Nigerian Consumers Don’t Trust Local Products – Nair | Independent Newspapers Limited
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Nigerian Consumers Don’t Trust Local Products – Nair

Posted: Nov 22, 2015 at 9:35 am   /   by   /   comments (0)

Chief Vijay Nair is the Chief Operating Officer of Cormart Nigeria Limited. He highlights the opportunities in Nigeria’s fast-growing Information Technology sub-sector in this interview.

What is your assessment of the manufacturing sector in view of current economic realities?

This is my 25th year in Nigeria and I would say we are now passing through a tunnel and we are not seeing any light; this is the worst time I have come across. However, I believe that this is also a wake-up call for our countrymen that we have to start producing our own goods. We have to be self-learned instead of just importing and selling.

Nigeria today, I would say, is just a collection of traders – everybody is trading. If you ask my colleagues what their wives do, they will say trading; whether it is in goods, household items or other food items. Everybody seems to be involved in one form of trade or the other. There is no value addition unless we manufacture goods.

Let me give you an example – the Indian economy was closed in 1990 and all the local manufacturers were given a lot of support by the government to get their acts right. They had a big domestic market just like Nigeria and they were forced to manufacture and sell to their countrymen and no other country was allowed to bring in goods. But at a certain stage, when they believed that the manufacturers were now strong, they removed the barriers. The moment that was done, international plants stated coming in and all inferior products died.

First, the customer gains and secondly, partnerships grow. Coca-Cola was in Nigeria at that time but in India there was no Coca-Cola. So they came in and started buying Indian companies which meant that external technology mixed with local technology and things improved a great deal. With the international plants coming in, the prices went down.

I think Nigeria should do the same thing but then with the WTO, it is not possible. So maybe they will have to raise the values.

Cormart, for instance, will soon go into manufacturing of styrene acrylic which is a raw material for the paint industry. What we expect the government to do is to raise the value and have a higher duty structure so that the local manufacturers can have some production because what happens is that the economy of scale allows some international players to select at much cheaper prices.

Manufacturing in Nigeria is not cheap; it is a myth that labour is cheap in Nigeria because for one job, you need four people while in Europe or some other parts of the world, one person can do the job of four people. So, when you pay four people’s salaries, labour is no longer cheap.

Secondly, there is the quality of labour issue; the job is never done right the first time and when you do it the second, third and the fourth time, there is always a cost implication. So, these are the areas where training comes in so that the people are empowered.

We are moving in the right direction though, and these harsh market realities are going to wake us up and speed up the process. What would have taken 20 years for the manufacturers to achieve will now take three to four years.

Things will fall in place; we are very hopeful. I am very positive about the youths and talent in this country; it is just the lack of resources. Power is the biggest problem in this country, the cost of running generators, buying diesel and keeping factories running is immense. In other countries, manufacturers are provided with good roads, water and electricity but here you have to provide that on your own.

The infrastructure has to be in place, again, the government has to give the necessary tax relief and genuine manufacturers should be given consideration in funding; the 19 per cent interest rate for instance is killing. The situation is like tying the hands of manufacturers and asking them to compete internationally; we are not being fair to our local manufacturers.

There is also a tendency among our consumers to patronise foreign goods; they believe that anything made in Nigeria is not good. This is very bad. We don’t have faith and pride in our products; it is important for consumers to be enlightened that Nigerian manufacturers can make quality products.

For me, we are going through tough times but many other countries have witnessed similar situations and have done well, so there is no reason why Nigeria will not do well; we have to believe in ourselves.

But despite these challenges, the sector is said to be the biggest economic driver, do you share this view?

Definitely, it is the same all over the world. But the Information Technology sector is one sector that can be explored too. In the United States they are outsourcing a lot of activities especially in the IT field and that is where a lot of people who speak good English can come in.

Nigerians have an advantage in that area, they speak good English, and the pronunciation is good, so a lot of these IT jobs have to come here. It is not going to India but to some other parts of the world. If you look at the number of international students in the United Kingdom or US, the biggest community is coming from China followed by India and then Nigeria.

The Chinese and Indians keep going back home but the Nigerians remain there and it becomes brain drain, they have to come back and bring in new skills and teach. That is where the government needs to provide the necessary support.

What effect is the CBN’s foreign exchange policy having on manufacturing?

What is happening is that it is driving our cost of production high and there are many products which have been put on the ban list. In the cosmetic industry for instance, glass bottles have been banned. We have two glass factories in Nigeria but they are making glass materials now only for pharmaceutical products and then the beer industry.

But for cosmetics, such as body spray, you have new fragrances, new bottles and packaging because every time people want something new. However, glass bottles have been banned, so there is a vacuum and at such those factories are not running and people are unemployed.

The raw materials are already here; the fragrance is here and so is the ethanol but there are no glass bottles. So, if the government is making polices, they have to actually demand that the Manufacturing Association of Nigeria sit with each of the divisions before such can be formed. This is a wake-up call. Maybe it is time for new manufacturers to be established here in Nigeria and create opportunities.

There have been calls for a focus on the local content; do you see a future where manufacturers will focus solely on local content?

Whatever is available locally we use, not only with Cormart, I believe most of the other manufacturing companies do the same too. We have our own principle, whatever that can be sourced locally has to be sourced locally. That is how you create employment and empower the people. But what is not available, the government should allow the manufacturers to import till when it is.

We should not be bringing in anything of low technology which can be made locally, but for things of high technology where we still have to learn, we can import. Manufacturers should first make things for the local market, then the African markets.

Today, most products are made across the globe. If a car is being manufactured for instance, the windows may be coming from India and some of the electronics components from Korea and lights from Japan. Some of these companies establish their operations in different parts of the world and look at the economy of scale, what can be sourced locally and what can be made in the best quality. The whole game has changed, so definitely Nigerian manufacturers have to look for international partners.

What percentage of your raw materials is sourced locally?

As of today, I would say 60 per cent of raw materials for our brand of products are sourced locally.

There have been an upsurge in retail malls development in the country, has this helped sales and distribution for local manufacturers such as yours?

It is a trend worldwide; people like to shop in leisure. Going to open markets with the hustle and bustle can make shopping discomforting. But if you go to a mall, you will be surprised that the price per unit of certain items is even cheaper than you are getting outside. It is an irreversible trend; more shopping malls will come up and in Nigeria, it is like a family day out. But more than anything else, the competition among manufacturers is there on the rack where the goods are displayed and buyers are allowed to make their choices, which is limited in the open market.

On our part, it is a very important outlet for us and we are seeing an increased percentage of sales moving in that direction. For me, it makes a lot of sense. The consumer is the key and once he’s able to see, feel and touch what he is buying and buying at the right value, this market will flourish. We will continue to do our best to cater to consumers.

-punch