Nigeria’s Infrastructure Deficiency Makes Businesses Suffer

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Mr. Isaac Orolugbagbe is a chartered accountant with several years of experience in the corporate world. He was the managing director of Red Star Express Plc, for 10 years. He was also on the board of the company as vice chairman until recently, when he joined CourierPlus as managing director. His task is to move CourierPlus to an enviable height. Orolugbagbe speaks with Kunle Aderinokun and Bamidele Famoofo about his plans to achieve the task

As CourierPlus, how did you get here?

Well, I may not be able to tell the entire story, but l do know that CourierPlus started as a subsidiary of a bank or a registrar company and when the Central Bank made a new law that all banks should divest from their non-core businesses, this company was acquired by Superflux and ownership changed. This company is about 10 years now and the ownership is still essentially with Superflux.

Could you tell us more about Superflux?

Superflux is a very big player in the security prints industry. In the process of their business they realised the need for logistic capabilities- the need to distribute cheque leaves, bank statements etc. This is a company that has the capability to print one million bank statements at once. In an attempt to assist their customers to distribute all the print jobs, they went in search of a courier company as a subsidiary that will complement their business, that was how they came about CourierPlus.

Has it been rosy for you running CourierPlus?

It’s been ups and downs, but we have decided to stay in the business as business is a continuum, hoping that it will be easy and rosy someday. We are all living for hope and CourierPlus is not an exemption. We are hopeful that it will become rosy and the company, customer and staff will grow someday. We are here because we are hopeful.

Since businesses operate in a very challenging environment in Nigeria, what are the challenges you face as a company?

The challenge this company faces is a national challenge. Everyone is facing it. The road network is a big issue. Vehicles that we buy and think will last four years can run into a pothole and their lives will terminate. Security challenges like armed robbery on roads…and we are on the roads every day, so we are suffering all those consequences every day. Infrastructure, in terms of health and education, affects our operations as the quality of graduates fall below standards. So we spend a lot of money to train staff when they graduate from school to make them suitable for our operations.

More or less we are becoming a university of our self. Health is a big challenge as the public health system is grossly defective. So you see companies getting involved in the things they are not supposed to be involved in like creating health facilities for staff well-being. So, when you compare a typical managing director in Nigeria with his counterpart abroad, the one in Nigeria is more or less a president of a country because he runs his own water corporation, power generation, security system, we run a mini-government in every enterprise. And if you look at the manufacturing companies for example, the money they spend in providing everything needed to produce is often times more than the cost of the machinery needed to do the production or even setting up the company.

Take for instance, if you want to set up a barbing salon, all you need is to rent a shop, furnish the shop with chairs and buy a clipper. The cost of a clipper is probably not more than N3, 000. But the things to make the salon work-power, security and water- are more expensive than the cost of the salon. This is the big challenge for all SMEs in Nigeria. If you buy a machine for your wife to grind pepper in front of your house, the machine will be N20,000 but the generator to power the machine will be N100,000. This infrastructural deficiency makes the small businesses suffer because it makes the cost of production high and the business becomes uncompetitive.

What then is the solution to all these challenges you have identified for existing businesses?

There is no one solution to be proffered as you have to look at the problems from multiple angles. Starting from education, let’s ask ourselves, what kind of graduates are we producing? Are we consumers or creators of knowledge? What is the quality of the lecturers? Are they the type that can see the opportunities available in the markets? If they can’t see the opportunities, the students also will be blind. In the developed world, a lot of things that companies are using to make money come from academics. What are the academics in Nigeria contributing to enterprise? What are they contributing to the development of the society? And this is affecting the quality of the graduates.

I mean we have mechanical engineers and you still see people climb palm tree in the villages to tap wine or harvest palm fruits. Are we saying we can’t design equipment that would allow the palm wine come down from the palm tree? Because when you talk about technology, it is adaption for application of knowledge for the benefit of your immediate environment. So, when we are still going to school and people are falling down from palm tree, then our intelligentsias have failed us woefully.

We need to review our curriculum. Students should start doing projects that will enable them to go into enterprise after leaving school. We are all chasing a piece of paper that we call certificate, but we are not chasing knowledge. If you have knowledge you don’t need certificate. But here knowledge is secondary and certificate is everything. And that is why people cut corners to get the piece of paper called certificate, but you cannot cheat to get knowledge, you have to earn it. So, we need to go back to review the way we are training our students so that they can be useful to themselves and the society. That is about education.

Besides, whilst government all over understand that the only business they have is to give birth to companies because any business that is set up and registered in a country that turns out to become profitable, government owns 30 per cent of that company by way of corporate tax. Now, if you understand that success from business will be bring revenue to government, and then government keeps creating the space and incentive for businesses to come up. This is what you in the develop world. You are encouraged to set up a business with grants and without payment of tax for a period for your business to grow before government begins to demand tax from you.

The the kind of money that Britain is investing in innovation centres is massive. Anyone with a business idea simply goes there for advice and support to help him have a smooth take-off. That is the biggest job of government. Then they would make money through tax and employment would be created. Until enterprises are created and are successful, our children would never find jobs. Rather than all of us concentrating on the existing businesses, we need to create new ones. A lot of the businesses are not doing well not because of capital only but most of the times the problem is management competence. We don’t have people who can run companies. Management is scarce in Nigeria.

Competency is rare. The reality on the field of business is different from the initial assumption that it will work. But if there are support systems that would create the opportunity for young people to have people to run to advice when business becomes tough, things would be different. The entire ecosystem needs to understand that there is a need for us to nurture our children if they must become successful. Also, our laws must not always catch, but facilitate. As you facilitate, you do compliance. For example, a very experienced customer office will tell you that the job of customer is facilitation of trade and compliance and revenue generation. If there is no trade facilitation there can’t be revenue. When you make a law that kill enterprise, there won’t be duties in the future.

CourierPlus offers diverse kind of services. Which of them is the company’s cash cow?

Really, we do not have a cash cow. Remember l told you this company started by rendering service to a registrar company, distributing dividend warrants and annual reports. Most of the other services we render came about from requests of customers. Everything is in response to the needs of the market and they are interlinked as every product drives the next product. Our aim is to be successful in everything we do.

CourierPlus operate in four countries beginning from Nigeria. What does the link look like and where is your next destination?

This is a Nigerian company. All these places are where the mother company had inroads. They are places where documents are delivered for the customers of the company. We also have link to Kenya in the East Africa, and occasionally we have gone to Benin-Republic as part of our logistic business. The next thing we are doing is to develop our capability and to make it a truly international company.

What’s your strategy for growth?

We are retooling everywhere. The biggest thing we are doing now is to train and develop our staff so that they attend to the needs of customers. We want to improve their ability to listen to customers and attend to their needs. We believe if we are good messengers, the company will grow and money will come.

What’s your opinion about the AfCTA?

If you look at global trade, Intra-African trade constitutes only about two per cent to it. We don’t do anything about it. Everybody trades with their colonial masters simply selling commodities. You sell Coffee, Cocoa, and Crude Oil etc. You sell the Coffee for 80 cents, and it is brought back to you as Nescafe for $2. Until we understand where the value is, knowing that there is no value in commodity, we won’t move forward. Value simply is in experience management. African government needs to understand that their priority should be in exporting finished product.

People have turned Africa to a place for cheap raw material supply. We specialise in selling cheap things and indirectly specialise in producing poverty. If you have cocoa, you should think about how to sell chocolate, and if you can’t sell chocolate, process it up to a stage where it becomes an input so you look at taking some of the values for your country. You can grind and refine Coffee to a stage where you can sell for about $1.80 to those who will return it back to us for $2. When you retain one dollar by nothing selling crude coffee for 80 cents, you can create employment and generate wealth. But that involves sitting down to plan and have serious cooperation among all players. That is the way of the future. We have the population and if for instance, Nigeria connects its 200million people to the economy, the country will grow.

For instance, why are we not paying househelps who constitute a big part of employment in the country a minimum wage? We must realise that until we protect this group of people we will remain in trouble as a nation. We do laws only to protect the educated and the professionals and neglect the people at the bottom of the ladder- the artisans etc. Until we protect the weak members of this society, Nigeria is not going anywhere. The truth is, that is where the employment is. You will make more money as a graduate if you go into metal fabrication or bricklaying than wearing ties and searching for white collar jobs. But these small jobs should be protected.

There must be Institute of Bricklayers etc to make these small jobs protected and become more profitable. The bricklayers should be trained and certificated as it obtains in some other African countries and the world over to acquire necessary skills that will bring the money. Laws should be enacted for househelps to earn minimum wage, be entitled to leave and they would become part of the economy because of their enhanced earning power and poverty will be eradicated. Planning is needed in transportation to create wealth. Drivers should be certificated and allocated routes to ply so we won’t continue have some routes experiencing scarcity of commercial vehicles, while others have surplus, thus recycling suffering and poverty. This is the work that government should do. This is what l met in Lagos when l came as a young man.

Can you share with us your success secret as MD of RedStar Express and how you would deploy it here at CourierPlus?

We really don’t have any secret but what we deployed is what called PSP-People, Service and Profit. You look for good people, train them, pay them well, and treat them well. When you treat your people well they would be happy with their jobs and that happiness will naturally transfer to the services they give to customers. And when the customers are dealing with happy people that give good services, they will come back. It is repeat patronage that translates to profit. But when people start chasing money before chasing people, it is on a short-term basis, before long, the company would shut down.

What’s the impact of technology on your business?

Every business today whether you like it or not if affected by technology. When technology first came, we saw as a tool for enhancing business, but today technology is now business. When l first joined DHL in those days, technology was calculator, personal computer, but later it became a means of communication and later a means to make our business do well, but today, it is no longer a tool but a powerful force that has changed the entire business model. It has become a channel for selling.

For instance, people can now click on your website to pay for goods and you go to deliver to them. It is no longer a tool, but a major revenue earner. Now you can make up to 50 percent of your revenue through technology. It has changed the business model, our platforms, and customers. People can now order for goods in their cars, homes etc. Technology is everything now, so you just need to find a way to understand it and ride with it.