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Govt. should focus more on SMEs — Nwolisa

By Vera Samuel Anyagafu

He started his business at a very young age with a seed capital of just a few thousands of naira.
Today, the CEO of Elkalisa Royal Nig., Ltd., Mr. Michael  Nwolisa’s success in Nylon business has immensely contributed to reducing the number of unemployed youths in the country.

A graduate of Archeology from the University of Nigeria, Nsukka, Nwolisa waded through vicissitudes of life to consistently approach the manufacturing of varieties of polythene bags with vigor.
In this chat, Nwolisa, who could be best described as a visionary, speaks on the stage to stage progression of in nylon production in Nigeria, the prospects and challenges.
He also suggested ways the Nigerian government can assist manufacturers achieve success.

Mr. Michael  Nwolisa
Mr. Michael Nwolisa

Type of business:
The business is classified under nylon sector of the Nigerian packaging industry, and could be categorized as informal sector, due to its operational structure.
Nylon production is almost dominated by Indians, followed by the Chinese.
This has made small players in the industry go through lots of challenges in a bid to survive.
In other words, the foreigners are basically in control of the industry and in many situations, determine direction of activities in the business.

According to Nwolisa, one of the toughest challenges is in getting  competent human resources.
“This accounts for more than 80 per cent failure in the business and by extension, many other small businesses. Lack of competent human resources is one major reason why most businesses in Nigeria fail to survive the first 12 months after start-up. It is often difficult to get honest and committed workers who can manage nylon production.

“Energy is another critical challenge confronting nylon production. Electricity has been the bane of industrial development in Nigeria and the high percentage of unemployment in the country.
“This issue has greatly contributed to the high cost of goods and services in the industry.

Funding also is another major challenge for the fact that it is capital-intensive. Seeking funds from lenders, especially banks, is very difficult. Lenders/banks would rarely lend or loan out money to small businesses and this has made it all the more difficult for operators in the industry to acquire needed machineries to grow their businesses.

Another challenge is locating strategic sites. It is sad  that properties in major cities are way out of the reach of small investors who are intending to set up nylon production plants in the country. The situation has necessitated prospective investors to move their businesses to remote areas.

“Developing this type of business in remote/  inaccessible areas often impede the growth of the business, but in a situation whereby it becomes difficult to get the much needed space and affordable site, one is left with no other option,” he said.

Multiple taxation:
“Although the operational environment for most businesses in Nigeria appear hostile, the impact of multiple taxation is unbearable.
The hostility, apart from the huge tax demand, includes poor electricity supply and exploitative nature of some members of the communities where these nylon factories are located.

The impression by people in most communities is that the sizes and shapes of machines translate to money automatically and therefore owners of such businesses should be at the beck and call of host communities whenever they need money. All these add up to the overall cost of doing business and this in turn, makes our products less competitive when compared with imported products,” he lamented.

On the category of people needed to start the business, Nwolisa said: “Just as every business needs an admixture of people to start up, so is the nylon business. To start up this type of business, one needs both low and high skilled personnel and must ensure a smooth take-off in order to avoid early bankruptcy.”

Sourcing raw materials:
“Raw materials for nylon production are mainly imported from Asia and Middle East with less than 20 per cent produced locally.
The little produced locally are in the hands of the Indians, since the Eleme Petrochemical plant, which was initially managed by the Federal Government, was sold to Indorama, an Indian company.”

Mr. Michael  Nwolisa's Elkalisa Royal Nig Ltd
Mr. Michael Nwolisa’s Elkalisa Royal Nig Ltd

Regulatory requirements:
“Every new business needs to be registered with relevant authorities at the three tiers of government. Business registration/incorporation at the federal level is key for any investor to venture into nylon production.

Both at state and local council levels, business permit, land use charge etc are required. Having done all these as a basic requirement, you need to follow it up with registering the business to bring it into the tax net of the state where the business is located. Again, there is NAFDAC certification that is needed especially from those companies producing feeder rolls for sachet water packaging industry.”

How government can assist:
“Since it is a fact that no country can develop economically without recognising the importance of small businesses and their role in her growth and development, it is important that government should develop policies that will guarantee the stability of all small businesses in the country.

Firstly, they have to build industrial clusters and provide all the needed infrastructure such as stable electricity, good access roads, more friendly tax laws that will eliminate the current multiple taxation regime that is in place right now. In the nylon sub sector, the government should do everything possible to eliminate the current high level of smuggling of imported nylon products into the country as this is currently having a negative effect on local manufacturing.

The imported nylon coming in from Togo, China and India are substandard and sold below real cost. If the government does not do something urgently to this trend and the dangerous monopoly by the Indians in the raw material supply chain, the nylon industry will just go the way of the textile industry. This, by my estimation, will have negative implication on the socioeconomic life of the country especially now that the country is grappling with very high unemployment rate.

In other words, the Federal Government should be more committed in the effort to provide enabling environment for SMEs in order to reduce the number of unemployed youths in the country.


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