By Bimbola Oyesola
He had pioneered so many products in Nigeria, so when he talks, it’s actually out of experience. Engineer Manny Igbenoba, Managing Director, 7T Microns Powder Limited, relayed several difficulties and challenges manufacturers go through in setting up businesses in Nigeria. From the importation of raw materials, the Customs, taxes, getting funds from banks, documentation down to the officials, they are mind boggling. Not even the present policy on the Ease of Doing Business by the present administration has lessened the burdens of Nigerian manufacturers.
But in spite of all these challenges, Igbenoba who recently pioneered another product, a thermoplastic road marking paints that will save Nigeria over $113 million foreign exchange annually said local production is just the way to go if Nigeria must develop.
He however tasked the Federal Government to put proper monitoring in place to ensure proper implementation of its policies just as it is in Ghana, where he says some Nigerians manufacturers are now relocating to because of the conducive environment.
He speaks more on job creation, backward integration and sundry issues in the economy.
Excerpts:
Challenges
The challenges which manufacturers are facing when setting up firms in Nigeria are many. For me, it’s like when you have a dream of setting up an industry in Nigeria, it looks brighter on paper. But when you really get to actualise it, then you will discover you are actually swimming against the tide, moreso, when you have to import raw materials for production. It’s easy when you have the money, but when you have to source funds from the banks, or the Bank of Industry, to getting the necessary approvals. For instance, if you are going into the chemical sector, you will have to get approval from NAFDAC, permission from Standards Organisation of Nigeria, and from the Nigeria environmental regulatory body. You have to get approval also from SONCAP. You have several approvals to go through. Being a member of the Manufacturers Association of Nigeria is good because you have to belong to a body where you can exchange ideas and have support. But we all have so many issues. Number one is the power supply issue, it is discouraging. For example, in a company like ours, we end up spending N1.2 million in a week to run the generator. The power supply comes in at about two times a week. And at the end of the month, we have to spend close to N670,000 on electricity for that small industry. We spend close to N1.6 million on diesel every week and at the end of the month, we still spend such a huge amount on electricity. The worst of it is when you are importing. The government will give such flamboyant impression that they are supporting Nigerians to set up factories locally. What about the officials that would actually carry out the instructions. The Custom duties, charges and so on and at the end of the transaction. One supposed to, at least, get about 20 per cent discount between the imported item and the manufactured items in Nigeria. Because if you have less than 10 per cent, that means there is no attractive factor there. The imported thermo plastic road marking paint came and sold at about N12,500, but our final product is sold for N11, 600. What is the enhancing factors? If we import the raw materials to produce, clearing it would be an Herculean task in spite of being a member of all these special groups. If one gets to the bank, Custom tariffs would still be high. Whereas being a member of these bodies ought to have ensured that one gets a discount on the raw materials is for local production. But if one does not want the goods to go into demurrage, then one just has to pay even if you have all the documents.
Local sourcing
I can say that 70 per cent of our raw materials are sourced locally, but the remaining 30 percent, is imported, but the cost of sourcing and delivery to the warehouse, is almost the same as the 70 per cent sourced in Nigeria. That means we are not making any headway because if the cost of bringing raw materials is high, the cost of production will also be high. So the 70 per cent sourced locally has been rendered useless. For instance, in Ghana, they are actually encouraging firms to come and do business. The Ghanaian government will give you loan with nothing more than about five per cent. If you have a partner in Ghana, 5 per cent, and gives you a grace of two years before you can start paying back. With that grace of two years, though the market is not as big as the Nigerian market, but at the same time, there is normalcy in business in Ghana, Ivory Coast, and Cameroun. But in Nigeria, before you transport one finished product from one end to the other, you have to pay. Because if you do not, the driver cannot go anywhere. So if you now put all the cost together, you discover that you would have incurred more.
Ease of doing business
If I say the impact of Ease of doing business on private sector has been positive, that percentage is not up to 10 per cent. And the ease of doing business, that’s on mental policy, but the attitude needs to change. Nigerians are corrupt from the top to the bottom. That’s the truth. Because if the government says it is supporting the investor to have an industry here, from the local government, to state and Federal Governments, all that you have to pay is really frustrating. Yes! Not until the Federal Government says specifically what an industrialist would pay. And not until it finds a way of enforcing that and making it easier for manufacturers to get their products at the right time, then setting up an industry in Nigeria would not be effective as anybody is seeing in the paper. I am still emphasising it, if you have an industry in Ghana, it would not take you one week to clear your raw materials. But in Nigeria, even if you have all the documents right, you cannot clear your goods easily, it takes up to a week.
Nigeria out of recession?
From the manufacturing aspect of assessment, we are actually getting better, but we’re not really there. The manufacturers are crying because local government bills are there, the state government bills are there, the Federal Government’s numerous bills are there. So how do you then set up industry when you get bills in a suicidal manner. How do you want this policy to be on the positive side. Manufacturers are crying everyday. If I show you the details even within the Manufacturers Association of Nigeria, they are crying everyday. Though the decision makers are trying to come out with solutions, but they cannot enforce what is beyond their office. Due to all these inimical policies, some of our members are really moving out of the country to set up their businesses. Because if I import a product and am supposed to clear the product with about N500,000 so to speak and at the end of the day am spending over N1.5 million on clearing. One cannot compete favourably with those that are importing. That is the problem we have in this country. It’s the officials that are frustrating the government policies.
Driving force
The driving factors, that is very simple, what I want to explore? I want to ensure that people in Nigeria, get something better than what they are importing. If we all sit on the fence and don’t do anything, relying on the false rhetorics that Nigeria can not do it, then we will not get there. Somebody must be there, and by the grace of God, in another two, three or four years, hope that our policy would be able to accommodate so many entrepreneurs. For example if I have the knowledge of inventing the paint and I do not do that, that is not in the interest of Nigeria. That is what I mean. We started tiles adhesive in this country almost about 15 years ago. The tiles adhesive that is being imported from China and India is in Nigeria. When we started, we prove that in Nigeria, we can produce it. That is the same driving force behind my organisation pioneering the road marking paints in Nigeria.
Is it the right time to produce?
This is the right time to go into production, there is no terrain that is not turbulent. Even though the terrain is turbulent, if we have to wait for the time that there would not be any problem, then there would not be any development in this country. I must tell you the truth, I am here to prove that made in Nigeria products can do better than what is being imported into this country.
Yes, we are going to prove that fact that in Nigeria, we can do something better. How can we say in Nigeria, we are importing 100 per cent thermoplastic road marking paint? It’s ridiculous! When we studied in the United Kingdom, almost 30 years ago, we were first of three people in the UK on this production line. I was in the UK some months ago and somebody asked me what was I doing, that I’ve been part of the system there and that the business now worth ‘s billions of pounds. I was working in the UK. I came back in 1979. And when I came back, I worked briefly with the military. And I said no, something must happen here. We must do something. That’s how we started the tiles adhesive. And we’ve added some other products. Now in that same spirit, I am tired of Nigeria importing this product, that is how we started. But the first challenge we had was when we needed to do analysis.
Anyway, I won’t mention that university. I approached them for the analysis. You know how much they wanted to collect? N5.6 million! And I said to myself, why must I pay N5.6 million? And I sent it to UK. You know how much we paid? £520! Can you compared that. If we have been discouraged, nothing would have happened. And I can tell you in about a year or few years time, other companies will come up with thermo plastic part. This is because they would have come to know that it is doable in Nigeria.