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.

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FINANCIALBRIDGE: HOW TO DO BUSINESS WITH THE AMERICAN INVESTMENT COMPANY THAT FACILITATES OFFSHORE FUNDING FOR NIGERIAN BUSINESSES

When Patrick Fournie, Senior Advisor with FinancialBridge, Inc. made his presentation on the “Private Ownership of Modular Refineries in Nigeria: The New Trend in Building Petroleum Refining Capacity: The Financialbridge Experience” at a seminar organized by the Energy Industry Development Initiative at the Federal Palace Hotel, Victoria Island, Lagos State, this past Tuesday, 11 November, 2008, seminar participants listened with rapt attention.

Fournie presentation, was for the Nigerian and other foreign participants at the seminar, a revelation of a new vista in financing strategies on the pivot of offshore financing, he informed the seminar of how FinancialBridge is facilitating funding for a Pharmaceutical Project in Abuja, at a cost of $12.2 million and an aluminum roofing sheet & allied project at Onna in Akwa Ibom State at a cost of $6.6million. FinancialBridge, he said, is also involved in funding for an amusement park project at Isheri, Ogun State, at a projected cost of $22.3 Million, a pit quarry mining project at Oyebiyi, Oyo State at a projected cost of $7.5 million and a 5-Star luxury hotel in Abuja at a projected cost of $55.8 million.

Other projects FinancialBridge had been engaged to facilitate funding for by Nigerian entrepreneurs are the phase one of the 12,000Barrels per day modular refinery project at Eket in Akwa Ibom State at a cost of $43.7 million and the 12,000Barrels Per Day modular refinery project at Kolo Creek in Yenagoa, Bayelsa State at a projected cost of $121.3 million. A $197.5 million 18,000Barrels Per Day modular refinery project in Edo State is also one of the projects FinancialBridge is facilitating offshore funding for.

Fournie who flew into Nigeria to make further revealed how his company had structured funding and project implementation procedures for the soon to be streamed 12,000 Barrels Per Day Amakpe Refinery Project at Ikot Usekong – Eket in Akwa Ibom State and the Rehoboth Refinery, also a 12,000 Barrels Per Day Refinery Project in Yenagoa, Bayelsa State.

Fournie, who, on behalf of Financialbridge, signed a Memorandum of Understanding (MoU) appointing Energy Industry Development Initiative as its representative in Nigeria, explained that FinancialBridge is an export finance and business credit consulting firm:

“We work with U.S. and international financial institutions to provide innovative funding solutions to private companies and government agencies, including: export trade finance, project finance, public sector financing and export working capital. We are also involved in equity financing and facilitation of bridging loans” Fournie said.

“We cooperate with Project Implementation and Management Companies in ensuring effective utilization of procured funds for successful planning and execution of related projects and trade transactions.”

Highlighting its primary sources of export funding in the United States financial market, Fournie said his company’s sources include: Export-Import Bank of the United States (U.S. Ex-Im), Overseas Private Investment Corporation (OPIC) and the Export Finance Banks and Credit Insurance Companies, among others:

“Ex-Im Bank is the official Export-Credit Agency of the United States that helps create and maintain U.S. jobs by financing the sale of U.S. Exports, primarily to emerging markets throughout the world. Ex-Im Bank provides Loan Guarantees, Export-Credit Insurance and Direct Loans, in fiscal year 2007, Ex-Im Bank authorized $12.6 billion in financing to support an estimated $16 billion of U.S. exports worldwide.” Fournie said.

Perhaps, of importance to Nigerian entrepreneurs, is the revelation by Fournie that the Ex- Im Bank has approved a $1.0 billion facility to guarantee Nigerian Projects (of which $800 million is still available) despite the global financial melt down.

Explaining the process for securing offshore funding for projects in Nigeria, Fournie said:

“Under the Ex-Im Bank Guarantee Program, the Promoter is required to provide Statutory Equity Contribution of 15% of U.S. Cost Content, while the U.S. Lender funds 85% of the U.S. Cost Content utilizing the Comprehensive Credit Guarantee of Ex-Im Bank. The Project Promoter is further required to provide Local Bank Guarantee to support the 85% portion of the U.S. Loan as well as finance local In-Country Costs requirements within the overall Project Cost.The U.S. Ex-Im Guaranteed Loans have Medium Term Tenure of 5 to 7 years at Interest Rates of +/- 2% above Six Months Floating LIBOR (London Interbank Offered Rate).

Some of the projects funding prospects of FinancialBridge include Oil and Gas (Modular Oil Refineries, Gas Gathering & Processing Plants, Downstream Petrochemical Projects, Pipelines, etc.), Energy (Gas Turbines and Diesel Powered Plants), Communications (Wireless VSAT Network VoIP Telephone, Fax, High Speed Broadband Internet Systems, Cable TV, etc.) and Solid Mineral (Quarrying & Processing).

Other funding prospects are: Manufacturing and Assembly (Small and Medium Scale Plants), Construction (Pre-engineered Buildings & Facilities, Stadiums & Arenas, Industrial Parks, etc.) Agro-Business (Farming & Food Processing), Medical (Pharmaceutical Projects, Supplies & Clinics), Tourism (Amusement Parks, Hotels/Resorts, etc) and Aviation (Used & New Passenger & Cargo Aircrafts, Helicopters, Airport Development & Expansion, Avionics & Spare Parts, etc.)

Highlighting the milestones already attained with the 12,000 Barrels Per Day (BPD) Amakpe Refinery as a case study, Fournie said:

“The Amakpe Refinery is being implemented in two phases, with Phase 1 – 6000BPD Refinery Plant originally estimated to cost about $36.5 million and now revised to cost $43.7 million, including Escalation, and revised Field Erection Costs. Construction of 12KM Dual Steel Pipeline connecting Exxon/Mobile QIT and Amakpe Tank Farm is estimated at $10 million of Additional Cost. The Project is expected to start production by October 2009. Out of the current revised Project cost of $43.7 million, $26.2 million has been expended while $17.5 million is outstanding to complete full funding of the Project.

“UPS Capital/Ex-Im Bank Loan of $10.3 milion is being disbursed to Ventech, based on P&M Construction Progress Payment while Amakpe Refinery has fully paid required statutory Equity Contribution and continues to pay the Counterpart Funds. Akwa Ibom State Government Investment of $8.5 million has also been applied to the Project

“As at June 27, 2008, Ventech achieved 50% Mechanical Completion of the Refinery Plants and Machinery Fabrication, which was certified by visiting representatives of the Department of Petroleum Resources, including Mr. M.D.B. Ladan-Head Downstream, Mr. O.A. Adeleke- Assistant Director, Dr. D.M.E. Eradiri- Chief Environmental Officer, Mr. Oyedele Sangobowale and Mr. Hussaini Basaka-Site Representatives. Based on this development, Amakpe Refinery has qualified to receive $1.2million Security Deposit earlier paid to DPR as a requirement for revalidation of related Refinery Construction License.

“Sterling Bank has approved additional $9.3 million Loan Facility for the Project. Amakpe Refinery is planning to issue 15,000,000 Shares of Common Stock of the Company for sale to Private Investors. The Private Placement is being packaged by Financialbridge and Sterling Bank for issuance by Sterling Capital Markets (Issuing House).

To start -up the process of obtaining required funding, a Company is required to retain the services of Financialbridge which will develop a Bankable Business Plan that will satisfy U.S. Export Financial Market requirements and procure the Project Loan.

The retainership will further cover service coordination of Project Loan Packaging and Procurement that will involve the Borrower and the U.S. Lender. The U.S. Lender will underwrite the submitted statutory documentation leading to Loan approval, following which the Lender will request the U.S. Ex-Im Bank for issuance of Political Risk and Medium-Term Insurance/ Comprehensive Credit Guarantee before disbursement of related Loan. The process of underwriting the Loan through approval and disbursement could be concluded within 45-90 days after the U.S. Lender receives the complete statutory documentation as outlined.

Financialbridge be responsible in carrying out tasks that will result in the successful procurement of U.S. Loan for the implementation of the project which include: Conduct of Feasibility Study and preparation of Bankable Business Plan that will satisfy U.S. Export Financial Market requirements. The Business Plan will be concluded within 30-45 days from receipt of Engagement Fee, Data from Market Research as well as Borrowers information. The draft of the Business Plan will be forwarded to the Company for approval and possible input before production of final Document.

FinancialBridge also processes Due Diligence, Approval and Disbursement of Project Loan within 45-90 days of the U.S. Financial Institutions receiving and underwriting complete statutory documentation from the Nigerian company.

If required, Financialbridge can also be engaged to Package and Instrument Private Placement of Shares of Common Stock of the company to raise additional funds through Private Equity Investment, utilizing a local Nigerian Bank as Issuing House.

The Funds raised through the Private Placement could be applied to fund Local Project Site Development and In-Country Costs as well as required Equity Contribution, etc.

The Nigerian company shall be responsible for the following within the requirements for successful Loan Procurement, including: Obtaining Nigerian Bank Guarantee for 85% or 75% of the total U.S. Loan amount to fund the Project, depending on the Ex-Im Bank or OPIC requirement.

Securing all required Permits and Licenses from Nigerian Regulatory Authorities, submission of three years audited financial statements of the Nigerian bank as certified by a renowned accounting firm. Provision of Equity Contribution of 15% of total U.S. costs content within the overall Project cost for U.S. Ex-Im Bank Guaranteed Loan to be added to 85% of total U.S. cost content as Loan, or 25% as statutory Equity contribution of total Project

Confirming Energy Industry Development Initiative’s (EIDI) relationship with FinancialBridge, the organisation’s Chief Executive Officer, Mr. Tom Obaseki said FinancialBridge has already shown interest in facilitating funding for some project ideas it had forwarded to FinancialBridge.

“As we speak, we have forwarded project proposals for the establishment of 5-7 MMSCFD Modular Gas Gathering, LPG and Lean Gas Production Plant in Nigeria, the establishment of Integrated 55MW Power Plant, Natural Gas Gathering and LPG Processing Project in Nigeria and for Development of Pre-engineered Medical Clinic & Diagnostic Centers, Pharmaceutical Project and Customized Medical Trailers & Boat Clinics, complete with Outreach Medical Technicians Training Support.” Obaseki explained.

FRUSTRATION SETS IN FOR COMMANDCLEM INVESTMENT SCHEME’s INVESTORS

For expectant investors that had invested sums ranging between N20,000 and N1million before June 19 2008 in the Commandclem Social Security Scheme, it seems the promise of the wind fall from their investment in the scheme is taking too long to materialize. Those that spoke with FORTUNE&CLASS WEEKLY said the wait for the conclusion of the court process that will enable the operators of the scheme start paying them is becoming frustrating.

The story behind the wealth making potentials of the Commandclem scheme is quite interesting. Protagonists of the scheme market it to intending investors as the ultimate path to escaping poverty through registering to become a patentee of a special paint product invented by a Nigerian way back in the 1980s or 1990s, in truth, non of the marketers can be specific about the date of the invention. By registering in the scheme, the investor is said to become a co-patentee to the supposed inventor of the product, a man named King Clement Uwemediimo.

Registered patentees, according to the scheme’s marketers, would be positioned to earn a life time monthly allowance of N30,000. Even after the death of the patentee, his or her offspring would be entitled to the monthly payment. There are other categories in the scheme differentiated by registration fee. The highest possible class in the patentee category is the Knight. A patentee qualifies to this category on paying a registration fee of N4,000,000. The promised benefits to a patentee in this category can’t all be listed, but it include lifetime monthly earning of N300,000, constant contract jobs and holidays in exotic places around the world.

The promises are quite impressive. But the downside is that benefitting from the impressive promises of the scheme is tied to the success of a court case. According to the marketers, King Uwemediimo had sued Mobil Nigeria Unlimited to court for patent right infringement. Is said that Uwemediimo had sold the right of the product, a special paint with which crude oil tanks in the ocean are painted so as to preserve the tanks from corrosion by the salty ocean water. The demand of Uwemediimo, the marketers said is a sum of $39.3billion. However, perhaps to make the offer more juicer, some marketers quote some more humongous figures like $67 billion or $8.7 trillion depending on the marketer selling pitch.

Suddenly, an industry seemed to spring up around the Commandclem scheme at about November 2007 when it was made public that the an Akwa Ibom High Court was going to sit in the Nigerian Consulate in New York to hear witnesses from Mobil on the patent right infringement.

A group of young men must have smelt the opportunity in the Commandclem court case. An organized campaign was initiated to market conclusion of the scheme as an investment.

The first sales line of the marketer is that an interested investor must be registered with the scheme before the court’s final ruling on the matter on June 19 2008. The second sales line is that Commandclem is favoured to win the case no matter the odd. The third pitch is that the court will order the all oil producing companies in Nigeria to calculate two dollars on each barrel of crude oil produced in Nigeria since the invention was allegedly sold to Mobil, and that, the market added up would amount to trillions of dollars. It is from this judgment sanction that participants would be paid their life entitlements.

The marketing pitch, apparently worked. Advertisement jingles were placed on radio programmes, while alleged representatives of the scheme even went around television stations for awareness campaign. Newspapers advertisement spaces were also bought to announce the scheme that would turn Nigerian poors into overnight rich people that would share in the humongous back log of patent fee that would be paid to Uwemediimo. Even on the internet, blogs and sites were dedicated to invite investors to register before the final judgment of June 19. Offices were opened nationwide for people to register.

Not a few Nigerians were taken in by the pitch. FORTUNE&CLASS OBSERVED a high traffic of people in offices of the scheme in Lagos State. In fact, one Okaiwele Austin requested on his blog site that interested investors should pay N5000 into his account before he would post contact details of the scheme operators to them. The officials of the scheme warned that no registration would be allowed after the June 19 2008 final judgment, this further fueled the high traffic.

But now, the cold reality of some of the unreal expectations of the scheme may be dawning on the investors. In the first place, the decision of the court can not be contemplated by any party to the suit. While it has been confirmed that there is truly, indeed, a court matter pending on the subject of a patent, the ruling of the court case is that of no other person than the judge. And the ruling can favour either Commandclem or Mobil. Besides, even if it is assumed that Commandclem wins the case, the cost sanction against Mobil may not be as huge as expected. In fact, if the court sanctioned Mobil in the cost expected by the Commandclem marketers, it would be the first of such in the world.

Anyway, the situation report at the moment is that expectant investors in the scheme back in 2007 are becoming frustrated over waiting for so long and to make it even bad, nobody can assure them of how much longer they are going to wait. The court that was expected to sit and make its ruling on the matter on June 19 did not sit because the judge was absent. The case was said to be adjourned to July 22. Again, on the adjourned date nothing was heard of the suit. Now, in November, not even the marketers of the scheme can provide updates on the court process and when it would be disposed of.

For a scheme that is tied to the judgment of the court, investors have started grumbling aloud that they were cheated into believing that the case was near conclusion before they registered but now that some of them have their money tied down to the scheme for more than a year, they are saying it seems they were hoodwinked.

PS: It has been brought to our notice that an aggressive advertisement of  Commandclem Social Security Scheme is ongoing in popular media houses in Ogun State, Nigeria, therefore, we believe it is our duty to advise the investing public to look before they leap. Thank you.