Time for Government to boost local steel industry
Steel is as critical to an economy as oil. Steel is at the centre of manufacturing, industry and industrialization. The country’s ability to supply high quality steel is a boost to the economy especially in a country that is gearing for high infrastructure development, industrialization, manufacturing and processing. There is no conceivable industry- small or big- that does not require some form of steel.
That is the reason why Government needs to pay heed to a call by local steel manufacturers for support to build their capacity to meet the various needs that the country has for its big infrastructure investments. By supporting the local steel manufacturers, the Government will not only be building local capacity to meet local needs; thus avoiding importation and dumping of low quality materials by foreign manufacturers, the country will also be creating jobs, building capacity to supply to the regional markets and therefore more revenues to the national coffers.
Recent local media reports indicated that three local steel manufacturers who could potentially supply steel to the standard gauge railways works; Roofings Ltd, Steel Rolling Mills and Madhivani steel are calling for government support (tune of US$7.2 million -about UGx 25 billion), to raise their capacity to supply steel for specifications of the SGR.
So far the local steel manufacturers have tailored their products for the small scale steels need for the country and the region and certified by the National Bureau of Standards. It is now necessary to produce to comply to Chinese specifications, in line with other Chinese plans and equipment in the various infrastructure projects.
In the steel industry, there is no such thing as free trade, as all countries take steel as a strategic resource. China, for example, subsidizes all national steel producers to enable them to sell to the local market below the production costs. This way steel is available for forging and manufacture of all types of industry equipment including small and medium scale processing plants. Besides, China’s steel for export is highly competitive.
In March 2015, the Government of the UK when local industry took a nose dive, injected millions of British Pounds (109 million) to resuscitate its manufacturing sector, including the steel industry.
The injection of state support however needs to be well planned and aligned to national strategic and long term interests. National needs beyond the SGR need to be anticipated and planned for, so that this single intervention will take care of all near future needs. It also needs to be linked to the country’s iron ore industry.
Three local steel manufacturers also need to be connected to the wider national strategic objectives and therefore connected to national industrialization drive, research and teaching in universities (national capacity building).