In the drive for revenue to sustain operations, regulators, particularly the Standards Organisation of Nigeria (SON) and National Agency for Food and Drug Administration and Control (NAFDAC), execute contradictory policies that turn out to be exploitative and counterproductive.
In this interview with Assistant Business Editor, KELECHI MGBOJI, the Managing Director and Chief Executive Officer of Stellarchem Nigeria, Ikpong Umoh, urges the federal government to review the activities of regulators to make them more efficient.
AFDAC, SON rivalry, manufacturers’ headache
Rivalry the National Agency for Food and Drug Administration and Control (NAFDAC) and Standards Organisation of Nigeria (SON) has done more harm than good to the growth of indigenous manufacturing.
These agencies are regulating our industry with the same set of principles. This, in itself, constitutes double regulation. There is good manufacturing practice. This is the framework NAFDAC uses to regulate our industry. SON has just come up with a similar framework and called MANCAP (Mandatory Continuous Assessment Programme).
On the surface, they may look like different programmes, but in reality they are one and the same thing. So, our industry is suffering from double regulation. SON has the mandate to set standards in conjunction with the industry.
Standards everywhere is a consensus thing. But here we have a situation where SON sits down in its office and comes up with a programme, calls it the standard, and says the industry must adopt it.
Right now we are battling SON on the issue of MANCAP because it amounts to double regulation. NAFDAC is already doing it, why should SON also be doing it? But they are busy charging money.
The explanation these agencies are giving is that the government has told them that there are no funds for them so they have to sustain themselves on internally generated revenue. And that means that they are going to have a multiplicity of regulatory frameworks to draw revenue.
Regulatory agencies are funded from tax payers’ money. All over the world, regulatory agencies are not revenue drawing agencies. The government must fund them from tax payers’ money so they can do their work as they are supposed to.
If SON is looking for a standard in the cosmetics industry, it should call the practitioners and involve them in reaching a holistic standard. It can’t just work up something as standard. We cannot accept that as standard.
In one of the issues we have seen, they took the specification of one company and imposed it on every other person, and claimed that this is the standard. It is unacceptable.
Because our industry is relatively small, we are unable to fight it out for everyone to see.
Cement industry wards off contradictory regulations
SON tried to foist a similar situation on the cement industry, and called it the standard. It took the standard in one company and tried to lord it on all the cement companies. Operators of the industry are big and have money. So they stood up against it, and SON withdrew it.
The new federal administration in should take a close look at SON and other regulatory bodies. They are industry killers.
They should not be allowed to deviate from their work which is setting standards by consensus, otherwise they become industry killers and not regulators.
People who are on the same kind of manufacturing should be allowed to come together and agree on the standard.
Corrective regulation, not punitive
For us in cosmetics, when SON talks we take a second look because we have known better. NAFDAC started closing down industries, collecting revenue from people and crying foul that there were so many fake and substandard drugs in the country.
SON came riding on the same campaign of fake and substandard products. After about eight years of operation, fake drugs, substandard products are still here with us. And some of the drugs and products come from China bearing SONCAP stamp.
Who is fooling whom? It is because we do not have a system that checks the checkers. We should have a system that checks the regulatory agencies. If after many years, they are still shouting that there are so many fake and substandard products in the country, then what are they doing; what’s their scorecard?
If you ask me how fake and substandard products can reduce in this country, I can tell you first and foremost, empower local manufacturers. You know where the local manufacturers are, and you know the products.
Go to a market pick, and if you find that the substandard product is by so and so company, do your analysis well and then invite the manufacturer and confront him. Confronting him is not to kill; it should be to correct him to do the right thing.
Once the regulatory agencies adopt this attitude, things will begin to improve. But right now, they are thinking of internally generated revenue.
Punitive regulation counterproductive
While they were discouraging local manufacturers from growing, they were encouraging foreign manufacturers to come in.
It became more lucrative for them to collect money and register foreign products than to waste time looking for local manufacturers.
When they said Nigerian products were not selling on the international market, this is not true regarding the cosmetics products. They don’t have facts. We are consultants and we have the facts relating to how well the products are doing.
Nigerian products don’t fail export standard
It is self-deceit to say that Nigerian products are substandard. As far as cosmetics products are concerned, I think the local and indigenous manufacturers make products that have higher standards than those imported.
In the 1980s, Nigeria’s cosmetics industry was doing so well that it was looked up to as the cosmetics workshop of Africa and the Middle East. People used to come from far and near to buy Nigerian cosmetics products such as Kessingsheen, Eleena, and Rainbow.
But when NAFDAC came with its so-called standard, it was not looking at how to improve the manufacturers to get to the next level. It was interested in how to draw revenue.
Some of industries are no more here today, coupled with the fact that the government opened the borders for every imported product. These combined to frustrate growth of the local cosmetics industry.
Regulators lack facts to back up claims
We also have to look at the claims of these government agencies. They play to the gallery, the facts are not there. It is very impossible for anybody to export yam to the United States from Nigeria. The reason is that the U.S. that drafted and signed the World Trade Organisations (WTO) agreement is looking at how to protect her market. So, they don’t allow every Dick, Tom, and Harry to bring in anything.
They have opened windows of opportunities for every country in Africa on what they labelled Africa Growth and Development Opportunity Agreement (AGOA). For Nigeria, they opened a textile window. I have somebody living in the U.S. who has been carrying Akara, Adire, and those tie and dye clothes to the U.S. and he sells. This has not been given opening for food items like yam. That has been given to Ghana.
So, Ghana is able to export yam, garri and food items to the U.S. and sell without hindrance. Nigerian yams are said to be infested with nematodes, and need be disinfected before they will be allowed into the States.
It is not every product from Nigeria that you take to the U.S. or United Kingdom and sell.
If SON is going to help local companies to export goods, that is good but I tell you that it is not every product that is substandard.
Other considerations in dealing with exports
There are other considerations when dealing with the outside world. I have been to China, India, Malaysia and other countries.
You cannot sell matches as foreigners on the streets of India. As a Nigerian, you cannot set up a cosmetics manufacturing company in China. The law does not allow you because there are so many Chinese companies that manufacture cosmetics.
But here we have a lot of capacities unutilised by local manufacturers, yet allow so many foreign companies to bring in cosmetics products.
Foreign firms’ threat to overrun local economy
Big multinationals are fighting tooth and nail to see that their market is protected by making sure that the small companies do not come into that market. They know that when small companies come in there will be upheaval.
Small companies come with lower prices and in most cases with superior quality. And the multinationals will prompt regulatory agencies with spurious allegations and the agencies would clamp down on them. When the small local companies disappear, the big foreign companies take over all the market.
We want to see change in those areas that have put local investors at a disadvantage.
Local Content Act fails to address industry issues
The Local Content Act was enacted to ensure that in the petroleum industry, there is local content. This implies that the personnel occupying certain positions must be local people. But it does not stop there.
The real local content that will salvage this country is the one that first and foremost ensures that local industries that are active and functioning continue to be active. When that happens, the foreigners will not bring all their people to man all positions, including those where there is local competence.
Second, if the government wants foreign investors, it must consider where Nigeria has expertise and competence. If a Nigerian group has expertise and competence in any area, whatever foreign direct investors that are coming in should be made to partner with the local company.
This is what India has done. Today, the car companies coming into India are not coming to operate alone.
That is why you hear certain names like Suzukimaruti. Maruti is an Indian company that has been trying to assemble cars for a long time and Suzuki came in to partner with them. Ashokleyland, Leyland came in and was forced to partner with Ashok to transfer technology.
We already have Innoson Nigeria trying to assemble cars and Debongos which was also trying to assemble cars; both companies in the South East. We should leave alone tribalism, ethnicity, and religion if we must make country move forward.
Foreign investors should partner local auto firms, not compete with them
Foreign direct investors coming in the area of automobile should have partnered the Innoson Vehicle Manufacturing Company or Debongos so that they can transfer technology, and not to compete with them.
The government exposes local companies to unnecessary competition. How can they grow? So long as we continue to think that foreign direct investors will solve our development problems, we will always remain small and be ridiculed in the area of technology.
The new administration in Abuja should learn from the mistakes of the past and lay emphasis on local manufacturing. Anything being made in the country should not be allowed to be imported, despite the treaty that government signed.
The U.S., UK, China, and India signed all those treaties. China was going to whitewash America with steel but the American government gave conditions. They told China to pay higher duties and adhere to limited quota. When China saw that it was not feasible to operate on those conditions, it backed down.
About six years ago when British American Tobacco Company (BATC), a division of Craft Foods, was coming into this country, it was boycotted because it manufactures cigarettes that endanger the lives of smokers, even unborn babies.
Promoters of the company moved from America to Vietnam to manufacture. When the Vietnamese discovered that tobacco smoking was killing their young population and unborn babies, they drove the company out.
A Nigerian went and brought the company here and perhaps put his child or brother as a director. And that was counted as Nigeria’s foreign direct investment. A company bringing poison to your country, and the same NAFDAC gave them certification.
The agency ought to lose its mandate for giving its seal to that company because that is an endorsement consigning the lives of Nigerians to perpetual doom. It should not have done that, but it did and made money from it and was very comfortable.
That’s blood money.
