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BUSINESS A.M. FEBRUARY, MONDAY <strong>12</strong> - SUNDAY 18, <strong>2018</strong><br />

MANUFACTURING & INDUSTRY<br />

27<br />

Odds against manufacturing<br />

Ease of doing<br />

business at<br />

risk of failure<br />

really moving out of the country to<br />

set up their businesses. Because if<br />

I import a product and I am supposed<br />

to clear the product with about<br />

N500,000 and I end up spending over<br />

N1.5 million on clearing, that’s a huge<br />

disadvantage. I cannot compete favourably<br />

with those that are importing.<br />

That is the problem we have in<br />

this country. It’s the officials that are<br />

frustrating government policies.<br />

Being a pioneer manufacturer of any product or service in a<br />

country like Nigeria is not an easy task, considering myriads<br />

of challenges experienced, occasioned by government’s negligence<br />

to provide direction. With enough experience gained<br />

from the manufacturing sector over decades, United Kingdom<br />

trained engineer, MANNY IGBENOBA, is a ‘walking knowledge’<br />

on manufacturing issues in the country.<br />

Igbenoba is the Managing Director, 7T Microns Powder Limited,<br />

and he relayed several difficulties and challenges manufacturers<br />

go through in setting up businesses in Nigeria. From<br />

the importation of raw materials, the Customs, taxes, getting<br />

funds from banks, documentation, down to the officials<br />

sabotaging government’s efforts, they are eye opening. Not<br />

even the present policy on the Ease of Doing Business by the<br />

present administration has lessened the burdens of Nigerian<br />

manufacturers, he said.<br />

But in spite of all these challenges, Igbenoba, who recently pioneered<br />

another product, a thermoplastic road marking paints<br />

that will save Nigeria over $113 million in foreign exchange<br />

annually, said local production is the only way to go if Nigeria<br />

must develop. He was interviewed by AJOSE SEHINDEMI.<br />

What challenges do manufacturers<br />

face when setting up business<br />

in the country?<br />

The challenges manufacturers<br />

face are many. For<br />

me, it is like when you<br />

have a dream of setting<br />

up an industry in Nigeria,<br />

it looks brighter on paper. But when<br />

you really get to actualise it, then you<br />

will discover you are actually swimming<br />

against the tide, especially if<br />

you have to import raw materials for<br />

production. It’s easy when you have<br />

the money, but when you have to<br />

source funds from the banks, or the<br />

Bank of Industry (BOI), to get the<br />

necessary approvals is a lot of stress.<br />

For instance, if you are going into<br />

the chemical sector, you will have to<br />

get approval from NAFDAC, permission<br />

from Standards Organisation of<br />

Nigeria (SON), and from the Nigeria<br />

environmental regulatory body. You<br />

have to get approval also for SON-<br />

CAP. You have several approvals to go<br />

through. Belonging to the Manufacturers<br />

Association of Nigeria (MAN)<br />

helps, because you can exchange<br />

ideas and get support.<br />

But we [manufacturers] all have<br />

many issues. Number one is the<br />

power supply issue, it is discouraging.<br />

For example, in a company<br />

like ours, we end up spending N1.6<br />

million in a week to run the generator.<br />

The public power supply comes<br />

about two times in a week. At the end<br />

of the month, we have to spend close<br />

to N670,000 on electricity for this<br />

small plant. We spend close to N1.6<br />

million on diesel every week and at<br />

the end of the month, we still spend<br />

such a huge amount on electricity.<br />

What do you experience while<br />

importing raw materials?<br />

The worst of it is when you are<br />

importing. The government will give<br />

such flamboyant impression that<br />

they are supporting Nigerians to set<br />

up factories locally. What about the<br />

officials that would actually carry<br />

out the instructions, Customs duties,<br />

charges at the end of the transaction?<br />

One is supposed to get, at least, about<br />

20 per cent discount between the<br />

imported item and the manufactured<br />

items in Nigeria. Because if you have<br />

less than 10 per cent, that means<br />

there is no attractive factor there. The<br />

imported thermo plastic road marking<br />

paint came and sold at about<br />

N<strong>12</strong>,500, but our final product is sold<br />

for N11, 600. What are the enhancing<br />

factors? If we import the raw materials<br />

to produce, clearing it would be<br />

a herculean task in spite of being a<br />

member of all these special groups. If<br />

one gets to the bank, Customs tariffs<br />

would still be high. Whereas, being<br />

a member of these bodies ought to<br />

have ensured that one gets a discount<br />

on the raw materials for local production.<br />

But if one does not want the<br />

goods to go into demurrage, then one<br />

just has to pay the extra fees quoted<br />

by the Customs officials, even if you<br />

have all the documents and one is<br />

helpless to do anything.<br />

Tell us about your company’s<br />

backward integration policies, do<br />

you source your materials locally<br />

or you import all?<br />

I can say that 70 per cent of our<br />

raw materials are sourced locally<br />

while the remaining 30 per cent are<br />

imported, but the cost of sourcing<br />

and delivery to the warehouse is<br />

almost the same as the 70 per cent<br />

sourced in Nigeria. That means we<br />

are not making any headway because<br />

if the cost of bringing raw materials is<br />

high, the cost of production will also<br />

be high. So the 70 per cent sourced<br />

I want to ensure<br />

that people in<br />

Nigeria, get<br />

something better<br />

than what they are<br />

importing<br />

locally has been rendered useless.<br />

For instance, in Ghana, they are<br />

actually encouraging firms to come<br />

and do business. The Ghanaian<br />

government will give you loan with<br />

nothing more than about five per<br />

cent. If you have a partner in Ghana,<br />

five per cent, and it gives you a grace<br />

of two years before you can start<br />

paying back. With that grace of two<br />

years, though the market is not as<br />

big as the Nigerian market, but there<br />

is normalcy in business in Ghana,<br />

Ivory Coast, and Cameroun. But in<br />

Nigeria, before you transport one<br />

finished product from one end to the<br />

other, you have to pay. If you do not,<br />

the driver cannot go anywhere. So if<br />

you now put all the costs together,<br />

you discover that you would have<br />

incurred more.<br />

What is the impact of the Federal<br />

Government’s Ease of Doing<br />

Business initiative on your company,<br />

considering the ranking from<br />

the World Bank, which stated that<br />

the country is doing well?<br />

If I say the impact of the Ease of<br />

Doing Business on private sector has<br />

been positive, the percentage is not<br />

up to 10 per cent. The ease of doing<br />

business is a mental policy, but the<br />

attitude of implementers needs to<br />

change. There is corruption from top<br />

to bottom in this country. That is the<br />

truth. Because if the government says<br />

it is supporting the investor to have an<br />

industry here, this is not supported by<br />

the fact that from the local, to state and<br />

federal governments, all that you have<br />

to pay is really frustrating. Yes, not<br />

until the government says specifically<br />

what an industrialist would pay; and<br />

not until it finds a way of enforcing<br />

that and making it easier for manufacturers<br />

to get their products at the<br />

right time, then setting up an industry<br />

in Nigeria would not be effective, as<br />

anybody is seeing on paper. I am still<br />

emphasizing it, if you have an industry<br />

in Ghana, it would not take you one<br />

week to clear your raw materials. But<br />

in Nigeria, even if you have all the<br />

documents right, you cannot clear<br />

your goods easily; it takes weeks.<br />

Nigeria was said to be out of<br />

recession, but in your opinion, has<br />

the country exited recession?<br />

From the manufacturing aspect of<br />

assessment, we are actually getting<br />

better, but we’re not really there. The<br />

manufacturers are crying because<br />

local government bills are there, the<br />

state government bills are there, the<br />

federal government’s numerous bills<br />

are there. So how do you then set<br />

up industry when you get bills in a<br />

suicidal manner? How do you want<br />

this policy to be on the positive side?<br />

Manufacturers are crying every day.<br />

If I show you the details even within<br />

the Manufacturers Association of<br />

Nigeria, they are crying every day.<br />

Though the decision makers are trying<br />

to come up with solutions, but<br />

they cannot enforce what is beyond<br />

their office. Due to all these inimical<br />

policies, some of our members are<br />

In spite of all these challenges,<br />

you are still in business. What’s<br />

your motivating factor, what’s your<br />

driving force?<br />

The driving factors, that is very<br />

simple – it’s what I want to explore. I<br />

want to ensure that people in Nigeria,<br />

get something better than what they<br />

are importing. If we all sit on the<br />

fence and don’t do anything, relying<br />

on the false rhetoric that Nigeria cannot<br />

do it, then we will not get there.<br />

Somebody must be there, and by the<br />

grace of God, in two, three or four<br />

years, I hope that our policy would<br />

be able to accommodate so many<br />

entrepreneurs. For example, if I have<br />

the knowledge of inventing the paint<br />

and I do not do that, that is not in<br />

the interest of Nigeria. That is what<br />

I mean. We started tiles adhesive in<br />

this country almost about 15 years<br />

ago. The tiles adhesive that is being<br />

imported from China and India is in<br />

Nigeria. When we started, we proved<br />

that in Nigeria, we can produce it.<br />

That is the same driving force behind<br />

my organisation pioneering the road<br />

marking paints in Nigeria.<br />

Is it the right time to produce<br />

considering the various challenges?<br />

This is the right time to go into<br />

production; there is no terrain that<br />

is not turbulent. Even though the<br />

terrain is turbulent, if we have to wait<br />

for the time that there would not be<br />

any problem, then there would not<br />

be any development in this country.<br />

I must tell you the truth, I am here to<br />

prove that made in Nigeria products<br />

can do better than what is being imported<br />

into this country.<br />

Yes, we are going to prove the fact<br />

that in Nigeria, we can do something<br />

better. How can we say in Nigeria,<br />

we are importing 100 per cent thermoplastic<br />

road marking paint? It’s<br />

ridiculous! When we studied in the<br />

United Kingdom, almost 30 years ago,<br />

we were first of three people in the UK<br />

on this production line. I was in the<br />

UK some months ago and somebody<br />

asked me what I was doing, that I’ve<br />

been part of the system there and that<br />

the business now is worth billions of<br />

pounds. I was working in the UK. I<br />

came back in 1979. And when I came<br />

back, I worked briefly with the military.<br />

And I said no, something must<br />

happen here. We must do something.<br />

That’s how we started the tiles adhesive.<br />

And we’ve added some other<br />

products. Now in that same spirit,<br />

I am tired of Nigeria importing this<br />

product, that is how we started. But<br />

the first challenge we had was when<br />

we needed to do analysis.<br />

Anyway, I won’t mention the<br />

university. I approached them for<br />

the analysis. You know how much<br />

they wanted to collect? N5.6 million!<br />

And I said to myself, why must I pay<br />

N5.6 million? And I sent it to UK.<br />

You know how much we paid? £520!<br />

Can you compare that? If we have<br />

been discouraged, nothing would<br />

have happened. And I can tell you<br />

in about a year or few years’ time,<br />

other companies will come up with<br />

thermoplastic paint. This is because<br />

they would have come to know that<br />

it is doable in Nigeria.

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