Mr Peter Folikwe
Sales Director of Vitafoam plc, Mr Peter Folikwe, bemoans the intractable problems in the Nigerian operating environment and explains how his company manages to stay afloat. He spoke with Crusoe Osagie
What are the peculiarities of doing business in Nigeria from your vast experience in the sector?
I believe that what I have to say is no longer news, if you don’t have the right enabling environment for business it will continue to be difficult, and even more so when you want to attract foreign investors to come and do business in the country.
First and foremost it is difficult doing business in Nigeria; I will not say it is impossible because it is only in that difficulty that we get to separate the boys from the men because when the going gets tough, only the tough gets going.
For us it has been turmoil because Vitafoam is a manufacturing concern, and because you need infrastructure on ground. Also we need power which is never available; unfortunately it is the government that handles all power projects in Nigeria.
Industrialists require other infrastructure like roads because if you produce your goods part of the element of marketing requires you distributing the product, and then if the facilities such as roads to get them out to the market is not available it becomes quite challenging.
We are also faced with multiplicity of taxes; even when you are doing legitimate business like Vitafoam does and you have to move from location to location, you will face a lot of hurdles from various legal and illegal revenue collectors extorting money from drivers in the name of government.
Still talking of infrastructure even in those locations where we actually sell our products, the owners of the properties for instance starts increasing their rents the moment business seems to be going very well, which makes it very difficult for distributors who are in business.
Another issue is the one which has to do with the political situation in the country, looking at what is happening in the northern part of the country now, some of us doing business there through our distributors and team members are now more concerned about the safety and security of lives.
And to a large extent it has not been easy doing business in the north around this period safety being a major concern.
Again even the consumer out there is becoming challenged and concerned due to the little disposable resources he has because of the environment around businesses. Prices keep rising and he can only afford as much as he can; what then happens is that he ends up even buying the wrong product.
Because it is one thing to want to buy and another thing to be able to afford quality, Vitafoam will never compromise on standards but again if there are other less quality products which the consumer can afford he goes for them.
There is also the issue of consumer advocacy which to a large extent I feel more has to be done because it is not just the issue of buying the product but buying the right product.
Another challenge which we face as a company is when you are a leader, you stand the risk of being copied illegitimately by people who are adulterating your products, and this is a major challenge which we face in the industry.
Though we have actually adopted several measures to arrest the situation like the rule of law but it has actually been difficult because we do not have money to lavish on the regulators who demand money before they can actually perform their civic duties and responsibilities.
The other option for us to proliferate our brand all over the place such that the probability of you buying the fake one should be less than the probability of buying the original.
The third option is for us to introduce a platform with a barcode or number on our products which can be sent via text messaging on your mobile device and get a response on the spot of purchase to confirm if the product you are buying is original or fake.
We also expected Standards Organisation of Nigeria (SON) to partner with us on the initiative but it seems that SON is going solo in its effort to rid the market of substandard goods.
What will you say about the competition you face in your segment of the economy?
The competition is always good for business and I have always been a strong advocate of competition particularly if it is legitimate, because for me that is the only thing that can bring out the best in you. And I make bold to say without really mincing words that we have our worth to show for it.
One of the awards we have received is called the most trusted brand award the award brought here to our office by the organisers who go out to the market to ask questions about the products and what consumers think of different brands out there.
Any award that comes to me without paying a thing or sponsoring the award event tells me that there is a level of integrity in it; just like the trusted brand award which we received, so that alone speaks volumes of how we are perceived in the market place especially by consumers, to be regarded as the most trusted brand in Nigeria today tells me that the consumers believe in me.
Like I said competition is good, Vitafoam started operations in 1962 and as of today we can say that we are the pacesetter in the industry.
We have actually graduated from the monotonous process of producing foam to offering solutions and not just products alone. To achieve this we have come up with subsidiaries like Vitablom, which produce solutions like bed-sheets, duvet and softer pillows, we are in partnership with Vono for instance for hard furnishing products like metal and wooden beds.
We have the Vitafoam comfort centres where we showcase these concepts; the comfort centre is an experience centre where you can look and feel the Vitafoam products on display.
Not long ago, the federal government launched 200 billion naira industrial fund targeted at manufacturers through the Bank of Industry did your company access this fund?
We were not bankrupt in the first place but because the cost of the fund was cheap enough we made an attempt but at a point we hit a brickwall; in the sense that they were asking for commercial banks to guarantee us which is not possible since they the commercial banks also want to give manufacturers loans at higher rates so why would they want to back anyone getting it elsewhere for less.
What is your response to shareholders plight in view of the downward trend of the capital market?
Anytime we get to meet with our shareholders during our annual general meetings, we are actually encouraged and that gets to show that over the years Vitafoam has been ensuring that our books are not crooked; our share price if you observe even when you had the bullish run of shares, Vitafoam was stable all through because we were selling
Again if you look at our shares, the return on investment has not actually dropped rather the returns have been very good and we have been posting profits and paying dividends. An investor in Vitafoam now is better than where he was five years ago, those who have been with us for some time now will tell you that Vitafoam is a guaranteed returns on investment bargain.
On the part of management too, we are doing everything to ensure that our market share is not only sustained but increased through more visibility, creating more options for our consumers, deliver on our sales volume and ensure that cost parameters are controlled as much as possible.
What is the size of Vitafoam now and can you tell us how the company has managed to grow so well?
Talking about turn-over which has continued to improve over the years between 2006 and 2011 from 4.2 billion to 14.7 billion, and profit before tax has also grown from 200 million to 800 million during the same period.
The business has been on the growth path that is why we are actually talking about diversification like foam which comes in two dimensions; flexible foam which is what Vitafoam is producing and selling and there is also the rigid foam which is used for insulation purposes.
Vitafoam owns a subsidiary called Vitapur which is into the production of insulated materials in technical partnerships with European and South African companies.
The company is very strategic right now to the economy of this country and has been able to contribute meaningfully with innovative ideas such as the floating fish cage which is a very unique product developed by them.
Instead of having the earthen ponds for rearing your catfish or cemented artificial ponds which would require a lot of other equipment like power generating and pumps to replace water in the pond from time to time, the floating fish cage can be immersed and anchored in a flowing river and in six months your fish is ready for harvesting.
And the cost of feeding is also drastically reduced, apart from having the fish in its natural habitat with no need to be changing water or spend money on electricity, these are some of the benefits of the floating fish cage and we have tried it.
The outcome is that the demand is actually increasing but we are looking at a situation where government can acquire them and subsidise for farmers’ empowerment as part of its poverty alleviation programme.
Talking about insulation, if you go into our factory environment you will see that we keep it conducive enough to get a lot more out of our workers; we have taken measures to insulate the roofs against heat and leakage.
Even in homes today, a lot of architects are recommending insulation of walls and roofs in the construction. It also has acoustic properties which are recommended for studios where recordings are done. It is also used for refrigeration and preserving products at cold temperatures.
50 years of Vitafoam, what is there to really celebrate?
If you heard the chairman of Vitafoam at the last AGM he said we were going to roll out the drums and the truth is that there is indeed a lot to celebrate.
A lot has been achieved by Vitafoam in the last 50 years even the mere fact that we are still on Oba Akran road 50 years down the line is no small feat considering the number of companies that have folded up.
In terms of human capital development so many lives have been touched; suppliers and staff. In terms of the Nigerian economy one way or the other we have developed the business sector in the country. I make bold to say that the company has really impacted business in Nigeria to a very large extent.
In country today we have four factories located in Ikeja, Aba, Jos and Kano so you can imagine the number of distributors that we have, currently we have implemented the key distributor scheme and with that we have over 100 key distributors in five regions across the country.
What is your approximate share of the market?
I can say that within the industry, we are the only publicly quoted brand, others are not quoted and so do not reveal a lot of information unlike us who are open to the scrutiny of the public, for us however to engage in retail audit to know our share of the market is quite expensive.
However we still engage some consultants and our sales team to see how we can gather some information about the share of the market and as we speak today I can say comfortably that we have well over 30 percent of the market share where you have 0ver 400 known and thousands of unknown producers of foam.
We would also like a situation where the regulators do more to control the standard density of foam so that consumers would have better quality for their money.
We on our part will continue to educate consumers on the right kind of foam to buy and they should bear in mind that foam being hard does not necessarily make it a good foam it may just be airtight and what happens is that when it is slept on for a while it decompresses because all the cells have been dissolved.
Soft foam that is resilient is good because when you rise up from it, it goes back to its normal shape and does not remain compressed; it should take the shape of your body only when you lie on it and not after.
Peter Folikwe had his primary and secondary school education in Lagos, before proceeding to the University of Nigeria Nsukka where he obtained a B.Sc in marketing.
He had his NYSC programme in Abuja at Nigerian Television Authority (NTA) where he worked as a TV presenter, came back to Lagos after service year and joined Vitafoam plc.
He joined Vitafoam in 1991 as a management trainee after working across virtually all Vitafoam operations he left the company in 2001 and joined MTN Communications Limited.
In MTN, he moved from the position of trade marketer to channel manager and was in charge of all MTN service and connect centres before he was invited back to Vitafoam in 2006.
He got back to Vita Foam as head of trade and marketing and two years later, was appointed into the board of Vitafoam Nigeria Plc as sales and marketing director, which he occupies till now.