‘Manufacturers Can’t Survive 20 to 30% Interest Rate’

mgmnt-manufacturingMaster Lock's manufacturing plant in Milwaukee, Wisconsin
  • ‘Manufacturers Can’t Survive 20 to 30% Interest Rate’

Sona Agro Allied Foods Limited, a biscuit manufacturing company and subsidiary of Sona Group of Industries, has exported its products to Ghana and other West African countries. In this interview with OKWY IROEGBU-CHIKEZIE, its Chairman, Mr. Arjan Mirchandani, says the company achieved this feat because it sources over 90 per cent of its raw materials locally. He also says there is a need to encourage indigeneous industries with cheaper funds and favourable policies, urging the government to engage more with local manufacturers.

What is the significance of the inauguration of Sona Agro Allied Foods export?

The significance it supports the government’s policy on backward integration and local farmers. It is important to help farmers. We believe they are the future of this country. We also believe that aside farmers, Nigerians can decide their future. It is not the business of any foreigner to decide the future for Nigerians. Foreigners could bring investments, technology and all the talents to make sure goods produced here are comparable to those from Europe and the United States, so that at the end of the day, one can take the products to other markets not only within Africa. It is necessary to look at the opportunities. This is one of the reasons we started this journey using local raw materials.

We started with just two containers for export, which in our estimation equals 200 containers, because when one has faith and takes a step at a time, one will reach one’s goal. Nigeria has an opportunity to grow, and to replace all imports with locally-manufactured goods and save foreign exchange. We cannot rely only on oil money. When you have too much of oil money, people get spoilt; when you have little, you start looking at what you have at home. Thus, taking one step is better than not starting at all.

What drives you as a businessman?

Every step we have taken has been guided by God. It is also our belief that you don’t ask your country what it will do for you, but what you can do for it. We make sure that we do our part for the society.

Many companies have been affected by the economic downturn, with some either downsizing or producing at less than installed capacity. What has been your solution to this crisis?

Probably, companies that are downsising were not able to get their acts together. Banks are also not helping the sector as their interest rates are between 20 and 30 per cent, which no manufacturer can survive on. With an interest rate of that nature, no business can survive. In India and other countries, interest rates are two, three or four per cent maximum. In Switzerland, you will get money at one per cent rate. When you have cheap money, you are encouraged to invest more. Nevertheless, we are still expanding, with no reason to downsize and deny workers their livelihood; we are doing everything possible to keep our staff even in the toughest season.

How do you comply with quality standards, especially getting certification from the regulatory bodies?

We adhere to quality standards in our production processes and have obtained certification from the International Organisation for Standardisation. We have complied with all the regulations from the Standards Organisation of Nigeria (SON), National Agency for Food and Drug Administration and Control (NAFDAC) and other government agencies. We are a responsible company and we are encouraged, despite the situation which makes us to be bringing in newer technologies. We are working with the Bank of Industry (BoI) and the International Institute of Tropical Agriculture to achieve this. We are grateful to some of these government agencies because they encourage growth in investments. If the cost of funds is not made cheaper more industries will die in Nigeria. I don’t believe that should mortgage the future of the country. We should encourage local industries that source raw materials locally. Nigeria got her independence in 1960, but we are not free until we are free by being self-sufficient. We need to start immediately.

How should the government assist investors?

We want the Federal Government to make cheaper loans available for the industries. We also believe that government officials should visit industries more often and encourage them, especially during moments of difficulties. It is the duty of every one of us to join hands together to grow Nigeria. That is why we think the Federal Government needs to engage manufacturers and ask them what their problems are. We have written many letters but we don’t get response from the government and this is very unfortunate. At Sona Group of Companies, we are producing with 100 per cent local raw materials, yet the Federal Government allows people to import commodities that can be sourced locally and they are charged only five per cent duties. For instance, some people are importing sorghum when we have enough of it in the country. We need to make policies to support local companies.

What are your investment plans?

At Sona Agro Allied Foods, we’ll like to see 100 per cent capacity utilisation. In the next 15 months, we are hoping to grow by 200 per cent. We feel that import reduction and government’s policies are helping to grow the industries and so automatically, employment will grow and the ordinary Nigerians will be proud that he is contributing to the growth of the economy. We have thousands of vibrant Nigerians in our work force and they are doing well.

What efforts are you making to ensure proper branding of your products to make them more acceptable in the market?

Great products are made of great quality. If you don’t do quality but you have great packaging, you won’t sell. The customer must get value for his money. Our belief is that people must get value for their money. That is important for us and we have obligation to our customers. We are also not relenting in our efforts to promote the products by building awareness.

What is unique about your products?

We are not doing anything extraordinary, but one thing I know is that when you produce quality goods, you don’t have to show off. Consumers themselves will determine what the market of the products should be.

Which of your subsidiaries is your flagship and what are the different market shares of your firms?

There is no discrimination in our organisation. Our industry is viable based on availability of local raw materials. I am all for it and I will do whatever it takes to replace imported products. Daily, we put millions of products into the market and we make sure that no problem or complaint comes to us because of our products. And we also pay close attention to our customers because we believe that the customer is always right and we ensure we give them value for money.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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