Indigenous Nigerian companies, supported, can become huge multinationals – Chief Umeofia, Erisco Goup boss
TOPIC: MADE IN NIGERIA PRODUCTS: THE ONLY VEHICLE FOR SUSTAINABLE DEVELOPMENT
A PAPER PRESENTED BY CHIEF ERIC UMEOFIA (IKUKU-OMA, AMICHI), PRESIDENT/ CHIEF EXECUTIVE OFFICER OF ERISCO FOODS LIMITED ON THE OCCASION OF THE 18TH MIKE OKONKWO ANNUAL LECTURE, AT SHELL HALL, MUSON CENTRE, ONIKAN, LAGOS ON TUESDAY SEPTEMBER 05, 2017
INTRODUCTION:
I wish to first of all stand on existing protocol by going straight to thank His Lordship, the Presiding Bishop of The Redeemed Evangelical Mission (TREM) – Dr. Mike Okonkwo for deeming it necessary to invite me in my capacity as one of the chief champions of made – in – Nigeria goods by asking me to present this paper. Your Lordship, I am grateful for this opportunity on my part to tell Nigerians first the obstacles towards a sustainable development of our economy through a robust support of made in Nigeria products and also the benefits Nigeria stands to gain if the made in Nigeria product policy is well formulated and implemented. Thus, it is my hope that at the end of this presentation, I would have succeeded in convincing some “army” of people who would join in championing the case for a robust policy and implementation of same by our government at various levels. This is with particular reference to other churches since this is the first church related lecture of this type to the best of my knowledge.
This is so important because no nation can develop without a strong industrial base that promotes the local production of goods and services consumed in that country. This is the singular difference between import dependent countries and countries that are industrialised and highly successful at promoting their local products.
DEFINITION OF MADE IN NIGERIAN PRODUCTS
Based on our practical experiences and challenges in the tomato industry, I believe it is important that we all understand correctly what we mean by “made in Nigeria products”. Ordinarily, the topic would not have required any further definition or interpretation given the simple meaning the expression “made in Nigeria products” conveys. This is not so based on the experience and challenges we have had to face since coming into the tomato manufacturing industry.
Without wasting time, made in Nigeria goods could be categorized into two sections:
- Nigerian products manufactured by companies owned by indigenous Nigerian citizens
- Nigerian products manufactured by foreign owned companies including Asians,
Lebanese and European etc owned manufacturing companies.
I believe this classification is important because it has been one of the reasons some of us in the Manufacturing Association of Nigeria (MAN) have had to form a parallel body called Association of Agricultural products & Equipment Manufacturers in Nigeria (APEMAN). Through this classification, we are seeking for the Federal government to create special incentives to encourage the indigenous manufacturers/ investors the way it is done in other countries like Angola, Ghana, China, India etc. We should do what other countries do by applying unwritten law to favour their indigenous investors at all times.
This is especially so because of the current state of the economy, the Federal Government’s MDAs through its policies would seem to be supporting foreign owned companies more compared to their Nigerian counterparts despite the fact that majority of them are not genuine, given their antecedents. For instance, they have access to easy credit facilities most times at single digits interest rate and also better access to foreign exchange compared to their Nigerian counterparts. Thus we formed the APEMAN in order to draw the attention of the government to this anomaly and also to remind them that the indigenous manufacturers in every country all over the world are the engine room of sustainable development in those countries. Nigeria’s case cannot be different unless we do not want genuine development at the pace of other countries especially some of the forward looking African countries like Rwanda, Ghana, Angola etc. After all, one of the industrial philosophies of our dear president Muhammadu Buhari (GCFR) is to eat what we have and produce what we need. We seize this opportunity to call on the Federal Government to implement the policy that all purchases of goods and services by MDA’s should be channeled towards local producers where they are available as this will encourage indigenous manufacturers to grow.
OBSTACLES TO SUSTAINABLE DEVELOPMENT THROUGH THE DEVELOPMENT OF MADE IN NIGERIA PRODUCTS
Having defined made in Nigeria goods in terms of goods produced by foreigners and indigenous manufacturers in Nigeria, I wish to highlight some of the issues or obstacles towards the production of made in Nigeria goods especially by indigenous manufacturers/ investors. The obstacles which may not be exhaustive include the following:
- Lack of access to enough foreign exchange. Till date, the Central Bank of Nigeria (CBN) still operates a foreign exchange regime that largely favours importers to the detriment of indigenous manufacturers. We have had to struggle to buy most of our foreign exchange from parallel market for the importation of needed machineries, raw materials and machine spare parts while the same funds are allocated in huge volumes to importers of fish heads, frozen fish, supermarket items as against CBN policy of ban on the 41 items. Who is fooling who if we cannot be honest with ourselves? The CBN must change this approach by giving needed priority to manufacturers especially indigenous manufacturers who are seemly unknown and therefore are not usually favoured in the allocation of foreign exchange. How can the economy be diversified when we deliberately allocate more foreign exchange to importers of finished imported goods that can be produced locally with high quality, to the detriment of the indigenous manufacturers. Impossible!
- Lack of appropriate policy against dumping and importation of substandard and cheap products from countries like India and China and other Asian countries. This is one of the fastest ways through which indigenous manufacturers are killed. We have had a running battle between the importers of substandard and fake tomato paste for some time because NAFDAC and the other regulatory agencies have not been doing their assigned jobs of ensuring that no substandard or fake products are imported into the country. Fortunately, Federal Government realized the importance of preventing these types of products from being imported and subsequently banned the importation of all types of tomato paste which took effect from August 19, 2017 after a long fight with the import cabals. Thank God. Although we wait to see the impact of the implementation of the policy but we hope our President will complete the good work started. Countries like Senegal banned importation of tomato paste over ten years ago. Unfortunately, this policy of stopping importation of fake and substandard tomato paste product has not been faithfully implemented by the relevant agencies especially NAFDAC. This is one of the frustrations being faced by indigenous manufacturers of products that can be produced locally.
- The role of bribery and corruption. Unlike other countries like UAE, Angola etc where we have our operations, some Nigerian government officials are terribly not patriotic and sincere in the implementation of the various policies that will encourage the local production of made in Nigeria goods. Most of the time, they align themselves with foreigners against the interest of indigenous manufacturers and the nation. These foreigners are more interested in short term gain via what they benefit from the Country. The irony of this situation is that President Buhari and his cabinet have always come up with good policies to help develop the economy. This has always been frustrated by the activities of some civil servants for personal gains. This must stop.
- The role of the multiple taxation by the three tiers of government (i.e. Local, State and Federal Government). This increases the cost of products and further makes the products uncompetitive compared to the prices of the sometimes fake and substandard products especially products imported from Asia and other countries; while the import cabals pay little or no taxes.
- Lack of infrastructure: most of us provide roads, electricity, water etc at great cost. This is most unacceptable if Nigeria wants to develop its economy through the local production of made in Nigeria products. At Erisco Foods Limited, we provided these facilities for our use at great cost especially electricity. It costs us a lot to generate our power supply, water and other relevant infrastructure needed in our production process. In other countries, these facilities are cheaply provided for their local manufacturers by their own governments. It has the advantage of making the prices of goods cheap and competitive.
- There is presently no practical policy by government to deliberately encourage the growth of indigenous manufacturers the way it is done in other countries. Government must recognize that indigenous manufacturers are not as financially strong as their foreign counterparts that are often supported with cheap funding from their home countries. Therefore, there is the need to encourage them to grow in line with the fact that they play a very genuine and important role in employment generation among others. This will spur more investments by Nigerians in the manufacturing sub-sector of our national economy. To do otherwise will act as a disincentive both to prospective manufacturers and the existing ones. Some of the civil servants are not patriotic enoughin the handling of issues related to the indigenous manufacturers. They favour the foreign manufacturers more obviously because of what they stand to gain. This is very unfortunate. In most African countries currently referred to as some of the fastest in terms of GDP growth, they deliberately structure their policy the way it favours indigenous investors/ manufacturers. Some of the countries are Ghana, Angola, Rwanda, Kenya etc.
- Nigeria is the biggest tomato paste importer in the world with over USD1 billion per annum. I call on all Nigerians to have a change of attitude and stop the penchant for consumption of foreign made products. For instance, India, China, America, European Union deliberately consume and patronize goods made in their home countries while they are out of their countries but we – Nigerians always like to buy foreign made goods in and out of our own country. How then can we develop our own country to be better than others or are they not human beings? Even when some countries have no oil yet they are better than us due to consistency in government policy and patriotism. The best of countries in the world is what I want my Country – Nigeria to be in the shortest possible time, by His grace. If you agree, say “so shall it be”.
- Policy inconsistency and Policy somersaults by succeeding governments particularly at Federal and State government levels. This is one of the greatest problems towards sustainable economic development
SUMMARY OF THE KEY CHALLENGES AFFECTING THE DEVELOPMENT OF THE ECONOMY – SPECIFIC TO ERISCO FOODS LIMITED
About two years ago, NAFDAC carried out an investigation on tomato paste sold and consumed in Nigeria and came out with a shocking report that over 91.1% of all the imported tomato paste sold in Nigerian market is fake and substandard (copy attached) but they are yet to enforce the recommendations till date. It may interest you to know that over 75% of fresh tomatoes farmed in Nigeria get wasted in the hands of our farmers year in year out due to absence of means of processing & storage of fresh tomatoes. The most painful thing on this is that Nigeria can cultivate and harvest fresh tomatoes twice a year against what is obtainable in China, European countries and USA that their climate condition supports only one season farming in a year. Abomination! You can now agree with me that we need what is more than deliverance to use our God’s special human and material resources to liberate ourselves from continuous economic slavery by some foreigners though pretending to be our messiah while their deep intention is to root, kill and laugh at us as fools that sold our right and precious resources to them for free of charge for them to continue to be our bosses forever; God forbid!
It might shock you to know that we are the architect of our economic problem for some years now when we decided to abandon our own God’s given natural food and other good things to promote importation of some substandard and fake products from other countries with impunity. By this action alone, we are personally and collectively responsible for all the criminalities, unemployment and backwardness of our economy as we prefer to export our raw materials like oil, cocoa, cashew nuts etc unprocessed and import finished goods with the same foreign exchange we ought to use to industrialise our country, fix our roads, upgrade out hospitals, power generation and create quality jobs; but we rather decided to take insult from so called foreign investors who are investing with our own funds and subsequently transfer the proceeds to develop their own countries after manipulating our financial institutions. Unbelievable!
I am saying this based on the experience I have in Erisco Foods Limited that Nigeria’s MDA’s prefer to suffocate us to death for their selfish interest for the reason that we are indigenous company. If not, how come Erisco Foods Limited is yet to produce at 20% of the installed capacity of our plant (450,000 MT/ Year) since inception? This is despite the fact that we are the biggest tomato paste manufacturing plant in Africa and 4th largest in the world with over 2000 staff members. We provide the power and water we use to run our factory, and at the same time get most of our FOREX needed to import machinery, machine spare parts and raw materials (that cannot be sourced locally) from parallel market at expensive rate, CBN only gives us a fraction of our FOREX needs on spot basis and some of them at 60 days forward while the same Central Bank of Nigeria (CBN) gives FOREX to importers of tomato paste, frozen fish, fish heads etc which the same CBN included in the popular “CBN 41 items” that would not be imported with CBN’s FOREX allocation. Note that machines and spare parts do not hear or understand lack of foreign exchange when they breakdown due to unavailability of replacement. What manufacturers need is allocation of FOREX at spot basis. Since nobody saw anything wrong in this, we reacted against this hypocrisy and they tagged our reaction as ‘talking too much’ but we have no regret in our reaction as my love for my country – Nigeria is supreme compared to any material thing to me and my company, and that is the reason we refused to import any finished food item into Nigeria since inception despite the fact that there was no FOREX restriction at that time but our reward today is punishment for being patriotic and standing by the truth. But for the sake of patriotic Nigerians like President Muhammadu Buhari and the Vice President – Prof. Yemi Osinbajo among few others that gave assurance and their body language to make our economy better, we are determined to continue to do our best based on the opportunity/ talent given to us by God until our country becomes “born again” economically as manufacturing sector is the only real sector that can make any country to move forward faster and be industrialised. Can you imagine that presently, manufacturing contributes only about 3% of Nigeria’s GDP? This is one of the reasons for the present high level of unemployment with equal high level of crime, ethnic restiveness among the youths etc.
I think it is time that Nigerians should design our own (Nigeria’s) economic technique to solve Nigeria’s economic problems as no foreign country will genuinely advise us how to get out of our economic problem. This is because no country will ever help another country economically most especially if the better country is getting good income from the poor country by exporting/ dumping substandard products and enslaving them economically. I therefore plead with all of you here and those at home to know that it is only we – Nigerians that can make our country and its economy to work with our made in Nigeria in all aspect of our economy because God’s blessing is enough for us that all Nigerians should be working and contributing to put food on his/ her family’s table. But we must change today and do the right thing. May God help us out. Can I hear Amen.
BENEFITS OF PROMOTING MADE IN NIGERIA PRODUCTS
No nation can develop its economy without robustly supporting their indigenous manufacturers. The fact that government of some of the industrialised/ semi industrialised nations like USA, China, India etc are pursuing this policy of supporting their indigenous manufacturers first means it is the right step in the right direction for Nigeria. Therefore, I wish to enumerate below some of the benefits that are derivable in supporting or promoting made in Nigeria goods especially through indigenous manufacturers.
- Increase in the level of employment generation. The more these companies grow, the more they are capable of employing more Nigerians. The capacity to create employment must be through government providing necessary support to the private sector.
- Foreign exchange earnings through the policy of import substitution. Nigeria has transmuted from being net importers of cement to net exporters of cement through the robust support/ policy provided by government. Today, Dangote Cement is in about 11 countries even outside Africa. This should simply be replicated in other areas of the economy, like tomato paste that can earn our country foreign exchange of over USD1 billion per year, if adequately supported by Government.
- Good and adequate support from government will increase the GDP of the country which will in turn ensure the reduction of poverty, crime etc. This is the kind of thing a good support for indigenous manufacturers can do.
- It is the indigenous manufacturers of any country that lead their industrial revolution. Thus, the more conducive the business climate, the more likely every company will thrive and the more healthy the economy. Nigerians should see and look up to the indigenous manufacturers for the sustainable development of the economy the way they look up to their clerics for spiritual succor.
- Indigenous companies when adequately supported, are capable of growing to become huge multinationals, made in Nigeria and not promoting only other countries made multinationals to our detriment.
CONCLUSION
I plead with all Nigerians to take this campaign of patronising made in – Nigeria products as their own fight for betterment of our economy and future generations not minding the frustrations from some unpatriotic Nigerians that do not wish our country – Nigeria well. So we must keep hope alive no matter any circumstance that comes our way. Our God shall see us through – Amen
Finally, we give glory to the Almighty God for healing our dear President who recently returned to the country from a long medical vacation. Therefore, it is expected he would give renewed attention to the key drivers of the economy especially on issues that are capable of supporting the growth and expansion of our indigenous manufacturers.
I thank Bishop Mike Okonkwo for this wonderful opportunity given to me in service of humanity. May our God continue to empower you to continue with this good work.
Thank you and God bless you all.
CHIEF ERIC UMEOFIA (Ikuku-Oma, Amichi)
President/ CEO of Erisco Foods Limited
THE TOMATO KING
The Sun Newspaper Manufacturer of the year 2015
Zik Prize Award in Business Leadership
Pillar of Education (Amichi)
The Igwe of Tomato
The Industrial Field Marshal
