OKAFOR: GOVT MUST PROTECT LOCAL MANUFACTURERS

for those sectors that are essential, where is it going?. And this is one thing, I believe the CBN needs to address.

Apart from forex issue that CBN should address, what are other specific things government should do to solve these challenges facing manufacturers especially the pharmaceuticals sector?

I will take them from what government can do in the short term and long term. The first thing, I think government should do is to make it possible for manufacturers of essential products to access forex. That is the first thing that should be done immediately to avoid catastrophe going forward. The second thing, for pharmaceutical industry, for instance, some of us have made investments, trying to upgrade facilities. We have built factories that are world class and we are not able to leverage those investments because we do not have access to affordable funding. The cost of funds is quite high and I know that the CBN is trying to do something but it is not enough because it is not focused on the pharmaceutical industry. I believe health is a security issue and government needs to understand that and we are saying we need to have a Pharmaceutical Special Fund. That fund should come at a single digit interest rate. So if we have the Pharmaceutical Development Fund and some manufacturers have access to working capital, in particular, at below 10 per cent, I believe it will help companies to be able to produce more because today, average capacity utilization is about 40 per cent and in the next three months if nothing is done it will go lower. So we need to have some funds that are affordable.

The other thing that government needs to do is to protect the manufacturing sector. We will be deceiving ourselves if we believe that our economy generally and manufacturing sector in particular are in a position to compete globally at this time. We are not yet competitive for obvious reasons- poor infrastructure and so many factors that are working against us. Economy of scale will weigh in favour of Asians and Europeans, who have been building up capacity over the years. And some of us, who do not have access to primary input materials, we still have to get them from some of these countries we are competing with. A lot of things weigh against us and so government has to find a way to protect manufacturers. The sooner that is done the better because if that is done, we now have an economy that you will say you have a robust manufacturing sector that is creating jobs, taking care of local needs and is exporting and earning forex. But that will not happen if the local manufacturers are not protected. I have actually talked about this for a while, we say oh we belong to the World Trade Organisation (WTO), we signed agreements and we cannot seem to be going against those agreements. But I think we have gotten to a point where we take some things and put them on the table and say we want to re-negotiate them. Today we have a problem, the oil price has gone down and the countries who are beneficiaries of this are not coming to our aid. We are now left to suffer the consequences. We are now being asked to devalue our Naira and kill our economy because the lower our currency goes, the better for them and when things are well, they will say open your market because they know you are not competitive. They will then be pumping their products into our market. And if you look at WTO or General Agreement on Tariffs and Trade (GATT), which preceded WTO, you find that those European and Asian countries had time from when they gained independence till they build their economies and then signed those agreements, they were ready. But it appeared that they were just taking us to sign those agreements immediately after our independence . So you are signing as an infant, you do not have the capacity and now we are being asked to fight the adults who have already advanced to certain level. It is an unfair playing ground. Therefore, with the potentials of the country, our size, human and enormous natural resources we have, I think we should be able to renegotiate some of the provisions in WTO. I am not saying we should go out of WTO but we should renegotiate. India and some other countries did it. They refused to sign some of these agreements until they got enough capacity. I think Nigeria should protect the local manufacturers. That is the point I am making to digress to this extent.

The other thing is the patronage of our local manufacturers. We need to patronize our products. Government has to carry out the campaign to buy made in Nigeria goods. The consciousness for Nigerians to buy Nigerian products need to be promoted not just by government but by private sector also. But we need to get the support of the government. That happened in India and they were happy with it. It is sad that some of the very senior decision making government officials, when they want to make procurement for this country with Nigerian money, they still have preference to buying from foreign manufacturers. It has been happening in the pharmaceutical industry, and other sectors of the economy. In the past they were saying some of these things we buy, we were getting funding from donor agencies and people bringing the money are insisting that if you do not have capacity to manufacture to certain standard they will not patronize local companies. But some of us took up the challenge, made huge investments and upgraded our factory, obtained World Health Organisation (WHO) certification and yet they do not patronize us. Nigeria bought some anti-retroviral drugs last year with Nigerian money and they did not buy from local manufacturers. The government still bought from Asians. It is painful that even your government will not buy from you. Our government should patronize local manufacturers and pay us. As we speak the federal government is owing companies for some anti-retroviral drugs they bought. The government is owing companies over N2 billion. So how will these companies survive?.

Looking at longer term solution to the challenges, infrastructure is critical. We need to begin to develop our infrastructure, fix electricity, roads, water. Those are basic things that will help to reduce our cost and make us more competitive. And specifically, for the pharmaceutical industry, we do not want to continue to import our input materials, we need to compete globally and for any reason we cannot source our input locally, competing globally will be difficult. However, we cannot source our inputs locally if we do not fix our petrochemical industry. The issue of petrochemical industry is critical for Nigeria and the manufacturing sector generally. Plastics industry for instance, get their input materials from the petrochemical industry. Therefore government needs to look in those directions in order to ensure that this country is self-reliant and reduce our imports and of course increase our exports.

Talking about government’s patronage, one of the reasons they give for not buying locally manufactured products is quality, competence and low capacity to meet the high demand for such products. What is your take on this?

Anybody who wants to do something must surely look for a reason to justify such an action. And I am not saying that manufacturers today have the capacity to meet all the needs of Nigerians. The pharmaceutical industry for now, we do not have the capacity to meet 100 per cent of the demand. But I believe we have the capacity to meet, at least 70 per cent of the essential medicines. Nigerians do not have any reason to be importing analgesics and things like malaria drugs. We can do them locally. The industry is upgrading, about four companies already have WHO certification and five or six are building facilities to upgrade to that level. So what more are you asking for. Government has come, look at our capacity and have seen.

The ECOWAS Common External Tariff (CET) was supposed to boost trade in West Africa. Sometime ago, there was a controversy, that has to do with pharmaceutical industry. Can you throw more light on that issue?

I would say that ECOWAS CET is, again, a good policy that would encourage regional integration and free trade. And the fact that Nigeria has 65 per cent of the pharmaceutical manufacturing in West Africa is good for us because it opens up markets for us. However, the challenge we have as an industry is that, may be, we did not engage the government at the right time so some adjustments that were meant to be made, were not made because I did not believe that any government official, who is worth his salt will make decisions that were made in this instance. That decision is that prior to the ECOWAS CET implementation, the tariff regime that was operational in Nigeria, was that if you are importing finished pharmaceuticals, you pay a duty of 20 per cent. And if you are bringing raw materials, you have between zero to five per cent. But with the CET it was changed and the people who are bringing finished pharmaceuticals are now enjoying zero tariff and those of us who are manufacturing, bringing our raw materials and input materials are now paying five to 20 per cent. So it did not make sense last year, it did not make sense two years ago and it is worse now. I think that it is something that government officials who are in our position should know that it needs to be reversed. The way it is, we are encouraging people who are importing finished goods over those who are manufacturing locally. The only problem we have is that it is taking too long to take action. We have made representations to all levels of government, we are not seeing action being taken. And the more you delay the more you are killing the local manufacturing industry. So we need immediate action.

Amidst all of these, what is May & Baker Nigeria Plc doing to survive the competition and remain a leading name in the industry?

They say that necessity is the mother of invention. That is the positive thing in what is happening in the economy as a whole because it is making people to look inwards. And for us in May & Baker, we are looking inwards. We actually started looking inwards on how we can run our business more efficiently, more prudently and how we do