Nigeria: Time to Take Back Paper Mills

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Editorial

The Senate initiated a probe into the privatisation of paper mills last week as they have remained moribund since they were sold to private concerns. The companies include the Nigerian Paper Mill (NPM), Jebba, Kwara State; Nigeria Newsprint Manufacturing Company (NNMC), Oku Iboku, Akwa Ibom State; and Nigeria Paper Manufacturing Company (NPMC), Iwopin, Ogun State. In the privatisation process, Negris Limited acquired NNMC, Oku Iboku; Noxieme Technologies Limited acquired Iwopin, while NPM, Jebba was liquidated and sold to MIBL Ltd., an Indian company.

Senate President Ahmad Lawan, while reacting to a motion by Senator Ekpeyong C. Stephen (PDP, North-West, Akwa Ibom), to probe the privatised paper mills, supported the motion. He said “We need to investigate how those investors who took over our paper mills have complied with the share purchase agreement they signed while taking over the mills. My understanding is that the paper mills have been privatised and we cannot ask the government to establish new mills.”

The fate that has befallen the paper mills is the same that befell most public enterprises sold to private investors at giveaway prices. The objectives of privatisation have not been realised, over a decade after. The expectations from privatisation include the following: to inject market discipline at board level; attract foreign capital to the country; to deepen domestic market; enhance skills and technology transfer to Nigeria; productivity and earnings improvement; create employment opportunities; greater accountability and evolution of better management practices; and to act as a catalyst for the revitalisation of Nigeria’s capital markets.

Of the three paper mills, it is only NPM, Jebba that has made efforts, by refurbishing two of its machines and now produces kraft paper for the local market. By implication, the country depends absolutely on imported pulp and papers for industries. At the Senate meeting, Senator Sadiq Umar (APC, Kwara North) stated that over two million metric tons of paper were in demand in Nigeria, so the country spends N50 billion to import paper annually. On his part, the Director-General of Raw Materials Research and Development Council (RMRDC), Hussain Doko Ibrahim, stated that Nigeria lost N180 billion annually due to the non-performance of the three paper mills.

The main problem facing the industry is lack of access to long fibre pulp, the temperate softwoods, used globally for paper production. As it is not produced in Nigeria, paper manufacturers depend on importation. Unfortunately, with prohibitive foreign exchange rates, local manufacturers are not able to raise the necessary funds to import long fibre pulp. Even if they do and eventually produce papers for the country, the local cost may be too high, so users may prefer imported finished products. Other challenges facing the paper mills include unreliable electricity supply, because paper mills require a large amount of steam and electricity to process wood into pulp and paper products.

Paper mills are vital to industries, educational and information sectors. In spite of the computer age, paper remains a less expensive means of spreading information or conveying data, thoughts, or ideas from person to person with convenience. As at today, millions of people would still prefer to read their books and newspapers on printed paper instead of using computers. It is for this reason that many developed countries, like Canada, United States, China, Sweden, Germany, Brazil, France and Finland are among global leaders in paper and pulp production and even exportation.

In Nigeria, the cost of importing papers for newspapers, books and stationery is very prohibitive and has led to the liquidation of some companies. Because of its importance, we call on the government to either take back the paper mills and revitalise them, or provide the new owners the necessary incentives to keep them afloat. This could be in the form of forex rate concessions, soft loans, outright bailout and thereafter monitor their activities and provide necessary leadership through policy direction.

It is evident that the privatisation of Nigeria’s paper mills is a failed exercise. Government must intervene and resuscitate them.

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