How NAFDAC Officials Set Our Thoughts On Profitable Expansion

At times, officials of the regulatory agency supervising a particular segment of the productive sector may be instrumental in the growth of a business within that industry. It is so with Abba Bond Corporation and Immense Food Limited. The companies were counselled by officials of NAFDAC to expand their factories to enhance economy of scale, they also counselled the companies’ management to look beyond Lagos for their expansion. GOKE OLUWOLE was there when the new factory of the companies was commissioned and a new range of products launched at the Ibafo factory site of the companies. He spoke with Funmilola Aina, the managing director and chief executive officer of the two companies.

Tell us how you started the journey into the world of food and beverage processing before you arrived at where you are now?

My name is Funmilola Aina. I am the MD/CEO of Abba Bond Corporations and Immense Food Ltd., business conglomerate which was the realization of my husband, Mr. Moyo Aina’s brainchild, and a long time dream that was incorporated in 1991 as a registered food and beverage processing establishment with a vision for excellence in all our production line.

Our goal is to be immensely unique in beverages and food production, providing excellent customer services using a well trained and motivated workforce. Though, we started with the production of sachet water (pure water) which was duly approved by NAFDAC in 1999. It was our pure water that was the official table water during the Junior Olympic Games in Lagos. Thereafter, we pioneered and introduced flavour drinks into our production line with three flavours: Blackcurrant, Pine apple, and Orange.

However, on realization that presentation, taste, and correct pricing are the most essentials in beverage and food manufacturing and marketing, we decided to carve a niche for our brand by introducing the then first ever bottle locking nylon packaging in 2004, knowing full well that we had to attract the children who are our main target consumers. The unique taste of our products endeared us to become one of the active players in the sector within a short time that we entered the market.

In 2007, the company researched and developed a unique creamy yoghurt, branded as O’YEZ Yoghurt. This was approved in February 2008 by NAFDAC, which as of today, has gradually become the most sought after yoghurt in the Nigerian market.

What is your company’s corporate social responsibility philosophy?

Our corporate social responsibility is to be fully involved in the development of our immediate locality by touching the lives of the people through our direct impacts like creating employment opportunities for the people around our factory sites. We have been supportive of the welfare of the people through the maintenance of roads adjoining our factory, our company has provided boreholes to some communities around and within Ibafo in Ogun State. We have also been donating exercise books to all the schools within our community here in Ibafo, We have also been donating to some motherless babies homes and orphanages, We have also been paying all taxes as expected despite the multiplications of taxes by different government agencies.

Has it been smooth sailing through all these?

After every dark cloud on our sky, God has always rewarded us with brighter moments; with determination, focus, and believing in God, we were able to conquer some of these challenges while some still linger. The first challenge we had to contend with was this expansion project that led us to Ibafo. We were formerly in Lagos but for the urgent need that NAFDAC officials advised us to look for a new factory site outside our old factory. NAFDAC officials said it will be cheaper for us to go out of Lagos where land is very cheap. At the end of the day, we were able to get this place in Ibafo, Ogun State. We were also faced with the challenges of power or energy supply like every other manufacturer; the cost of fuelling our generating set is really killing the business. Manufacturers are really groaning under the heavy yoke of alternative power supply, lack of infra-structural amenities like good road network and water supply.

We are even the one sinking boreholes for the people of this community, security of lives and property are at the lowest while some government agencies are burden on us with multiple taxation. Because of the welfare of our workers we have to look for a decent hospital that will care for them and their families, but the people here have no access to good public health care. Our children are all registered in private schools as there is no public school around. Getting funds for some of our projects have been another challenge; we now know that when a company is still growing no bank will be interested in it.

How would you describe your points of achievement in your choice of entrepreneurship?

When you talk of achievement, to me, it is just when I am thanking God for the fulfilment of a dream. This is my own understanding of achievement as a servant of God. In fact, I need to tell you, I am by his grace a pastor with the Mountain Of Fire Ministry [MFM] and one of our achievable dreams so far is the completion of our new factory, the endorsement of our brand as it was picked as the official drink during the Junior World Cup in Nigeria some years ago, the acceptability of our products in the market is another mileage in our journey into manufacturing in Nigeria.

As a child of God I still thank God for his grace and to my lovely and adorable husband who is the Chairman of this company and he is also the main financier of the Abba Bond Corporation and Immense Grace, makers of the top range drinks that include the O’YEZ Yoghurt we are launching today. Without sounding immodest, I would also say that the market men and women too are some of our most priced possessions as they are the faces of all our products round the whole corners of Nigeria wherever you see our product being distributed. When we were awarded the Nigerian Finest Flavoured Drink of The Year 2008 Award by the Institute of Direct Marketing of Nigeria at the Lagos Sheraton Hotel & Towers also hallmarked the attainment of a great height in the life of this organization.

NIGERIAN ENTERPRENEURS SCARE: GOVERNMENT POLICIES THAT DESTROYED BIG-TIME BUSINESSES

Only the naïve entrepreneur in Nigeria is excited with the contemplation of floating a manufacturing concern. The wise ones, schooled in the experiences they have had to contend with in the ever changing dynamics of manufacturing and other investments tasks in the production lines have fled the scene to the shelter of trading and merchandising. This, for good reasons. The challenges of conducting manufacturing and related production activities in the country, though, besetting, are however benign when compared with the ease with which government oft volte-face on policies and action stamp out the promises or existence of a once upon-a-time manufacturing plant.
In this review, we track some of the celebrated industrial concerns that had been heckled into non-existence by government policy summersaults over the years, official actions or inaction that have become the scare of entrepreneurs.
Presidential Initiative on Cassava Production
In 2002, cassava suddenly gained national prominence following the pronouncement of a Presidential Initiative. The intent of the Initiative was to use cassava as the engine of growth in Nigeria. In the ordinary sense, the perception is that cassava is indigenous to the country, official statistics claim that Nigeria grows more cassava than any other country in the world with a production capacity of about 34 million metric tones a year.
The Presidential Initiative on Cassava production and export was initiated in the year 2002. The goal of the initiative was to promote cassava as a foreign exchange earner in Nigeria as well as to satisfy national demand. The challenge of the initiative was to make Nigeria earn 5 billion US dollars from value added cassava exports by 2007. The objectives of the Presidential Initiative on Cassava was to expand primary processing and utilisation to absorb the national cassava production glut, identify and develop new market opportunities for import substitution and export stimulate increased private sector investment in the establishment of export oriented Cassava industries, ensure the availability of clean (disease free) planting materials targeted at the emerging industries, increase the yield, productivity and expand annual production to achieve global cassava competitiveness, advocate for conducive policy and institutional reforms for the development of the Nigerian cassava sector and integrate the rural poor especially women and youths into the mainstream of the national economy.
The federal government under Chief Olusegun Obasanjo backed the initiative with funding support while encouraging banks and other government and multilateral agencies to drive the initiative through funding support.
Suffice to say that in response to the government drive, an industry revolving around cassava plantation and processing started emerging. Opportunity seekers were encouraged to invest because of the obvious outward flourish of government. The signs were obvious too, under the Presidential Initiative on Cassava, Nigeria mandated millers to integrate 10 percent cassava flour to wheat flour in making bread, a percentage mix of ethanol in refined petroleum motor spirit (petrol) in the nation’s refineries. These were moves aimed at increasing the utilization of the tuber crop.
Other statistics pointed to the profitability of entrepreneurial engagement in cassava related activities; the domestic demand for cassava starch is about 130,000 tonnes per annum and 200,000 tonnes per annum for high quality cassava flour. The domestic demand for ethanol is 180 million litres – all ethanol is imported In Nigeria. None of these markets are being satisfied by local supplier even till today in Nigeria.
Individual entrepreneurs were attracted into the field and the buzz made the rounds of great things happening in cassava production in Nigeria. Unfortunately, the fancy was just for a time, even before the exit of the Obasanjo’s regime, there were obvious signs of government distancing itself from the clarion call to cassava farming and processing, soon after the assumption of office of President Umar Musa Yar’Adua, immediate successor to Obasanjo, federal government articulation of the cassava initiative lost its din.
The lacklustre enforcement of the policy of mandating flour millers to integrate 10 percent cassava flour to wheat flour in making bread and other confectionaries were altogether abandoned. Of course, the idealism of the refinery blend of ethanol with petrol had been a mirage according to entrepreneurs that had found their ways into cassava processing. “The nation’s refineries only functioned epileptically, rather, the bulk of refined products are being imported from foreign refineries, so the idea of the ethanol could not have worked out at all.” A cassava processor said
The government of Yar’Adua nailed the fledgling sector by abandoning the ethos of the Obasanjo initiated presidential initiative on cassava initiative. Importations of cassava processed by products and all have been allowed in the country with import tariff of 20 percent value.
“Apparently, this has sounded the death knell for that endeavour.” Another cassava processor said. “Local conditions have made it difficult to produce and process cassava, the thinking was to protect the industry until such a time that it would be able to compete favourably with importation but I understand that government decided to make this reversal because of the need to mitigate increased food prices. But then, we think that it would have been better to strengthen cassava production and processing in the country to boost food supply and to earn more income for government through export.
In the final analysis, the fact is that most entrepreneurs have had their investment and efforts gone up in smoke, another promise subverted by inconsistent government policy shift.
NIGERIAN LAMP PLC
One of the outstanding business endeveavour the recently demised Chief Beyioku Adebowlale of the Adebowale Store fame would be remembered for is his Nigerian Lamp Industry Plc. A courageous indigenous effort to play in the main stream manufacturing sector, when Adebowale built the Nigerian Lamp plant in his native Epe in Lagos State, it was reported to be the first of its kind in Africa. The plant was equipped to manufacture light bulbs and fluorescent.
It is reported that Adebowale was encouraged to make a foray into the manufacturing effort away from his electronic products trading concern in the Adebowale Electronic Store by the positive outlook of government incentive for indigenous manufacturers to commit to the economy in the 1980s.
Unfortunately, by the time the plant came on stream, it was like hitting dirt on first day of commission, government had made a reversal on policy, rather than protect local industries, government lifted the restricted importation of bulbs and fluorescents tube and other lamp forms. The market place was immediately flooded with Asian and Far East Asian countries bulb brands, which were cheaper though low in quality.
Nigerian Lamp, unfortunately, had become a publicly quoted company, Nigerians had subscribed to is initial public offer, but with the influx of cheaper products and brands into the market, the company’s operation became blighted and soon after became literally comatose. The company that never took off for operation eventually was placed under a receiver manager. This officially announced the demise of the once upon a Time promising company.
ROKANA INDUSTRIES PLC
Rokana Industries, had, back in the late 1980s caught the attention of the dentistry world with its production of the uniquely styled Jordan tooth brush. The market penetration of the Rokana brand of tooth brush was fast and quite domineering. It is reported that in its first year of introduction, the Rokana brand had pushed other imported brands to the back of the shelves. Jodan tooth brush was, considered the authentic Nigerian brand though the brand is a British franchise.
The dominance of the brand won’t endure for long however, because the Federal Government felt no need to specifically outlaw the activities of importers who would rather import fake Jordan tooth brush into Nigeria than to import other brands.
This more or less killed the vibrancy of the brand in the market place, it is however to the credit of the endearing qualities of the brand that it still subsists till day despite the continuous import of its counterfeit. The limitation is that Rokana, the producing company which is also a publicly quoted company floated by the immediate past commerce minister in the Yar’Adua’s cabinet Mr. Charles Ugwuh, has remained more or less moribund on the stock exchange’s price listing as investors ignored it even when the stock market was upbeat.
DOYIN INDUSTRIES
Doyin Industries is still a flourishing concern, this would not have been so if the man behind the manufacturing concern had not been well grounded in the ways of manufacturing in Nigeria. Of course he had been badly burnt from his engagement with manufacturing.
Samuel Adedoyin, the man behind Doyin Industries started out in business as a trader and he made quite a success of it that he diversified into manufacturing of household and food items and body care products. By 1996 he mobilized credit to build an awesome factory to manufacture his company’s range of products, and he was daring enough to take on multi-national companies. Travails soon ensued, electricity limitation to power the factory and the credit sourcing for funding the factory project became a burden, the market was also flooded with cheaper products from Asian countries.
The operations of the company soon became hamstrung, credit issues from City Express Bank became a public embarrassment for the Kwara State born industrialist, eventually, a production line of the industry had to close down and workers lay off.
DUNLOP
Dunlop Nigeria Plc is the latest of once buoyant companies to hit the dirt. The company had endured the harsh economic environment and had over the years returned impressive earnings to investors in the company being a public quoted company a greater majority of 95 per cent of the company’s shares belongs to several state governments, public companies and no fewer than 93,000 private Nigerians.
In 1991, it acquired majority shareholding in PAMOL (Nigeria) Limited, a rubber producing company to ensure uninterrupted supply of the right quality natural rubber, a major raw material in tyre manufacturing.
The company pioneered the radial car tubeless tyres in West Africa; produced the first crossply tyre in tubeless in Nigerian market; was the first Nigerian tyre company to hold the E.C.E 30 Certificate, an export requirement for car tyres to Europe; and first manufacturing company in Africa (beside South Africa) to hold the ISO 9002 certification.
It would soon be revealed during the former minister of commerce visit to Dunlop factory late last year that the company was merely struggling to stay afloat. The managing director of the company had complained about infrastructural deficiency, especially energy (electricity and recently, gas outages) and import duty regimes, inconsistent tax regimes which combine to place local manufacturers at significant disadvantage.
A major gripe of the company was its N8 billion expansion into the Heavy Truck Radial segment which was frustrated by reversal of government policy on tariff for imported truck/bus tyres from 40 per cent to 10 per cent at the beginning of 2007. This according to the company’s officials, created unfair and inequitable advantages for importers of finished tyres.
The dichotomy between tariff for car tyres (50 per cent) and Truck/Bus tyres (10 per cent) is said to have been abused by importers, both in terms of tariff and haulage evasion.
The situation confers undue advantages on importation rather than local manufacturing, now, the company has declared its incapacity to continue manufacturing activities in the country. Unofficial source said it would resort to tyre importation with grave implications for the rubber from its subsidiary, Pamol.
FAMAD (FORMERLY BATA) PLC and LENNARDS NIGERIA PLC
Before the introduction of the Structural Adjustment Programme, Bata’s ubiquitous outlets were the ultimate in foot wear shopping for all ages, Bata with its lesser cousin, Lennards Nigeria Plc. After 1986, the promise of flourishing was effectively shut out of the footwear manufacturing outfits. Government could not stem smuggling activities.
Synthetic shoes from Dubai and other Asian countries and high quality leather foot wear from Europe smuggled large scale into Nigeria particularly suffocated indigenous production. Ironically, the nation’s export in their raw forms the materials needed for footwear manufacturing. The products are exported, refined, recycled and packaged abroad to be sent back to Nigeria as import.
Till date, no appropriate government policy has addressed the inadequacy in the sector that has turned FAMAD (BATA) and LENNARDS into moribund companies.
VOLKSWAGEN AND PAN NIGERIA
In the 1970s Nigerian was the centre of attraction in the African continent with its hosting of the Volkswagen and Peugeot Automobile Nigeria plants. Nigerians, before the economic deluge of the last quarter of 1986 were sure of brand new cars proudly assembled in Nigeria. The assembly plants were supposed to be transitional in the nation’s march to becoming a full fledged vehicle manufacturing country.
The dream was cut short by government policy. Government steel rolling mills could not produce an ounce to support the desire to attain full production capacity, just as the value of the naira had suddenly depreciated in the years running to the close of the 1980 decade, and government back in the days, unofficially gave the go ahead for the importation of second hand vehicle (Tokunbo) at outrageously low tariff without consideration for age of vehicle to be imported.

FINALLY, OTEDOLA BREAKS MONOPOLY WITH 2MILLION TONNES OF CEMENT

The persistent rise in the price of cement, an essential building material, may be heading for a reverse with the Federal Government approval granted Femi Otedola to import 2million tonnes of cement into the country.

The cement which a source close to the CEO of Zenon Oil and Gas said will soon land in Nigeria, is believed to be one of the Federal Government strategies to in the short run avail the Nigerian market cheap supply of cement.

“Of course, the Federal Government is aware of the fact that hitherto, the supply side of cement is controlled by a close knit community of suppliers who had turned cement supply into an open monopoly.” The source said.

“Though Federal Government had lifted the ban on importation of cement since January as part of the strategies to correct the shortfall in the supply of cement believed to be in the region of 11.5million tones, the efforts of the first batch of companies granted the right to import have not shown yet in the market. I think due to a combination of liquidity crunch in the nation’s financial sector and the global financial crises which have made access to credit a tasking process, most of these players might not have been able to bring in enough supplies of cement into the country. Naturally, the Federal Government had to make overtures to Mr. Otedola, who, they think has enough liquidity to break the strangle hold of the monopoly that cement supplies had turn.” The source revealed.

The source further added that the importation of cement by Otedola is going to be a continued process until the price of cement becomes affordable to the common man.

“This, I think, is going to be the first in the process to crash the price of cement. I am informed that the price of the first importation to be undertaken by Otedola should sell between N600 and N700, the calculation has been done. I think that after this consignment, others would be brought into the country until the price of a bag of cement becomes affordable to the average intending home owner.” The source added.

In response to a question on the impact of wholesale importation of cement to local cement manufacturing capacity, the source reasoned that the importation policy is an interim measure to assuage the difficulties in the building sector.

“I don’t think it is proper to allow Nigerians to wallow in the difficulty of unrealized dreams in real estate because local capacity has to be protected. Nobody is stopping the growth of local manufacturers, I know that government is encouraging that aspect of the sector by also opening up the space to intending manufacturers who are also given adequate incentive, the importation is an interim measure as I had said, to bring down price in the immediate.” The source submitted.

SENATE CAPITAL MARKET COMMITTEE CHAIRMAN, GANIYU SOLOMON, CARPETS SEC, NSE AND CBN FOR LACK OF COORDINATION

Senator Solomon: very serious

Chairman of the Senate Committee on Capital Market, Senator Ganiyu Solomon has no soothing description for the nation’s capital and money markets regulatory authorities. In an interview monitored on AIT, Senator Solomon said the Securities and Exchange Commission have been at cross purpose with each directing and dispensing policies that are parallel to each other.

 

Senator Solomon said despite the easy excuse provided by the global financial market meltdown, it was obvious the Nigerian market was headed for trouble with the independent manners the regulatory authorities were conducting their supervisory roles in the markets.

“It is obvious that they are not coordinated” Senator Solomon said. “The three regulatory bodies are expected to consult with one another and agree on common ground before they make pronouncements on policy direction for the capital market and other related activities. But what you see is CBN saying one thing today and the SEC saying another tomorrow while the NSE takes another position the other day. It confuses investors and market operators.”

The Chairman of the Senate Committee on Capital Market also questioned the surveillance capacity of the regulatory authorities:

“It is apparent that the surveillance capacity of the regulatory authorities is limited. It takes time before they react to issues and when they do, they react haphazardly.”

In response to the question of his personal opinion of the assurances of the insulation of the Nigerian financial and capital market to the global financial market crisis given by the Minister of Finance, the CBN Governor and the Minister for National Planning on the floor of the Senate, Senator Solomon said what the officials were trying to do was to merely calm the nerves and anxiety of Nigerians:

“What they are trying to do is just to allay fears” Senator Solomon said. “We all know that the world has shrunk to a global village so what affect a part of the world reflects in other parts of the world. You can see that oil prices have come down which is a fallout of the global crises this will definitely impact our economy. And again, we domicile our foreign reserve in dollar, this mean that if the value of the dollar falls it will affect the value of our foreign reserve. So there is no way we can be insulated from the global crisis.” Senator Solomon explained.