‘Parity in duty for imported raw materials, finished goods bad for backward integration’
To encourage investments in the country’s manufacturing industry, especially in sectors involved in backward integration, there is a need for government to implement policies that would discourage importation through the introduction of incentives for local producers.
Specifically, one of the operators involved in the local production of adult diapers, urged government to address the issue of payable duty for both imported diapers and raw materials in order to encourage local production.
In a chat with journalists in Lagos, the Managing Director and CEO of Wemy Industries, Paul Odunaiya, advocated a diaper policy targeted at reducing tariffs for raw materials used by local manufacturers and controlling influx of substandard diapers.
“There are raw materials that we pay high duty on. For instance, we pay 20 percent duty on non-woven, which is a raw material. This should not be the case. We should pay zero or five percent because this is a way to encourage industrialisation and low prices for the low-income consumers,” he said.
He disclosed that finished diapers still came into the country at 20 percent duty, prompting Wemy’s competitors to continue importing while masquerading as manufacturers.
“Some of our competitors are importing into the country, which is very unfair to us. It leaves a bit of bitter taste,” he said.
He explained that with the diaper policy in place, Wemy Industries would expand more and attract new investors.
“I have an investor who says, ’If you have a diaper policy, I will invest $20 million into this country.’ There is so much policy summersault in the country, and they cannot risk their investments without a diaper policy in place,” he further said.
He stated that diapers were health products and Nigeria should not continue to allow substandard products to flood the local market.
“The problem with the adult diaper in our market is that they are usually scarce and there are poor quality adult diapers in the market, most especially because they are expensive. So, quality and quantity are usually inadequate. It is really a challenge for pharmacists and doctors to find the right products,” he stated.
He, however, admitted that importation of adult adapters was an unsustainable business as a 40-foot container would only give about 500 bundles, which might only cater for 500 people.
He disclosed that apart from lack of policy, there was shortage of skills in the adult diapers market.
He confirmed that Wemy had been working on backward integration, though the majority of its raw materials were still largely imported because of absence of a standard petrochemical industry in Nigeria.
“The constraint is inadequate working capital. If I have working capital and I get government policy to help protect my investments, I can quickly reach my capacity. I have full capacity in three out of my five lines because I am happy to price sharply and produce high volumes. I want proper government protection so that I can price properly,” he said.
The company, which makes Nightingale and Dr Brown’s hygienic brands, recently brought in the adult diaper machine to solve a problem of scarcity and help conserve foreign exchange for the economy.
“I can tell you that ever since we started the adult diaper line, the products have gained traction. Locals can now buy locally, rather than import. We also solve the problem of jobs and technical skills,” Odunaiya said.
He said the company had sent some of its staff members to China to learn the nitty-gritty of the operations of the adult diaper machine to ensure efficiency and returns on investment.
He said the company now produced cheapest adult diapers in the West African market.
“Our strategy as a business is localisation of our products so that we manufacture all of them locally, rather than trade them,” he explained.
“The adult diaper is a massively big machine because you are making the products for adults. And it is very difficult to ascertain statistics on the users of the adult diapers in Nigeria and West Africa because it is a silent and private condition,” he further said.
He pointed out that based on international averages, that adult diaper market was usually one-thirds of the baby diaper market.
He stated that the diapers were for mothers that had given birth to a high number of children, old women and women affected by Vesico-virginal fistula (VVF)—a hole that develops between the vagina and the bladder.
“We have a problem in northern Nigeria and West Africa, which is the problem of VVF. We have one of the highest cases of leakages in the world because of old customs and practices of marrying young ladies at young age. There is also the elderly who suffer from the same conditions. A lot of them are mothers who have had a lot of babies. The adult diaper is here to alleviate some of these problems,” he said.
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