As Registrar/Chief
Executive of the Financial Institutions Training Centre (FITC), Dr. Oladimeji
Alo stamped his authority on the operations of banks and insurance firms.
Today, the scholar chairs Berger Paints Nigeria Plc board. In this interview
THE NATION NEWSPAPER, Alo an advocate of corporate governance and
professionalism, speaks on economic development and the operating business
environment.
Talking about
corporate governance, some are demanding that regulators should not regulate
the tenure of directors. Rather, companies and their board should decide how
long the directors or any executive should stay contrary to what we have now in
some of our codes?
I think it is an ongoing debate and I believe that the
regulatory authorities have every right to ensure that boards are effective and
an aspect of the effectiveness is that those who are on the board have a sense
that they have tenure. If you have a case where someone has passed a particular
age, he may not be effective. Our rule states that once you are 70 you should
declare it, it doesn’t mean that you are not going to be re-elected but every
year you have to be re-elected and you have to keep declaring it. That is an
issue. For the other sectors like banking and finance, they have ample reasons
for suggesting that there is a maximum number of years you can spend and, for
me, it has to do with the nature of the business. So, the debate is open but as
long as the director is effective and as long as the regulation in force allows
it, the director can function on the board.
What are the policies
working in favour of domestic manufacturers?
Well, one policy that we are quite delighted about is the
effort to push made-in-Nigeria goods by asking ministries and parastatals of
government and functionaries to patronise made-in-Nigeria goods. For us, that
is very good because we are an indigenous company. We are the first paint
manufacturing company, established in Nigeria way back 1959 and we believe that
such a policy will favour us. The other thing I am happy about as an individual
is that for once, we are having some sense of transparency in governance and
the emphasis on doing things right. We can’t get it all the time at once, we are
making progress and I am delighted at the progress we are making. Today,
everybody knows that a day of reckoning would come. You can do whatever you
like to do but one day someone would call you to account. Unlike what you have
in the immediate past where there was a season of impunity when people do the
wrong things and nobody could challenge them. Now everybody is afraid,
everybody is conscious that one day, somebody can ask you how you came about
the money you are flaunting and how you used your position in office. So, for
me, these are good signs. We hope we would make more progress in that
direction.
Looking at it from
the other side, which policies are adversely affecting businesses?
For me, I was not quite happy at least in 2016 with the
foreign exchange policy of the government. A situation where we had several
exchange rates and the attempt the government made to force the rates even
worsened matters. But you can realise that since the beginning of this year,
things had improved and the rate had improved. But a lot has to be done to let
the rates close. Let us have a single exchange rate. You may have a second
warrant which is just the parallel market rate, but you cannot function with
four exchange rates in any country. We need to do more with respect to earning
foreign exchange. Our dependence on oil has gone too far, we need to encourage
the production of other things locally that we can export to earn foreign
exchange. Also, we need to do more in encouraging industry. In this country, we
actively discourage industries; we actively discourage manufacturing that is
not good enough. We need to encourage industries by making sure that the policy
we have favour them in terms of access to the forex market, in terms of regime
of tax that we have, in terms of what I considered to be the mutual
relationship between government agencies and manufacturing company. You know,
many of the agencies of government see private entrepreneurs as if they are
enemies, as if they are criminals. They proceed in dealing with them with the
assumption that they are criminals. That is wrong, that will not get us
anywhere. They must proceed with the assumption that these are partners in
progress and they require the government’s support. A greater challenge we have
in Nigeria is that those in government and those in government bureaucracy see
themselves as policemen to catch the thieves and they see private entrepreneurs
as people willing to beat the laws that is not going to work. In other climes,
those in government, in bureaucracy of government see themselves as those who
provide the enabling environment of business. I need to see that happen in
Nigeria.
If you are to advise
the government on some quick wins, what would you say, especially of the top
three things they should focus on, going forward now?
Number one, for me, is that there is too much waste in
Nigeria. Too much waste! We need to reduce the waste that we have and you know
about it. If you ask me, we don’t need two houses of legislature, collapse them
into one. If you ask me, we don’t need full time legislators, make them
part-time legislators, if you ask me, all the trappings of wealth we display we
do not have the resources to support them. A legislator is going for a meeting
and he goes with four SUVs, you know that is waste! There is waste at every
level. That is my point number one.
Point number two is that we need to get serious about the
future of the country. We are not investing enough in the future of the
country. We seem to be consuming for today. You see how much we spend on
recurrent expenditure, just paying salaries andwe don’t even have the money. We
need to spend more on capital expenditure and prepare for the future of the
country because the future of the country belongs to our children and in terms
of population, they have a larger
population size in Nigeria. So, we should act today with the future in mind. We
are not doing that now. Third point, we need to work towards political
stability in the country, too many things heating up the polity. People are
raising all manner of issues and generating crisis where it is not necessary
and most of the people who are doing that are those people who benefited from
the rot of the past and all they want is confusion so that nobody would ask
them questions. We need to have stability. Certain questions should have been
settled in Nigeria today. Those questions should be settled to enable us focus
on our future as a country. If they do those three things, for me the sky will
be our limit.
What are those
questions that should have been settled?
For instance, federalism should have been settled. I don’t
know where you can run a federal system as if you are running a unitary system
that should have been settled. For instance, things like giving the state the
freedom to operate and allow them to engage in healthy competition that should have
been settled. This régime of going to Abuja to share money, regime of local
government coming to office twice in a month and all they do is to share money,
that has to stop. The regime you collect VAT and you collect about 65 per cent
from Lagos State and Lagos gets about 15 per cent of what is collected has to
stop. You need to encourage the state that generates this income to have
greater share of it, so that other states will then be creative to look at what
they can also do where they have competitive advantage. What we have today is a
Godfather distribution sharing system. It will not work. What we need is a
production system in which every constituent unit of the country believes that
they have things to develop and that if they are developed, they will have
larger shares of it. For instance, I support derivation principles, I support
that those who produce oil should get far more than what they are getting now.
And others should go and look for what they can produce. Together we shall all
contribute to the net. For me, these are issues that can move this country
forward, not what we are doing now.
Let us come to the
issue of investment environment. There are fewer Nigerians investing in the capital market now and our
savings ratio is one of the lowest in the world. So, what can we do to improve
savings and investments?
I think one thing is that you can only share what we have.
The level of disposable income of Nigerians had gone down in the last two years
on account of the recession and there is need to promote the culture of
savings. People should save. Again, we need to do more in our capital market.
There has been too much abuse in the capital market, too much inefficiency;
there are so many unnecessary costs of doing business at that market which need
to be looked into. Of course, they are trying as there has been lot of
improvement, but they still need to do more. Now, when you do that, you are
going to make it a viable mechanism for people to raise capital to do business.
So, for me, these are the things we need to do.
You talked about
raising capital. Is Berger Paints considering coming to the market to raise
capital?
Not immediately. We raised capital in the market four years
ago. Right now, we are not considering that, but probably when we finish our
new plant and we are up and running, maybe the owners may consider that option.
What are you doing in
the area of backward integration?
We are very committed to backward integration.This is
because we believe that, that is the future for us. Unfortunately, we are in a
sector where those things don’t even exist in Nigeria. Only few of our raw
materials are even found in Nigeria. Of
course, it would even be cheaper for us if we are able to source our raw materials
in Nigeria. And so, what we are doing is to invest in research and to see how
many more things we can get locally. So we believe in backward integration and
we are actually pursuing it effectively.
What’s your view
about the tax system?
Well, honestly we have no problems with the current tax
rates because it is okay. It is not too high but what I have problem with is
the tax system in this country is the agencies that administer them. They have
to be reformed. Their attitude to business should change and they need to be
more efficient. I have no problem with
the tax system. Every country has its own regime and Nigeria tax regime is not
bad at all. But how do we implement it? How do we operate it? That is the areas
we need more focus.
What is your
company’s growth strategy for 2017?
What we are trying to do is to expand our distribution
channels. You will realise that last year, we started what is called the
outsourced business partners. We discontinued with distributionship and open
dealership and depot for ourselves. We appointed individuals who are business
men and business women in their own right who own the depot, have their own
staff and get general discount from us and they act like our channel of
distribution. We have about 30 now, and we are still going to have more this
year. Also, we are going to spend more
on branding our products, rebranding our products to be top of mind with
respect to those who use our product. Again, we are going to be much more
effective with our sales team. Gone are the days when a sales man can hide
under the performance of another sales man. We have reformed that now. We are
going to track the performance of our sales team even better and we believe
that it will be better. Don’t forget that our new plant is one of our
strategies for the coming year. We believe that once we are able to produce the
product of the highest qualities that you can get anywhere in the world we
would be ready to compete in the market.
Your Annual General
Meeting (AGM) was well organised. What is the secret?
Well, I think the point is that we seek to follow strictly
the rules and regulations of the authorities – Securities and Exchange
Commission and Nigerian Stock Exchange and we do things to the letter that is
why we are able to do such a very businesslike AGM.
I am sure you are aware of the other side of shareholders’
activism and what we have been seeing at various AGMs. What would you advise
the regulatory authorities and directors to do to curtail abuses and make the
AGM achieve its purpose of interface between owners and managers of the
business?
Well, for me, as an individual, who is a student of
corporate governance, I believe the AGM is a business meeting and shareholders
has one major opportunity to confront their representatives on the board to ask
questions and demand answers, ask for transparency, ask for accountability and
that should be the focus of the AGM. We should not be distracted by gifts, by
food, by snacks and all those things. Those things tend to distract people. A
business meeting is a business meeting and must focus straight on business. You
could notice that everybody who wanted to ask question was given ample
opportunity to do so. I even asked that if there were additional questions that
were the businesses of the AGM because not all of them have the opportunity to
meet us daily, even though we have a website and things are published there. An
AGM is a statutory meeting where they have unfettered liberty to ask questions
and receive answers and, so, we should not allow anything to distract from the
object of that meeting and that was exactly what we did.
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