Mahmoud Ajami:High interest rate discouraging foreign investors in Nigeria

Ayo Alonge

Mahmoud Ajami, is the Managing Director of Limex Global Industries Limited, a Lebanese company that is into the production of soaps and detergents, with Bimbo soap as its prime product.

Ajami spoke with our correspondent on the pros and cons of doing business in Nigeria.

Excerpts:

Investing in Nigeria

I am a Lebanese but grew up in Nigeria. I have lived a chunk of my life in Nigeria. I live in Nigeria and I hardly travel back to Lebanon. Challenges of running a company in Nigeria Things used to be very challenging for us in this country, as investors.

If you bring your money into Nigeria, at first, you are oblivious of your chances of succeeding, but it is not the case now. The main issue, I can say, is with the banks. If you have to request a loan, you are charged 23 per cent interest rate and sometimes 40 per cent. As an investor, you may have to go elsewhere to source for the loan, which will now amount to increasing the cost of production.

Company’s size and organogram

In terms of the workforce, we have about 400 staff.

Managing competition

We have been long in this business. We started the company about 22 years ago and 16 years old in Nigeria now.
In the detergent business, others have their own business and we have our own.

We plan to stay far longer and there is nowhere we are going. None of the people that came in later than us are now
as knowledgeable as we are about the business. It is very easy for us to survive because of the wealth of experience
we have. Some won’t even understand how to sell below the cost of production.

Exploitation of Nigerian workers by foreign investors

Of course, that’s not the case in our company. You can go and find out about us anywhere. Even during the economic crisis, we increased salaries in 2015, 2016 and 2017. We increased by over 30 per cent.

Massive retrenchment

No, that’s not about us. We have never done that. We don’t do it.

Surviving in Nigeria as a foreign company

As I said, we have a wealth of experience. We also produce the right products. Sometimes, you have to adjust your business and make it suit the taste and pocket of your customers.

Company’s most popular brand

This appears very difficult for me. It is because we can no longer predict the market. Consumers change their tastes such that when you have a brand moving well right now, the next the month, it is no longer moving. That makes us keep improving on all our brands.

Sourcing raw materials

We wish we can be sourcing locally. We were buying from foreign suppliers and during the crises, we lost a lot of money. The major loss was due to the fact that the dollar rate suddenly skyrocketed above the naira. That made us
lose a lot of money. Then we started sourcing raw materials from local suppliers. It is a lot better for us to source
locally because of the dollar rate and even export criteria.

Impact of sourcing raw materials locally

I would say that it has not been too bad for business because we have to share so much of our profits with local suppliers. But it saves us time and energy. It makes the company run effectively. We can say we want to run at a loss for about six months just to ensure we satisfy the Nigerian market. When importation was very rough for us, it coincided with the instability in the dollar rate, and we just had to squarely face that major challenge.

Guarding against products counterfeiting

We try to control that to the barest minimum. I must confess that NAFDAC (National Agency for Food, Drug Administration and Control) and SON (Standards Organisation of Nigeria) are doing their best. It may not have been easy for us but I must say that the appropriate au- thorities are trying their best to a large extent.

Best moment of the company in terms of profit margin I will say it was in 2008 and 2009 too. 2014 was also good too. We were not expecting that we were still going to be in business during that sea- son. I say this because many
countries that experienced less of what Nigeria experienced during the economic downfall almost locked up but that wasn’t for us here. We knew how to move away from the recession, fast enough.

The security situation, for us, was also impressive. That makes me say that this country is one of the strongest in the world because there are similar economic challenges out there.

Any plan to leave Nigeria someday?

We don’t have any plan to leave Nigeria. Investors are first scared when they come to Nigeria, but come to think of it, the state of insecurity faced here is everywhere in the world – in Europe, America and Asia. I am not leaving anytime because whoever leaves loses.

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Ease of doing business in Nigeria

Certainly, I think the policies are there and they are good. You will know from the way Nigeria managed its way out of recession. If there is no good security system, there will be nothing like ease of doing business. One thing such policies must now address is the interest rates on bank loans. That really makes some investors get discouraged from doing business in Nigeria.

Comparing situation of SMEs in Lebanon to what is obtainable in Nigeria

I think there is no basis for such comparison. Lebanon is a piece of cake when compared to Nigeria in size. They also rely on expatriates a lot to survive.