Naira will rise if we produce more – Danolis Group

Tell us about how you started your company?

Danolis Group actually started off as an investment company in 1992, trading in electronics from China and other Asian countries. Later, we expanded the business to include kitchen equipment, as the demand for enamel ware increased. So we were importing stainless and enamels and distributed them to traders at the Oke-Arin market in Lagos. By 1998, we expanded the business again to include building materials. At one point we were the sole importer of hard board, we were importing this from Poland and we were also importing plywood from Ghana. Again, as the business grew, we went into manufacturing of ice cream and yogurt and also into pharmaceuticals.

A lot of businessmen appear to be interested in importing, is it that the business is so profitable?

Every business is profitable depending on how you run and manage it. Importing like every other business has its risks and that is why some businessmen keep moving from one product to another when one fails. But we have continued to grow every arm of our businesses because to be in imports, you have to be focused, consistent and resilient. I usually tell those coming into the business that you don’t have to abandon a particular line of import because it didn’t go well the first time. Every product has its season and when that season comes, the product will sell. Also, you have to be honest and firm in your dealings with your bankers, shippers and agents because any of them can cost you the business if you are careless. When you have taken care of all these there is no way the business will fail.

Tell us about some of the challenges of the business?

For a beginner, the challenges are many, especially now with the current global crises. Access to funds is becoming tougher, because the banks are now stricter with giving out loans. In any case, the monies are no longer there either in dollar, or in naira, while devaluation has compounded the problems. So even for existing businesses like ours, the environment is tough. For instance, we have had to reduce some of our commitments by reducing the volume of our imports, and being the beginning of the year, people are still recovering from the festive period and planning for the year, so this has slowed down most businesses.

Again, you must have a trustworthy shipper and agent or they will ruin you. For instance, last year we ordered hard board from Poland worth over N200m and the shipper sent grade 2 and 3, which are not very good. We are in court with them on the matter, because last year, we made good business from the high quality ones and if we now give these low quality grades, we will damage our reputation.

Also, there are a lot of environmental hazards that could cost you the business. For instance, in April 1996, we lost three containers of enamel worth over $270,000 to rain, everything was damaged by the rains.

Often you hear about the Customs impounding or ceasing goods, why do this happen?

Most often, it is not the fault of the customs but the businessmen who are the architects of their own problems. Normally, when you place your order, you are expected to pay 30 per cent of the value and you pay the balance after they have shipped the consignment to you. But the situation is such that many Nigerian businessmen will not have the money for the full value, yet, they will place their orders. By the time the goods arrive they are unable to pay, thereby contributing to the congestion at the ports. After three months of inaction, the customs will be forced to impound the good and auction them. Other times, the importer will not do his market study and orders for goods that have no markets for them, and when he discovers no one wants to buy, he abandons them at the ports.

You talk about ports congestion, what really is the cause of this apart from the scenarios you have mentioned?

Apart from abandoned goods, we have a situation at the ports, where there is only one government agent – MP Moeller, in charge of clearing goods and removing the containers. But the machinery they have, in terms of trucks, are not enough to clear the goods and move the containers. Instead of allowing individuals or the importers to make their own arrangements they prefer to do everything on their own including moving the containers to earn more revenue for their transport division.

What they do is to place ships on roaster for clearing of goods, sometimes they divert the ships to neighbouring ports, which increases the cost of freighting, and this is eventually passed on to the final consumer. Because of their limited machinery, clearing of goods can take up to two months incurring demurrage. The Federal Government promised that goods will be cleared within 48 hours, but this is not happening. Although government has intervened and ordered that the ports be cleared within 60 days to decongest the ports, but this might not be feasible, except government builds more bonded warehouses and get more land for the loading of containers.

Also, when the goods are diverted to other ports, some of them are lost in transit. At one point, when our s hip was diverted to Cotonou, we lost about N40m, as some of the consignment were missing while bringing them to Nigeria.

How easy is it to recover such missing consignment?

It depends, but either way, it is not easy. If you are the only importer of such goods, then it becomes a little easier, but when it is a general good, there is nothing anyone can do. When they are lost, they are lost forever.

There have been varied opinions about pre-shipment and destination inspection, which do you think is better?

For the Nigerian economy, destination inspection is better because in the period of pre-shipment inspection so much money was lost, as shippers would just ship you sub-standard or expired goods. But with destination inspection, the Standards Organisation are there to check the quality of the goods that are coming in, and if they are pharmaceuticals, NAFDAC will also be there, so the incidence of bringing in sub-standard or fake goods are reduced.

How easy has it been running your manufacturing business in view of the power situation in the country?

Manufacturing is one of the toughest business to engage in in Nigeria presently. Sometimes, I wonder how manufacturing companies break even. We took government’s advice that more people should invest in the sector and we started the manufacturing arm, only to discover that power is making the division very unprofitable. In a week, we spend about N150,000 on diesel or five drums of 200 litres each. So if government should deal with the power situation as it has promised, then the economy will be the better for it.

With constant power, more people will invest in manufacturing. In fact, more foreign investments will flow in. In my line alone, I have had proposals from five foreign firms, the only reason why some of the deals for them to establish in Nigeria have not been concluded is because of power.

The situation is also contributing to the fall in the naira, because as an import dependent nation, the dollar will continue to be higher. But if more people go into manufacturing, and we begin to export, the naira will rise. But no one can go into manufacturing without constant power or you go bankrupt within the shortest possible time.

Source: The Punch