Austin L. Asimonye is the former Vice President of Manufacturers Association of Nigeria (MAN) and the CEO, Austin Laz & Co Plc, makers of Ice Machines. In this interview, he discusses Nigeria’s economic recession, the policy environment for manufacturers and how they fared in 2016.
What is your assessment of the 2016 business environment?
The 2016 business environment was very harsh and almost hopeless from my own point of view. There seems to be no policy direction, particularly on the planning of the economy, simply put, there is no direction on the part of the government.
How did this affect Austin Laz Plc?
Manufacturing is a chain whereby you extract a lot of inputs from many sources and there are some we import ourselves, but when you don’t have forex to import, you look for other sources. When you apply to the bank for forex, you have to queue up and only to be told that forex is not available.
So it led to crippling the manufacturing sector, which I am part of. Majority of our members have closed shop, and no longer producing as a result of inability to access forex for raw materials.
Moreover, for some of the inputs that we get from other sources, they are also imported by the agents or the dealers. As a result of scarcity of forex, the prices of these inputs have tripled; some of the inputs are no more in the market. This is because so many importers are unable to access forex. So many of them are afraid to import, not knowing what the next four weeks may bring. It is a situation that has been very difficult to face.
All these coupled with the power situation have led to high cost of production. This situation led to significant drop in sales as consumers started seeking alternatives. In a nut shell, the overall economy is down.
What is your assessment of the 60 per cent forex allocation to manufacturers by the CBN?
Like you know, I was the immediate past National Vice President of MAN, among our members, I have not heard, I have not seen any that have been given preference in sourcing forex from the banks as stipulated by the CBN, or that he was allocated with certain amount of forex.
I have not heard from any of the members or that the 60 per cent of the forex was kept somewhere for the manufacturers. This is not true, and the painful thing in it is, how the government could make public pronouncement that they are going to do something without living up to it.
They communicated that to the manufacturers through our National President, Dr Frank Jacobs and I was in the National Council meeting when the National President mentioned it, we doubted it, but it’s like the President believed it, but till now, it is not happening.
It never happened, so what baffles me is why top government officials who are policy makers would come forward to make certain pronouncement when they know they would not fulfil it thereby misdirecting people.
All of these things make it impossible for entrepreneurs to operate in the country. It makes it difficult for us to plan, if you take them by what they say and gather momentum in that direction, you will only discover that you have misplanned. It is confusing, it is heart breaking, it is annoying and it is like having someone in the driver’s seat that you are not sure of where he is driving you to.
Do you see a way out of economic recession for the country?
Why did we step into recession, is it not because of unproductivity? It is simply because of unproductivity. Everybody from the politicians to the people in government and to the civil servants, and to the common man on the street is waiting to have a share from the oil money, to have our existence on the oil money and everything is tied to the oil money. No productivity. We entered into recession because our production has been on the lowest strata.
If we are going to come out of recession, it has to be through production, productivity is the only way out. But the question now is, if the government is telling us that we are going to come out of it soon, they should tell us what plans they have put in place to increase production. They have not told us the plans they have made to keep the manufacturers producing, till now, I am yet to see any of the policies either in work or by action, and they are telling us that we will soon come out of recession, is it by magic?
Success is a decision; you have to decide to succeed. Until the Nigerian government decides that we are going to succeed economically, it is not by rhetoric. So long as we are going to be docile, talking on the peripherals, saying what the people would want to hear and our heart is not in alignment with what they are saying, to me, it is self deceit.
As someone in the know, is it true that most manufacturing companies are producing below 20 per cent of their installed capacity?
It is the same in my own industry and every sector is under comatose as we are discussing. In business, there is a break-even point, and so long as you are unable to attain the break-even point, it means the business is not sustainable; it is like a person that is under suffocation, it is sure that your life may not be there for more than a short while. It is not just that companies are producing below capacity; so many companies are folding up.
As soon as the overhead rises above your income, the company cannot continue because your workers are not there because they love you or they love the company, they are there because of their remuneration. And if you are unable to remunerate your staff, they grumble, and become the enemies of the organisation because they are hungry and they are angry.
What strategies have you employed to keep afloat?
Well, everybody is adopting all kinds of survival mechanisms, depending on the business of each person. In some businesses, it is easier to adapt but more difficult in some others. You don’t just depend on the will power of the manufacturer or their resilience, but the environment is a very serious determining factor. For instance, when Obama came to power, all the automobile industries were almost dead, they were folding up, but he introduced the bailout philosophy which was difficult for the legislature to accept, but he stood his ground and that became one of Obama’s economic doctrines.
If you go back to history you will discover that every American President has its own presidential doctrine, and this is the product of the intellect because the people that come in there do so to make extra ordinary intellectual impact.
Obama came in when Bush was already confused and he did not know what to do to the economy of the USA and that shocked the entire world. This man came in and introduced the bailout system which he used in bailing out the banks, the manufactures and especially the automobile industry and they all survived.
Today the American economy has gone out from negative growth to positive growth. Coming out of recession requires doing some intelligent things, some smart things. What smart and intelligent things has the Nigerian government done?
They have to come up with intelligent and smart policies. I am not just here to criticise, but am saying the obvious things. It is the duty of the government of any nation, be it at the federal, state or local government level to provide a focused leadership for the people.
That is why you have come there because before you get to power, you have told the people that you can do it, that you can make things work again. So you have to provide a focus, provide a direction, think for the people and they will follow suit.
Well, I am not saying that the government has failed, we still have hope, but that hope must be hinged on something, it must be seen doing some intelligent things, intelligent brainstorming in policies that you know can work.
They should be able to gather the right economic team because we are not lacking intellectuals; we have the right economists in this country who are making waves outside and within the country. But if you do not tap them at critical times like this, what will you expect them to do. When your ship is sinking, it is not the time to fold your hands.
Should the economic downturn of the country be attributed to poor policy management?
In the world, you don’t have poor human beings, what you have is rich individuals, intelligent individuals, dull individuals, smart individuals and very dull individuals. It is man that creates wealth and it is not the other way round. Wealth does not bring itself to be, so it is the ability of man, particularly those in the government to fashion out what to do to stem-up the economy.
Why should Nigeria suddenly fall from being the number one economy in Africa to the worst economy in this continent; why should our currency for now seem to be the weakest? If you are climbing a tree and you get to the top, let your climbing rope loose, you have no other option than to crash. I am not in the best position to judge whether they tightened the climbing rope or they let it loose since they came in, but I know that success is not a thing to be waited for.
Economic boom is not a thing to be waited for; it is not based on good luck. If you want economic boom as a nation, then the people on the driver seat m