Small-scale efforts, great results! Every month Club Africa speaks to business experts with extensive knowledge of the local business and investment environment in Africa
“Power problems hurt manufacturing”
Ben Elfrink on running a business in Nigeria
What is it like to run a company in Nigeria? How are red tape, power cuts and security problems bothering business? And what can be done to help Nigeria reach its full economic potential? Ben Elfrink, CEO of the First Aluminium Nigeria PLC, shares his thoughts, with some positive notes.
First Aluminium is a manufacturing company with 600 employees and branches in Lagos, Port Harcourt, Abuja and Kaduna. When Ben Elfrink was asked to leave Belgium in order to restructure this company, the 56 year old businessman hesitated. “Nigeria has a huge image problem and I can now say that there is truth in many stories about corruption and red tape. In Nigeria´s defence however I must say that for many Nigerians life is tough. It saddens me to see that 120 million Nigerians have to live on less than a dollar a day. They are forced to make some money with every transaction they make. And there is more going on, like the bombings in the north and the kidnappings in the oil producing regions in the south.”
Are security problems hurting business in Nigeria?
“It is always present, in all levels of life. It is the corruption at the top that causes most damage to Nigeria’s position. Although this is an oil-producing country, there is not a single refinery in Nigeria that is in operation. That is why oil products like petrol and diesel are imported from abroad, from refineries that in some cases are owned by some of the wealthiest Nigerians. It is a strange situation, knowing that local production is not under control, import of oil products is stimulated and petrol is heavily subsidised by the government.”
“The power cuts in Nigeria – on average three cuts per hour – are definitely bad for business. To keep our production process going, our factories run on diesel fulltime, our production cost is sky-high. Power and gas supply is extremely unreliable.”
This issue is a reason not to invest?
“It is why there are hardly any manufacturing companies in Nigeria. For foreign investors, the high production cost weighs heavily on the negative side of the scales. In the end: if setting up a new business looks promising in terms of projected turnovers and profits, the deal will go through. But with the energy situation as it is, it takes an extremely attractive activity to make a profit at the end of the day.”
Any signs of improvement?
“The new government is definitely trying to make changes. The good news is that this country is a huge and growing market. In the meantime, improving the bad image may attract new investors. How? How about tourism? Nigeria has some of the most beautiful beaches I have ever seen. And some interesting cultural sites. Great hotels, especially in Lagos. But I don’t think I know of any activity in the tourism business… Anybody interested?”
Do you have similar or different experiences in Nigeria? What should be done?
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