CEO Interview: Ibukun Awosika, 30 years of doing business in Nigeria

‘The longer you are in a space and delivering value, the longer you cannot be ignored’

IBUKUN AWOSIKA is chairman, First Bank of Nigeria Limited and founder/CEO, The Chair Centre Group, including The Chair Centre Limited, Sokoa Chair Centre Limited, Furniture Manufacturers Mart, TCC Security Systems and Cubes & Boxes Limited. It has been 30 years of running a successful business in Nigeria and she speaks with KEMI AJUMOBI on the challenges and triumphs of her business, how businesses can grow, government’s intervention and encouraging optimism in the Nigerian system. Excerpts:

30 years of doing business in Nigeria

When I look at the last 30 years of the Chair Centre Group, I think about my workers, and the people who had made it possible to build out on the dream of a young woman of 25 going on 26, to build for the long term of 30 years and build to this point, and so when things are hard, you think about those who have built together with you and you are not quick to give up because they are part of your story. There are multiple factors that affect a manufacturing business as opposed to a services business. I can understand some of the issues because I have been on both sides. 

We stated out in 1989 January essentially as a local manufacturing company producing furniture. And along the path, based on certain limitations as opposed to where I wanted to go in terms of the vision of the company, I started exploring ways for us to be able to produce in a sustainable manner, the same quality in large volume over time.

You can have the best imagination about designing, but your ability to execute it would depend on what you have to play with in terms of machinery and resources. So we invested in that, and then used the factory to produce for our own retail customers through our retail business which is the Chair Centre, and then process for other factories. 

Importance of delegation of duties and leaving a legacy

My people are fully empowered and I delegate responsibilities without any issues. I mean, think about it, if that was not the case, when the corporate world became intense, it would have been difficult, it would have had great impact on the business because one of the things that has always troubled me about Nigeria is that there are many great Nigerian businesses that had been built over time, but a lot of those business had died as the owner died.

As a young woman, as I grew my business, I kept asking myself, ‘if my business dies when I die, I’ve wasted my life, because if I spent all of my youth building, and then it goes down just because my time is up, then I’ve left no legacy. Then I set a target for myself that by the time I’m 50, I’d like not to be at the centre of driving my business every day, so when I became 48, we engaged a firm to consolidate all our companies into the group, and we tried to identify the talents within the company that were able to take the positions that were open and where we needed people from outside to do that so that I could pull back from being at the centre of the business. So essentially, my work is strategy and new businesses, but the everyday running of the business is not mine, I don’t like operations even as a person. I probably did it in building the business because I had no choice. 

I can think of the idea, I love the ideation and the execution of the idea but once it becomes a process, I’m bored and on to something else which is probably why I ended up with multiple businesses. So the people who really make the business go on are my team because they are the ones who drive it every day and my only gift to them is to fully empower them to be able to do what they need to do in order for us to continue.

Pains of an ethical business woman in 30 years of doing business in Nigeria

It is your responsibility to set your own agenda; it’s your responsibility to fight to maintain what you believe and what you consider to be right or wrong. What you will also find is that, people are looking for value in many ways, and over time, what you need to do is to show them the value that you bring to the table at every opportunity. Now, will you have every opportunity? No. But you see, the opportunities you lose on account of your value system, that’s your opportunity cost for what you believe and it’s a price you must be willing to pay. Now, one thing I can say categorically is that there are enough decent Nigerian institutions that also want to do things right, otherwise, we will not have survived. That’s really what that points to because the only reason we’ve survived for 30 years and still in business, is because we found like minds along the path as we sought to deliver value.

Now, one of the things we did to make up for the things we would not do, is to make sure that we were indispensable to our customers. I had a saying in the early days that all our customers had to do was encounter us the first time. With our dedication to our business, in terms of the quality of product that we sought to deliver to you, and with sincerity in terms of the service that we sought to give, and with our diligence in servicing you over time, we always sought partnerships with customers rather than a sale because a sale is a one-off, one-time thing. Partnership is a relationship, and when you seek to build a relationship, you’d find that partnership is a weapon for many of those things. When people get to know you and get to know the value you bring to the table for them in terms of products and service, and personal interactions, you would find that, yes, there are people that would still make a choice against you for those things, but there are many decent people who will not. 

All in all, you know the more you stick to something, the more confident you become at it, and the longer you’re in a space and delivering value, the longer you cannot be ignored. There are many days you want to cry because you know of a transaction you’re better at, you can better deliver but, it isn’t given to you because of what you stand for. Nevertheless, we’ve learnt patience of waiting for our time within the context of our business, and we have consistently sought to fight for our opportunities with everything that we have.

So, it’s in building for the long term, it’s in delivering quality to the customer, it’s in consistency of your values, it’s in becoming indispensable to your customers in many ways.

In what way is your sector evolving?

If we talk about furniture, I think sadly, we watch a lot of companies come and go because they haven’t been able to survive. But also, we’ve watched a number of incursions into the sector, especially Chinese companies who are coming into the markets. There is also quite a massive smuggling sector, because technically, by the law till today, complete furniture importation to Nigeria is actually banned, but I guess what you have to do is drive around, either the high street of Awolowo Road, V.I, or go to markets like Alaba and all of that, and there is furniture everywhere.

So, we’ve had to learn to compete with both legal competition and illegal competition, and what we’ve always sought to do is to find how to have advantages over those competitions despite their tasking proposition because if you are paying duties on everything as you should, and you have a lot of taxation left, right and centre and you’re still dealing with diesel to produce and all sort of power issues, and somebody else is bringing stuff through other means without the cost outlay that you have, they will create a tough competitive environment for you.

They do not create the jobs that you create because I could import billions of Naira furniture and run my business with five to ten people. However, there is no way I can produce that without running a factory of hundreds of people. Also, a lot of capital investment is involved which includes machinery and operational cost. So, it’s a commitment to our country as a firm believer in the fact that, there is no way we’re going to survive without some level of manufacturing activities in our country. There is no way we can create jobs enough if all segments are just reliant on importation because with that, you’re creating the jobs in the manufacturing country. Your people are only involved in sales and installation.

You know there are many days you have to convince yourself it’s not just about you because there are also days where I think to myself, if I sold all the asset of this company today, and I put my money in the bank and get interest on it, I’ll be wealthier than I am leaving the business operating because you have all the money in cash. I’d have no liabilities to carry, no electricity to look for, all of the factors you have to build with. You pay your taxes but you will also be earning decent interest on your capital that you put in the bank.

But when you think about the hundreds of families whose life is dependent on your continuous existence in business, and with pride you can look at the projects you execute, and the value you’re creating for your country, albeit through sweat and blood, you’d hope that policy decisions would encourage you more and support your ability to deliver that value in an easier form.

Access to capital for small businesses

I think small business owners are actually in a much better time than when I started in so many ways. When I started, the banks wouldn’t even talk. I remember there was a bank that would not even allow me to open an account with them because we were too small as far as they were concerned. Also, most of the banks existed to service big companies and businesses. But in this time and in this season, you have quite a number of options. You have microfinance banks, you have all sort of intervention funds and grants available for businesses, you have a lot of FinTech options for short term money albeit more expensive.

But you know sometimes, people talk about ‘but it’s so expensive’ forgetting it’s the opportunity cost of having access to that money. I remember, I think it was ’93 or ’94, a very frustrating moment for me in my business. I really needed money to buy some machinery and stuff to move us forward because we had reached the point of frustration, but no bank was going to give our business at that age, we were four years old then, I was a young lady doing manufacturing, who was going to give me a major loan for that?

It was really a customer of mine who had taken interest in me because he knew that I was diligent and dedicated to my business. I was doing some work for their company and saw that I was sad on that day, (I was pregnant at that point) and just thought ‘what’s wrong with you? you’re not your normal self, follow me to my office.’ And I sat in front of this gentle man, and I told him what was going on.

The man said, ‘you know what, I could give you a one-million naira loan’ (this was 1993), ‘but you need to find a finance house that would broker between us. I would give them the money, and they would issue it to you and they would be responsible for collecting the money and the interest but they will be responsible for paying me my money’. Luckily for me, the only way I had survived in the short term was always to go to a particular finance house to get short term money –30 days, 60 days or 90 days, to execute project, to buy a machine I desperately needed, and work over that period just to pay back, but I always paid back.

So I had a good track record with them and when this opportunity came, I went to them and said ‘look, I had this opportunity will you do it?’ they said ‘we’ll do it because we know you’ll pay’. So they got the N1m, gave me the N1m, I worked like a jackal for the next fifteen months, every 90 days I had to roll over, paid part of the principal, pay interest, roll over and went on. But because of the machines I could buy with the money, I was able to take a major job at that point, that by the time I finished the job and they paid us, I could go to the finance house to ask them ‘what is final pay off?’ it was a season when interest rate was as high as between 40 to 72 percent. It was that period in Nigeria when finance house rates were crazy.

I saw it as a short term high cost for my long term vision, and so I took the money, with diligence and dedication, worked the money, and the materials and the machines I bought with it to create the value to pay off, and once I paid them off, I owned the machines. So I could then use the machines to generate value and that was how I survived. So in a time and a season where you now have microfinance, albeit more expensive, but the money is available.

What that teaches you is, if you take it, you must be disciplined, do what you need to do quickly, return it, but also, that the profit from your own business must not be consumed, because you retain your business without wasting in lifestyle. So, that discipline helped me to build internal capital very quickly because I retained most of our earnings within the business investing in machines, in building capital for the business and in keeping us light in terms of debt.

It’s a good time for small businesses as compared to when I started. So if you just make sure you keep proper records, you’re disciplined with your resources, you don’t consume all the money, delay gratification, your business will go a long way. I don’t think I bought my first car for years until after I started my business. By the time I bought my first car, which was not a brand new car, I was already doing 150 million in turn over. You need to focus on the goal, and give the business what it needs in order to go on.

Is it true that the cost of credit is falling? What advice do you have for the government, CBN and banks in general?

I think what people also forget is that Banks sell what they get. A bank’s product is money and it trades on money. So, if you take your money to the bank and you are asking for interest payment on your deposit of a certain level, the bank can never give that money out as a loan to another customer at a level lower than that. It would still have to add on its cost. Banks have branches, they run on generators, they need to provide security, borehole needs to be provided and so on. So you have all of those other factors that add to the cost, the cost of doing business adds to the cost of financing because, you know, I sit on both sides now so I can see it better.

You can easily say ‘oh the banks are making it difficult and all of that’ but in reality, they are running a very expensive shop in terms of all the things that you need to deal with and by the time you do all that, you’re in business to make money, you’re not in business to make a loss. So you have to be profitable and that accounts for some of the high cost of funding, but as all the other factors in the economy and infrastructure and all of that are getting better, and many other things are at play; then the environment can only get better. It’s obviously a deliberate policy of the central bank to make sure that the cost of funds is much lower in the market and throwing out a lot of policies to achieve that, and we’re a regulated industry; so the banks definitely don’t have a choice but to respond the best way that is possible to regulatory directions from the central banks.

Importance of gender equality on boards and in businesses

There is a lot going on in terms of getting women on to boards either by deliberate policy decisions or choices made by the institutions themselves. We also have positive actions by organisations like WIMBIZ, who are deliberately ensuring that women are equipped and prepared so that they are available because, part of the issue is that  some companies say ‘we can’t find them’. Good news is that, now, it is a little hard to say that because there are more than enough qualified women that are available however, note that you might be technically competent but you may not be skilled to do other things required. 

That is why other programs that WIMBIZ for instance is running, is to fill the gaps so that you will not have that excuse. The women are having what you need and I think we are making process. Though it needs to be faster nevertheless, progress is being made. It is important to have diversity on boards because any smart company knows that diversity only adds value to you. 

You can’t be looking at issues form a 180 degrees view, you need a 360 degree view to look at matters and except you have men and women together at the table, you can never have a 360 degree view on anything because we look at things differently. So, it is in the interest of institutions to have that diversity on the board to the best that they can.

In addition, more women are now building successful businesses so they have control of who gets on their board and as such can influence it in many other ways. I am positive that we will get there.

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