Single exchange rate will reduce inflation — Erisco Foods CEO

The Chief Executive Officer of Erisco Foods, Eric Umeofia, in this interview with Funmi Fabunmi speaks on issues affecting the growth of the Nigerian manufacturing sector, among others

How conducive is the Nigerian business environment to manufacturers?

Generally, the Nigerian business situation is nothing to write home about because our economic managers, particularly the MDAs, from federal to state institutions, don’t actually support economic expansion or diversification. They wish and want it verbally, but practically I don’t see anything they are doing that aligns with what they are supposed to be doing. I want to say that they antagonise the future of our country. They don’t want to listen and learn from other countries that have succeeded. They want foreign exchange to be available. They want everything in Nigeria’s economy to be moving well. They want our money to gain ground without doing anything to support all of this. They are instead supporting importation and consumption because if you allow Nigerians to import air, they will imported air but the economic managers ought to have known how to support indigenous manufacturing than the importation which they are currently supporting.  In every aspect of Nigeria’s economy today, the system is supporting importation and foreign goods. More than 90 per cent of goods sold in Nigeria today are imported. Why are they coming in? It is Nigerian money they use. It comes through Nigerian borders and it is in the Nigerian market. It is not hidden information. So, if you continue to come and tell me or any other person that we need to diversify the economy, we need to export; what are we exporting? I call it drama because the system does not recognise manufacturing and or manufacturers. They do not want to recognise us and that is why we are where we are today. The only way to help and support the economy is to buy made-in-Nigeria goods.

How can we raise internally-generated revenue in some states?

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We want to raise IGR due to advice from the International Monetary Fund and some consultants, but we are not expanding to create more industries for money to come naturally. We want to tax the existing ones to death.  That is why manufacturing companies continue to close down every day and they do not care.  There is a need for a paradigm shift towards manufacturing before our economy will be okay. And God has blessed us with everything good in this country for us to be self-sufficient, but the people managing our economy have not been promoting local manufacturing. People like us are crying that despite the fact that we bring in our own funds, and create the jobs the government is not creating, they send their agencies and (revenue) agents after us. These agencies do not want manufacturing in Nigeria. Every Nigerian should know that it is a simple arithmetic; unless you support made-in-Nigeria goods and manufacturers in Nigeria, foreign goods will be our best. If you do not support your own, nobody will.

To manufacture locally is actually more difficult than going to Borno to fight Boko Haram. We at Erisco got our money from Dubai and Angola to establish our factory here. We only took money from the Central Bank of Nigeria for operational cost, even at that, whenever we want to expand, it is difficult to get any funds.

To what extent are local manufacturers facing competition from their foreign counterparts?

We are facing harsh competition from importers who are mostly foreigners. Chinese and Indians are mostly behind tomato importation in the country. We are competing against the same foreigners in this country that want to pretend to produce goods. The government supports them more than us. They are at home in this country more than us. Also, financial institutions support foreigners more than they us. That makes it three competitions that we are facing. So, how can we survive? If you look around, you would find that they do not want made-in-Nigeria, especially by indigenous people. We are just keeping hope alive that all will be well in accordance to President Muhammadu Buhari’s desire. The president wants every company in this country to do well- both foreign and local. It is only indigenous manufacturers that can help the economy.

How would you describe the impact of inflation on the economy?

It is heavy and it is not going to abate no matter what they think they are doing. If the pricing is stable, inflation will not be there. Inflation emanates from unexpected pricing, and the worst of it is that when you do not plan to gain, it is difficult to plan. So, inflation can only abate when government plans the economy to be stable. How do they plan? First, is foreign exchange available? If you say it is not available then it should not be for all.  Don’t tell everyone it is not available and then turn around to give some other peoples.

If it is N10 that is available, make it accessible to everyone equally. We are ready to share what is available according to productivity. It should not be about giving to people that are not in the industry, it is for people that are in industry. Inflation is rising due to price instability. So, this is why inflation has continued to rise in this country. If they create one exchange rate, it will reduce inflation in this country significantly.

Some people have goods, but they do not want to sell them. They are hoarding it, saying, ‘I do not know what will happen next week’. But if you are sure that this is the standard of money, such a thing will not happen. I lost N74m in exchange rate in one day. After I bought dollars at the rate of N800, it came down to N700. It was because of the instability of the economy.  At a time, I said I didn’t want to even sell; I wanted to shut down. So, inflation rate would only slow down when we do the right things. First, by making our foreign exchange rate to be one. No country has tried having two rates and succeeded. We are introducing new naira. I welcome it. Everything will be okay but by February or March, let’s see how the exchange rate will come down without the industry. I challenge the CBN governor, by February/March, let the dollar drop to 400/450. It is not possible when we do not have a manufacturing sector.

What impact is insecurity having on the industry sector?

You cannot tackle insecurity without industrialization;  It is not possible, if you like bring more military. I advised the government three or four years ago to put more money to develop industrial sites to create more jobs and watch insecurity reduce gradually. Using the army or police is important, but it is of lesser impact at this time. Now, there is no job. Some people want to work, but they do not have the capacity.

I once read in a Nigerian newspaper how an armed robber was asked why he chose to rob and he said he did not get employment and at a point, his friend who used to give him handouts introduced him to robbery. He joined them so that he would survive. So, this is why some people want to work, but because there is no work, they join evil gangs.  When I was young, you can never see a graduate as a robber. We must create jobs and then use guns to order the stubborn folks back into shape.

Insecurity has affected our operations heavily. In some areas, we do not go for marketing again. Some of the places where we want to start work today are open factories, but we are not doing so because of insecurity. It is affecting business heavily. So, that is part of the reason inflation is rising. If you cannot move around or meet up with the demands from your consumers, it would affect sales. That is why if the government knows what we are doing, it will appreciate us.

What is the biggest challenge affecting food production in the country?

The biggest challenge among them is dumping. The second is lack of funds. For instance, my factory now is 450,000 metric tonnes. I have never operated it at 15 per cent capacity since inception because I do not have the funds to back up my raw material and the government has continued to look for investors to come here. Those of us who invested have not stabilised. We are just stopping ourselves.

What is Erico Food doing to support the Nigerian economy?

We have done a lot and will continue to do so. By the grace of God, we have over 2,000 workers whom we pay salary every month as and when due despite the frustrations from MDAs. And for years, even in 1994 when we launched the Erisco bonpet fire extinguisher, we gave each state government in this country one utility vehicle. We gave Lagos two. We have many scholarship programmes. In my village, Amichi, we have been given over benefactors scholarships. We have through this programme trained doctors, engineers, pharmacists, a lot of them and have continually intervened at one time or the other. I believe in humanity a lot and have worked in line with this, incorporating physically challenged persons into our workforce.