Categories: Revenue

Importation Of Iron Rods, Others costs Nigeria N600bn Annually

Failure to formulate a policy to encourage the growth of local steel industry to produce more materials needed in building and construction works, the nation will be losing as much as N600 billion yearly to the importation of such materials, particularly iron rods.
The industry which is a key sector in Nigeria’s economy provides industrial items such as iron rods, barbed wires, coils as well as metal doors and windows and should be the bedrock of the nation’s industrialisation.
But due to long neglect over the years, the sector’s growth has been stunted resulting in over 80 percent of materials used by the Nigeria’s construction industry being imported with the costs skyrocketing following the crisis in the foreign exchange markets.
Local manufacturers of iron rods have increased prices of their products due to shortages of industrial fuel such as low pour fuel (LPFO), automotive gas oil (AGO) and natural gas. Stakeholders in the sector are calling for genuine efforts to be made to address the challenges and save the sector from total collapse. This is even as experts have warned of dire consequences in the construction industry, if importation of building materials is left entirely to the vagaries of free market forces.
President, Nigerian Institute of Quantity Surveyors (NIQS), Mrs. Mercy Iyortyer who spoke to LEADERSHIP Sunday warned of the consequences of uncontrollable increase in the prices of iron rods which has become a big challenge on project estimates in recent times. She said government, as a matter of urgency, must put in place policies that would bring down the costs of materials.
Also president, Nigerian Institute of Building (NIOB), Tijani Shuaib said the high cost of iron rods had reduced the purchasing power of prospective clients, who patronize estate developers.
“For example, the cost of rods has skyrocketed from N170, 000 per ton to N300,000, thereby making the price out of reach to people. The high interest rate from mortgage is also a factor that even when the houses are built, you cannot find buyers”, said Shuaib, who is also an estate developer.
The iron rod is an important component in building construction, being an important element of reinforcing cement concrete. Investigation carried out in a building materials market in Matori, Lagos, showed that apart from the proliferation of substandard iron rods in the country’s market which portends great danger for the sector, the prices are high.
The prices of imported iron rods per ton (pieces) are 12mm at N175,000 for 93 pieces; 16mm at N175,000 for 52 pieces; 8mm at N175,000 for 210 pieces and 10mm at N175,000 for 130 pieces. Iron rods made in Nigeria cost N10,000 less per ton of 12mm at N165,000 for 93 pieces, 16mm at N165,000 for 52 pieces, 8mm at N165,000 for 210 pieces and 10mm at N165,000 for 130 pieces.
As a way forward, the president of the Nigeria Institute of Estate Surveyors and Valuers (NIESV), Mr. Bode Adedeji said it was high time government at the highest level summoned the political will required for rigorous implementation of all the policies and programmes on the development of the housing sector.
He explained that in advanced economies, the housing sector had been developed and structured to play a crucial role in the overall economic development, pointing out that the multiplier effects of the housing and construction sector are huge, verifiable and transformational. According to him, only a comprehensive and well-formulated government policy that addresses all options, including alternatives to steel, can bring relief.
The director-general, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, urged the Federal Government to ensure more liquidity in the foreign exchange market to restore investors’ confidence in the economy.
Yusuf who stressed the need for Nigeria to reduce its over reliance on imports and improve its global trade competitiveness, said it was imperative for the country to have a feasible plan to lower its import content and develop its export potential. Despite the merits of import substitution and protectionism of local industries, choosing such an economic approach underscores a lack of clear economic.
“The sector should also have been providing employment to millions of Nigerians, particularly in steel rolling companies which produce steel materials, if the federal government had developed it over the years,” he said.
President, Nigerian Institute of Building (NIOB), Kunle Awobodu, said the imported billet or locally recycled scraps are the raw materials being melted to manufacture the reinforcement steel bars used for construction in Nigeria, pointing out that if the cost of production had remained static in the 26 out of the 36 functioning steel rolling mills in the country, there would be no cause for alarm.
But if the cost of production has increased during this period, then it is interpreted that the steel manufacturing companies either have very wide, flexible profit margin or the steel quality has been compromised, he contended.
“Once the local rolling mills can discard production of low quality steel bars and focus solely on quality steel bars that would be certified regularly by Standards Organisation of Nigeria (SON), then there should be no need for imported reinforcement steel bars that sometimes record non-satisfactory quality. Moreover, Nigeria could become exporters of reinforcement steel bars if the quality meets international standards. This development, of course, will reduce the pressure on the foreign currency to the benefit of the nation’s economy,” he added.

Anene Peters

Anene Peters is an intern with Naija247news Media. He's focus is on tech and science. He's a graduate of Abia State University with a major in Computer Science and Communications. You can contact him for press events on 0903 927 6505

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