…Says foreign investors will only come when local investors are thriving

…As VP Shettima harps on local content

By our Correspondents

President of the Dangote Group, Aliko Dangote, has made a case for the Federal Government (FG) of Nigeria to consider private investments into any sector of the economy particularly manufacturing as national assets.

Speaking at the Nigeria Manufacturers’ Summit in Abuja yesterday, Dangote opined that industrial or manufacturing entities are not like trading entities. while expressing his belief that the fundamental role and responsibility of government should be not only to promote investments and attract investors in manufacturing. but also to ensure that these investments are nurtured and protected to facilitate growth and sustainability.

Dangote, who noted that there are various factors contributing to the underperformance of the manufacturing sector, emphasised that the crucial issue requiring attention is government policy and its approach toward investments and investors.

He emphasised that Government Protection of the industry does not solely encompass short to medium-term Regulatory Mechanisms such as tax holidays and other incentives which have their place in industrial policy and should be applied when necessary to mitigate investment challenges.

He advocated for policies that safeguard domestic industries and cultivate them into indigenous champions capable of generating jobs and fostering prosperity in the face of current global economic woes.

“I am concerned with a long term policy framework which ensures that investors can invest with the understanding that the industry will in the long run be regarded as a national asset and not just investor’s assets, so that when it is threatened, either by external forces or by changes in the environment beyond the control of individual operators, Government will take appropriate action to protect investors and support them to survive the threat.

“Almost all countries did this in response to the COVID threat. Those in the pharmaceutical industry may well remember how India protected and supported its pharmaceutical industry,” he said, while noting that if such policy had been adopted in the past, Nigeria would boost a flourishing textile and tyre industry as well as functioning refineries.

“If we had adopted such a policy and Government attitude to the Textile Industry and tyre industry in the 80s and early 90s, perhaps our economy today would still be benefitting from the job creation capacities of these industries. Or if we had adopted this attitude to our Refining industry, Nigerians would not today be too anxious about Dangote Refinery,” he stated.

The African richest man further emphasised the important roles Government has to play in making a market competitive.

According to Dangote, “In every economic regime, including the most advanced, investment projects in manufacturing and industrial sectors need time and a conducive environment for them to mature, build capacity and scale, to become competitive against those in older and more mature markets.

“But since the Mid 1980s non-industrialised countries and their leaders have been discouraged from protecting and supporting such investment and forced to expose them to unfair competition from stronger, older competitors in their own internal market, even before the newcomers are commissioned. Yet these same older/bigger players are well supported in their home markets,” he said.

He listed several examples of government intervention to protect industries: the blocked sale of US steel to Nippon Steel of Japan, the blocked sale of six US port management companies to Dubai Ports World, restrictions on Chinese cranes at US ports, and the US imposition of tariffs such as 100 percent on Chinese EVs, 50 percent on semiconductors, medical products, and solar panels. He also cited the restriction of Russian gas supply to Europe, which led European countries to increase coal usage despite opposition to fossil fuels, and the US government’s distribution of $39 billion in subsidies to incentivize local microchip production.

Dangote referred to Asia as having achieved significant levels of industrialization by pursuing industrial policies where the government played an active role in nurturing and supporting local companies. They subsequently leveraged this success to attract foreign direct investment (FDI) into Free Trade Zones.

Disputing assertions that protecting domestic industries leads to reduced competitiveness, Dangote argued to the contrary, citing examples such as China, Korea, India, and various other Asian nations.

He pointed out that these countries successfully developed into robust economies and posed a challenge to the established global economic order precisely because they protected their industries.

He noted that in the past, Nigeria was not competitive in cement production, producing less than 2 million tons of cement per annum up to 2007. He pointed out that due to strategic government policies and support, Nigeria has since become Africa’s largest cement producer and exporter, ranking among the top 10 globally in competitiveness.

Dangote noted that in 2023, Dangote Cement alone contributed more tax revenue to the government than the entire banking sector.

“In the past, Nigeria was not competitive in cement production. Up to 2007, Nigeria produced less than 2m tons of cement per annum. Today we have about 60 million tons of production capacity and another 9m under construction. The foundation for this success story was laid by an administration which decided to extend full support and protection to Nigeria’s cement industry.

“Today we are among the 10 most competitive cement producers in the world and the biggest cement producer and cement exporter in Africa. In 2023, Dangote Cement alone paid more taxes into the coffers of the government than the entire banking industry,” he said.

Dangote also refuted claims that protecting industries would lead to monopoly, stating that it is common knowledge that foreign investors only come when they see that local investors are also doing well.

“I am convinced that when Government Policy becomes more supportive and protective, investors will be more willing to collaborate and partner with the Government in resolving other challenges such as infrastructure deficits, market instabilities and macro-economic issues such as inflation and foreign exchange volatilities,” he added.

Reiterating that Nigeria has all it takes to develop and sustain a globally competitive manufacturing sector, Dangote called for re-thinking of its industrialisation policy, by learning from leading countries in the West and the East who are actively protecting their domestic industries.

In the same vein, the Vice President of Nigeria, Senator Kashim Shettima also called for the prioritisation of local content and promotion of made-in-Nigeria products, noting that Executive Order 003 which makes the patronage of locally manufactured products mandatory is still in effect.

The VP regretted that the sector, which has a crucial role to play in building a nation driven by production and abundance, had endured a series of setbacks over the past decades.

“Distinguished ladies and gentlemen, I implore us all to leverage this summit to develop an actionable roadmap and policy framework, ready for immediate implementation, to create the changes we want in the manufacturing sector. I assure you that we shall always maintain an open-door policy to accommodate your needs and expectations.

“Let us be reminded that we cannot achieve significant progress in our drive for industrialisation unless we deliberately promote the production of capital goods. We must be focused on expanding our production base, prioritising local content, and promoting made-in-Nigeria products.

“I want to assure you that Executive Order No 003 – Support for Local Content in Public Procurement by the Federal Government, which mandates the patronage of locally manufactured products is still in effect. The relevant government Ministries, Departments, and Agencies (MDAs) are mandated to fully comply with the order,” he declared.

Shettima observed that as a country in Africa, “a continent that has languished at the bottom of the global value chain, with its share of global manufacturing at less than two percent,” Nigeria has no better option than to support its indigenous firms to produce locally and increase their capabilities.

The Summit, according to him, offers the opportunity to re-evaluate the challenges confronting the sector and proffer solutions that would resolve them, even as he noted that a competitive manufacturing sector would reduce the inequities in the nation’s economy as well as overdependence on imports.

His words: “Our proposal to minimise the economic imbalances in the nation is based on strengthening the production base of our economy, particularly in manufacturing.

“Most of our setbacks as a nation, as each of you knows, are due to over-dependence on imports for even our basic necessities. That is why we need you to address the various challenges facing the sector and ensure we have a competitive manufacturing sector.”

VP Shettima expressed satisfaction with what he saw during a tour of the exhibition, saying he is convinced more than ever of Nigeria’s industrial capabilities, creativity, and innovation.

Stressing the role of manufacturing in driving the nation’s wealth, job creation, living standards, and revenue generation, the Vice President said it explains why President Bola Ahmed Tinubu is focused on accelerating infrastructure projects, including roads, ports and energy supply.

“It is essential to expedite the delivery of infrastructure projects that will enable the sector to leap forward and thrive. This is why His Excellency President Bola Ahmed Tinubu’s focus on roads, ports, and energy supply is strategic,” he added.

The VP identified five pillars of the summit, which he said are a clear roadmap for stimulating the manufacturing sector, pointing out that it is imperative to enact meaningful change and develop industries by addressing critical issues under each of these pillars.

He listed them to include upscaling productivity and competitiveness, energy security and infrastructure development, improving the macroeconomic environment and ease of doing business, promoting Made-in-Nigeria products and local content development, and leveraging regional and continental trade for export development.

Access Holdings Plc on Tuesday, held a formal signing ceremony as part of the arrangements to raise a total of N351,009,103,017.25 (Three hundred and fifty-one billion, nine million, one hundred and three thousand, seventeen naira and twenty kobo) by way of a Rights Issue (‘the Offer’) to existing shareholders.

The Offer is part of the Group’s strategy to enhance its working capital requirements, which include organic growth funding for its banking and non-banking subsidiaries.

The Signing Ceremony with respect to the offer was held at Access Tower, the corporate office of Access Holdings in Lagos. Access Holdings’ shareholders had at its 2nd Annual General Meeting (AGM), which held on Friday, April 19, 2024, unanimously backed its plan to execute a Capital Raising Programme of about US$1.5 billion as well as the subset initiative to raise capital through a Rights Issue of ordinary shares to its shareholders.

Under the Rights Issue, 17,772,612,811 (Seventeen billion, seven hundred and seventy-two million, six hundred and twelve thousand, eight hundred and eleven) ordinary shares of N0.50 each at N19.75 per share on the basis of 1 (one) new ordinary share for every 2 (two) existing ordinary shares held as of Friday, June 7, 2024.

At the Signing Ceremony, Acting Managing Director/Chief Executive Officer of Access Holdings Plc, Bolaji Agbede, disclosed that, “The Rights Issue is a significant step in delivering our 2023-2027 strategic plan. The additional capital will enable us to maximise emerging opportunities and deliver long-term value to our shareholders.”

Chapel Hill Denham is the Lead Issuing House to the Offer, while Atlas Registrars Limited will serve as Registrars through the exercise.

The Joint Issuing Houses are Coronation Merchant Bank, Stanbic IBTC Capital, Vetiva Advisory Services, Greenwich Merchant Bank, FCSL, First Ally Capital, FCMB Capital, Renaissance Capital Africa and Meristem Capital.

Other parties to the Offer are Coronation Merchant Bank, Coronation Securities, Chapel Hill Denham Securities Limited, FSDH Capital, Cordros Capital, Cowry Securities, First Integrated Capital Management Ltd, Network Capital Ltd, CSL Stockbrokers Limited, Compass Investment & Securities Ltd, PAC Securities Limited, Dynamic Portfolio, Chartwell Securities Limited, Tiddo Securities Limited, and Futureview Securities Limited.

Subject to approval of the Securities and Exchange Commission (SEC), the Acceptance and Application Lists for the Rights Issue are expected to open on Monday, July 8, 2024, and close on Thursday, August 8, 2024.

The Rights Circular for the Issue, which contains a Provisional Allotment Letter and the Participation Form, will be mailed directly to shareholders of the Group. Printed copies of the Participation Form can also be obtained at any Access Bank branch and the offices of the Issuing Houses during the Offer Application Period.

All existing shareholders and prospective investors are encouraged to read the Rights Circular and Prospectus and, where in doubt, consult their Stockbroker, Fund/Portfolio Manager, Accountant, Banker, Solicitor, or any other professional adviser for guidance before subscribing.

The Federal Government has adopted a new withholding tax policy which will bring relief to thousands of small and medium-sized enterprises (SMEs) throughout the country.

This development is expected to bring clarity and simplicity to the tax system, which has been plagued by ambiguities and complications since its introduction in 1977.

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said that the newly approved withholding tax regulation will be published in the official gazette soon.

Withholding tax is an advance payment of income tax that can be used to offset or reduce tax liabilities.

The Federal Inland Revenue Service (FIRS) deducts withholding tax at varying rates of 5-10 percent depending on the transaction.

However, the previous regime was criticised for its complexities, which led to excessive compliance burdens on businesses, especially small and medium-sized enterprises (SMEs).

Oyedele revealed that the federal government has exempted small businesses earning N25 million or less from withholding tax, effective June 3.

This exemption is expected to provide relief to SMEs, which have been struggling to comply with the complex tax regulations.

The new regulation also introduces reduced rates for businesses with low margins, as well as exemptions for manufacturers and producers, such as farmers.

The chairman of the presidential committee noted that the previous regime was marred by ambiguities regarding persons required to comply, eligible transactions, applicable rates, and timing of remittance.

These ambiguities led to tax evasion, avoidance, and difficulties in obtaining refunds for excess withholding tax.

Moreover, the lack of exemption threshold made compliance and enforcement uneconomical for both taxpayers and the tax authority.

The newly approved regulation addresses these challenges by providing clarity on the timing of deduction and definition of key terms.

It also adopts global best practices to ensure that the tax system is fair, equitable, and conducive to business growth.

Oyedele emphasised that the regulation has been updated to reflect emerging issues and contemporary challenges, ensuring that the tax system is dynamic and responsive to the needs of businesses.

The publication of the new regulation in the official gazette is expected to provide a much-needed boost to Nigeria’s business environment.

By simplifying the tax system and reducing compliance burdens, the government aims to encourage entrepreneurship, stimulate economic growth, and increase revenue generation.

As Oyedele noted, the new regulation is a significant step towards creating a more conducive environment for businesses to thrive in Nigeria.