By Bimbola Oyesola, [email protected]
The food sector is one of pivotal sectors in the country, but stakeholders in the sector are plagued with several challenges, which cuts across multiple taxation, insecurity, foreign exchange and others.
According to the President of the
Food, Beverage and Tobacco Senior Staff Association (FOBTOB), Jimoh Oyibo, policies of government have made operations in the sector difficult.
In this interview, Oyibo notes that
tax relief would help the companies regroup and stabilize.
He also speaks on why Organised labour resorts to Protest as a means to send a message to the government to correct anomalies in the country and other issues of national interest.
Excerpts:
Sector review
It has been a very challenging period. I came into the system when the economy was almost in shambles. I remember when i was asked why i chose to lead this great association. My response was that i perform better in an environment where there are issues. We are there to confront and find solution to challenges.
Challenges
Most companies in this sector import their major raw materials. And because of this, they need forex which of course have been very difficult to get, even in the banks making them to resort to sourcing from the black market. And we all know that the black market rate is different from the official rates. This makes these companies invest more into buying the forex. And by the time they spend so much money on getting FX coupled with the high cost of production, you can tell that the prices of finished goods would be very high because the companies cannot price below the costs they have incurred. Any company that does that will price itself out of the market and would likely collapse. Also, the profit margins that they would have made would be eroded by the hurdles experienced in the process of getting forex.
Backward integration
The government initially came up with the idea of backward integration. Some companies have attempted this, companies like Indomie, GP foods, Flourmills and the rest. But there is a challenge as well. These companies established farms, but the issue of insecurity have hindered them from utilizing them, the fear of being kidnapped by bandits and all that.
Insecurity
I believe that the government have a hand in the insecurity of this country. If the government cannot curtail the excesses of the bandits and terrorist, they would continue to have a filled day destroying the nation.
Most times, the security agencies relax and after these bandits and terrorists have succeeded in taking away their captives, that is when the security operatives come in. It is like we are reacting instead of trying to prevent. By now this issue of insecurity should have been a thing of the past. The government have been too soft on these set of people. Why would you want to dialogue or pay ransom to terrorists. You are encouraging the trade by doing that. When you try the stick and carrot approach and it is not yielding any positive result, then it is time to go all out to ensure that these terrorists are wiped out.
Companies leaving Nigeria in droves
Food is perhaps the most important sector of all. Everybody relies on food, without it, there would be no nation. This has given us some edge in keeping our head afloat. For now, except Ragolis water, we have not had a case of companies closing down or leaving in the food sector. However, it is important to note that they are really struggling to survive. That was also what made us to emphasize the need for government to give them tax holiday so that they can heave a sigh of relief, because whether we like it or not, government policies have not been favourable to the sector. Tax relief would help the companies regroup and stabilize. Otherwise, if the trend continues in this direction, some companies may collapse.
Redundancy
This year alone, we have received over 15 letters from companies requesting to embark on redundancy. The one that was so prominent was the issue of the recent ban on sachet and pet products in the alcohol subsector. Gladly, we fought it to a standstill with the help of the National Assembly, NAFDAC has been directed to reverse their decision on the ban. Otherwise, we would have been talking of thousands leaving their jobs. Besides the ban on these items had a political undertone.
This year alone, i would say over a thousand workers have lost their jobs, more are coming because we have a lot of other requests of redundancy from companies. We have even deliberately refused to attend to them to stem the tide. Redundancy is killing the industry and affecting our members.
Expectation
Honestly, the government is confused. Take for instance the recent case of the ban on sachet alcoholic drinks, a government that cannot create job is taking down the few ones that are available. The private sector is what is sustaining the economy, yet the government would stop at nothing to frustrate their efforts. One would have thought that a serious government would called the stakeholders together and have a discussion around it. But that was not the case. They just woke up one morning and implemented a ban.
If the government is serious, they would prioritize the private sector because it is the engine that drives the economy.
Inflation
I suggest that it should be compulsory for every local government to have a farm settlement where they grow specific food items. Also, there is need to develop processing plants to process these food items. When you visit the markets, you realise that the volume of oranges that rot away is almost the same quantity that rots away. Why cant we develop a plant that can process these into other finished goods like orange juices and so on to curb wastes. The same goes for tomatoes and other foods items.
This would help crash the prices of goods, because when these products are everywhere, the level of supply would bring down the prices.
Also, the issue of poor infrastructure particularly bad roads and poor transport systems have made it impossible for many farmers to move their produce to urban centres or where it is needed for consumers. Storage facilities are also very important to be able to preserve some of these food items when they are in abundance to serve us when there is scarcity, but the government have not done well in these aspects. If the government cannot do it on their own, then they can partner with other countries.
Government intervention
The truth is that it will have no impact. The farm produce are already available. If you go to the market, you will see yam, bean, garri, tomatoes, pineapple and all that in abundance. The real issue now is that the purchasing power of the average Nigerian is not enough to get these things into the house. For individual and family consumption, we have enough of these farm produces in the market already, but the naira weakens every day. A time will come when we would take a bag of money to the market just to buy a cup of rice.
Minimum Wage
It is not the quantum of money but the value that matters more. In the 80s when i started working, my basic salary was N75 which was enough to settle my immediate needs including rent, school fees and feeding. But why is it, that today, people receive over N500,000 yet they cannot do the same thing.
I am a member of the tripartite committee on national minimum wage, we have had series of meetings. Labour is proposing N500,000, governors are saying N40,000 some are saying N60,000; there is a yearning gap.
Even with the existing N30,000 some states have been unable to pay and this is because they are lazy. They should improve on their IGR so that they can afford to pay. If they cannot afford it, where are they getting the money to live that luxurious life. Have you ever heard that a governor owed himself salary, but they are owing a man that is earning N30,000 while he that is having free food, free transport and almost everything free is owing somebody.
There is enough money in this country to do a lot of things, but the indepth corruption in the system is denying us of this.
Strategy
One of the things that we preach when we have our meetings is for our members to be productive, because companies need their workers to be able to produce more so that the increased volume of production would help compensate for the decline in profit margin as a result of high cost of production.
Also, when companies come up with the idea of carrying out redundancy, we ask the question “Has redundancy ever solved the problem for any business?” The answer is NO.
Also to protect the job of our members, we come up with the strategy of telling the companies, “For every 15-20 workers you let go, can you also remove one or two management staff?” This is because the management staff is where almost half of the company’s salary goes to. This condition is what we use for the basis to protect our members.
Some companies who can manage the difficult business environment are also not being sincere and also trying to take advantage by seeking redundancy simply because other companies are doing it. Once they let the workers go, they then bring in casual workers and cheap labour.
Policies demand urgent attention
One of the major issues is multiple taxation. So many taxes being levied against these companies either from state, local government or from the federal. Which is why i have strongly suggested that they should be given tax reliefs, let’s say for a year, so that these companies can breathe an air of freedom.
Things doing differently/ Scorecard
One important thing we have been able to achieve is stability within the sector. We used to hear when companies call for redundancy saying they would let off 200 members at once and so on, but in recent times, the highest we have recorded from redundancy is about 50 while others are even less.
Furthermore, the industry is becoming more stabilized that if we have any challenge with any of our clients and they communicate with us, we visit them and engage the management.
We also take Gratuity in the industry very seriously. Some employers have been trying so hard for it to be stopped, but I have consistently fought against it. When some were finding it difficult and engaged us, we said ‘Okay instead of scrapping it, we can modify the terms to ensure that they can afford to pay.’
Expectation from government
Honestly, we should not expect much. I will appeal to Nigerians to partner with the government, because persistent protests, strikes, cannot bring anything good. As much as we are going to carry them out, let us do it in a civil manner that will not lead to destruction of lives and property. Let us also preach to the government on the need to engage organized labour more to see how best we can together build this economy.
Incessant strike
As long as we have the right to protest, we will. Protest is used to send a message to the government to say that ‘What you are doing, you are not doing it well or you are relaxing on your promises.’ It is designed to keep them on their toes and not take over the government as they make it seem.