The Group Managing Director of Red Star Express Plc, Dr. Olusola Obabori, speaks on multiplicity of agencies in the ports and also how the company’s investment in SMEs, perishable goods, will empower farmers. Chinedu Eze brings the excerpts:
How are you supporting small and medium enterprises (SMEs) and how do you intend to expand Pre-authorised Payments (PAP) system?
The support for SMEs is already ongoing. We started this project in 2018 and it has been running since then. An SME is a company or an organisation that does not have more than between N5 million to N50 million income. This the macro classification guide provided by the United Nations.
But there is a micro classification which we need to also pay a special attention to. These are the lower SMEs. Examples are: small shop owner with a monthly income of around N25, 000, your barber, hairdresser, petty traders, those selling on Instagram and such small time entrepreneurs. They may look ordinary but they represent a significant economic power.
We were able to gain access to a lot of these people through various platforms. We also formed a strategic partnership with SMEDAN (Small and Medium Enterprises Development Agency of Nigeria). We invited SMEDAN and they gave us a list of these people.
We invited them to a session some time ago at Welcome Centre, Lagos and tutored them on business success strategies, starting with the fundamentals. We showed them how to incorporate a business, manage the inventory and put proper systems in place.
Without such knowledge and training, such small businesses will be losing money or will not reach their fullest potential. So, whet we do is to run training sessions from time to time and keep them up to date on best practices.
After harvesting all the data, we bring them to Red Star and offer them substantial discounts in moving their goods to other cities, thus expanding their businesses.
We also issue them special discount cards that enable them to ship across our various platforms.
So those are the some of the things that we have done with the SMEs. And today I am sure we have thousands of them on our platform working with our e-commerce department.
Another major area of focus for us is the agric sector where you find a lot of peasant workers. Thankfully, I chaired the committee of agric and export forum for Nigerian Industry of Commerce.
We found out that most of these farmers and agro entrepreneurs have no idea how to sell their produce outside the country. They don’t know what certification they require. They don’t know how to go through NAFDAC, SON (Standard Organisation of Nigeria), Quarantine. At Red Star, we have experts in the house who have done this over the years. We then help them to go through the documentation. Once they are certified, we help them to export. This is how you grow the economy and from the grassroots.
You spoke about your interest in perishable goods. I will like to know how far you have gone in developing it?
I will say that we are a major player in the perishable goods sector, because when nobody wanted to play in that sector, we went there. We knew we will not make a lot of money from it but we saw the importance to the overall growth of the country.
If you look at the cost of producing tomatoes and other perishable goods and the cost of moving them to the market in a brand new truck, you will see that it is not profitable.
We are a specialist company in high value goods, no matter the weight of the goods, it must move very quickly; that is our core expertise. But if you come to the perishable side of things, for example tomato, it is a big weight item and costly to move. But we have remained in that space as a form of contribution to our national development.
In the future when that space gets better we will be the first to profit. We have made further investment in cold chain trucks now, and in the last three, four years, you would have see some of our trucks on the road, written Red Star cargo, cold chain services. They are brand new trucks. Have we made money from them yet? No. But we are patient.
We have also put the trucks into another area of paramount importance – the movement of delicate vaccines. There are foreign donor agencies from who are moving medicaments that are temperature controlled around the country. We work with them.
Our investment in cold chain storage has turned out to be quite strategic. We are now providing indispensable cold storage services to pharmaceuticals and makers of other goods that require strict temperature control.
Despite the fact that you have a very good warehouse in Nigeria,
your company still faces the challenge of moving goods to other countries. Why is it so?
This is a good question and it is a question that has been there for a long time. I will say that Apapa is work in progress. What we have now is slightly better than what we have before. Previously it was chaos in the past but things have improved, and we are encouraging and working closely with service providers at the Ports.
Some of them are private sector organisations. Remember that Apapa road was a total mess, and previously impassable. But we
can drive freely to Apapa now. However, the process of getting containers to go in or trailers to come out still has its own challenges.
Imagine if I have to pay N60, 000 per trailer and put it on a badge, so you have four trailers on that badge, that is N240, 000. And then you put that badge on the waterways and then it enters into Apapa, we discharge, it goes to load and come back and then we ferry it to Ikorodu. Look at the long process and amount of waste.
That is why it is said that the cost of moving goods within Nigeria is more expensive than from China to Lagos.
However, I will say that there is now relative sanity in Apapa compared with the past but it can be improved in the course of time. We are hoping that government can improve in terms of the call up system that they created.
Another critical area of concern with regards to exports and the ports is the huge number of government agencies in the ports. We have complained about this in the past. So at the port you have National Drug Law Enforcement Agency (NDLEA), Customs, Department of State Service (DSS), Anti Bomb squad, Quarantine services, SON, the Police, Navy and so many others.
This multiplicity of agencies slows down business and sometimes cripples certain export services, especially for perishable goods. If for example you are carrying yam, the yam will rot in Apapa before it goes through all the checkpoints and regulatory bottle necks.
For us who do export via air, for example, we will still go through those agencies but we will fly out, let’s say at a maximum cost. So what we should have been doing by sea, we try to take them by air.
The disadvantage of this is that when our goods land in that other country our cost of arrival there is higher that the growing market there. That is why we are not competitive; you see the challenge we face?
So if we are going to be competitive, the government needs to work on what happens at the port so that our cost of shipping out is minimised and we can slowly start regaining a competitive advantage in the international market.
