12-02-2018
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
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.