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Government agencies killing local industries – Manufacturers lament

By on April 4, 2015

Some manufacturers have accused regulatory authorities in Nigeria of killing the local industry.

They say the authorities are daily discouraging local manufacturers through practices that have sent most of them out of business.

At a recent interactive forum organised by the Lagos Chamber of Commerce and Industry for regulatory authorities and the private sector, the manufacturers alleged that the regulators, instead of helping the local industry to grow, were bent on frustrating operators through unfavourable regulations as well as arbitrary levies.

One of the manufacturers, Gabriel Akpan, a dealer in cosmetics products, claimed that most companies that were registered five years ago by the National Agency for Food and Drugs Administration and Control were no longer in existence.

Speaking at the forum which had in attendance representatives of NAFDAC, Standards Organisation of Nigeria, Lagos State Environmental Protection Agency, National Environmental Standards and Regulations Agency as well as representatives of the private sector, Akpan claimed products from local manufacturers that were registered five years ago were not on sale in the local markets.

He said, “Out of more than eight companies that were registered at the time, only about two of them are still doing business. The rest have all folded up. The markets are flooded with foreign goods. Local manufacturers spend hundreds of thousands of naira on product registration but after six months, if one should go to the market , one will not find those products.”

He observed that other West African countries encouraged their local industries but not Nigeria, wondering how businesses were expected to create employment when they had all closed down.

The most painful aspect, according to him, is that agencies demand taxes without bothering to know if the entrepreneur will survive. Yet what people are selling in Nigerian markets are Cotonou products.

An entrepreneur who represented toiletries manufacturers, Umoh Obong, alleged that regulatory agencies once frustrated his attempt to buy equipment in order to improve operations in his company and also employ more people.

He said, “When we approached the bank to finance the letter of credit, the bank instructed us to get Standards Organisation of Nigeria Conformity Assessment Programme import permit.   I ran down to SON for the import permit and I was asked to submit an invoice and letter requesting it. After giving them the invoice and letter, they gave me a bill of N600, 000.

“We could not secure the machine and the bank eventually withdrew funding due to delay in obtaining the SONCAP document.”

The President of LCCI, Remi Bello, also recounted a recent personal experience. He said he received a letter from SON notifying him of the revalidation of his Mandatory Conformity Assessment programme certificate.

He said without any form of consultation or prior notification, the agency sent him a letter asking him to pay N100, 000 as revalidation fee.

Obong noted further that revenue collection had become the major driving force of all the agencies. “What they do is to come up with various regulations on a regular basis without due consultation with the stakeholders. Regulatory agencies have become the prosecutors, judges and the jury. And these agencies are supposed to be fully funded by the government.”

He urged government to stop giving regulatory agencies open-ended authority saying they were using this to muzzle local businesses.

On his part, Bello who described the private sector and the agencies as partners in creating an enabling environment for businesses to thrive, said, “The regulatory environment is crucial to the operations, viability and profitability of businesses in Nigeria. The regulators we have here today have been in the forefront of promoting standards and protecting the country from the incidence of substandard and fake products over the years. These are sensitive and enormous responsibilities that are germane to the growth and survival of our economy”

He urged the regulators to take into account the operating environment for business while undertaking their regulatory and monitoring functions.

He added that businesses in the country were burdened with challenges of infrastructural deficiencies and macro-economic shocks.

He said, “Today, most investors are burdened with huge cost of providing electricity, access road, security and other industry-specific facilities in the midst of poor access to affordable credit, multiple taxation, high and volatile exchange rate.”

The LCCI boss admitted that the chambers had received increasing complaints from companies about the activities of regulators.

He said, “We also conducted an in-depth survey on the activities and impact of some regulatory agencies including NAFDAC, SON, LASEPA and NESREA. It was discovered that many businesses had issues with aspects of regulatory activities.

“There is burden of regulatory overlap between NASREA and LASEPA which adversely impacts on investment. The recurring issues border on numerous charges and fees imposed by the two agencies. Such fees include environmental development charge, chemical storage permit, laboratory analysis, submission fees for environmental assessment and submission fees for environmental audit report.

“Companies are being compelled to use the associates of NASREA and LASEPA officials for the assessment/ audit report at ridiculous prices,” he said.

Bello added that companies also complained about issues such as closure of factories and business premises without cogent reasons, high frequency of factory inspections with attendant official and unofficial charges and waste of time.

He observed that the activities of SON and NAFDAC overlapped with regard to cosmetics, foods, drinks, beverages, health and confectionery items. Also, there were delays and high cost of registration and certification of products, frequency of visits that came with costs to the companies, and collection of excessive quantity of products supposedly as samples.

He urged the agencies to reflect on the issues in view of the threats posed by these challenges to the survival of businesses. “The real sector and SMEs are critical to national economic development especially in the area of job creation and poverty alleviation. Since government cannot generate the quantum of jobs needed to gainfully engage the teeming unemployed youths, the private sector and especially the SMEs should be empowered and supported,” Bello stated.

Responding on behalf of NAFDAC, the Deputy Director, Advertisement Control Division, NAFDAC, Mrs. Sinmidele Onabajo, reminded the forum that NAFDAC by virtue of its functions was empowered to regulate and control manufacturing, importation, exportation, distribution, sale and use of food and drugs including detergents, packaged water and chemicals.

She noted that in the process of carrying out the activities, there was bound to be meetings between NAFDAC and the companies.

She said, “Several things have been noticed in NAFDAC that is common to other agencies and the basic point is the overlapping functions. But I believe if we work together, we will move Nigeria forward.”

Speaking on the high cost of certification and excessive collection of samples, she stated that it was not the first time the agency was receiving such report, adding that the reports were viewed with every degree of seriousness and the agency tried as much as possible to attend to issues raised through feedbacks from the public.

On the issue of collection of samples, she stated that the agency had reduced to the barest minimum at the ports, samples that were being collected. “At the point of registration in fact, no samples are collected currently other than the ones for analysis. That is the fallout of the complaints that we have received from other stakeholders including LCCI,” she said.

Speaking about tariff, the NAFDAC deputy director noted that the last time the agency had increased tariff before 2014 was four years ago.

She said, “We cannot remove ourselves from what happens in the country in general. If we want to carry out activities in an effective way, we need money.

“That is why we decided to review the tariff for effective regulatory activities. We also received complaints that the money we would be charging would be too high. It was actually 50 per cent increase on imports, but now, it has been reviewed downwards,” she added.

On the fact that the markets were flooded with foreign products, she noted that it was a free market that allowed lower tariff for goods from West Africa compared to products from Asian or European countries.

Also speaking on behalf of LASEPA, the General manager, Mr. Adebola Shabi, regretted the fact that industries were closing down and relocating to Ghana, Togo and Republic of Benin. He however blamed operators for the situation.

Shabi said people were in the habit of establishing industries without proper consultations with the relevant ministries and chambers of commerce and industry in the state.

He said, “When entrepreneurs visit these ministries and chambers of commerce and industries, they will tell you what to do and which agency they need to go to. We cannot have a better environment without regulation and there is no regulation without the involvement of stakeholders.

“I have been on this job for many years and we have been having regulations, inviting stakeholders but when we invite them they refuse to turn up.

He said that LASEPA was created in 1996 to keep the environment clean and the agency was acting according to laid down laws guarding its operations.

On the issue of multiple taxation, Shabi frowned on the term, multiple taxation, saying it was wrong.

He noted that the agencies rendered services, not taxation.

He said laboratory analysis, creditor’s service permit, submission of report were not taxes.

 

[Punch]