‘Imported goods through neighbouring countries crippling local economy’
Abiodun Oladapo is a value-chain operator in the agribusiness sector and Chairman, Small and Medium Enterprises (SMEs) Group of the Lagos Chamber of Commerce and Industry. In this interview with FEMI ADEKOYA, he talks about the challenges in the real real sector and how value-chain operators like small businesses can make a difference in their contributions to the nation’s Gross Domestic Product (GDP).
Recently the National Bureau of Statistics (NBS) released the Q2 report in which the non-oil export accounted for some growth, but critical sectors such as agriculture and manufacturing still underperformed. What is your perception of all these especially when you look at the contribution of small businesses to the economy?
Well, it is a bit discouraging especially when the SMEs are supposed to be the engine of the economy. They are supposed to really drive the economy and all over the world where things have become good enough, it is the SMEs that really drive the economy, because they employ the largest number of people and contribute the largest percentage to the Gross Domestic Product (GDP). Here in Nigeria, the situation is the reverse. We look towards big players to drive the economy and that is where we are having it wrong. If you look around you now, you will see the Chinese, Lebanese and the Indians even when you go to the rural areas for example in Ibadan, you will meet a lot of Chinese, Indians and Lebanese trying to buy raw cashew and the main reason is that our policies are not properly aggregated because they run at cross purposes.
If you have to buy diesel at the rate of N245 per litre and you want to use the same diesel for your tractor, how do you want to factor that one in? When the farmer finishes, his own end products cannot even meet the cost of production and if he manages to get out of a particular season, he will not want to go back to such a business again. All over the world, we know that governments come in to subsidize, and encourage operators to build their capacity. SMEs are having a lot of challenges but getting through them gradually.
It has been argued that finance is not the main challenge facing small businesses, but lack of capacity. What is your opinion about this?
That is just the issue. For example, a good number of people will go into business without having a bankable business plans. Before going into any business, you must have a clear idea of what you want to do. I met a friend who has plans to go into agribusiness having identified the kind of business he wants to go into but has no knowledge of the market. There is a need to restructure the way we really run these businesses; there is a need for technical, managerial and incubation centres where we really need to teach people to understand the business they do.
This because anytime someone retires, the next thing is that he is going into business without any business plan to identify the viability and feasibility of such business. It is just too bad and when I took over as the SME Group Chairman, the first thing I did was to develop a 67-item questionnaire that cuts across virtually all questions to which any businessman must provide an answer. It may surprise you that we had less than 25 people who responded out of a population of about 470 active members People find it difficult to separate their businesses from their personal expenses, so it is a bit difficult and capacity building is a big issue. Since I took over this year, we have done about four trainings for our members as part of our capacity building efforts.
Recently, the CBN reviewed the interest rate and access to funds for small businesses and green field projects especially in the manufacturing sector. How fair is this move by the apex bank considering the need of the sector?
Like the question I posed to you earlier, are our people ready to do business in the way they should do business because the issue of best practices has been a challenge? If someone finds it difficult to separate himself from his business expenses, how do you want him to provide records? This is why you discover that foreigners are taking full advantage of this policy rather than indigenous businesses. When we discovered that agribusiness was becoming challenging, we had to bring experts in to develop a comprehensive business plan for our own business which cuts across the review of technology, review of the managerial, financial, and marketing sections so that it guides us to ensure that we do not miss anything.
For someone running a business, no matter how simple the business is, you need a business plan and you need to be guided by that business plan and you must continually evaluate the performance by that plan. Close to about 90 per cent or more of the small businesses do not understand what a business plan is; they make money today and do not keep records and that is why they are even having issues with tax authorities because tax authorities deal with records and even the CBN you are talking about deals with records and this is why we are organizing a seminar with topics cutting across all these issues to be delivered by experts.
For example NISRAL will be there to talk about de-risking and how small businesses can access loans with ease; we are bringing the likes of Sterling bank as a partner to talk about the steps to get loans easily, because they made us believe that within 24 hours you can get a loan if all your records are okay; and in terms of marketing, we are bringing in some experts, we are bringing in connect Nigeria who will be talking about digital marketing. We are also bringing Olanihun Ajayi who will be talking about how you can take advantage of the current tax policies and we are also bringing in the credit bureaux who will be talking about the need to keep records and how bad past records can implicate you when you are looking for fresh finances. So these are the challenges but we think we would get there one day.
How do you plan to help small businesses to be competitive against new foreign entrants?
There is no way you can run businesses without competition. It is like a driver asking other road users to leave the road because he has to use the road; such a situation will never rise. How do you enjoy a football match when you ask the opponent to leave the pitch for you? It will be boring as nobody will be there, so it is taking full advantage of the opportunity being offered by the environment that makes the difference. As we are talking now, a good number of businesses are performing well when they engage best practices, but for those that are looking for where competition will be absent, it will never happen, because you have to give the best to the customer and that is why there is competition.
What will be your advice for government on how to protect local companies from unfair competitive practices?
Let us go down to agric and particularly go down to livestock. You will have noticed that a good number of poultry farms have closed down, because they cannot compete favourably with the imported chicken market even though the imported chickens are not good for public consumption in the first instance and this is why the government placed a ban on them. However, they still find their way into the Nigerian market. Government needs to do more in that area and the best way to attack this challenge is from the market and consumer perspective.
For instance, the regulators can go to popular markets and demand for the source of those imported chicken, because most of them do not have NAFDAC approval or SON approval. Have you ever being to Cotonou to see how these chickens are packaged and brought into Nigeria? It is pure poison, they will take the chicken and soak it in all sorts of chemicals that are injurious to human health and after soaking it, they engage labourers to take it to the other side of the border for re-bagging and put inside containers to be frozen again. If you want to know the difference between the two, place a pure Nigerian frozen and imported frozen chicken on a table and come back after 6 hours, you will notice that no fly will ever move near the Cotonou chicken. This is because of the preservatives that were applied on the imported chicken. This is what is being sold to Nigerian consumers at a cost that is far below the cost of production of local producers. Nigeria is seen as a dumping ground and most of these consumables come through our neigbouring countries. The quantity of imported chickens that come through is such that if they take a tonne to a person in Cotonou, they will still have some tonnes left and this will tell you that these goods were not imported for the Cotonou market but for the Nigerian market because of our size.
Would you say importation has continued due to a lack of capacity by indigenous producers to meet demand?
We have capacity, but a good number of poultry farms have closed down which means that capacity is still there, but because the business is being run at a loss and this leads to the business closing down. Government needs to effectively protect the local businesses and citizens, because these frozen foods being brought into the country illegally are pure poison. When there is an issue, who pays for it? The Nigerian healthcare system where everybody becomes a victim of cancer and anywhere you go to, you see obesity in the town and obesity is caused when you feed the body with false food, nutrient deficient food and toxins.
So the government needs to do more by discouraging consumers from buying such foods. Technology can also help in this regard to differentiate between the good and the bad chicken, the chemical-laden chicken and the natural chicken. If these importers find it difficult to get customers for their poisoned frozen foods, they will no longer bring it in anymore.
Smuggling has made local capacity drop to 10 per cent of what it used to be and in terms of loss, it is a quantum and highly discouraging. Local producers can meet demand if they are allowed and encouraged. A situation where you produce and you cannot even recover the cost is certainly not a business. So government needs to help this business to thrive. They need to effectively curtail the illegal importation of poultry products into the country, they need to use the consumer’s perspective, the consumer needs to be the one to insist that he does not want such products. Nigerian producers are required by law to register their products with NAFDAC. The NAFDAC team should be able to go into these markets and be able to trace the source of the chicken in the market and in a situation where a trader cannot produce sufficient document to show that it can be traced to a particular Nigerian producer, then it is not fit for consumption by a Nigerian consumer. A situation where culprits are dealt with to the fullest of the law, they will be discouraged from bringing in these foreign products because it has negative effect not only on the economy, but also on the health of Nigerians. People are dying from consuming these poisonous foods they call foreign.
Like chicken, rice also suffers the same fate. How do you manage this situation when consumer purchasing power is low and regulators do not have the manpower and capacity to monitor the borders?
That is a very serious one. A serious one in the sense that someone who lacks purchasing power is being denied something cheap knowing that if he does not eat he would die of hunger. So he believes that he has been eating this poison for quite a while and he is still alive, so rather than been deprived to eat the poison he will rather choose to eat the poison and still manage to be living that kind of a diseased life. I think government can still do a lot along that line by empowering people and seeking ways to reinvigorate the economy so that the purchasing power of the individuals can be improved upon. You will see a good number of graduates roaming the streets in search of jobs that are not available and the kind of empowerment programme which government puts in place is at variance with the kind of training with the mind set the man has got.
We need to internalize our economy to engage our people to produce what we need and consume what we produce, this is the way developed economies of the world did it to get to where they are. Why should we open our gate to all sorts of imported goods? When you check the back of about 90 per cent of the goods in the country, you see made in China and this means we have created job opportunities for the Chinese. Why not do same for our people. We should also look into our educational curricular; it should be developed to make it relevant to the needs of our economy so that we will churn out graduates that produce what the country needs.
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