In this interview with James Emejo, Vice Chairman, Manufacturers Association of Nigeria (MAN), Abuja Chapter, Mr. Odun Emasealu, who is also managing director, Interior Woodwork Limited, advises the current administration to take practical steps to resuscitate the economy
How would you assess the developments and contribution of the real sector to the overall performance of the Nigerian economy?
Of course, we’ve not done very strongly in the economic sector and unfortunately, we have the issue of oil price which has brought us to this quagmire or economic impasse. That’s where we find ourselves at the moment. But we believe that it happens; mistakes have been made in the time past and it’s time to sit back and come up with strategies to address it. Every situation can be overcome depending on the strategy. I think the government has to be very practical. All this sitting in the office and coming up with statements and lying to ourselves and believing we know it when we don’t know it, should stop. There’s need to understand the seriousness of our situation right now, it’s critical. And they should act quickly to ensure that they do the right things and solve the problem before the hardship becomes too much. They have to be working on that now, in real terms and not by making speeches and just saying things from the books. So that’s my advice.
The Central Bank of Nigeria (CBN) has recently made policy statements which are targeted at improving credit flows to the real sector. How much impact has this had?
A lot of times we don’t know the reasons or the parameters used by the CBN to come up with some of these policies but I believe they have their reasons. However, a lot of times, it does not come down right well because there are things we believe should be addressed as a fundamental before getting to what they are doing right now. I have said it in different fora that with lending rates of 24 percent, 27 percent and exchange rate of N200-N300 at the black market, there can’t be any meaningful development. That ought to be the first thing to address. And I don’t understand why banks should pay deposit rate at 10 per cent, 12 per cent, they should make it two per cent. Then you drop the lending rate also-and that’s the beginning of investment drive to the real sector.
Don’t you agree that there’s little the CBN can do to make banks lower interest rates given that they are profit oriented?
We have to understand that there are various kinds of businesses; hospital is a business, if they run it well as a business, if they want to be strict, people will be dying. Now, some businesses have dual purposes, of course, income making for the owners and some have the social part of it, some have developmental part of it. For example, if you are running a bank, there must be development, it’s part of it. If you are running a hospital, there must be a level of compassion, it’s not in all cases that someone comes in and is dying and you say you have to pay first before I treat you. The hospitals take in people they treat and sometimes they don’t get their money but they can’t allow people to be dying. Similarly in banks, certain things can’t be allowed. I don’t think it’s right for the CBN to say banks are businesses and that they must make money; you can’t have banks declare profits every year and there are no industries.
There are concerns by manufacturers in particular over the seeming difficulty in accessing foreign exchange for importation of raw materials. How bad is the situation?
I think the issue right now is not that it’s hard to access foreign exchange, there’s no foreign exchange. That’s it. The CBN doesn’t have to disagree. We are all human beings and we have eyes and we know how much the country makes. We know how much they were making when it was $150 per barrel of crude oil; it doesn’t take a Soothsayer to let you know that someone who was earning $140 per barrel and is now earning $30 per barrel will have lower income than when it was $140; it’s not what they (CBN) say, it’s what we know. So we know that income is low and the country is primarily import oriented and so there’ll be a problem. But the truth of it is that there’s scarcity and demand is high, it’s simple economics but it’s affecting everybody; it’s affecting business generally, of course manufacturing, even trade, commerce is affected.
How would you evaluate the potential and performance of the wood sub-sector of the economy?
It’s a developing sector generally in the country; and unfortunately, we’ve not been able to develop the primary supply of raw materials, so we are hoping that we can achieve that as we go on. But this sector has grown over the years. There’s been a ban on furniture importation over the years and it has helped the sector but there’s still so much to do. People are coming to develop their businesses and we see a big future in it. There’s a high employment provision for the country. So I think it’s a good sector in terms of employment generation and income earnings for people who are participating in it.
How much of local content do you have in your company?
Everything you’ve seen in Interior Woodwork Limited are locally manufactured. Our factory is here in Abuja and everything is made here and that shows you how well Nigerians can do and go if they have the real tools and the environment, they’ll really do better. People argue that imported item is often better but from what you can see, it’s not always true. Of course at the beginning, there could be issues with any company but over time we are expected to improve and if given the right environment and more factories come up, there’ll be internal competition and when that’s strong, of course, you will have to improve in order to sell to get any share of the market. So everything was done here to the highest standards. Of course, we have foreign technical partners because some of the machines we use are very advanced, and our people were not exposed to it. But we’ve done a lot of transfer of technology that a lot of people can now use it and Nigerians can now use it apparently.
What are the challenges and way forward for the sub sector?
Yes, we’ve got over 160 million people in Nigeria, or thereabouts and that’s huge market-and so the market is there. In fact, we don’t even need to export to really make money. But the greatest challenge is that with the current situation that we are in, the difficulty in getting foreign exchange-because most of the materials in the furniture industry, apart from wood are imported. We have to integrate backwards and that’s what the government wants to achieve, which is fantastic. However, how do we integrate backwards? How do you manufacture accessories? How do you have wood good enough for the furniture industry? The government has to look at the issue of industrial raw materials and that’ll take care of a lot, not just the furniture sector but other sectors.
At a period when there are calls for local patronage amid concerns for quality assurance, how can the industry woo Nigerians, especially the luxury class?
Generally, in manufacturing, the beginning of quality control is your inputs. If the quality of the input is low, there’s no way the finished material will be high quality. So if you put in high quality materials and your processes are not good, you may not get high quality. So for you to get high quality, you must get high quality inputs, good processes, and then good end results. We must first work on the quality of the raw materials. So for all, we use high quality materials, we ensure that our inputs are very good and we strengthen our processes.
In the wood work industry, it’s about your machinery, the capacity of your machinery and once you have very good machines, your work comes out good. Here, there are no machines all over the world better than what we have.
What’s the acceptance rate for your woodworks?
It’s hundred percent. We belong to a certain niche in the market and when people of that niche come to us, they don’t complain. Of course, if you are not in that niche, you may find it difficult but if you are higher, you may not come here but for our target market, we are very fine.
What’s your thought on the inability of Nigerian overseas student to pay their fees due to the forex situation as well as banks’ suggestion to cut supply of forex for school fees, BTA among others?
The problem we have in Nigeria is that everybody wants to livelike the rich. Abroad, there are people that go to certain places, certain schools but in Nigeria, once you make something very expensive, everybody wants to get there…so once it (foreign exchange) is not available (at the official window) people will sort themselves out. I don’t have a problem with; if you can afford it, fine. And if we devalue and the rate is the same, all these won’t arise. Let me tell you, even at N400 to the dollar, nobody’s child is coming back, Nigerians will still send their children abroad to school, you know our people. They’ll sort it out.