How Nigeria can revive dead steel industry – Engr. Dideolu Falobi, MD/CEO, Kresta Laurel Limited

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By Ayo Alonge, [email protected]

ENGINEER Dideolu Falobi is the Managing Director/Chief Executive Officer of Kresta Laurel Limited, an engineering and construction firm which installs, repairs and maintains elevators, escalators, industrial UPS, generators and power systems.
In this interview, Falobi emphasizes the potential and challenges within the country’s steel industry, while insisting that the future is only bright for the sector if government and stakeholders can rise to the task of revamping the sector through adequate funding and empowering investors.

How does your company import this sophisticated equipment into the country?
Actually, we have partners, different companies in Europe who manufacture them. We are authorized distributors for those partners.

Does it not bother you that Nigeria is yet to be able to manufacture these sophisticated equipment?
Yes, it bothers me and it does not, at the same time. It bothers me that we aren’t able to manufacture some of them, if not all. It doesn’t bother me because it’s not every country that is expected to be manufacturing these machines. There are some factors that come to play in terms of manufacturing them. One is market availability. Even in Europe, there is a lot of outsourcing. If we cannot manufacture, we should be looking at the direction of outsourcing. There has been the outsourcing aspect that has been added into the system and we are working hard. The challenge we are likely to face is the cost of financing such. Power supply problem and also steel, which is the backbone of these products, should also be considered. If our mines and steel industry is not buoyant enough to provide raw materials needed for the production of these products, what would happen is that you are transferring the importation somewhere.

So, what is the problem with our mines and steel industry that we have not been able to produce these equipment, despite our endowment with these raw materials?
It’s what you should know. We have the Ajaokuta Steel, Delta Steel, Osogbo Steel, and the rest. The same thing that happened to Nigerian Railway Corporation and the textile industry happened to our steel industry. Do I need to add anything? I think that is it. We have not got things right. Until the Ajaokuta Steel and the rest are functional, we can’t get it right. Fundamentally, we know we have the issues of corruption, poor power supply, technology, and the rest. I am a fellow of the Nigerian Society of Engineers, and I know this.

What are stakeholders like you doing to address these anomalies?
Stakeholders should first move away from discussing the problems with the plants and start to make a move forward. We have had several reports on what went wrong. What we should be doing now is to address how we can move forward. Without the steel industry, which is the backbone of industrialization, there is bound to be problems, because you can’t achieve a lot of things. You must get the steel industry right and unfortunately, it’s capital intensive. You may not even be able to get replacement parts for damaged equipment any more. We can attract investors to put up new plants but let us first address the challenges that we need to address to move on.

At what point can government partner with stakeholders to ensure we revamp the manufacturing of steel products?
It’s at all points. The first is that you know the way Nigeria is structured. Even if you are a private sector person, if you don’t have the support of government, you are likely to run into problems. Any investor coming in will first guage the mood of the government from the beginning and at different stages, they begin to measure unimpeded progress. Except government takes it serious that they really want to attract investors, we may not achieve the goal. We also need to come up with good policies and back them up with major actions. We have been battling with power for a very long time. You can’t work on diesel. Even there is no longer adequate supply of gas. The government has to holistically solve these problems. We also have to deal with illegal tax issues. All sorts of people come into your premises to request different forms of taxes and we need to address that. We are keeping people in employment and what has the government done to encourage us? We see how different governments encourage the private sectors of their economies around the world.

Would you like to be quoted as saying the government should support the private sector with huge funds?

I am saying the government of the day should look at how they can support us. There are different reasons the private sector has to be supported, despite the fact that they are profit making. The private sector is operating where there is no power and even Forex is scarce. How do you survive? So, the tendency is there for you to lay off your staff. When you do, there are negative multiplier effects because you encourage crime.

In what areas has the looming economic recession affected your company?
We are in the construction industry. When there is recession, the first that feels it is the construction industry. Quite a lot of projects are on hold and quite a lot others have been canceled. Even ones that are meant to come into the country are on hold. Another is that the purchasing power of the average man on the street is dropping drastically daily. Some contractors have not received billions of naira of their revenue and they are beginning to shutdown across the country. So, it impacts the country’s image and reputation. These are reasons government should come in and help those of us who, despite the recession, have kept our staff. Most companies are spending their capital to remain in business and very soon, the companies may fold up.

Is there likelihood your company folds up soon or relocates, should the recession bite harder?
Relocate to where?

I wouldn’t know myself…
We are a Nigerian company and we are here to stay. We have been here for 20 years. Our dream is to be in business forever. We don’t want to consider relocating from Nigeria or close shop. We are very lucky we have a lot of projects ongoing. So, we are surviving with many streams of income.

How would you react to the issue of abandoned projects due to poor funding?

I have no other reaction other than to say that if a project is not funded, it’s going to be abandoned. I don’t have a problem if the project is abandoned due to scarcity of funds but if it’s about a new government coming in and abandoning what the old was doing, then I have a problem with that. We have a situation where an old government leaves and the new comes in and abandons projects in process.

Nigeria is broke. Would you support government going to borrow to finance abandoned projects?
We don’t have a history of managing burrowed funds prudently. Before we go and borrow, we must have a proper documentation of how to pay back. However, there is a fundamental point to note. You can refuse to borrow but bring in investors to pump money into the economy. Nigeria is a country blessed with a very good return on investment.
I am of the view that to fund your projects, you need to convince me on how to pay back. We need to think out of the box because when you borrow, you have to come up with a well-planned avenue on how to pay back otherwise, you are only postponing the doomsday to generations yet unborn. So, you have to think deep before you go borrowing.

Do you believe one major cause of delay or abandonment of capital projects is the Treasury Single Account scheme?

I don’t believe that. I think that TSA is meant to ensure the safety of public funds. It simply means let us put all our money into one account and let us have what you say you need money for before we can release it to you. Some of these MDAs have a lot of accounts not known to government. Some won’t remit the revenue generated into government purse and I am fully in support of TSA. If the funds are properly budgeted for, there is no problem with that. I think government has brought in sanity with TSA.

Recently, your company was named among the three best performers on major projects in 2016 across Africa. To what do you credit that feat?
What happened is that we partner with the best all over the world and if you are not the best, you are one of the best. Annually, one of the companies, Kone, looked at 57 countries and saw that we are among the best three. It’s not just in terms of volume but also in the way our projects are executed. We were also recertified.

What’s the future of mines and steel industry of the country?
It’s very bright and possibly the best. Nigeria is a very open market because we don’t have good roads and our dams are not working. Any developing country that is to develop would be talking about engineering because engineering in itself, is development. The reality is that if you want to engender rapid growth and development in the sector, power supply, water, everything is engineering. Unfortunately, our rate of development is influenced by politicians, which shouldn’t be so. Until we get it right, I believe the future of engineering in Nigeria may be negative.

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