Economics

Cement Glut Saves Nigeria N300bn

The glut in cement production occasioned by an increase in the production of the commodity as a result of the policy established by government has saved the nation N300 billion in foreign exchange (currency) that would have been expended on its importation.

The volume of production went up from mere 2 million tons in 2002 to an astronomical high of 28 million tons this year, thus making the supply to outstrip the demand.

Minister of Industry, Trade and Investment, Dr Olusegun Aganga stated this yesterday revealing that the saturation in the market has propelled the nation to resort to the exportation of the commodity, thereby fetching the country more money.

According to Aganga, who spoke to State House correspondents after meeting with Vice-President Muhammad Namadi Sambo on the fate of the Nigerian joint venture entity which the federal government has with the Benin Republic on Onigbola Cement factory in Benin Republic, the purpose of the parley is to ensure that the management and control of the factory should be as agreed with the Benin Republic government.

Aganga explained that:“there is no shortfall in terms of supply and demand,” considering the fact that if all the cement factories in the country are working in full capacity, “we will have 26-28 million tons of cement. That is much higher than the demand as of today.”

Consequently, Nigeria is now “exporting cement. In fact, if we need to supplement that again, this company that I was talking about in Benin Republic even though the capacity is only 500,000 they are actually importing to the northern part of the country a limited amount.

He added that  all the accomplishments had been as a result of the  government’s cement policy since 2002. “In 2002 we were producing 2 million tons of cement. Today it is 28.6 million. For the first time in 2012, the federal government did not issue any import licence for cement in this country. In the course of that we have saved the federal government at least N300 billion in what would have been used and that contributed to the significant fall in imports in 2012,” Aganga said.

Reeling out figures, the ministers said import of the commodity dropped by 43 per cent, dragging down the cost of import from about N9.5 trillion to about N5.3 trillion. This, he indicated, saved about N4.2 trillion that has gone to increase the external reserve.

“So when you see reserve building up that is one of the reasons. And when you look at why has the importation come down you look at one products, cement for example no importation at all, it saved us N300 billion,” the minister further added.

The development in the cement industry, pointed out by Aganga, had jerked up the revenue accruing to the federal government by N52 billion profit in Q1 audited, above the N200 billion projected for the year.

“That is more than $1 billion assuming that tax is paid at 30 per cent. That is how countries and individuals make money. That is why industrialisation becomes a key to transforming a country from being poor to a rich nation. I’m glad that under President Goodluck Jonathan, for the first time ever, we have a robust industrialisation plan that is going to move from being a poor to a richer nation.

He affirmed that the government’s industrialisation programme was working, thereby increasing its volume of trade and accelerating the growth of the economy. “That is what industrialisation is supposed to achieve. We have started that process. We are in a position where our exports is rising since 2005,” Aganga said.

He gave a catalogue of achievements with regard to the overall industrialisation drive of the incumbent administration as the decrease in textile importation by 56 per cent, decrease in the importation of vegetable oil by 52 percent and increase in the export of crude oil and gas to about 94 per cent.

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