Tunde Okoya is the managing director of Lange and Grant, a company that provides cooling insulated panels for processing and storage facilities. He is also Vice President of OTACCWA, an organisation that advances cold chain in W/Africa and advances reduction of $8.5billion post-harvest loses in Nigeria. Tunde’s desire is to play big in the construction of mass housing that are energy efficient and also to help farmers transform from small to large commercial farming by being efficient in storage and processing. In this interview, Tunde, son of renowned Rasak Okoya, the chairman of Eleganza Group of industries looks at challenges confronting the manufacturing sector and provides some solutions. The astute industrialist is also Honorary Consul of Seychelles, the tourism country that is rich in environmental conservation. Tunde’s idea is to bring Seychelles’ experience to Nigeria. Excerpts
What is your take on Nigeria’s economy as an operator in the system?
The economy is filled with immense promises and opportunities, taking into consideration the population, geographical spread, the size of GDP which is the largest in sub Saharan Africa. There are tremendous opportunities, especially if certain structural problems such as infrastructural challenges, difficulty in bringing goods from the ports, roads and human capital can be strengthened. This will allow manufacturing sector to play its rightful role and contribute more to the GDP. Nigeria’s manufacturing sector does not operate in isolation, if therefore we can correct issues that will enable Nigerian industries compete favourably with their counterpart abroad, the sector will be a major contributor to GDP and forex.
What exactly are you expecting from ports to enhance competitiveness?
There was a report carried out by USAID which compared the cost and time it takes to transit goods from Kano and other cities to Sea ports in Lagos for export against similar operation in Ghana and other countries. It was taking about18 days but now it is running into several months. The cost is unbearable for people that have to sell for instance cashew or cocoa in the same international market at a fixed price. Taking goods from hinterland to Lagos sea ports is far longer than the time it takes similar farmer in Ghana and this has implications for the sale of the goods in the international market. The cost of clearance is also a huge issue. There should be policies that protect exporters and importers in Nigeria.
The Buhari-led government is doing another four years. With all the socio-economic challenges besetting Nigeria, what do you expect from the government?
The government needs to pursue policies that should have the largest impact for the largest number of people. A recent report from PwC talked about the size of informal sector in Nigeria and how the size of the formal sector is shrinking yearly because there is no incentive for people to transit to formal economy and start paying taxes. The report suggested real estate development as a way out. As we have seen in some economies, recession kicks in when there is slightest problem with the real estate sector because it has the largest impact to the widest number of people. Such policies need to be pursued. Secondly, policies such as consumer credit, retail banking, and rural banking that can improve consumer purchasing power need to be pursued. Any time there is doubt in consumer confidence it has a huge impact. We need to release the verve that keeps people in poverty.
What should government be doing to address high lending interest rate which is impeding manufacturing sectors’ efforts to perform maximally and impact employment?
It is hard to do any business where cost of funds is about 25% and still make a margin. The approach of CBN getting more actively by providing credit to critical sectors of the economy is a good policy in the short term but in the long term, we need to ensure that we curb the excesses that create inflation, and other things that distort the economy such as subsidies and imbalance in the entire fiscal structure of the economy. Such capital needs to be freed and apply it to more productive sectors. The banks need to galvanise deposits and support the real sector such as agriculture, manufacturing, rural areas where people don’t have formal banking. We should remember that manufacturing is not trading; you can’t borrow and start repaying in 12 months. We are also under-estimating the impact of fintechs. Though, we are slightly seeing the impact and we will see more impact from that sector. Nigeria needs to get itself prepared, as Africa is becoming one regional bloc and if we don’t address those major structural imbalances in our economy we will end up in a dumping ground.
Could you assess this government in its four and half years?
Policies in terms of social intervention are noteworthy. Its impact is slow, gradual but it will be felt, though some people don’t agree with those polices. Reports say by 2050, three quarter of the people living below the poverty line will be in Africa and in Nigeria. There are some people living on the fringes and they need to be captured, so in spite of criticisms, those social interventions are critical. There is need to have more improvement where fiscal and monetary policies work together to advance the economy. There is also need to have active involvement of the private sector. It is beyond the capacity of government to fund certain infrastructure and it is essential we have the political capital to make policies that will attract smart money; patient capital and FDI.
Could you tell me more about Lange and Grant that operates in the cold chain sector?
Lange and Grant plays in various sectors of the economy, because we provide services that are required in agriculture especially in the storage and logistics value chain through the deployment of cold chain in addressing post-harvest loses. We provide cooling insulated panels that provide processing and storage facilities. In the meat sector, you cannot build an abattoir without insulated panels because they make the environment clean. Our products can be used to store foods and fruits and prolong the shelf lives. We also play in the construction sector as we have insulated roofing. This provides energy efficiency in a building that helps protect the environment. We also make insulated panels for low cost housing, for building of factories, auditorium, churches, shopping malls etc. It is a new smart way to build as it is fast, efficient and cost effective. We are opening a new facility that will increase our capacity annually.
How have you been able to sustain the business in over 10 years?
It has been really tough, but I must confess that we see a lot of prospects that informed recent investments running into several millions of dollars. We have gone through a period when we thought we will shut down, no forex for raw materials, initial low demand in oil and gas sector due to challenges in that sector, reduction of purchase from telecoms sector as the sector had made some initial investments in that area. Due to these challenges, we had to cut down production at a time, but we stayed on the vision. When slight rebound in the economy started coming, there was also rebound in the business. We shifted our focus from those sectors to real estate. The potential is to change the entire building philosophy in the country, build quick and efficiently and energy saving. Due to global warming people will need to insulate their houses and therefore minimise the energy spent on cooling. Percentage of foreign and local source of raw materials is almost 50/50. Due to partnerships, we are blending some our chemicals locally.
How can organisations like banks assist to improve the cold chain industry?
Cold chain is basically about infrastructure and Organisation for Technological Advancement of Cold Chain in West Africa, OTACCWA has been trying to partner with banks to understand the need. Capital with single interest rate is important for farmers to establish this infrastructure that will help them store and process their produce. The infrastructure can be jointly owned. Countries that have large cold chain facility always tend to have higher agricultural output because they are producing more and storing more and reducing wastages. In this regard we are organising a national conference in November, this year to further advance this course.