Revisit tariffs
in the printing industry – Ladipo, MD, Academy Press
By CHRISTIAN OCHIAMA
Monday, May 5, 2008
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Ladipo
Photo: Sun News Publishing |
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The Managing Director of Academy Press Plc, Mr Olugbenga
Ladipo has urged the government to review the tariff regime
of the economy as it affects the printing and publishing sector.
In an interview with Daily Sun, he said that the "average
rate that we pay for our materials is about 30 per cent. For
an industry that does not have local substitute for its inputs,
that, to me, is too high."
Ladipo observed that even with this crushing tariff regime
that is clearly against local producers, the policy tended
to favour importation of finished goods like books through
lower tariffs.
Said he: "That sets you at a disadvantaged position when
you are competing with someone who has to bring in the finished
goods" from outside the country at a lower tariff. Ladipo
also spoke on other issues relating to the printing and publishing
industry.
Introduction
My name is Olugbenga Ladipo, the Managing Director, Academy
Press Plc. I have been with the company for the past 10 years.
Prior to joining Academy, I worked with Nigerian Bottling
Company, makers of Coca-Cola. Before then also, I was with
Akintola Williams Delloitte. I trained as an accountant, I
am married with children.
Academy Press as a publisher
Let me first of all correct one thing. Publishing is an industry
which we are related to but we are not publishers per se.
We are printers. And if I should explain publishing, though
we have an affiliated company which is into publishing that
is West African Book Publishers Limited. We are printers to
the publishers. They do the book publishing. We do the book
printing. That is the difference between the two.
What we encounter in printing
The first thing I have to let you know is that we in the printing
industry, we have a situation whereby virtually all that we
apply in getting the printing done is not produced locally.
If you talk of the machinery, there is no printing machine
that is manufactured in the country. You go on to the materials
– papers, ink, chemicals, plates none is produced locally.
So, you have a situation where you are dependent on bringing
in all those things from abroad. You talk about the distance,
you talk about the availability, you talk about the cost.
These are challenges that we face. Each of the processes has
its peculiarities. You know what our ports system is like.
You know what our government policies are. These are things
that affect the ability to operate smoothly.
Specifics
If you talk about government policies and we start with talking
about the tariffs because this is a major aspect of our costs.
The average rate that we pay for our materials is about 30
per cent. The ink, the papers, though the spares and the equipment
are not as high but put everything together, you have about
30 per cent average tariff rate. For an industry that does
not have a local substitute, that, to me, is too high. That
is one aspect. The other is that the policy too, in addition
to the tariff, does not favour the local producers. Because
at the moment, the finished goods are brought in on a lower
tariff rate. That sets you at a disadvantaged position when
you are competing with someone who has to bring in the finished
goods. Our major product are books. And if I may go back to
the difference between publishing and printing, when I said
that publishing is for the book writers, while printing is
for the printing of the books. It is the publishers that come
to the printer to print, they don’t ordinarily take
on that aspect of the book production. Or they go abroad to
print. If you go abroad, you print and bring the books in
on a lower tariff than the person who will have to import
the materials to print at home. I don’t think it is
a level playing field for the local printers. To us, that
is a major challenge.
Have you called govt attention to it?
Yes, we have called the attention of the authorities to this.
We are a member of Manufacturers Association of Nigeria (MAN)
though the book publishers also have their association. So,
through our sub-sector of the Manufacturers Association, we
put these things across. And we also participate, to some
extent, in the input for the tariffs too. And we always make
our case known. Of recent, we’ve had cause to write
directly to the Presidency and the Ministry of Finance making
copies for the Ministry of Education, so that they can hear
our case. We appreciate the need for everybody to want to
secure his area because if you talk with the person, who is
allowed to bring in materials at a lower tariff, they would
also give you their reasons, that look, the local industry
cannot cope, so that whether we like it or not we have to
go abroad. My concern is a situation where one is at an advantage
position against the other. I won’t mind a situation
where they make the average tariff of printing materials to
be at par with the tariffs on finished product. That, to me,
will be a level playing field. Though one can also argue that
look, the local producer is supposed to be cheaper. But we
are even saying, make it the same. We are still trying to
communicate and reach out to some other government authorities
to look at the situation and make it fair. We are not asking
for any favours. Just let us have a fair play in the system.
Any official response?
There has not been any response. We are still waiting for
response. As I’m talking with you, we’ve had the
opportunities of talking with government officials, top ranking
government officials. They say, oh, yes we are aware of this
but these things are also done because of some inputs from
some other quarters but we have to do something about it.
Every opportunity that we have, we always make this case.
But in terms of whether they’ve been an official response,
we are still waiting for them.
Other constraints
Energy is also one major challenge. If you look at the nature
of printing, we are largely energy dependent and you know
what the situation is about in the country. Energy is not
even there. A printing press runs on power and any time there
is power outage, what happens is that you have to kind of
begin again. Because, before you can get a press running,
you set and practise what we call make-ready, stabilize the
runs and you can imagine, after doing that, you are running
for 30 minutes and Wham! The power gets cut. Then you have
to start again. You lose material, you lose time, you also
suffer damages on that press. So, invariably, your equipment
are getting damaged, you’re losing materials, you’re
also losing time. The time you pay for your labour, you don’t
get the ideal output. Yes, PHCN is not there. You have to
go extra mile of having back up facilities that is providing
generators to run. Generators tend to work more than the public
power source. If I now come to what it has cost us, we have
taken a giant step, if you go into our premises now, we are
almost at the point of putting into operation an independent
power project (IPP) which we recently embarked on. We are
taking advantage of the gas availability to have a turbine
in our premises. We intend to run on that fully cutting off
PHCN. Because of the problem associated with power cuts and
inadequate power supply this has been at a very high cost
to us. We had no choice because we had to avoid some of the
deficiencies that we suffer. So, we have an IPP to take care
of our energy supply for now. But we hope that government
will come around to sanitize the energy sector, so that power
can be available to everybody. There are other infrastructure
that are not available. The roads are a problem. The financial
system is getting better. In the past, borrowing was at a
very high cost. It is still high. But it is getting better.
As high as what percentage?
It’s an average of 16 per cent now. It used to be above
30. It’s a lot of improvement. But when you compare
it with what obtains abroad, interest rate is under two digits.
So, we are still not there. We still have to get to that level.
Activity on the Stock Exchange
Before I go into that, one other area that I have not mentioned
is the skill. You don’t get the required skilled labour
in the system. The skilled labour is not available in Nigeria.
Though, we have two polytechnics doing printing courses, they
are still far off. Even the equipment they use to train is
nothing to write home about.
Skilled labour in terms of quality or quantity?
Quality. Quality is not there. Quantity is not there. So,
for us, we have to develop our training programme. We run
an in-house apprenticeship scheme. We also run a graduate
training scheme and we also have to send people abroad to
train which does not come up in other industries that can
tap from the system. We have to incur costs to bring up to
the level which is ideal for us to do business.
The Stock Exchange
We are quoted on the stock exchange and our shares are being
traded. But since the last public offer which is the IPO that
we did back in the mid 90’s, we have not actually accessed
the capital market for funds. And to that extent, we can’t
say that the company has directly benefited from that source
of funding. So, that is the situation. Unless, tomorrow, we
go to the market and source for fund that is when we can say
we are benefiting from the market.
Reluctance to go to the exchange
I won’t say that we’ve been reluctant because
for you to go to the capital market, the variables to be considered
have to be right. You have to be sure that people have the
ability to take on that share. You also have to be sure that
the price of your share is right, is commensurate with the
value of the company as at the time of going to the market.
So, those are the things we’ve been watching. But apart
from this, the amount needed will also have to be considered
because you are not just going into the market to source for
money. You also have to be mindful of what you need the money
for and mostly you should have major projects as a reason
to source funds in the capital market. We did that in the
mid 90’s, we followed a steady trend of just gradual
improvement in our capacity expansion and the banking system
has been able to satisfy that for us including the internally
generated resources. But we are not ruling out the possibility
of going to the market.
Especially with your IPP
With our IPP, yes. That we have financed from external collaboration.
We have not used our own money.
Satisfying customers’ needs
Definitely, I will be unfair to say that we’ve had it
perfect with customers. Because the customers will always
want you to perform beyond expectation and because there is
always one constraint or the other, you are not likely to
be mostly, able to meet up with the customers’ needs.
Needs in terms of what the customer wants you to do. You can
only perform within the limits of your capability and I will
tell you that in the country, we still don’t have enough
capacity to cope with the occasional upsurge we have in the
print products demands. And when that happens, everybody will
not be satisfied. That’s the simple way to put it. But,
for us, we have maintained a certain quality and standard
right from day one because, one, we set out establishing the
company. We did not set out to be a local standard player.
We out to actually take over jobs that were being done abroad
then. We set out to compete with the best in the world and
if you are going to do that and succeed, you have to maintain
that standard and quality that are comparable with what is
the best in the world. So, that has been our founding father’s
objectives that we have carried through. We have tried to
contribute our quota in the system. We’ve had our ups
and downs. But we’ve succeeded in forging ahead. Last
year, we got the ISO 9001 2000 certification. That is also
an evidence that we maintain certain quality and are recognized
for it. We intend to keep that up.
Challenges of competition
In every environment, there is competition. So, we are challenged
by competition. But what we have done is to play in our own
area of the market. We have our strength which we tend to
emphasize, which we tend to make to bear on the types of jobs
that we do. And to that extent, we do not have too many competitors.
We are volume players in the industry. There are other printers
but we don’t necessarily compete with them. We emphasize
our capacity to take on volume. There are other printers that
do volume printing but it is not a rivalry, so to say because
we know that every quality player will get his own patronage.
In terms of managing the competition, we just emphasize our
quality and emphasize our standard.
Market acceptance
Definitely, the market acceptance is commensurate with what
we put in. The market acceptability, we don’t want to
speak for ourselves. We want the customers to speak for us.
The customers are in the best position to do this. Some of
them have done this. They’ve given us award. We’ve
had so many awards both in the area of being the best printing
company for some of our customers. I mean they have other
printers but they choose us and say we are number one. We
take that as a good compliment. We are also a known brand
for quality and that is why some of our customers have stayed
with us. That is why they’ve been with us because they
know that they can come here and go to sleep. What you face
with some of other printers is you give a job out and you
have to stay and lose sleep because you’re never sure
of what is going to come out of that job. But in our case,
many of our customers know us for our worth and when they
come here, they know that they can just leave it for us to
do and wait for the result. And we have tried as much as possible
not to disappoint.
Printing industry in the future
When we talk of the future, we have to look at our economy
as a country. Because the important thing is to establish
how important you are in the economy. And what would be the
effect of the economy whether it is going positive or negative.
We see the Nigerian economy as growing and you can see what
has happened to the Gross Domestic Product (GDP) in recent
years. What has happened to the interest rate and the per
capita income and inflation. These are positive economic indices.
And we can only go along with that and benefit. We also have
to look at the government, we are in a democracy and when
you have democracy and you talk about the benefit of democracy.
There is a major area of democracy that has to do with printing,
that is the area of education.
In Africa generally and Nigeria is not an exception, there
are places where we still need to meet up with the rest of
the world and democracy is the system that is going to enhance
the process. People appreciate the importance of education.
We have to produce books. People have to read. We have to
produce printing materials and we are working to be part of
the development. We intend to grow along and be able to take
more challenges in coping with the upsurge in the needs of
this important sector.
Reading culture and the printing business
It has been established that the reading culture in Nigeria
is not okay. I think this has to do with the economy. A situation
where people are unemployed, people are hungry, reading is
the last thing that they want to do. I even think it is getting
worse. I remember during my school days, we were still able
to afford one newspaper or a weekly magazine. But these days,
people are not even able to feed not to talk of being able
to buy books or materials to read. But in recent times, the
economy is improving and soon we should be able to get back
to overcoming some of the poverty effect of inability to take
to reading and go back to reading. The government, too, should
be ready to fund that aspect especially for the junior ones.
The UBE programme is a laudable one but I am not sure if it
has had the desired effect up till now. Maybe by the time
they come up with what they are going to do, then we will
see what happens. Because the government is supposed to provide
books for the populace especially the junior school students.
We don’t have to saddle the parents with the responsibility
because people are still not able to afford reading materials
for the children. So, the government should be in a position
to assist, when that is done, the reading culture will change
because you start from the grassroots. The adults are most
likely already at a level where they are hardened. Somebody
that is not used to reading and is over 40, can you then start
converting that kind of person?
Printing and publishing and the 2020 Vision
We’ve mentioned one thing, education is very important
and education is largely by reading. We play in the sector
of book production. So, our role is to believe that more printing
materials, more books will be made available to people and
we should be ready to be the ones to provide that. We should
also be able to provide that at a cheaper rate, so that given
the same amount by having more quantity in terms of number
of books to be made available to the populace to read. So,
that is one major role. Apart from being alive to our social
responsibility, employing people, pay them well and also see
what we can do for the community in which we operate, we give
back to the society.
Corporate relationship
The relationship between the management and staff have been
very cordial. I always say that it is like two persons whose
sustenance and existence depend on each other. To that extent,
you have the same goal. Because the staff are the ones who
are to make the company, to aid the management, and the objective
of the management is to balance the stakeholders. We have
the staff, we have the owners of the business and we have
the government. We ensure that everybody gets satisfied. It’s
not to make one part suffer and the other are enjoying the
better part of the largesse. So, we talk, we run the company
together. We organize forum, have easy channel of communication
between staff and management and we agree on the way forward
and implement it. Because you can’t be giving directives
or instruction which people don’t believe in. Mostly,
they won’t do it the way it is supposed to be done and
that means that the objective will not be achieved. So, we
carry each other along. The management carries the staff along
to ensure that the objective of the company is both agreed
on and implemented together. What is due to staff is given
to them. We have many welfare packages that we put in place.
Because a staff that is not happy is not likely to give its
best. Within the available resources, we make sure that we
satisfy our staff. Anything beyond that is what we would say
is going beyond the possibility. Because, you can’t
give what you don’t have.
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