From: Okey Sampson, Aba
Chief Emma Obi is an Aba-based industrialist who produces agro-allied products. In this interview, he tells of how he started business with 20 Biafran Pounds during the Nigeria/Biafra war to become one of the leading industrialists in the city.
How did you begin?
I started business during the Nigeria Civil War. At the time I was a very young man and Biafran soldiers could not conscript me because of my age, so, I was able to move around within Biafra land to buy goods and come back to my town. I used to go to Oji River province to be precise, Oboniyi in present day Enugu State, to buy things. From Oboniyi I would move to Owa also in Oji River province, which the Nigerian army had captured at the time. There I would buy things we lacked in my community like rolls of cigarette, salt, tobacco leaves, potassium and others. I bought those things from Owa and took back to my village to sell. I was making 10 pounds from every trip. I continued that way until the war ended in 1970.
After the war, Biafra money started depreciating, people started rejecting it, and I used the money I had to go into palm oil business. With the money I made from the palm oil business, I travelled to Aba in 1972 to start pharmaceutical business and later went into agro-allied industry, which depends on local raw materials.
How long have you been in this business?
My agro-allied factory was opened in 1993; we have managed it for 23 years. Our production centres on crushing of palm kernel and buying palm oil. We combine the two and fractionate them, we then refine to remove the fatty acid and deodorise it to get vegetable oil.
What does it take to go into vegetable oil production?
Manufacturing of vegetable oil products is something you can start on a small scale and continue expanding when you must have understood the business very well. Even if you borrow money from banks, you should know how to mange the fund well. So, we started by crushing and selling the crude oil. With time, we installed what is called solvent extraction plant, which is more a advanced process of extraction of oil from kernel. But we later had a handicap here because of the chemical that is used to do the extraction. It became so scarce in Nigeria and very costly too. So, we found it difficult to break even and later disengaged that plant. What we are doing now is to crush palm kernels with expeller machines imported from Malaysia or Indonesia. After crushing, we go into refining which is not easy; it follows the same process of crude oil refining though it’s on a small scale. It is not what one can go into without having enough technological knowhow and fund.
How much can one have before going into vegetable oil production?
A modular plant for refining of vegetable oil costs about $1m, so, when you convert it to naira, you will know it’s not a child’s play.
One can start by being a dealer, buying from manufacturers until he has enough resources to go into production. Like I said earlier it’s the same process with the big refineries that refine crude oil.
What are the raw materials for vegetable oil are they readily available in the country?
Vegetable oil is gotten from a series of nuts oil –groundnut oil, sunflower oil, palm kernel oil and a lot of other oil-producing nuts that are crushed, extracted, filtered and then used to make vegetable oil. All of these are available in large quantity in this country. So, we don’t need to import them. At present we have more than 500 tonnes of vegetable oil in our factory waiting for buyers and some people will go from out of the country to import from Indonesia and Malaysia that are subsidized by their countries’ governments, thereby making them cheaper than the ones produced locally.
How do you contend with foreign vegetable oil imported into the country?
Our economic policies are not implemented. We are borrowing the system of the Western world were people are talking about what to give to their countries and not what to get from the country. Nigeria should use the policy of high duty to stop the flooding Nigerian markets with imported goods; that was the approach South Korea adopted when they were trying to come up as an industrialized nation and their Customs men did not compromise. But in Nigeria, it is different; our Customs officers collude with importers, particularly foreigners who come in as investors but end up becoming importers, and defraud the country through illegal importation of goods.
A pointer here is that some multinational companies in the country I will not like to mention their names import shiploads of vegetable oil into the country falsely declaring this as palm oil, at not less than N2bn per shipload.
They step it down to even $100m and convert it to be less than N400m and pay 35 percent duty which is less than N10m and bring in goods that is more than N2bn and use it to destroy the industry by selling at very cheap rate that is not gotten anywhere in the world. Apart from importing contraband, they do not pay the correct duty. When such goods are brought into the country, the ones produced locally will not be sold until the companies that imported from abroad sell off all they have in stock because the goods are cheaper than those produced locally as a result of what I said earlier.
What’s the way out of this quagmire?
The thing that will solve the problem is for the Federal Government to establish another body that will oversee activities of the Customs officers particularly at the ports because conspiracy against government’s good policies has been their objective, and that to make money.
These Customs men are even richer than politicians we have been accusing of looting the nation. Take for instance, they are aware that a shipload of oil coming into the country is N2bn and 35 percent duty on it is N700m, but our investigations reveal that these importers pay less than N10m and you know what must have exchanged hands before they are allowed to pay that meagre duty.
What incentives do you need from government to beat global competition and remain afloat?
The incentive we need which will not cost government anything is to make sure that those goods that have high duty rate are paid. If they are paying the correct duty they cannot sell at the price these importers are selling because I know the global price of oil. So, the price the importers are selling it here shows they are not paying the correct duty. Some people believe that imported vegetable oil is cheaper and at the same time has superior quality. It is not so, the quality is the same, but what makes it cheaper is what I have just said and if government will look into it, it will be better for local industries and help the economy to growth.
Manufacturers in Nigeria had a lot of challenges before the present administration came. The government came up with measures that breathed life into some of these industries. Are those measures still in place?
Frankly speaking, before this government came in, some local manufacturers were not doing anything again because the past government had importation of goods as their stock in trade. But within the first year of the present government, so many industries have resurrected including my own because the unnecessary competition was no longer there.
Instead, we started employing more staff and increasing salaries. I commend the present government for their initiative towards importation, but the only thing is that now they have relaxed and people have started importation of goods into the country indiscriminately. What is in vogue in the country today is the importation of vegetable oil which some people will declare as crude, but they are importing oil called Olin that was banned by the administration of ex-President Olusegun Obasanjo; they are bringing it in now and calling it crude and I cannot mention names, but Customs officers know them, they are multinational companies who are hell bent on ruining the economy of this country. They came in as investors but end up being importers of banned products.
Government is also talking about exportation of goods to other countries, is that on your scorecard yet?
Let’s tell ourselves the home truth: Nigeria is not yet mature for the exportation of agro-allied products. Let’s feed ourselves first, we have the consuming power, which is an asset to this country. You cannot talk of exporting something like yam when people are hungry; it is not a good initiative. There is no way one can carry food to the market to sell when the children are still hungry. But what we are talking about is that let us feed ourselves first, then after one year of sufficiency in feeding ourselves, we can then go nuclear to export.
What do you do with the waste you get from crushed palm kernels and other nuts?
When we talk about industrializing a given country, people don’t know the multiplier effect. Formally, we were exporting these PKC that come out after the extraction of oil, which have left over of 7 to 9 percent of oil content. By then our people were importing frozen fish and chicken, but at a time, government stopped the importation of all these consumables and people began to have poultry farms where they grow livestock and they buy the PKC from us to make feeds for their birds and fish. And this thing happened at a time when companies in Europe said they would no longer buy PKC from Nigeria again because that they contain particles they don’t like and with the government policy of banning imported frozen meat and fish, the PKC we were looking for how to dispose off as waste, became a steady market and that is the multiplier effect of good governance and good productivity.
As a manufacturer, what are the day-to-day challenges you encounter?
The major challenge is that of electricity. Another problem is that of roads, the road leading to our factory where we also have the NNPC Depot in Aba is in deplorable condition. I have spent several millions of naira to fix that road; but it’s beyond what an individual can do. So, government should come to our help.