Now is time to ban imported wires
Government attitudes toward local production of wires and cables have been condemned due to lack of patronage by the government. In this interview with Managing Director of Coleman Wires and Cables Limited, Mr. George Onafowokan said it is unfortunate that Nigeria has cables companies that are key to power solution but government jettisons them for made in abroad. Excerpts:
How has it been with Coleman so far?
Coleman Cables and Wires Limited is not a young company, we have been in business since 1975, we started as a small company and we've managed to grow the business to be the largest cable company in the West Africa Coast. Basically it is our vision and mission that is keeping us in business because there are a lot of challenges in doing business in Nigeria, but up and down either way the cable industry has been a good industry for us. We've been very successful as Nigerian because of our belief and passion for Nigeria dream.
This is an engineering firm that we have done very best as Nigerian, we've built the business from small scale industry to its current stage because we look at Nigeria as a market on its own where there is always possibility.
What is the objective and vision of Coleman?
Our vision is to make Coleman wires and cables a place to look for in West Africa in terms of quality, standard of cable and deliverability. To make our vision possible, our objective as a company is to make our products available in every region of this country. We see our business expanding massively because the key part of our vision is to make the deliverable of cable available everywhere in the region, in the country and West Africa at large. Also we see ourselves not only Nigeria company but as a company to reckon with in Africa.
Is there any plan for you to divest your business from wires and cable?
There are always opportunities, if you look at the business for long term you always have difference portfolio. Coleman is going to have different integrated portfolio that is having something to do with cable. We started with house wiring cable, latter we moved to power cables, from there to high voltage production and making us only the sixth company in the continent to make high voltage cable. We have a cable factory which is only one in West Africa, we pioneer many things in the industry and we are going to pioneer other products that have integration into the industry. We see ourselves being a solution to power industry, basically every accessories that have to do with cable will be part of our business over the long term.
Is there any problem facing Coleman and how do you intend to tackle them?
The peculiar fundamental problems with every manufacturing company in Nigeria are poor infrastructure, bad roads and poor power supply. As Nigerians you cannot wait for government for everything otherwise nothing is going to happen, we have to generate our own power. Today we invest so much in gas power generation, we invest in infrastructural developments. All these serve as hindrance to our business because it is capital cost, in other countries business owner will not take all these as part of their projects. Looking at the startup cost or expansion cost in Nigeria is heavy on the hand because you have additional 20 to 30 per cent going into power and infrastructure that under normal circumstances should not be part of your project cost. Currently we are doing a multi-billion naira project but we are spending 20 per cent of that money on power, that does not help, it hinders our ability as investors, it hinders our ability to put together our project. Invariably government supposed to provide adequate infrastructure that will enable us to do our business. Although our ongoing project Arepo 2 can be seen to be part of government initiative because this is a partnership with Bank of Industry and that has helped. We need single digit or lower than single digit interest rate for projects to be sustainable especially when the capital cost is high on infrastructure, that doesn't help our case. I believe the new government has a lot to do and we've seen a bit more stability in the economy because certain discipline has been proved which I consider we will see it benefit towards the next year and above.
Apart from BoI intervention, how do you source for your funds?
We get loans from commercial banks, 90 per cent of our funds are coming from commercial banks especially working capital. High interest rate today especially with what happened on TSA and dollar crash makes it expensive to borrow money, banks are lending in high double digits and that's not helping economy at the moment because the higher we are borrowing our cost, the more difficult for us to think of expansion of the current business. Today Coleman is employing over 300 people and with ongoing expansion we expect to increase our staff base to over 500 and we have ability to employ over 8,500 people if we run our all factory fully, we are running it around 30 per cent, we can run at full capacity if government is patronizing local business. Real sector can develop Nigeria economy if the government decided to focus on those companies that can create employment and generate more jobs. For real sector to expand and create more jobs government needs to reduce cost of borrowing, commercial borrowing cannot sustain manufacturing companies because it is very expensive and is not helping us if they cannot find the way of balancing the cost of funds.
Nigeria is trying to improve the state of power generation, transmission and distribution don’t you think this should be of help to your business?
Patronage should be the best thing in our industry but it is not, this is the reason why the industry is not growing like other industries. Patronage for local business especially for government is very poor. There is no zeal by local manufacturers to go and look for government patronage when you cannot guarantee of payment. Invariably it has improved but until we are in a situation where we can ensure that power solution is seen as integral part of Nigeria. We need to look at it holistically that what can we produce, how many companies produce meters, how many companies produce cable, how many companies produce steel and source for these items locally then the cost of putting power in place would be cheaper by doing this we are creating more jobs. We have a lot of work to do on power but we are not concentrating the solution to ourselves, we need to concentrate more solution to ourselves. When our government doesn't look inwards for its own solution on what it needs to do and we are importing everything, it's sad when you see importation of cable is done at zero duty to support the power project and we ignored cable companies in the country.
Is it that Nigeria cables are of low standard to imported cables or what is the cause?
Today we are very happy that everybody knows that made- in- Nigeria cables are better than any imported cables.
Is it that government doesn't know that Nigeria cable is better than imported cables?
Government knows, they were part of NIS/SON standard campaign developed by both the cable industry and the SON. The standard are high, the cable quality are high, Coleman in this industry is a known good quality, deliverability but what is the essential problem is that the lack of patronage and patriotism by government.
Coleman has the capacity to do whatever quantity they want, and we are still expanding because we believe one day government we see it that we can do what they are importing from abroad. We have expanded almost 1,000 per cent than any other company in the history of Nigeria cable industry and we have done that within five year period. Our own is to show the government it is possible to do local, we've done some oil and gas projects for the local, the private sector is driving our business, but government is not, government should be driving the cable industry. Today Nigeria with huge population should have nothing less than 40 cable companies if the government is doing it right and they should all be very busy. We've many cable companies, open and closed down over the last 40 years because the government does not patronize indigenous cable companies. It is unfortunate that we have an industry that is important to solution of power and we don't bother about them, until when government and its agencies focus on businesses and have a local content law that our power industry can improve. The ministry of power has no incentive to buy cable from local manufacturer. I think it is time to get ban on cable importation, may be our cable industry will grow better as it is in the cement industry.