Nigeria's dream of having a virile iron, steel and fabricated metal sector may be hard to realise as retrogressive import duty, dollarisation of gas and high cost of acquiring mining equipment combine to stifle the sector.

The steel sector encompasses makers of primary and secondary aluminium products, cold rolled coils, wire rods, enamelware, galvanised iron and steel, nail and wire, steel pipes and steel.

Industry stakeholders say they are frustrated by low import duties imposed on iron, steel and aluminium products which encourage import of substandard goods rather than encourage local production.

"Some people have been bringing in steel pipes with wrong declaration to the Customs while paying five percent duty instead of 35 percent. This trend has been observed to be more pronounced in Onitsha, which has a big market for smuggled pipes," said steel pipe makers, who are members of the Manufacturers Association of Nigeria (MAN) in a sectoral report released to BusinessDay last Thursday. "Tariff lines should be increased from 178 items to 300 items," they said.

Speaking in the same vein, Kamoru Ibitoye Yusuf,CEO of Kam industies, which operates a large cold roll mill in Ilorin, Kwara state, said, "We need a consistent policy on duty rates, so we can have more investment on cold rolling mills in Nigeria.

"It is from cold rolling mills that base materials for making automobile panels and other components are derived, so if you encourage investment in this sector it will galvanise local auto production and generate jobs. "Iron rods have been protected by 50 percent duty, cold roll has not been protected. That is the reason investors are running away from that end of the business. One cold rolling mill can sustain 50 to 100 local industries which will create jobs."

Nail and wire makers say influx of fake finished products has made patronage difficult and put the sector in peril. The group says duty on wire rods should be increased from 20 percent to 50 percent, while enamel ware makers call for upward review of duty from 20 percent to 35 percent.

In spite of over $5 billion sunk in the Ajaokuta Steel Complex Limited, the project is yet to be completed. This may have been caused by a legal tussle between the erstwhile concessionaire and the Federal Government. The implication of this situation is that over 85 percent of manufacturing equipment, which could have been obtained from the complex, are imported from abroad.

"An iron and steel complex is essential in kick-starting the industrial process in the country," said Frank Udemba Jacobs, president, Manufacturers Association of Nigeria, in an industrial memorandum made available to BusinessDay. "Government should work towards the speedy removal of all impediments to the full privatisation of the steel complex," Jacobs said.

Steel makers pay for gas used in factories in dollars, rather than naira. This the situation has continued to impact their bottom lines negatively. To end this situation, they say gas users in the sector need to be given a 30 percent discount as gas price in the country should be at par with the international price.

"We need to look at payment of gas in dollars," said Jide Mike, former director-general, MAN, and consultant to WEMPCO Steel, during an annual general meeting of the group held last Thursday in Lagos.

The iron and steel industry relies so much on the mining sector for many of its raw materials. However, the high cost of mining equipment and lack of heavy investment in the sector are impeding the value chain segment, thus depriving the country of jobs and foreign exchange that could have been generated in this segment.

Stakeholders say to encourage investors and support growth in the sector, mining equipment and machinery for hot cold rolled coils should remain at zero percent import duty and zero percent value added tax (VAT). Oluyinka Kufile, newly elected chairman, Basic Metal, Iron and Steel and Fabricated Metal Products of MAN, said government should unify duties to boost local production.

According to Kufile, for Nigeria to achieve its National Industrial Revolution Plan (NIRP) target and generate jobs, there must be a clear-cut roadmap to develop the sector.

"No nation can get anywhere without this sector. We need jobs; we need to grow; we need to rise above our peers; and I believe the secret is this sector," he said.