Asian Tigers are here to stay–
AjaguOil
By CHRISTIAN OCHIAMA
Monday, February 18, 2008
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•Ajagu
Photo: Sun News Publishing |
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The Group Executive Chairman of Betcy Group of Companies,
Dr Ausbeth Ajagu, has admonished Nigerian businessmen to brace
up for the challenges posed by the invasion of their counterparts
from Asia.
Speaking to Daily Sun from the background of the Asian trade
avalanche spear-headed by China, Ajagu warned that the “Asian
tigers have come to stay whether we like it or not.”
The situation, dicey as it is, was made even more intricate
by Nigeria’s membership of the World Trade Organisation
(WTO).
According to him, the development was welcome because “we
operate in a global world now,” and urged Nigerians
to accept the ensuing competition with the utmost sense of
urgency that business decisions demand. Ajagu spoke on other
business related issues.
Introduction
I trained in Political Science, Legal Studies and Business
Administration. I am the Group Executive Chairman of Betcy
Group of Companies with interests in Oil and Gas, Construction,
Engineering, Manufacturing, as assemblers of farm Power Tractors,
and Real Estate. I also have interest in tourism. I am the
Executive Chairman of Oak Hotels, Lagos and Oxford Hotels,
Abuja.
In addition, I am an industrialist, entrepreneur, author,
public policy analyst and motivation/conference speaker and
has over 100 published articles/works which include the best-selling
books titled The Entrepreneur and Roadmap to True Greatness.
I am the president, Academy for Entrepreneurial Studies, Nigeria
(AES), national council member and past alternate chairman,
SMI Committee of Manufacturers Association of Nigeria (MAN),
chairman of Amuwo-Odofin Industrial Group as well as 2-Star
Paul Harris Fellow of Rotary International.
I was president, Rotary Club of Amuwo (1997-98), the chairman,
Anambra State Oil Palm Development Agency Board (2000-2002);
member, Presidential Technical Committee on Road Maintenance
(2000-2003), among several other positions. Until recently,
I served on the boards of the Nigerian Shippers’ Council
(NSC) and National Inland Waterways.
I am the chairman, Board of Trustees of Youth & Gender
Network, an NGO and member of the Central Working Committee
(CWC) of the National Think Tank. I am a fellow of the Institute
of Directors’ (IoD) Nigeria, fellow; Institute of Corporate
Administration of Nigeria; Fellow; Institute of Cost Management,
Nigeria; Fellow, the Chartered Institute of Finance Consultants.
I was also chairman of Institute of Directors Industry Committee
(2003-2007) and fellow; Academy for Entrepreneurial Studies,
Nigeria (AES).
I have received several local and International awards which
include the award of “The Overall Best Graduating Student,”
(Masters’ Degree programme) in Lagos State University,
Ojo, Lagos (1996-97) academic session), “Distinguished
Professionalism Award” (2002) by University of Nigeria,
Nsukka, Alumni Association, “Outstanding Intellectuals
of the 21st Century Award (2002)” by International Biological
Centre, Cambridge, England, “Paul Harris Fellowship
Award” by Rotary Foundation, “Outstanding male
Entrepreneur of the year 1999 Award,” by Success Digest
Magazine. “Honorary Doctorate Degree in Business Administration
(DBA)” from the Staton University Tampa, Florida, U.S.A.
and was honoured by my people with the highly exalted title
of Odogwu Nimo for my philanthropic works.
Multiplicity of levies by local councils
By my training and nature, I don’t exaggerate. I don’t
give false information. I still have the letter they wrote
to us. They wrote us and we vehemently kicked. The case is
not yet closed. Why should we pay tax on the generators we
are using? Why should we pay tax on the boreholes we are using?
Is it our duty to provide water. Is it our duty to provide
security? Why do we pay our taxes if we still have to provide
all these things. Governments nationwide and world wide have
the duty to provide security. They have the duty to provide
social amenities – water, electricity and build roads.
But, unfortunately, we have not been seeing that in this country.
I am not saying that the government is not doing it’s
best, but much is still left to be desired.
Is their best good enough?
I will score them 35 per cent,
Funding SMEs
We in the Manufacturers Association of Nigeria (MAN), came
up with an initiative, a well documented ledger and academy
for entrepreneurial studies Nigeria too. We were able to lobby
government and got the former administration to endorse a
series of options which have to do with 10 per cent of the
profit of banks being set aside – profit before tax
of banks set aside for the financing of SMEs. This was later
changed to 10 per cent after tax. Now, they have made it optional.
It is no more compulsory for banks to invest. These are few
indications of what we stand for. The bankers committee, with
due respect to them, first of all started by removing the
tax element and all that and now they’ve neutralized
the Central Bank. But I feel it’s wrong. And unfortunately,
the Central Bank made it optional for banks to invest in SMEs
thereby destroying the initiative.
You and I know that SMEs are near to the poorest poor because
of their lean capacity. They are not able to provide the necessary
wherewithal, to provide the back up securities to be able
to access loans. So, the option came as a remedy such that
the banks can have equity investments in these companies so
that when success is being achieved both parties – the
bank and the hitherto owners of the businesses will be part
of it all. But now that it is optional, no bank wants to invest
in the real sector. No bank wants to talk with the SMEs because
it is believed that the risk factor is too high. And the only
way to develop a nation is when the SMI sub sector is energized
especially when you consider the fact that they constitute
83 per cent of the nation’s workforce. Total employers
in this country, if you divide them, 83 per cent of them come
from this sub sector. I believe that the best bet is for the
federal government to prevail on the Central Bank to reverse
that decision and make it compulsory, mandatory for banks
to invest in SMEs.
CBN and reversal of original decision
I would say that an average banker wants to make a maximum
yield, maximum profit as soon as possible. So, the pressure
was on them probably by their investors or as the case may
be, to maximize profit and the only way to achieve this, they
feel, is by getting the high networth individuals to bank
with them. Not knowing that if you support a small or medium
scale industry when it grows, you will still enjoy the largesse.
The turnover is more among the SMIs, because they are large
in number. They don’t have enough to keep in the bank
– they pay in, they remove. So, the turnover in terms
of cost on transaction (COT), income from that is high. So,
I think from our investigations and research that the banks
put pressure on the CBN and they had to reverse the decision
or rather had to change the initiative by making it optional
which is against the industrial growth of this country.
Why CBN succumbed to pressure
You see, we operate in a democratic setting. Democracy is
a factor of number. The winner takes all. But more than that,
I feel that that shouldn’t be the case. I think the
CBN should return to their earlier decision. Prof Soludo has
been an energetic, principled as well as a forthright person.
But I think this decision is not in the right direction.
SMEs are helping themselves
I think they are doing enough. If you have a baby today, before
the baby will start helping himself, you need to help him
to grow by way of teaching him how to grow, eat, abstain from
bad habits, teach him good habits. Until you are able to nurture
your child, you won’t be able to judge whether he is
doing well or not. Besides, we are talking about growth. If
you have a baby, even if the baby is not doing well, that
does not mean you should abandon him. He remains your baby.
It behoves on you to make sure that he starts behaving well,
by nurturing him continuously. So, I would say that they are
doing their best but they need a lot of tutoring in terms
of ability to keep accounting records, business records, embrace
best practices in corporate governance, enforce the things
we teach in the Academy for Entrepreneurial Studies. You find
out that there’s a lacuna, a void in which people go
into investments without first studying their investments
and their chances.
Academy for Entrepreneural Studies
Academy for Entrepreneurial Studies, Nigeria is a foremost
training institute where we train entrepreneurs and leaders
to achieve the best God has given them by way of grooming
them, teach them best practices in their chosen fields, teach
them to adhere to good corporate governance. We teach them
how to discover their potentials and how to maximize these
potentials because its one thing to discover ones potentials
and another thing is to maximize them. We teach them how to
discover their talents and put them to good use. Because you
may have a wonderful product but until you market it properly,
you won’t be able to achieve your aim.
So also, until you are able to market yourself you remain
isolated. And as long as you remain isolated, you won’t
have your money’s worth. And if you don’t have
your money’s worth, you won’t grow. We package
people and send them forth. Introduce them to the Bank of
Industry if they want to start their own businesses, we introduce
them to people who can help them. If one is in paid employment,
we make him the best, we teach them what it takes to grow
in those departments so that eventually management will recognize
them and promote them. So, it’s all round.
Getting admitted
Basically, we have three categories – fellowship, full
membership and associate. Associate membership is meant for
people who are undergraduates, they come in and pass through
some courses then they become full members and well equipped.
Full membership is meant for those who are graduates. But
you still have to attend the training programme of the academy
which is very educative and compressed in terms of information
and impactful. We have all the finishing meant for people
who have excelled in their respective endeavours but still
need to be identified with society by contributing part of
what society has endowed them with.
It’s a major movement. You have the likes of the president
of the Manufacturers Association of Nigeria, president, Nigeria
Society of Engineers, the Director-General of Standard Organisation
of Nigeria, Director-General of Federal Radio Corporation
of Nigeria, my humble self and the publisher of Success Digest
magazine.
Micro and macro economic policies of government
Yes. I will say splendid. The National Economic Empowerment
and Development Strategy (NEEDS) option is a welcome development.
The State Economic Empowerment and Development Strategy (SEEDS)
also is wonderful. But more than that, like I did say before,
the Nigerian nation and her people, we know our problems,
we know the solutions. But we’ve not had the political
will to implement some of these solutions. You and I know
that for instance, until Prof Soludo came, the foreign exchange
was about N150 to the dollar. Now its N120. That means we
are getting somewhere but that does not mean that we have
achieved what we desire. Single digit is our target in terms
of interest rate. If other countries can achieve it, why can’t
we? Why should we be borrowing at 21 per cent interest per
annum? It is ridiculous. There is no manufacturing concern
that will be able to break even at that rate. It’s not
possible.
Before you import your manufacturing equipment, raw materials,
it takes about three years gestation period for it to turn
around and get into the market. These are the things we’ve
not gotten right. And tax regime which is another policy of
government that I have talked about in terms of harmonization
of the laws and rates and getting them gazette such that all
government parastatals and agencies as well as the three tiers
of government will respect these gazette laws. Until some
of these things are done, we are not achieving anything.
Government and taxes
I would say they are sincere. It depends on those who execute
these laws. The government, I feel, sees it as a means of
making money. But you can’t make money to the detriment
of the people. Because first and foremost, they are there
because of the people, for the general interest. If you really
want to have an interest, if you really want to have a human
face government, you should look at the tax regime.
How transparent is your tax regime. You and I know that because
of the leverage the governments at different tiers have, they
are well disposed to security personnel, they can bulldoze
your premises if you fail to pay tax. I remember one who came
and said that we should not fumigate our hotel and shut it
down. The local government said that we should have invited
their environmental people to come and fumigate our rooms.
I asked them why? They said because it is they that are licenced.
Why must we come to you? Let us assume private professionals
charge N10,000 and your charge is N50,000. So, we went to
court, we got judgement and they apologized. That’s
part of the problem. Why must we go to a local government
before we can fumigate our rooms. It doesn’t make sense.
These are some of the legislations we think are wrong and
obsolete. And until government makes a definite pronouncement
and gazette it, we are not going any where.
Activities in the capital market
If you look at what happened in Cadbury and compare it with
what happened in Enron, the erstwhile United States energy
giant and word.com then you begin to imagine. I believe that
all things being equal, its okay. It’s reasonably real
but may not be 100 per cent real because some of the cases
cited above taught all of us a lesson that so much profits
are declared on paper not in the real sense. And my advise
is that people should take it easy tread with care because
right now, there is recession in the United States of America
and the government there is trying to fight it through changing
their legislations and policies.
If any such thing happens in Nigeria, it will be suicidal.
I am not saying it is real. I am not saying that it is not
real. I will score it about 60 per cent real, 40 per cent
not too real.
Tourism industry in Nigeria
If you look at what operates in Kenya or even outside Africa
in Trinidad and Tobago, if you go to Florida, if you go to
Nice in France, these areas survive mainly on tourism because
people are discovering that there is need to relax, to take
vacation. If you recall the popular saying “all work
and no play makes Jack a dull boy.” But there are certain
indices that must be gotten right. Security for instance.
You must have a secured environment for people to take you
seriously in terms of tourism. People don’t want to
go to places that are not secured. Where you know that your
life is not sure, you are robbed by hoodlums. Nobody wants
to go there. I think tourism is a good business, it’s
a very good sub-sector in any economy. Look at what is happening
in Calabar now. But a lot can still be done in terms of security
and infrastructure. It is very expensive to run hotel services
in Nigeria where you need 24 hour electricity and security.
Diesel is N110 per litre. How are you going to break even?
It’s not possible and upon that government is taxing
you and stressing you. So, it is supposed to be a good business
but it is not quite a good business in Nigeria.
The Chinese challenge
Whether we like it or not, we operate in a global world. No
thanks to Nigeria’s membership of World Trade Organisation
(WTO). Besides, it is a welcome development. Asian tigers
have come to stay whether we like it or not and their products
are so cheap when compared with goods manufactured in Nigeria.
This is so, because, the cost of production in those countries
is cheaper than what we have in Nigeria.
In those places, you take for granted things like light, security,
water, road, even the market. Labour, there, too is cheap
with over a billion citizens. You can then begin to imagine.
Nigeria is just 130 million. For them everything is perfect.
Their raw material is cheap too. They are also naturally endowed.
They have everything it takes. For us here, with our condition,
you have to innovate or you die. What do you do? You organise
yourself, restrategize, make yourself more relevant, bring
into market competitive products, produce goods at very low
cost and make sure that the quality is standard. That’s
why Standard Organisation of Nigeria (SON) and NAFDAC should
move in swiftly and standardize these things.
If you have a right standard and you are able to produce to
lower your costs in terms of over head, in terms of manpower
or rather, you task people to do more than they would ordinarily
do because you need to break even and unfortunately, the government
can’t ban everything. Because if it does, it would contradict
the terms of the agreement signed at WTO. We don’t have
any option. Some of us are embracing them, getting them to
partner with us in our operations and see how best we can
import some of their raw materials to finish them here. But
it is a major challenge. Before, it was the South African
invasion. Now it is the Asian invasion. But competition brings
out the best in every endeavour.
Difference between the rich and the poor
The major differences between the rich and the poor, is what
they think in terms of ideas and how they spend their money.
You need to be cost effective in every planning you do. Before
you embark on any programme, you carry out a cost benefit
analysis. If it is not cost effective, it won’t survive
the test of time. Even if you are a non-governmental organisation,
you need money, plan effectively to succeed and remain afloat,
otherwise you go down the drain. |
