Moribund Paper Mills And Industrialisation Plan

Nigeria spends about N60 billion annually on importation of paper, according to data from the Raw Materials Research and Development Council (RMRDC).

The papers constitute raw materials that boost production in the real sector to grow the gross domestic product (GDP). These include the manufacturing, packaging and publishing businesses. The small and medium enterprises (SMEs) also engage in the consumption of the commodity, including light industry for paper conversion.

Nigeria used to have vibrant paper mills. As part of its strategic plan for pulp and paper production for domestic and export markets, past governments commissioned the Nigeria Paper Mill, Jebba, Kwara State, in 1969; Iwopin Pulp and

Paper Company (IPPC), Ogun State in 1975 and the Nigeria Newsprint Manufacturing Company (NNMC) in Oku-Iboku, Akwa Ibom in 1986.

The original plan was for the three pulp and paper mills to provide tonnes of different papers in their thousands every year. The overall performance of the paper mills was encouraging.

As of 1985, the Jebba mill was producing 65,000 tonnes of kraft paper, liner and chipboards, sack kraft, and corrugated cartons per annum. The Iwopin facility, which was billed to produce 38,000 metric tonnes of bleached short fibres and 65, 000 metric tonnes of fine writing, printing papers annually, performed above 96 percent, according to data from the Bureau of Public Enterprise (BPE).

Likewise, the Oku-Iboku factory, which had an installed capacity of 100,000 metric tonnes of newsprint per annum, produced an average of 25,440.5 metric tonnes between 1988 and 1992. During these years, the

NNMC was producing international standard newsprint which was exported to the United States of America, Canada, Ghana, Sierra Leone, and many other countries. The company reduced Nigeria’s importation of newsprint up to 12.5 percent in 1987.

However, by 2002, the three mills had stopped working. They were killed by mismanagement and corruption – the main virus that attacks governmentowned enterprises. Compounded by shortage of funds to import raw materials, machinery parts and pay workers’ salaries, the facilities began to collapse until they eventually turned into liabilities.

In a bid to revive the ailing companies, the Federal Government made moves to privatise them through the Bureau of Public Enterprise (BPE), starting from the mid-2000s. But the exercise ended in a failure.

For instance, the government sold 90 percent of Oku-Iboku’s shares to Negris Holding Ltd, an indigenous engineering company and affiliate of the Energy Company of Nigeria (ENCO) in 2008. The Asset Management Corporation of Nigeria (AMCON) eventually took over the facility of Negris, which was heavily indebted to a Nigerian deposit money bank.

Similarly, the BPE formally handed over the Iwopin mill to Beulah Technical Company Ltd (BETCO) as the core-investor in March

2014, offering it 100 per cent of the company’s shares. It turned out that the privatisation process was faulty and it failed to yield the desired results. The companies that acquired the facilities were accused of engaging in asset stripping without government intervention.

The National Development Plan (NDP) 2021-2025 recently inaugurated by President Muhammadu Buhari, which is meant to launch Nigeria into the league of highly industrialised nations of the world, calls for urgent attention to the paper mills industry. Nigeria prints over 1.2 million books annually. Experts estimate that the country loses about N800 billion every year when smuggling and finished paper products imported in the form of books, electoral materials and packaging are taken into account.

The Plan acknowledged that Nigeria’s manufacturing sector is among the largest in Africa, with numerous opportunities. However, the sector had continuously faced several structural challenges, which had caused many manufacturing firms to shut down, limiting growth and investment inflows into the industry.

Indeed, the Plan submits that issues, such as power supply, logistics bottlenecks, limited credit availability and scarcity of foreign exchange have all affected the sector’s performance over time. As a result, the growth of the manufacturing sector has been stagnant (average of -0.6 percent between 2015 and 2019), while capacity utilisation has remained unimpressive.

Manufacturing is critical to Nigeria’s industrialisation and advancement towards becoming a leading global economy in the coming decades. Earlier national development plans recognised the potential of the manufacturing sector, not only as a major source of economic growth, but also an important driver of concentric economic diversification and structural change.

The NDP and the African Continental Free Trade Agreement (AfCFTA) offer opportunities to embark on a strategy for a robust paper mills industry. We therefore urge the Federal Government to create an enabling environment for the revival of the paper mills. This includes a critical review of the post-privatisation status of the old paper mills towards rehabilitating those that can still be salvaged or open another vista that will attract competent investors.

There will be enormous business opportunities in printing, publishing, packaging, conversion, pulp and paper making. The various government intervention programmes towards empowering the SME operators would involve high consumption of paper, especially for export.

The earlier success story of the now moribund paper mills attests to Nigeria’s huge opportunity for paper mill business. A revival of the paper mills will enhance exporters’ capacity to access specific export markets in the EU, US, Asia and Africa.

We urge the National Assembly and the Senate’s Committee on Privatisation to hasten action on the investigation into the activities and operations of the paper mills and advise the government accordingly. The Ministry of Industry, Trade and Investment and the Bureau of Public Enterprises (BPE) should engage appropriate stakeholders for the same purpose.

Depending entirely on imported paper to grow the economy will not only aggravate costs, but also hinder the objective of the nation’s industrialisation plan.

The earlier success story of the now moribund paper mills attests to Nigeria’s huge opportunity for paper mill business. A revival of the paper mills will enhance exporters’ capacity to access specific export markets in the EU, US, Asia and Africa