REJOINDER TO PUNCH NEWSPAPERS EDITORIAL OF 18TH DECEMBER, 2023 TITLED “Ajaokuta Steel Company is Moribund, Just Sell It”
By Anthony Madagua
I read the above referenced editorial of the respected Punch Newspapers of 18th December, 2023 and find it useful to write a rejoinder especially against the backdrop that your media house is one of the most respected print media in the country and could mislead its wide readership with this uninformed opinion.
Firstly, the opinion that workers at Ajaokuta “have been collecting salaries without doing anything” is erroneous. They engaged in preservation program for such plant which is very tasking. For example, the numerous rotating equipment in the steel plant with their unique bearings and features need to be turned manually to avoid their being rested in one position for months and years. Such preservation protocol amongst others will inform any serious interest and value for such steel plant.
Secondly, there is the undeniable fact that steel industry is the bedrock of industrialization of any nation. Steel is technology, steel is politics, and steel is power. No nation has ever industrialized without steel hence all the emerging nations in the last 4 decades have ensured the development of their steel industries using it as pedestal to become economic giants- South Korea, China, India, Singapore, Saudi Arabia, South Africa etc.
Thirdly, the opinion expressed clearly ignored the history and antecedents of these emerging economies of the World.
The government of South Korea developed its steel industry based on the philosophy that “sectors such as iron and steel, petrochemicals are seen as the backbone of a modern industrial economy, hence they continued to undertake risks that cautious entrepreneurs would tend to avoid by providing heavy capital investment in these industries” which was largely responsible for the Korean Miracle”.Lee Kuan Yew in his book “From Third World to First” wrote “The government took the lead by starting new industries such as steel mills (National Iron and Steel Mills) and service industries such as a shipping line,…” The Indian government initially established 3 steel plants in Bhilai, Durgapur and Rourkela within the the same period to drive its industrialization. The government has since built other plants at Bokaro and Vizhag. The lattersuffered initially a similar fate like our Ajaokuta Steel but Indian government persevered, completed the steel plant and has since expanded the installed capacity twice. Are we then surprised that India almost on the same level of development with Nigeria in the early 70s has grown to become the 4th most industrialized nation in the World?
Saudi Arabia’s Hadeed Steel Plant built and commissioned by the same consortium of companies like our former Delta Steel in same 1983 has been expanded to over 5million tons per annum from its original installed capacity of 800,000 tons per annum.
It is worth mentioning that the only common index among the first 20 economies of the world is that “all are serious steel producing nations”. Hence, anyone thinking of displacing any of these nations to join the first 20 economies without a virile steel industry is day-dreaming.
In 2015, PricewaterhouseCoopers undertook a study triggered by the emergence of state-owned enterprises (SOEs) in global economy and came up with a position paper ”State-Owned Enterprises- Catalysts for Public Value Creation?” Examples of such SOEs include Saudi Aramco, SABIC, Indian Oil and Gas Corporation, China Railways and many more.
These SOEs feature in Fortune 500 Global List of Companies and Forbes 2000 List of Global Companies. Some of the SOEs are presently in Nigeria doing profitable business and even participating as core investors in our privatization program, yet we delude ourselves to say government has no business in business.
Fourthly, the sordid outcome of the privatization program of the former government-owned steel plants in Nigeria cannot be said to have informed this editorial opinion which is unusual and quite curious considering the pedigree of Punch Newspaper. Today, none of these privatized steel companies are working. The unguided privatization of the former Delta Steel Plant without consideration for the three inland rolling mills at Jos, Katsina and Oshogbo for their major raw materials signposted their death knell post privatization. Can we say that the GENCOs and DISCOs have lived to expectations after their privatization?
Many companies that were paying dividends before their privatization stopped paying any dividends after privatization. So, the issue is more of corruption both in private and public companies in Nigeria and we should stop opinionating that government has no business in business in as much as we are inviting Aramco to come to Nigeria to assist our NNPCL. The issue is therefore is to encourage government to provide needed leadership to make our industries work in Nigeria which I believe this government is ready to do. Privatization should be driven to enhance performance and not as an escape route to discard plants especially strategic ones.
I urge the editorial team to read the book ”Who Says Government Has No Business in Business” by Anthony Madagua (2015) and many of such books and exposé so that they will be informed on how a state-owned corporation in India manages and operates 10 numbers out of India’s over 20 refineries profitably. Our media should continue to demand that our leaders provide the required leadership to have global companies like ARAMCO, POSCO, Indian Oil and Gas Corporation, Steel Authority of India, Baosteel of China, Korea Electric Power Corporation etc. instead of postulating on opinions that have no scientific basis, data or credence.
Anthony Madagua is an industrial analyst writes from Abuja.
tony_madagua@yahoo.com
Sir, your rejoinder to the Punch Editorial on one of the nation’s steel companies is very apt and directional. Government upon government has bought into this misconception of government enterprises ‘cannot work’ having spend billions of naira to put them in place. This is the song that has driven us backward and caused us to wholely depend on foreign products. I’m only flabbergasted that the Punch with robust and well informed journalists could put up an argument of the nature to wanting the Federal Government throw away the Ajaokuta just like that.
You have deeply elaborated in your book that Government has business in business and you have remained an unwaiver apostle of government being in business. In this regard, I qeued behind you. One question for the Punch Editorial is, does it want the Ajaokuta or Delta Steel to be given to one of its cronies?