Banks
not helping manufacturing industries –Omanukwue
Chief
Ben Omanukwue is the pioneer managing director of KRABO Nigeria Plc,
a company quoted on the Nigerian Stock Exchange (NSE), is not happy
that a lot of things that ought to be in place to aid the growth of
the capital market are not in place.
He believes that the
problems bedeviling the capital market should be tackled from the
angle of government providing the conducive atmosphere that will
suite manufacturing sector which is the pivot on which the wheel of
the economy rotates. He also shares the opinion that investors and
operators should adhere to the tenets of the profession where they
found themselves. In this interview, he bared his mind on major
issues crippling the capital market. Excerpts:
I am into
manufacturing and marketing of products. We manufacture correction
fluid and printing chemicals and soap. But this time, we no longer
manufacture because of the problems in the country concerning erratic
power to generate heavy duty manufacturing machines, procurement of
raw materials, technical partners and capital.
Products
manufactured
We used
to manufacture correction fluids which go by the name, Krabex. That
was the product we were seriously into. In fact it is from Tipex we
got our Franchise (Krabex Correction Fluid). Although that is not the
only product we are into we are also into office equipment especially
filing cabinet, security equipment and saves. We manufacture that one
and we import saves. These are the few products we are into.
Factory
office and source of raw materials
Our
factory is located in Anambra state, precisely in Ifitedunu.
Ifitedunu is about 14 kilometers from Onitsha and 10 kilometers to
Awka, the state capital. We source our raw material from imported
resin and another chemical we use from those who import them from
abroad. We also use a solvent which is the main ingredient, locally
procured. However, that we are no longer producing does not mean that
the company is dead. The company is still alive.
We have
not folded up. Difficulty in getting energy supply for the company
stopped us from manufacturing and that is what makes us seem like out
of business. We are partially alive because we have not folded up. I
said partially because of the predicament in the energy supply and
cost of raw materials and some other components in manufacturing that
are very hard to come by. At a time importation of the finished
products became cheaper compared to the goods manufactured locally.
This therefore made it a waste of energy and not profitable to still
strive to produce locally. Government is not helping matters.
This
is because the cost of production outweighs the importation, thereby
giving reasons why one should go into importation of the products. So
there is no point wasting energy, raw materials and resources since
after production no one buys and those that buy fail to pay. At this
time if you manufacture, you manufacture at a loss and will not be
able to pay your staff and other charges involved. We were unable to
meet a lot of costs, so that is why we temporarily stopped
production. But the company is into marketing and supply.
Deviation
from core competence
Well,
the most important thing is capital. If we have capital we can
diversify into other portfolios. We can even diversify into
production of pure water and bottle or table water which is even more
lucrative now. We only need lean capital to start production because
the factory is there, we only need borehole machine and another line
of business is started. We then can get machinery for the pure water
and other allied products. We can still diversify if there is
capital, although the banks are not helping matters as far as capital
is concerned.
Local
or foreign partnership
We
are open, if any foreign partner is interested in our company, we can
discuss with him. We still have floating shares which we can sell.
There is the enabling environment created by government. They have
got a lot of gains to make from it because governmental policies are
there to encourage such partnership. The partner can after business,
repatriate his profits if he likes. There is cheap labour and market
for any product here in Nigeria, so what he needs is the capital and
every other thing is available.
Factors
forcing manufacturers out of business
The
greatest problem of manufacturing sector is power supply. If there is
regular power supply, then 50 per cent of the manufacturing problems
are solved. If there is no power, the cost of running generator with
diesel will eventually take off the profits and eat into the main
capital. If you factor the cost of procuring all these into the
production cost of the product, the price will be very exorbitant.
Then you will bear with me that the manufacturing sector in Nigeria
is suffering. So that is the problem we are facing. Apart from the
problem of raw materials, the basic thing is NEPA or PHCN that is not
helping matters with epileptic and erratic power supply.
Effect
of taxation
Yes,
this is the policy of government, to pay this and pay that. Once you
are an existing company, government will like you to pay this tax or
that not minding whether you record profits, pay salaries or not.
Taxation is one of the major problems manufacturing companies are
facing. But nonetheless, we are prepared to pay taxes as long as we
make profits because the taxes are paid from the profits generated by
companies. But on the other hand, if you don’t make profits,
where do you get the money with which to pay taxes.
Conducive
atmosphere for business
Nigeria
is quite conducive for business because there is the market. As long
as there is stable power supply, reasonable taxation, reduced civil
unrest and all that, there is nothing one manufactures that cannot be
purchased, no matter the quantity. There is the manpower and labour
is relatively cheap and not as high as people think. People are
willing to work but no factory to work in. Due to lack of
infrastructure, people are not encouraged to go into manufacturing
because after considering all the costs of factors of production you
will know it is on the wasteful side. But when you talk of business,
Nigeria is where to go. Some of these factors of
production that will help whoever is in manufacturing are stable
electricity, water supply, good roads because after you may have
finished your production, there must be good roads for easy
transportation otherwise you produce for personal consumption than
for commercial purposes.
Relocating
to other country
Well,
Nigeria is the in-thing. Definitely I am a Nigeria and would like to
patronize Nigeria. The only problem we have is government policies
that are at times not business friendly. Otherwise, why should I
leave Nigeria for other country to do business? Once there is the
provision of infrastructure, energy and conducive environment, which
we are crying for, there is no reason why one should relocate to
other country. I don’t want to leave my country and go to help
build other people/country’s economy. If I do that, it will
reduce unemployment for the country while increasing that in Nigeria.
Personally, I will not like to leave this country and that is why we
pray government to provide the infrastructure, the enabling
environment that would help business to grow.
Government
should also enact friendly laws that will make the banks to give loan
facility to business men because no business thrives without capital.
What is happening now in the business world is better imagined than
beheld because no bank is ready to give out loans. The ones that are
ready to oblige you will charge such interest and demand such level
collateral that you may not afford.
New
development in the banking sector
The
new development is not very healthy in terms of what the sacked chief
executive officers did with depositors’ money. We never knew
that when we deposit money in their banks, they use it for their
private businesses. Investors are not happy over that. The Central
Bank is trying to sanitise the banks but they should be careful the
method they employ otherwise such method will backfire.
The
sanitization is also affecting the manufacturers and individuals.
They should bear in mind that the sanitization must be done with
human face so that manufacturers could still get some sort of
financial support from the banks for the purpose of lifting their
businesses.
By
MADUKA NWEKE
SUNNEWS Thursday, February 04, 2010
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