquired 60% of the Daily Times and its main rival, the New Nigerian Newspaper, on 1 September 1975. Circulation steadily declined as the administrations of Generals Ibrahim Babangida and Sani Abacha tightened control over the newspaper in the 1990s, and the public turned to livelier independent publications

Private ownership

The newspaper was mismanaged. On 16 December 1998, shortly before the return to civilian rule, hundreds of workers of the Daily Times began an indefinite strike because their salaries were five months in arrears. Under the civilian administration of President Olusegun Obasanjo, the Bureau of Public Enterprises started the process of returning the Daily Times to private ownership.

After a failed attempt at a public offer (IPO), the Daily Times Nigeria Plc was advertised for sale in 2003. In 2004 Folio Communications was approved as the preferred bidder, gaining control with 96.5% of shares. The sale process was confused, resulting in various lawsuits. Former employees did not receive their termination benefits. Later, Folio did pay some of the employees who had been laid off when the newspaper was closed in 2007, but many had not been paid by 2010 despite efforts by their Union to obtain the money owed them. Today, the print newspaper has still not restarted production.

Nigerian Refineries: Port Harcourt, Warri, Kaduna

Dilapidated infrastructure, ageing plants and a lack of investment have held back Nigeria’s refining industry for years, while militant attacks worsen the situation. The Port Harcourt Refining Company Limited (PHRC) is one of the 10 subsidiary companies owned by the Nigerian National Petroleum Corporation (NNPC). The refining complex is comprised of two refineries: the Old Port Harcourt Refinery (OPHR) with a processing capacity of 60,000BPSD and the New Port Harcourt Refinery with processing capacity of 150,000 BPSD. The combined total refining capacity of the complex is 210,000 BPSD. The company produces Liquified Petroleum Gas (LPG), Premium Motor Spirit (Gasoline), Dual Purpose Kerosene (DPK), Automotive Gas Oil (AGO), and Fuel Oils. Its facilities are located on the same site at Alesa_Eleme, some 25 kilometers East of Port Harcourt, the capital of Rivers State and occupies an area of about 900 hectares.

Nigeria imports 30 million daily litres of fuel for consumption. But the actual Nigeria’s demand is about 85,000 bpd more than the combined refining capacities of all the state_owned, state_run, poorly_maintained, and chronically_dysfunctional refineries at Warri (WRPC), Port Harcourt (PHRC), and Kaduna (KRPC), or about 230,000 bpd more than the quantity of crude oil (300,000 bpd) allowed by the Federal Government of Nigeria for domestic refining and consumption, or/and about 440,000 bpd more than the current ultra-low efficiency domestic refining operations in Nigeria, an NNPC officil said.

Refining below capacity

“Warri is up to 75 per cent and the rest are between 60 and 70 per cent,” NNPC spokesman, Levi Ajuonuma, said. “In another couple of weeks, we will be ramping up production. The key is pipeline security,” he added.

He admitted that the optimal level of operation by Nigeria’s four oil refineries stands between 60 and 75 per cent capacity. Nigeria is Africa’s largest crude exporter, shipping more than 2m bpd to thirsty consumers in the United States, Europe and Asia, but sub_Saharan Africa’s second largest economy has to rely on imports for 85 per cent of its fuel needs.

Power Holding Company of Nigeria

The history of electricity development in Nigeria can be traced back to the end of the 19th century when the first generating power plant was installed in the city of Lagos in 1898. From then until 1950, the pattern of electricity development was in the form of individual electricity power undertaking scattered all over the towns. Some of the few undertaking were Federal Government bodies under the Public Works Dept, some by the Native Authorities and others by the Municipal Authorities.

By 1950, in order to integrate electricity power development and make it effective, the then colonial Government passed the ECN ordinance No. 15 of 1950. With this ordinance in place, the electricity department and all those undertakings which were controlled came under one body.

The ECN and the Niger Dam Authority (NDA) were merged to become the National Electric Power Authority (NEPA) with effect from the 1st of April 1972. The actual merger did not take place until the 6th of January 1973 when the first General Manager was appointed. NEPA, from 1989, has since gained another status_that of quasi_commercialisation. By this, NEPA has been granted partial autonomy and by implication, it is to feed itself. The total generating capacity of the six major power stations is 3,450 megawatts.

In spite of considerable achievements of recent times with regards to its generating capability, additional power plants would need to be committed to cover expected future loads. At present, efforts would be made to complete the on_going power plant projects. Plans are already nearing completion for the extension and reinforcement of the existing transmission system to ensure adequate and reliable power supply to all parts of the country.

What is currently referred to as the Power Holding Company of Nigeria was formally known as National Electric Power Authority. For several years, despite consistent perceived cash investment by the Federal Government, power outages have been the standard for the Nigerian populace, however, citizens of the country still do not see this as normal.

Nigeria’s cement industry

The Federal Government had formulated a policy in 2001 whereby only manufacturers or those building local factories would be allowed to import cement. Between 2000 and 2006, Nigeria imported about 40million metric tonnes of cement at a cost of over $3bn, according to manufacturers. Some of the companies like the Nkalagu cement Company e dead or sold or working below capacity. Last year, the FG ordered Customs Service to approve the importation of 2.5million metric tonnes of bulk cement by six local manufacturers to cover shortfalls in cement supply for the second half of 2010, showing the state of the industry.

According to the Cement Manufacturers’ Association of Nigeria (CMAN) the main raw materials needed in cement manufacturing are abundantly available, dotting over 70 per cent of Nigeria‘s landscape. Last year, the demand for cement in the country was between nine and 10million metric tonnes while local production was about 5.7MMT, according to government’s projection. Government said cement manufacturing firms spent 40 per cent of their costs on energy, a situation that made their products uncompetitive with their foreign counterparts.

United Textile Mills Limited (UNTL), Kaduna

Prior to 1997, the Nigerian textile industry remained the second largest in Africa after Egypt’s, with over 250 vibrant factories operating above 50 percent capacity utilization. Then, the local textile market had a share of about 20 percent of Nigeria’s textile products with the balance of 80 percent being imported. As at 1980, the textile industry in the country could boast of over 125 textile factories but today only about 25 are still producing, as most of them have closed shop. For instance, Afprint, a once household name in textiles in Nigeria has since diverted to other business. The company is now selling cars.

Some of the once thriving textile firms in Nigeria that have closed down their operations are the International Textile Industry (ITI) with factories in Isolo and Ikorodu, both in Lagos, with 800 people losing their job, First Spinner Ltd, Ikorodu, Lagos, with about 500 employees; Bhojr Textile Industry with about 700 people out of jobs; Reliance Textile Ikeja, Lagos, with about 500 people sacked; Fahibdayekh and co Ltd in Kano, with more that 1000 people sent into the labour market and Atlantic Textile Mill in Lagos which finally closed down in 2008 with about 800 people losing theirt jobs.

Existing factories

The existing factories which have since been cutting down on jobs owing to inability to cope with high cost of production are operating at below installed capacity. The loss of job in the sector hit about 10,000 when the largest textile company in the country, the United Textile Mill in Kaduna State closed down with about 5,000 people sent to the labour market.

The Federal Executive Council under the Olusegun Obasanjo administration instituted a N70 billion Textile Bailout Revival Fund to inject life into the ailing textile sector with a mandate given to the United Bank of Africa (UBA) and the Nigeria Export Import Bank to source for and disburse the approved N70 billion to the stakeholders.

The disbursement of the loan was later to be handed over in March, 2009 to the Bank of Industries and government jerked up its total commitment to N100 billion. However, stakeholders seem to be divided over whether the N100 billion bailout funds would be able to revive the industry. The United Textile Mills Limited (UNTL), Kaduna, reportedly gained access to the fund to begin the renovation of its dilapidated factories. Other textile industries are also said have received money from the bail out fund.

 

Last modified on Saturday, 01 October 2011 15:36

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