Eburajolo: Prospect of the Textile Industry is Very Low

19 Feb 2013

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Adams Oshiomhole

The Deputy Group Managing Director of Kewalram Chanrai Group, owners of Afprint Plc, Mr. Victor Eburajolo, spoke to Linda Eroke on the current state of textile industry and other related issues. He maintained that the possibility of the industry bouncing back to growth is very slim. Excerpts:

Despite the ongoing efforts by the Federal Government at reviving the nation’s moribund textile industry, the Deputy Group Managing Director of Kewalram Chanrai Group, owners of Afprint Plc, Mr. Victor Eburajolo, has said the chances of the textile industry bouncing back to growth are very slim.

Eburajolo, who acknowledged the efforts of government to support the local textile companies, said the problem of the industry goes beyond the reduction of import levy and injection of fresh funds.

He made the submission in an interview with THISDAY and explained that the industry is confronted with a myriad of problems which mere injection of fund alone cannot address.

He said: “The problems of textile industry cannot be completely separated from the problems of the real sector. Besides the problem of power, Afprint like other textile companies was confronted with high cost of raw materials; smuggling as the consequences of Nigeria’s membership of World Trade Organisation, (WTO) and other bilateral agreements which allowed other countries to dump textile products in Nigeria at very cheap rate”.

Besides, he stated that the cost of production is too high even for textile companies to break even, noting that “when we are talking of cost of production, people look at just power. But I want to bring this to the notice of Nigerians that even if you fix power, what of the mode of transportation? This is one country in the world where you transport virtually everything by road. You have to truck products up North and they go through these roads that are not constructed to take these heavy loads”.

He said: “Nobody is in business for the sake of doing business but we are all in business to contribute to the growth of the economy and make some profit. When we started I talked about the World Trade Organisation (WTO) where we have to compete. Once you join, you will have to compete with any country that is a member of the WTO. There is no way the textile industry in Nigeria will compete with the textile industry in India or in Asia.

“For instance the productivity of the workers in Nigeria does not meet the average in India. When Adams Oshiomhole was the secretary of the textile union and I was the executive secretary of the manufacturers association and we did a survey where we discovered at that time that China and Nigeria were paying the same minimum wage when you convert to dollar.

“We took the study a step further by comparing the labour productivity of the Chinese and that of Nigeria. We discovered that the productivity of the Chinese by ILO standard was seven times that of Nigeria. And you want me to compete with them.

He continued: “Apart from that, they do not have this problem of light, good roads and we know that all these add to cost of production in Nigeria. It is not done anywhere, where you have to import everything including the spare parts for your machines. So with all these advantage, they also get subsidy from their governments. Let us leave all that even the cost of borrowing is very high.

“In other countries, cost of borrowing, if you get at 4 per cent, you will say it is high. What is the cost of borrowing here, if you are lucky you will get 18 per cent and it is difficult to get banks that want to give manufacturers loan because of the gestation period. Instead, they will give to those who are importing petroleum products because they will repay immediately after importing.

“The Bank of Industry that the government has set up is doing the best it can but there is a limit to what one bank can do. So, if you look at all of these, where is the manufacturing sector? Look at a company like Dunlop, it has closed down, Michelin has closed down and textile is virtually gone. The real sector has a problem. So, I do not see the textile industry doing well in this country with all these challenges”, he added.

Giving reasons why the Kewalram group closed its textile market and diversified, he said the group's decision to embrace agriculture and commodity trading remained a rewarding one.

Specifically, he said the company's resolve to invest in agriculture was as a result the unabated smuggling of textile commodities, adding that till today, the import-ban on textiles remained ineffective into the country.

Giving the company’s profile he said the group is into agriculture and fertiliser production. “Afcott is a private sector initiative that boosts agricultural production in the country. The project was conceived by Afprint Nigeria Plc in 1986 against the backdrop of an acute shortage of raw material and idle capacity in the textile industry. Afcott is part of Kewalram Chanrai Group.”

He added that the company, which is based in Adamawa State, seeks to encourage farmers increase agricultural production by providing support through technical know-how and better inputs.

Speaking further on the activities of the company, he said: “We assemble tractors, we manufacture Sunola oil and very soon we are going into frozen foods. We are into electronics, we assemble cookers, air conditioners, fridges and very soon we will start to assemble sharp television sets. We are also into pharmaceuticals known as Kewalram healthcare. We are into water purification doing a lot of business with oil industry. We sell Mitsubishi cars and have added some Chinese brands”.

State of Industrial Relations Practice
Moving away from the challenges facing the textile industry, Eburajolo, who was also a one-time President of the Chartered Institute of Personnel Management (CIPM) and a past Chairman, Committee of Industrial Relations Experts of NECA decried the current state of industrial relations practice in the country.

He attributed the decline in industrial relations practice to the decline in manufacturing sector and turmoil in the financial sector adding that this has also affected the level of collective bargaining in organisations.

He said: “Industrial relations practice in this country has been on the decline for close to about 10 years. The unions have virtually lost their steam in this country. Only NUPENG and PENGASSAN we have been seeing that are strong to take on/challenge employers when it comes to negotiations and defending the rights of employees.

“This decline in the union strength and activities came on about 10 years ago when the manufacturing sector went on a decline. Because the service sector is fragmented, you can hardly have unions that are very strong in the sector. So the manufacturing sector experiencing a decline in addition to the turmoil in the banking sector eroded the strength and resolve of the unions. So today, you find out that employers can usually get away with their matter.”

He noted that: “This has also affected collective bargaining very seriously and without collective bargaining there is no way a worker can get equal strength in dealing with the employer. Although the law said that there is a contract between an employee and the employer but in an economy where the rule is on employment, what strength does a work have to negotiate with his employer.

“So the unions are not able to stand up properly so industrial relations practice is more or less gone. At one time Nigeria was doing very well in industrial relations practice such that at the ILO comments and suggestions made by Nigerian representatives were taken very seriously but today that is not the case.

“I have however talked to a few union leaders and realised that the union leaders have become lazy that is because when dynamics change you must adjust your strategy immediately. Though there is decline in manufacturing, the service industry is growing though fragmented but if the unions are determined they should be able to organise the workers properly.”

According to him, “most of the unions because of outsourcing concentrate efforts in fighting casualisation. There is nothing against outsourcing because it is a norm across the world. But what I expect them to do like what is obtainable in other parts of the world where if you get hold of certain jobs that have been outsourced in the country, under the trade union law, you can easily classify these outsourced people, put them in a union and go back to the companies to negotiate with them so that their staff can benefit”.

He said: “But, we are not doing that.  So all those that are outsourced are virtually on their own. And we are saying how do you account for a graduate after three, four years of graduation, he is still on N25,000 monthly salary. That is the system we are operating today, a system where employers can pay whatever they like without the unions challenging them.

“In the public sector, everybody is employed by the government so it is either they do not understand what industrial relations is all about or they have refused to key into it. Look at the likes of Sylvester Ejiofor, during his time, the industrial relations practice in the public service is usually very strong. These ones have gone and the younger ones could not continue on that line. Rather everyone is just looking for something to eat. But the rules are the same”.

Expatriate Quota Abuse
On expatriate quota abuse, he said: “In Nigeria today, expatriate quota abuse has become a norm. For instance, there are Chinese selling recharge cards even in Kano and we are not filtering them. That is how bad the influx of expatriates into the country has been today. By the time I started in the industry, expatriates were supposed to be equivalent to experts. That is how they were addressed.

“What knowledge do you need to sell recharge cards in this country? Dr. Stephen who works with the presidency in the International Monetary Fund (IMF) once said that even in America which preaches globalisation, when a third world country finds anything that it can export to America to make money, their instinct of protectionism springs up immediately in America. Let us look at this issue of globalisation very well. We have all the raw materials and resources that are needed to develop our country.”

He added: “It is not the law on foreign nationals coming to work in our country because the law is already there, the problem with expatriate quota abuse is with the system because the system is corrupt that is why the law is not implemented. How did the expatriates find their way into our country, they did not jump in, they went through the immigration system. Those selling recharge cads in Kano, they all have their papers how did they come in, on what basis?

“They run restaurants and do not understand the law of the land and do not even have regard for the law of this country. Then tell me, if they can break the law with impunity, is it the ordinary Nigerians working with them that they will respect? It has become so bad that our children are beginning to think that hard work does not pay,” he added.

Tags: Business, Nigeria, Featured, Eburajolo, Textile Industry

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