•Says China’s devt model should be embraced

By Charles Kumolu

Chairman  of Blue Diamond Logistics and Chief Executive Officer of Shanghai Engineering Works Limited, Mr Festus Mbisiogu, in this interview, speaks on how to improve the productive sector of the economy, how economic downturn is affecting production and how he successfully built his business empire in the last three decades. Mbisiogu, who sees steady power as the solution to most of the country’s current economic challenges,  wants Nigeria to take a cue from China’s development model.

Your firm, Blue Diamond Logistics, has consistently blazed the trail, satisfying customers’ needs for 30 years. What has kept it this strong? 

Blue Diamond Logistics started years back about three decades now. We started from Dubai and to the glory of God, we have strong presence in five countries – Dubai, China, Turkey, Vietnam among others. The core of our services is ensuring that Nigerians, who think of doing international business, have hitch free transactions. We help interested individuals in taking up documentation because most of them have difficulties in getting their items. We further guide them on documents preparation and help them to source for these products outside Nigeria, especially in Turkey and China. Because of the language barrier, we act as the middle person between the buyer and supplier. Also, we assist them in monitoring their products in terms of quality control. My staff are always on ground to ensure that what they purchase is what the Chinese people are sending to them after which we handle the shipment of their commodities via air and sea. Through our third party, we handle the clearing aspect and send it to their doorpost. Our aim is to ensure that our clients have hitch free transactions and this has kept the company going all these years.

Core values

Our company is big on trust and integrity. Those who deal with us are still with us because of integrity. I remember someone telling me that he sent money to one of the shipping agents in China and lost about $100,000,000 because the person could not be reached. In our company, we make it a point of duty to cultivate the habit of integrity and trust by ensuring that when we tell you that your goods will be received within a period of time, we work tirelessly to make sure it is received within the duration. That is trust and competence. As stated in our flyers, there are three cardinal points that we give to customers – speed, safety of customer goods and accuracy. All these things are very important to us.

Expansion 

into maritime

What is in our mind is hitch free transactions. Uzotex Bonded Terminal in Lagos is one of our chains of businesses because 70 per cent of the containers that come into this country are sent to different bonded terminals. For years, It has been our company’s plan to expand our operations on the side of the bonded terminal. We are so happy to be granted the licence to operate a bonded terminal because we intend to assist the Federal Government in decongesting the port. And with the customs on duty, we want to assist our customers with fast tracking their containers when they are sent to our bonded terminal. Also, we want to ensure prompt monitoring of their consignment. The bonded terminal has been in our expansion plan. There was a time in this country that the sea port was crowded with containers. That time, our containers would arrive and it would take about two weeks to get to bonded terminals. The thought of joining other people delivering these services prompted the idea of having a bonded terminal to assist the federal government in helping to decongest Apapa Port and make it easier for the industry to excel. We felt it would help our customers and the nation as well.

Volatile economy

For Blue Diamond Logistics, we are being faced with a whole lot of challenges. One, we don’t have short term plans because of frustration caused by the dollar and the cost of clearing too. Within two to three months, customs has increased duties more than five or six times. Before, to clear a container of 40 feets would cost around N7,000,000; now, it is about N19,000,000. So many bonded terminals are being closed because people can no longer import. It is too difficult to operate in such an environment. For instance, there was this order we placed. As of the time we placed it, the cost was around N80,000,000, if you place the same order now, you will find it difficult to pay for that goods. Because of the exchange rate, which has doubled, it is now around N160,000,000. Many companies are seriously affected and there is no replacement. Why prices of commodities will keep rising in this country is because there is no alternative to these products. If there were alternatives, there would be competition. For us, it has not been easy but we are still in it because of the passion we have. To break even is too difficult, making profit is too difficult for us. One, because we no longer import as only few are importing. Those who have placed orders cannot pay to complete it, not to talk of shipment. We have the passion to assist our customers but this is a trying time for us and we can’t quit now because we want our customers to have hitch free transactions. It is not easy for any company. We have explored all strategies to keep the company going and it is failing us because we can’t control the monetary policies, which is hurting us so much.

Shanghai Engineering Works

What brought about Shanghai Engineering Works and Industries Limited was as a result of government’s clarion call for people to relocate their firms back home in 2011. I yielded the call. However, I remember telling them on their visit to China that it is not easy for Nigerians to relocate their firms back home because of the issue of steady power supply. I also cited to them the Canton Fair that always takes place in China, the industrial part of that fair. Nigerians don’t go there because they keep wondering where they would get electricity to power all the machines. But some of us took that bold step and went into that section to import heavy duty machines. As I speak now, the situation is devastating.

Some of the promises made were like a mirage in the sense that the company looked for where to get light to manufacture. We pushed and we got light. It took me about N40,000,000 to get light in my factory. They call that line a ‘dedicated line’ and that line is not consistent. The kind of production we do in that factory doesn’t allow for a break in transmission. Once there is a break in power transmission, the whole material will be stocked, and it takes about one or two hours to restart it. You have to flush and start again. We needed a steady power supply and all efforts to solve that problem were not yielding fruit. We now resorted to being on generator, thus buying various sizes. Before we knew it, diesel increased significantly. When I was interviewed in London a while ago, I gave them a comparative analysis that we use about 10,000 litres of diesel monthly which is about N30,000,000. I told them that we cannot continue this way. As a manufacturer you have to input the cost of diesel, the cost of maintenance, overhead cost into your products before selling. As I speak to you, the operation in my factory has reduced to almost 30 per cent. Because of this hardship and the dollar issue, we have downsized.

Worse of it is the lack of a steady power supply. It is the worst so far. Almost 70 per cent of our staff has been asked to leave our company in Owerri. I remember testifying to the media that when we started newly, some customers were happy that some of the products they bought abroad, they now buy in Port Harcourt. We import so much because we don’t produce and that is why we keep looking for dollars. If we have a conducive environment for our factories, we won’t have this dollar scarcity. What we have, won’t go out. In China, when you think of starting a factory, government is there and it would make sure that you have access to the land and road, just as they will investigate what you intend to produce to give you money at a single digit interest rate. They also give you a 10 per cent rebate on the amount of dollars you bring in. This is the model that China uses. Once you indicate interest, they ensure you have constant power supply, give you funds and give you an interest rate that is as low as three per cent. In Nigeria, the last loan I got from a bank was 27.1 per cent. Some banks even take 30 per cent. How can one survive with such interest rates? It is too devastating. Government should praise the owners of any factory that is still in operation in this country because sustaining operations in this economy gives them nightmares on a daily basis.

Good Governance Initiative

My wish is to see our country grow. I keep telling people that why I am in China or anywhere in the world is to create the good things there in Nigeria. What informed the Good Governance Initiative that focuses on steady power supply is that 80 per cent of what we use in this country comes from abroad, particularly China where steady power supply contributed to where they are today. Because they have light, wherever they find themselves, they conceive an idea, invent something and start exporting. Consequently, I said to myself that I can’t be in an environment and all I do is to criticise government, let me have a non-governmental organisation through which I can convey my ideas to government. I remember engaging previous ministers of power on the need to have a steady power supply. I told them the problem does not lie in having an eight-point agenda, they should make it one point (power), which is the most paramount thing. Without power, we are wasting our time in this country. Without a steady power supply, the dollar will keep rising, exchange won’t come down without a steady power supply and prices of food items won’t come down without a steady power supply. Steady power supply is one of the master keys to change things in this country. I know how hardworking we are. We have the population and the brain. It is so frustrating.

The whole idea of the initiative is that I want to see what I can contribute to the country as I cannot just concentrate on the income I make from my business.

Government

They should bring out intervention funds with immediate effect. Government should locate all the genuine and committed manufacturers through the Manufacturers Association of Nigeria, MAN. Diesel can be subsidised. This will help. Also, the intervention funds should be created at a cheaper rate, a single per cent interest rate. The Bank of Industry, BOI, loan is about 18 or 20 per cent. In fact, all efforts to get a loan from BOI have been frustrated. They have taken one per cent fee from my account and have not given me the loan for five years now. They are still with my money and are saying it is non-refundable, yet they can’t give me the loan. This is what so many manufacturers are passing through. I had to go to a commercial bank that gave me a loan at almost 30 per cent