Sehinde Johnson, managing director/chief executive officer of Infinity Paints International Limited, in this interview with ZEBULON AGOMUO, Editor, spoke on the prospects in the paint industry sub-sector of the economy; the challenges of manufacturing in Nigeria; the need for government to protect manufacturers from traders who have used the country as a dumping ground for foreign paints, and that the real sector remains the hope of any successful economy. Excerpts:
May we know a little bit about your background in the area of your business?
By training, I am an accountant, but by my pedigree and stint at a paint manufacturing outfit. For almost about 10 years,I managed people, finance, materials, market, methodologies, machineries and many others. So, we were well equipped to handle every aspect of paint manufacturing. That’s what I did at thetop echelon; and that provided the basic pedigree for me to launch on, and moved to the industry, and take it to the next level. So, by the time we started Infinity, we were not just looking at paint manufacturing, we were looking at total paint solution house. We do paint manufacturing; we do estheticconsulting; we do property branding, and paint application. So, it is an organisation you come in and everything about your paint requirement is met. It is a one-stop-shop for paint manufacturing. It is quite an experience for us. We have done Infinity now for over a period of 10 years. We started out late 2008; since then we have been doing the best we could to carve a niche; to add colour to the Nigerian building industry and to see what next we could, to do paint in a way that it has not been done before in Nigeria.
Manufacturing in Nigeria is fraught with many challenges. How have you been weathering the storm in terms of harsh operating environment?
I am an incurable optimist. A system will not be a system unless it has a weakness and of course, strength. We ordinarily expect that in a business system, there would be challenges; and of course, in our own economic milieu there are bundles of challenges. People talk about infrastructural deficit; the ease of doing business in Nigeria, multiple taxation and whole lot of bottle-necks all over the place; there is also the issues of insecurity, power, easy access to financing, among many others. But if you look at it from the angle that every system in the world has its weakness and its strengths; that gives one the courage to say let me engage the weaknesses in the system and maximise the strength; make whatever you can make out of it, and I think that can-do spirit of an average Nigerian has been what has been keeping us going. It has been tough and it could be tougher; but as they say, ‘Tough time never last; but tough people do.’ We do not have an option. It is not all of us that will do politics; everybody will not travel out of the country and stay back somewhere and build other economies. For a few of us who have decided to stay back, we just felt that we have to contribute our own quota, even if it is three, four, five…ten families that you can take out of the street and all that; it is an impetus. An impetus to want to go on and take another one family out; another one family out, etc; maybe,in the process you can turn out to be the next Dangote that could come out of this land. Those are possibilities, and of course, the motivation is not just that you are making money but that you are adding value.This is because, I must say that the part of the underpinnings behind the insecurity we have in the country is unemployment. If people are not working, consumption cannot be equal to zero; so, it becomes a security threat and you have an avalanche of generation of graduates that are on the streets doing ‘Okada’, and stuff like that. They are not happy and at the end of the day, when you look at the multiplier effects of all of these, it impacts negatively on our security challenges in the country. So, it is an impetus to say that you are taking a number of families out of the streets; you have given them hope; you have given them reason for living and they are happy. Though we may not do it on a big scale, we are positive that with time things will improve in our country and we can do better than we are doing at themoment.
There are many other brands of paints in the Nigerian market; how do you cope with competition?
Well, I believe that‘what is worth doing at all is worth doing well’. There are so many paint companies in Nigeria; the truth of the matter is, it is a perfectly competitive market; there is free entry and free exit. But we can say we have about three tiers of paint manufacturers in the country. The first tier is made up of those that came in and were bought over from the British Colonialists. A number of foreign people came in and started paint manufacturing industries in Nigeria in the 60s and when they were leaving they sold to Nigerians who took it over. So, you have such big paint manufacturing companies who are publicly quoted. The next (second tier) are privately-run paint companies and they are doing very well. They have carved a niche for themselves. We also have the lower cadre which is the third tier. Somebody has had a stint in the production department of a paint manufacturing company; now he is out of a job and he feels he has a little knowledge of formation; so, in order to keep the family going he tries to do whatever it is he can do to stay in business at his own level. But by and large, the fact that there is competition makes it even better so that people can be on top of their game.If you want to stand the test of time, you can’t afford to give just anything to the market.In our own instance, based on our pedigree having operated at the highest echelon of the paint industry for about 10 years before we started Infinity Paints, that provided a pivot upon which we can build a brand; a brand that is going to stand the test of time. We are not willing to just do anything. We want to do a kind of quality product that can be called the Nigerian value paint, not only in terms of quality, but in terms of cost and effectiveness. Because you bear in mind also that when you are looking at the building industry generally, by the time a man begins to do a building construction, paint comes at the very last point of finishing. At that time, may be, his budget has been exhausted by almost about 50 or 100 percent variance; his capacity to do a kind of finishing that he would have loved to do has been whittled down; he doesn’t have access to extra funds any longer. Not only that you must make paint that is of very high quality, it must be cost effective and that is the niche that we have carved for ourselves at the Infinity Paints. We have done a brand that we can call the Nigerian value paint. It is cost efficient; it is durable, adding value in terms of esthetics and that informed why quite a number of players in the building sub-sector are married to Infinity Paints. Those of them that have signed us on over the years have stayed with us; and they are happy with us because we are passionate about adding colour and values. We are passionate about the esthetics that we give to buildings, not just about the paints and the quality, but the esthetics. When you go out in the city and see beautiful properties and they are traceable to your factory and the impact your work is making, it gives you great joy. To that extent, we can say that competition is healthy. There is always a gap there for you to feel in the system. We have been able to carve a niche in the gap that we have filled so far.
In measurable terms, what is the size/percentage of demand for your product at the moment, compared to, say, five years ago?
Yes, let me say this; we don’t operate at the first tier, we operate at the second tier. The first tier are largely quoted companies that have spanned generations, decades in the business environment, especially in the paint manufacturing sub-sector.We operate in the 2nd tier, and for us, over time, we narrow down to projects. We are project-centric. We have a few number of people that come to us to pick up products because they have seen the products on the will; we deal mainly with builders who build estates and do high prestige projects such as schools, hospitals and quite a number of others. To that extent, I cannot say this is the percentage of the market that we share; we have a kind of this clientele that we serve. We are project–centric. We are happy that they are happy with us. But having said that, you know, the industry generally is facing a lot of challenges. When you look at the paint sub-sector in the country, it is a turn-over of about $250 million (Two Hundred and Fifty Million Dollars) annually. Unfortunately, we don’t have a protectionist policy for the indigenous manufacturers. The trend over time is that you see an influx of foreign paints into the country, in the market place. Not only that, it is as good as dumping from India, China, from all over the place. They just bring in paints and flood the market; that makes it even more difficult to now say, this is the size or percentage of the market that you share; because most of the players in the industry merely trade; some of them don’t even have traceable offices and addresses.So, it is not helping the local manufacturers. The Paint Manufacturers Association of Nigeria has been in the vanguard of government raising duties on imported paints as a way of protecting the local players. Because, when you now reduce manufacturing to a situation whereby it is even more profitable and better for them to trade, local manufacturers might even want to close shop and begin to import and you can imagine the multiplier effect of that on the labour market. How many people can a trader employ compared to a full-fledged manufacturing company that has all strata of workforce in their employ.
So, if there is no protection; if people find it easy to trade, and of course, the banks are happy with trading because the value chain is shorter compared to manufacturing. By the time the raw materials come in; you turn it around and send to the market; it takes quite some time; but for those who are trading, they just import and sell.
How many staff are they engaging? So, these are areas of challenges generally for the industry that one would have expected that government would have taken a responsibility and do a little more such that the local manufacturers can have a sense of protection and do more than they are doing now, by government providing the enabling environment, in terms of regulation, to make it a bit difficult to not only bring imported paints, but to prevent people from making Nigeria a dumping ground for all manner of paints from different countries of the world. These are some of the things constituting challenges to us.
Technology appears to impact both positively and negatively on business. Some people have gone beyond the use of paint, they now opt for glazing and cladding. How are you looking to leveraging technology to improve your business? And how has the use of these alternatives affected your market?
Cladding has always been there and quite a number of alternative products that are being used for finishing, but that notwithstanding, all these products are not really substitutes to paint. The fact remains that when you take cladding for instance, the cost of replacement is heavy and it will not last forever. When you begin to use cladding, by the time it begins to wear out and degenerate, you may not be able to change it over night because it is very expensive to do that. But when you look at painting, it is not something that would take you a long time to renovate. When it comes to technology, unlike the traditional paints where you have a few colours, colours are now being personalised. Without some bits of technology, you cannot meet the demand and taste of the client, especially in the decorative segment. People come and they would want a unique colour and if you are traditional in your method of production, you would not be able to do that.So, you need technology. Paint manufacturing now is technologically-driven to a large extent in Nigeria and everybody is buying into it. If somebody gets into your shop, within a space of an hour, you are giving him his colour and he is taking his paint. So, you already have the gauge fixed into your system.Sometimes, it is done online because we do a lot of online marketing. So, in the comfort of your office because you can imagine the time it takes to get down here. Some young executives would not want to take the trouble of coming down here. They just go to the internet, chat with us and place their order. We get it done on record time and deliver. So, it is a smart city thing, and we are getting compliance from our clients.
I know that some of the components that you use are not sourced here. How do you deal with the forex or are you getting forex at N305?
The point is that we have a lot of vendors, who complement what we are doing in the industry. They bring in the products and we source from them. So, while we concentrate on production, they concentrate on supply of the raw materials. By and large, I don’t know if anybody is getting forex at N305 but theoretically it is possible but there are bottlenecks in the system that do not make it so easy because at the end of the day, you have left your primary job to begin to pursue some other things, which can bring distraction. Although, you cannot get forex as cheap as you see it on papers. It takes more time and the bottlenecks are always there. So, what do you do? The clients are not going to wait for you, and projects have their own timeline. And if you cannot get it at official rate, you have to pay for what you see.
There are also some restricting policies of government when it comes to importing some of these things. How do you deal with that?
We do not have any problem with government policy when it comes to importation, only that some materials that are injurious to health have been restricted in manufacturing. To a large extent, there are substitutes to it and people are becoming compliant. So, bottlenecks are challenges that you have a way to play around them and to ensure that you would continue to have your raw materials to sustain the industry but a large number of our materials are sourced within, especially calcium that is almost 100 percent sourced in Nigeria. We only hope that government will have the will power to divest from oil and look at the second phase of our petrochemical development where you see quite a number of these raw materials that we bring in coming out. Then, you would not have to be importing some of these raw materials if the government will have the will power to look at the second phase of the petrochemical development. There are products that are done in Nigeria now and there is supply sufficiency. We only expect that things will get better. With the global trend in petroleum, quite a number of vehicles do not go on fuel. We expect that the government would look into all of that and be able to glean whatever they thing they can glean. And that would be like an impetus for them to divest from oil. If you take the petrochemical industry for example, a lot of by-products come from that and they would also impact our industry positively and minimise our forex use in Nigeria.
You talked about personalising products and producing to suit client’s need; can client also tell you to lower the quality in proportion to the size of his or her pocket over dwindling purchasing power?
Off course, anything is possible but for us we have decided to carve a niche by filling a gap, building a brand that is known for a kind of quality, and we are consistent in giving that quality. And that is the only way our client can stay glued to us. If you want to add goodwill, which is the greatest asset that you have in business then, you should not just have a good quality but you must be consistent in doing that. Once people know your brand for a particular quality, and because of pressure in the market, you begin to vary that brand, you become inconsistent. And once people know you for inconsistency, nobody would buy into that brand. For us, our quality is the Nigerian value quality and we stick to it. The truth is that you cannot afford to serve every client in Nigeria, look at a gap that you want to fill and stay right there. People will appreciate you for what you are doing and your customers will stick to you. It is our philosophy not to joke with our goodwill, which is a function of the quality of the product. If it is about few tricks, make some good money in the industry and move on, it means you don’t have future in business, but if you want to remain in business for a long time, you must be consistent with the quality of products you do. We don’t do all manners of qualities of paints that are in the market place today. So, if you are looking for cheap paint that is next to water, you can get it in the market but you cannot get such in Infinity Paint.
The 2020 Budget has been presented. As a businessman, what are your expectations?
We cannot over-emphasise the fact that our economy is public sector-driven. The public sector drives the economy of Nigeria but unfortunately the monies are not trickling down. Government is not finding it funny, resources are dwindling, insecurity in the North-East, and banditry has impacted on the sources of revenue for the government. By and large, you will also appreciate the fact that over a period of time, when the budget is announced, it is not yet to be a rule until you see the percentage of the budget that is executed. Sometimes, when budget comes in like that and you see the figures, it could be heartwarming but a lot of caution. What is the percentage of the budget that is being executed? We wish the government well. They are doing a lot that they could do to ensure that things go well but it may not come so cheap.I believe that the manufacturing sector is the pivot upon which modern economies thrive. If I have an opportunity I will continue to say it over and over that you cannot build a skyscraper hanging in the air. The real sector must always be the foundation upon which national economies are built from America to Zimbabwe, from China to India, every part of the world. From the first world to the third world, any successful economy must be built on the real sector. As long as we are still dancing around this in our country, I am sure that we are still far from the reality. The government must have the willpower to divest our economy from being mono and oil economy to the real sector where the medium and small businesses are given their priority place in ensuring that the real sector is built.They are the once that will provide employment for the masses and give hope for the future generation that are coming. Look at the whole of China, millions of small and medium scale enterprises are driving the economy of China, and they don’t stay on that. They also import. So, it is as good as a revolution to conquer the whole world. Everybody is busy and now that the whole world is flat, there is no local champion anywhere. By and large, the government should focus on the development of the real sector. That is the way to go if we are going to sustain the upcoming generation. As it is today, the real sector is in comatose because the enabling environment is begging for answers. If you look at the other neigbouring countries in the West Africa sub-region, some Nigerian companies have moved out to those countries because the Ease of Doing Business in Nigeria is still very poor. Then, the infrastructure development is still in comatose. These are the realities. If you go to Ghana, Benin Republic, you will see a lot of Nigerian companies. These countries give coompanies tax relief and other incentives to attract investors into their countries. Nigeria should not be left out. We should look at our real sector by reengineering our policies to encourage more investors. All of us cannot be politicians but if you look at the large population of our youths that are unemployed and the multiplier effect in the economy as well as the security issues in this country, I think we have had enough and if we don’t deal with it today, it will affect our tomorrow because the more our youths are idle, the more they involve in crime. Government should also look at the issue of gridlock because if you put a vehicle on the road, it takes up to 4-5 hours to move from Lagos-Ibadan Expressway to your destination, which should not have taken up to 30 minutes. I can beat my chest that if a study is carried out on our manufacturers in that belt, it would be difficult to find manufacturers that are making use of 40 percent of its capacity. Look at the impact of the gridlock in that axis to the market and when you operate in a competitive market, how many buyers would want to take the trouble of coming to your factory when they can easily get somebody that within a space of 30 minutes, they would be there? Off course, we know that it would not be forever, but this project has lasted for more than two years as it is now and most of the manufacturing companies in that belt have been growing under a kind of revenue losses, and you know that there are some of the costs that are fixed. Nobody is going to ask you a question of how you are coping or if you are utilising your full capacity. You just have to pay your tax, pay your bills and others. These are the realities and how long can an industry survive in that kind of climate?Government is doing great by constructing the road, but on the other hand, one would have expected that alternative routes should have been created if we put into consideration, the economic price because production has gone so low. A lot of companies have sacked their employees. Markets have also gone low and they are not running at optimal capacity. These are some of the challenges but we trust that the road would be done in a short while so that we can have relief after so much pain.
