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Manufacturing

FG approves the establishment of Shoe, Garment, and Leather processing factories worth N5.08 billion

The Federal Government has approved the establishment of Shoe, Garment, and Leather factories in Kano and Abia.

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FG approves the establishment of Shoe, Garment, and Leather factories worth N5.08 billion

The Federal Government has approved the establishment of Shoe, Garment, and Leather processing factories in Kano and Abia state, through a PPP worth N5.08 billion, in a bid to revive its production.

This disclosure was made by the Federal Minister of Interior, Mr. Rauf Aregbesola, in a tweet via his official Twitter account.

The decision to establish the processing factories was borne from the Memo which Mr. Rauf Aregbesola, presented during the Federal Executive Council meeting yesterday.

The memo gave a detailed analysis of how the potentials in the shoe, garment and leather processing industry could be harnessed and used to the country’s advantage to create value, foster social development and remedy the country’s unemployment issues.

The Minister while presenting the memo, explained that the establishment of Shoe, Garment and Leather processing factories in Janguza, Kano State and Aba in Abia State under a PPP arrangement worth N5.08 billion, will create 1,290 direct employment and 3,000 indirect employment when the factories become operational.

(READ MORE: FG to revitalize rice farms in rice producing regions)

Providing more details on the arrangement of the project, Mr Aregbesola reiterated that the establishment of the factories will be under a Public-Private Partnership (PPP) with Erojim Investment Limited and its technical partners, Poly Technologies of China.

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It is important to note that the PPP arrangement is aimed at establishing a world-class factory using the most modern technology and quality inputs to produce high-quality shoes, garments, and leather products to meet the demand of NCS and other Ministries, Departments and Agencies (MDAs), whose personnel wear uniforms and make use of other accessories.

READ: Questioning Nigeria’s fiscal federalism and resource sharing models

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In case you missed it: The FG in May had disclosed through the Director-General of the Infrastructure Concession Regulatory Commission (ICRC), Mr. Chidi Izuwah, that it would be targeting N5.08 billion from the partnership with the private sector to revive the garment and leather industries.

At the time of the publication in May, Mr. Chid Izuwah explained that the N5.089 billion would be made up of 80 per cent debt and 20 per cent equity with zero financial contribution by the federal government.

READ: Nigeria @ 60: The Aviation sector and its travails

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However, the approval of the establishment of the factories by the Federal Government is an avid step towards reviving Nigeria’s Manufacturing sector, as well as the activities of the garment and leather industries.

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Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor. He is a business owner and a stern advocate of Financial literacy, who believes in the huge economic prospect of the Nigerian Payment channels and Fintech space.

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    Business News

    Senate calls for the liberalization of cement policy to crash the price of the commodity

    The Senate also tasked the FG on providing more industrial incentives to bring new players into the cement industry.

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    The Nigerian Senate has called for the liberalization of Nigeria’s cement policy to boost production and subsequently crash the price of the commodity in the country.

    This motion was raised by Senator Lola Ashiru at today’s senate plenary, the senator also tasked the Federal Government on providing more industrial incentives to bring new players into the cement industry, in addition to the liberalization of the cement policy in Nigeria.

    Ashiru explained that to reduce the price of cement and in extension, other building materials in the country, the Federal Government needs to provide an enabling operating environment that will encourage new entrants in the country.

    The Senate in conclusion called on the FG to provide more industrial incentives and protections such as concessionary loans and larger tax incentives to encourage new entrants and expand the national cement production infrastructure, as this boost in production will lead to a downward review of cement price in Nigeria.

    What industry leaders are saying

    Earlier this year the founder of BUA Group, Abdulsamad Rabiu, called for the liberalization of Nigeria’s cement policy to boost production and reduce the price of the commodity.

    The billionaire philanthropist faulted the belief that Nigeria is self-sufficient in terms of cement production, noting that recent statistics and figures on Nigeria’s population and cement production do not support this status of sufficiency in cement production as stated by some individuals.

    He attributed the high price of cement products in the country to the supply gap which exists in the country, as the few producers who currently operate in the country are unable able to meet the country’s huge and growing demand.

    The Group Executive Director, Strategy, Portfolio Development and Capital Projects, Devakumar Edwin, explained that the demand and consumption of cement in the nation currently outstrips supply, and this can be pegged on the growth in the country’s population, and the strong appetite for real estate investment and construction in the country.

    He revealed that a supply gap of about 40% exists in the country’s cement market and that all players in the industry are working hard to level production with the rising demand in the country.

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    Business

    Cement prices surge in South East as scarcity, price hike hit North East

    Prices of cement have risen by 67% in many Southeastern states and by 40% as observed in northern states including Bauchi, Gombe, Borno, others.

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    The prices of cement have risen by 67% in the South-East states of Abia, Anambra, Ebonyi, Enugu and Imo.

    This is as some residents of the North-Eastern part of the country also complained of price hike of cement, which they attributed to the scarcity of the product and the activities of middlemen who try to capitalize on the situation.

    According to a report from the News Agency of Nigeria (NAN), a market survey conducted at various wholesale and retail shops in the eastern zone shows that the price of the product has almost doubled when compared to the price in 2020.

    READ: Aliko Dangote to earn N234 billion as dividend from his cement business

    What the cement traders in the eastern states are saying

    A cement dealer at Kenyetta Market in Enugu State, Mr Ifeanyi Amadi, said the increase in the price of the product which started last year was due to the Covid-19 pandemic and increase in dollar exchange.

    He pointed out that a trailer load of Dangote cement with 600 bags, which sold for N1.5 million in 2020, sold for N2.3 million in the first quarter of 2021.

    Another retailer, Samuel Uwakwe, noted that a bag of Dangote Cement now goes for N3,900, Unicem for N3,700; BUA Cement for N3,700 and Kogi Super Cement for N3,600.

    While begging the suppliers to reduce the price and make the product available, Uwakwe expressed his reservations at few individuals being given the opportunity to supply the product noting that the prices would likely crash during raining season.

    READ: Dangote Cement considers debt funding options under 300 billion bond issuance programme

    In Abia, a cross-section of residents of Umuahia, the state capital, also decried the high price of cement, which ranges from N4,000 to N4,100 per 50kg bag.

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    Those who spoke to NAN said the price hike had further dashed the hope of many Nigerians, wishing to own their personal homes.

    A businessman, Mr Victor Ugwu, said he had to suspend his building project because of the current development as he could not afford to continue with the current price of the commodity.

    He said,  “I think the hike can be attributed to the monopoly being enjoyed by the cement producers in the country. Unfortunately, there may not be any respite until that monopoly is broken.”

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    READ: Dangote Cement pays N1.1 trillion in dividends in 5 years.

    However, a cement dealer, Mr James Ogbonna, said the price increase had nothing to do with the manufacturers of the commodity but rather put the blame on the activities of shylock distributors of cement.

    He said, “In the first and second week of March, we sold a bag for N3,200, but within the third week we started selling at N3,500. By the end of March, the price moved up to N4,000 and now, we sell between N4,000 and N4100, depending on the brand.”

    A cement dealer in Awka, Mr Kenechukwu Okoye, said before the #EndSARS protest in 2020, a 50kg bag of cement was sold at N2,500 bur rose to N3,000 immediately after the protest and from there to the current price of N4,000 and N4,100.

    The survey also says that in Owerri, the Imo state capital, the price of cement is between N3,850 and N4300, depending on the brand.

    At the building materials Market in Naze, Owerri North Local Government Area, Dangote and BUA cement are sold at N4,000 per bag while BUA and UNICEM are sold for N3,900.

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    Mr Okechukwu Okonya, a seller, said the cost could be attributed to the high cost of transportation as a result of fuel price increase adding that major dealers sometimes hoard the product in their warehouses to create artificial scarcity.

    The survey report says that in Abakaliki, Ebonyi, prices of almost all building materials have gone up, with Dangote and Bua which sold for N2,500 earlier in November and December 2020 now selling for between N4000 and N4500.

    Similarly, Unicem cement which also sold at N2,300 within the same period had also gone up to N4,000 and N4,300.

    Similar price increase in North East

    The survey report in Bauchi, Gombe, Borno, Yobe, Adamawa and Jigawa, shows an average of 40% increase in price.

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    According to the respondents, this could be attributed to the outbreak of Covid-19 which affected production in factories, while demand kept rising.

    Others, however, blamed the hike on the high cost of transportation and other sundry activities associated with the business of procurement and sales of cement in the country.

    Malam Ibrahim Sanusi, a cement dealer at the Gombe main market described the hike as outrageous when compared with the price of the same commodity the previous year.

    He said that a bag of Dangote brand which he bought for N2,400 and sold for N2, 500, is bought for N4,000 from their depot in Gombe and sold for N4,200.

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