Doing business in Nigeria, for those in the real sector of the economy, is a herculean task. The challenges, according to Alhaji Remi Bello, Managing Director, Critall Hope Nigeria Limited, are multifarious and range from multiple taxation duplicity government agencies; power problem, influx of substandard products, challenge of business credit as well as manpower deficit. Bello, who is also the Deputy President of the Lagos Chamber of Commerce and Industry (LCCI), as well as President of Jericho Businessmen Club, could not hide his feelings that Nigerian university system could be part of the headache of the manufacturing sector as the graduates being produced by them leave much to be desired.
For a man, who steers the affairs of a company that pioneered the aluminium and steel products in the country in 1958, Nigeria is still a hub for a genuine businesses to thrive despite all her challenges. The LCCI boss, however, said that the success of the sector was predicated upon the government creating an enabling environment for the local investors, who he insisted could compete favourably with foreign counterparts, if given the chance.
He speaks more on other issues affecting the sector. Excerpts:
Economy
It’s been very challenging. The challenges have always been multi-dimensional. We have the challenge of energy, which is now well known to everybody. But I believe if it’s well handled we would turn things around. We have the challenges of funding, credit management, getting funds from banks for the real sector. It’s not easy getting funds from banks especially with the latest policy on the 50 per cent Cash Reserve Ratio (CRR) introduced by the CBN. But before then, we’ve always been having challenges of credit from banks, especially those of us in the manufacturing sector and this has its ripple effects on returns.
This is not unconnected with the high cost of operation. But in addition to funding crisis, we have mulitple taxes from related agencies: We have the Standards Organisation of Nigeria (SON) and the National Agency for Food Drug Administration and Control (NAFDAC) and all these affect my own business lately. As a manufacturing company, one has to deal with SON, and those agencies in the maritime sector when you want to import each time one is importing from any country. And without a certificate from the MANCARP, you need a waiver from SON, so one would have to pay, though not a fixed sum. But if one is a member of associations like LCCI, Manufacturing Association of Nigeria (MAN), you would pay nothing less than N50,000 just to get a waiver, for getting SONCAP waiving certificate.
The big question then is, what’s the N50,000 being paid for? Is it for the issuance of the paper or what value have they given that I should pay the N50,000. This is a challenge. It is a kind of big task we are facing. So also we have the challenge of infiltration from the Chinese market and the issue of fake products, especially in the aluminium line. The quality of aluminium brought into the country is outrageously low, even though the unsuspecting public would not know the difference.
It is a well known fact that the metal is sold by weight world over. It is the content of the aluminium that determines the price of the aluminium products. Gold, likewise, is sold in weight. But the fake importers would sell hollow pipe to the unsuspecting consumers and before you know it, it would start deteriorating.
These are some of the challenges we are facing and again we have that of manpower and labour. Yes, we have men on ground, but the kind of people being produced by our universities leaves much to be desired. A situation where accountant will be thinking for an engineer is not good enough. That is a great challenge we face in the manufacturing sector.
Filling the gap
There is this great shortage of skilled artisans and technicians, that our technical colleges are not producing again. Today everybody wants to go to university. But Critall Hope has an agreement with Industrial Training Fund (ITF) and Yaba Training Centre, where we send our apprentices to have two days theoretical experience weekly and three days of the week in our factory, all leading to certificate. Whatever we spent, ITF would subsidise or reinburse us with 50 per cent of the training cost. At the end of the programme, the trainees would be given certificates which would be well recognised. That is how we have been able to overcome some of these problems.
Expatriate quota
It is one problem that Lagos Chamber of Commerce has been trying to address in recent past whereby some companies would bring in all manners of staff under the expatriate quota. Some would even go into the open market, not to buy but to engage in retail sales that are meant for the local. This, we have been drawing the attention of the immigration authorities to because that it is something that should be addressed to protect the indigenous interest. Before you know it, they would overrun the economy, hence it is a real problem that should be addressed. Unfortunately, I am not sure if government is doing much about it.
LCCI efforts
As far as I am concerned, the best LCCI can do, apart from carrying placards, is to continue to advocate. We can’t carry placards. So the best we can do is to make our position known through quarterly press briefing of the president, as well as when we have the opportunity of hosting government agencies where we can equally express our views about the matter. But on this one, I am not sure if much is being done for now, the reason being that the economy is said to be open with our involvement in WTO, we need to open our border. Those are the things hampering effective combat of this issue.
Sub-standard products
It’s one of the challenges we are facing, but it shouldn’t have been much of a challenge if we had got an enabling enviroment. There is a limit to which we can continue to be protective, but we should have an enabling environment. The world at large is becoming global and smaller by the day. If a company fails to be effective because of government protection, the internet can offer a better alternative. But if the environment is right with effective power, companies here can become competitive.
If Nigerian companies are competitive, we would not be against any products coming in from abroad. Let them bring the products! Experience has shown that local products are always better that those imported products. We have seen it in the electricity industry, where Nigeria cable is seen to be better than the imported cable, that is an example of what can be achieved locally. The same thing in our metal industry.
A consumer can always seek redress if there are problems with the products bought in the recognised companies. For example, my company has been around since 1958. We see people that have bought our products 20 years ago still coming back. But if it has been imported products by a trader, the moment the trader finished selling and discover he does not make much profit, he would move to other products. But this is a business we have invested so much in, the entry is so difficult, you can’t just vacate it that way.
What I am saying is that let there be an enabling environment, definitely the infiltration will fizzle out on its own when there is no patronage. If we are competitive in terms of price, the quality will always be there because the products we are talking about are inferior, they are not good products. That is what we are saying, but we are not able to compete because we are standing at a disadvantaged position. There are some costs that have nothing to do with our operation that now have to be borne by us.
Think of all manners of levies and taxes that have nothing to do with our operations. If we don’t have to bear all these, we would be standing at a vantage position. Whereas those imported products are being brought in with laundered money, drug money, if it’s a real money like our own kind of money, I think with what government is doing with regards to money laundering internationally, interpol and the likes, I think there is a kind of reduction. What we are seeing is genuine infiltration that can fizzle out by good enabling environment for the locals. If we have good enabling environment, with power, labour and security well attended to, our companies will be in better position to fight all these infiltrations.
Foreign products influx
When we talk about losses, we should be talking of it as a nation, not as individual or a sector. We can know the level of loss through the level of our performance. Nigeria is supposed to be a rich country with the abundant resources we have and the oil money we are making. But the oil money is not giving us the kind of value it is supposed to deliver. As a nation, unless and until we are able to get these things right, the loss is unquantifiable. It’s so huge. It’s not something we can say N1billion, N2billion, but it can be seen in the level of poverty in the economy.
Over-reliance on oil
Any wasting asset is not a thing any nation should break her heart over. Oil is a wasting asset. What we have been given that is a natural endowment is our land. Agriculture, solid mineral resources and our manpower.
Those three brought together, we can never run out of nature. The only unfortunate thing is the way we’ve been talking of diversification into agriculture with all manners of programme but with little to show for it. That is where the challenge is, and we all realised it, we all know that the economy should be diversified and Ministry of Agriculture has been talking about this. The way out is our agriculture and solid minerals combined. What I should expect is that the money we are making from oil should be re-invested into agriculture.
I always wonder what we are doing with such expanse of land we have in areas like Lagos-Ibadan expressway and other parts of Nigeria. Is it because there are no people to do it or we don’t believe in it or we’ve gotten so much land that we don’t need all those? We keep on talking about diversification, even if those lands should belong to individuals, what stops the government from leasing the lands for agriculture and return it to the owner whenever the owners want it back. But I don’t think there is anything like that. Under the Land Use Act, the land belongs to the government and so far there has been too much of talking with little action.
SMEs
Sincerely speaking, there is hope. The potential is very huge in this nation. If one is sincere and is a genuine business person, despite all the challenges, Nigeria is still a country to invest in. Why? The people. All this insecurity threat we are having is foreign to us. I am sure it’s going to fizzle out. It’s a matter of time. Just let the government address the fundamentals; make the environment to be conducive, things will work out. We have the numbers in terms of population. We have the market. So what are we talking about? Yes, there is inflation, there is poverty in the land, but despite that, there are genuine business people who still make their money. If one is genuine and sincere with what one is doing? I believe such a business will thrive.
Insecurity
It has to do with our values, something is fundamentally wrong, we don’t know what is worth dying for any longer. Everybody is after money and money is not everything. That is the greatest challenge and the more you run after money, the more people will be very aggressive. When we look at what has caused the insecurity, people have talked about environment; survival instincts, when people don’t have home, all these put together lead to the challenge we are facing. When I said value sense, in those days, when someone is caught stealing, it doesn’t end with the person, but goes down to that person’s family. People would not even want to marry from such family.
There is poverty in the land, how can you address poverty when you don’t create employment? We know the number of industries we used to have in Lagos, Ilupeju Industrial Estate, Ikeja, Apapa. Most of these factories are becoming worship centres. What do we think will happen? People that are supposed to be going to work are becoming idle. What is the major cause of Boko Haram insurgent in the north, it’s poverty and why are the people poor? Because the leaders have misplaced their priority. Their value sense is totally different. The money they supposed to use for the development of the states is being diverted. So all these put together, when you look at it, one will see that the greatest challenge we need to address is our value sense.
By the time our value sense is aligned like what Buhari/Idiagbon were trying to do during their days things will work better. If that is brought back, then people will be more accountable. People will then know that when you are in charge of office funds, you are keeping it in trust. Unfortunately, we all profess to the nation’s creed, forgetting that we will all account for our days in this life. But if the environment is conducive for good business, for people to work, and the value change is re-aligned, things would be better.
Unemployment
If the environment has been good, employment will be created. The rate that we are producing graduates is higher than the rate at which means of sustenance is growing. It’s not even growing. That’s the problem.
And that is even contracting. How many small businesses are we seeing around, like Critall Hope? How many of Critall Hope have we seen being established? Except one man business or the other. Youth unemployment will always be there if we don’t create employment and even in employment, when those in employment don’t leave and the numbers of graduates being produced annually is on the increase, the only way to address it is what I’ve said, make the environment conducive. Government don’t need to establish business. With good environment, businesses will be established and there would be employment.
Trees are never climbed from the top, the number one thing that should be addressed is enabling environment. If that is addressed, people will be able to establish business, when people establish businesses, they will create employment. Well an idle hand is a devil’s workshop. it’s because of the employment that is not being created, that youths are unemployed and what would they do? What would they turn to? They will turn to crime, that is the way out.
Insurgency
I want to believe it’s the way the system has been designed that has led to this. If the system has been designed otherwise, probably we would not have had this kind of experience we are having. One, why should the legislators be fixing their own remunerations? Is there no salaries and wages commission again? Those are the type of question we should ask. A former minister once said that we spent about N1trillion maintaining the legislature between 2005 and 2006. If that is the truth, what are we talking about, is that not the money that we are supposed to put into the industrial sector.
People have been talking about the type of the system we are running – presidential system of government – that it is expensive, but it’s the way that we are going about it that makes it expensive. Unless that is addressed, corruption would continue to be the order of the day. Again it’s still a matter of value sense, after amassing the wealth, what do they do with it? Do they go to heaven with it? They leave it behind, if the value sense is clear, they would know they did not need to amass all these wealth.
Staff rationalisation is not the best way out of crisis.
Multiple taxation
This multiplicity of agencies is only peculiar to Nigeria. I don’t think they allow it in the United States of America and the United Kingdom. Most of these agencies are supposed to be a department under a big umbrella. Having NAFDAC, SON and others standing independently makes it more cumbersome and expensive as their chief executives would have to get all the pecks of office, that take so much from the national treasury. But unlike if SON has been the umbrella body, with others being a department, the cost of running the agencies would not be as much as we are having now. In the cause of sustaining the lifestyle of these CEO and agencies, they resort to all manners of internal funds generation (IGR). We are going to be at an advantage at the long run if most of these agencies are merged because there would a kind of control from the top. I think we are going to be better off having all related agencies combined.
LCCI success
The remarkable success of LCCI is its voice. From the feedback we’ve been having from ministers, commissioners, even governors when we have opportunity of talking to them. They always looked forward to our report to gauge their performance.
The benefit to members on the other hand is like having an insurance, one does not appreciate insurance, until one actually needs it. It is when one has an issue with government or in the industry that one realise the importance. I have had an experience in the past when I had a challenge with one of the government agencies, and it was the LCCI that came to my rescue. We’ve had some of our members that have had issues with SON, and it was through LCCI that we knew that there was a desk in Lagos State that handles such industrial complaint.
2013 performance
The challenges will continue to be there because the energy situation has gone to the worst for the year. The first half has been very challenging, but we are hopeful, we hope we will be able to recover some lost glory before the year runs out. Energy still remain the major challenge for our company because our generators are on constantly. Before now the Federal Government said we’re generating 4,000 megawatts, but now it has dropped to 2,600. Definitely we are going feel it. There is no doubt that it is going to affect our profit margin, since we’ve been running at a very tight situation.
Rationalisation
We have done that in the past, but one has to look at all elements of cost and see the one that could be avoided. We have done it, even though staff rationalisation is not the best way out of crisis. The best way out is to look at how one can push up the revenue through sales. There is a limit to which cost can be cut. Cost cutting is not always the solution but how to improve your revenue base.
Power challenge
There is no two ways about it but to privatise electricity. We have experienced it in the telecommunications sector. Let power sector be fully privatised. When the telecomunication started people were talking about cost, per second, per minute. Initially, MTN was charging us per minute, nothing like per second, but now it has come down. When there is competition nobody will tell the competitors to stop. The way out of electricity problem is complete privatisation period. there is no two ways about it.
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