‘Why we can’t set up indigenous paper mills in Nigeria’

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Ratan Varyani is Group Managing Director/Chief Executive, Vista Group of Companies, made up of over eight subsidiaries with interest in paper production, pharmaceuticals, agro-allied business, packaging, manufacturing to mention just a few. The company unveiled its corporate headquarters in Isolo-axis of Lagos recently. In this interview with Ibrahim Apekhade Yusuf, Varyani shares his experience managing a conglomerate that has been operating in the country for about three decades. Excerpts:

Could you tell us about the Vista Group?

Vista is a company that started off in Nigeria 30 years back. From a very humble beginning in Lagos Island, we have grown to a massive company. We have almost 400 employees and we are the largest manufacturer of exercise books in sub-Saharan Africa under one roof. We make exercise books in the name of Campus brand and we distribute it across Nigeria. And we also convert paper and supply to the printing industry in Nigeria as a whole and we bring in consumer goods, equipment and distribute these across Nigeria. This is the core business of Vista. We used to be in Surulere axis of, where we have our manufacturing unit. We also have here the corporate office. And we have also diversified into various industries as a Group. What we have is distribution centres in five states and in each of the centres we are getting books to the end users also do a lot of donations to schools. We give free books top schools. These are part of our CSR related activities. We do this often, we move from one state to the other. This year for instance, we are moving to Kano because that is the demand from the state. We are also interested in the manufacturing of books and household items. The Vista Group is made up of Vista Line, Sewell Pharmaceuticals, Vista Nova, Vista Agromart, Artemis Life Sciences,

Beyond Nigeria, do you have presence in other African countries?

As a Group, yes we have presence in other African countries. We have presence in Ghana, Malawi, Mozambique, Zambia. These are the countries we have expanded our presence.

Are you saying there is no local content?

There is a lot of local content. We do the printing in-house, which is done in Nigeria. We do the conversion of the product in Nigeria. Apart from the raw material, which is pulp and paper, it is sourced from other parts of the globe.

You say you have 400 employees. What is the percentage of expats and locals in the company this is because most multinational companies based in Nigeria engage the services of foreigners compared to local. What is your take on this?

Less than 10 per cent is expatriates and 90 per cent is local. All our engineers are Nigerians. All our people handling the machinery are Nigerians. We have more than 350-370. If we bring in expats, we have technology transfer scheme for the locals, especially in engineering and things like that. They ensure that they do training to the other and when they do it and when we want to do more expansion; we require them to take up such roles.

What has it been like doing business in Nigeria in the last three decades?

Nigeria has gone through a lot of issues in the last three-four years, especially with regards to foreign exchange, recession and all. I think with what the government has done, there should in the next few years to come.

Where lies your target in Africa?

Nigeria is our largest market and whatever we produce is basically for the Nigerian market. We do not export out of Nigeria but hopefully in the future when the climate is better and the cost are lower because that’s a very important factor in exporting. The products are world-class products that we make. So it can match any product produced anywhere else in the world. But a lot of our products get transported to other neighbouring countries like Chad and Cameroon but it’s through the borders and it’s our distributors that do it, they are not formally exported. Most of the other countries which are landlocked are also from the French-speaking don’t use the same kinds of books that we use in Nigeria. So there is a difference there. But in time we are also looking at increasing our export.

What is your source of raw materials? Are they basically local?

We have to import the raw materials because the paper is not manufactured in Nigeria. It is very costly to set up here so we import paper from different parts of the world. But we convert and fully manufacture the books in Nigeria. So we have the state of the art machinery which we import from Germany and we have the state of the art factory in Surulere, Lagos.

Does the paper industry suffer from product counterfeiting?

Not so much. In our books, I know there are certain areas people are trying to counterfeit and make cheaper quality books in the brands that we do. But that’s a very small section and it’s insignificant. Paper is a very capital intensive product so it’s not easy to counterfeit and it doesn’t pay economic-wise.

Could you share part of your strategy for encouraging local content in your area of operations?

As a company we have decided that we will encourage local content so we are looking at ways to do that more and more. So it is not just in terms of employment, we also do that in the raw materials that we use. So if there are local content providers we will be happy to work with them. We still have a long way to go. Since we have been there for 3o years that given us the experience to manage, how to operate within the context and environment we find ourselves.

Can you be specific as regards the challenges you have had to face these past years?

We haven’t faced any such issues like getting permit for our expatriates working in the country and all that in the past. We have been able to build relationships with government agencies across in the right places and we also get to understand where they are coming from and follow the rules. We have been very clean in terms of opening our doors to anybody. So that is why it is taking us time to grow to this level. We have faced enough challenges in terms of the importation that is happening in the last few years because it is becoming difficult to import our raw materials even the port situation has not been very helpful because of the delays. But despite that we have been able to rise to the level we have grown. We have good relationship with all the relevant government agencies. We however would like a situation where the skills development would be greatly encouraged by the government. Because for us, we would rather like to engage the locals and let me tell you, everything about business today is about pricing. If I have a Nigerian it doesn’t make us. I would rather prefer engaging a local than an expatriate because more often a local expert would perform better than his foreign counterpart. So it pays more to engage locals ultimately.

The paper industry is one of the sectors that enjoy some form of concession that gets tax holidays and waivers. How has that affected the sector?

Contrary to normal belief, that we should have indigenous paper mill producing, I believe that paper mills manufacturing is a very capital intensive, it’s environmentally polluting and it’s also not very easy if you don’t have the right infrastructure. Power is a big requirement for paper mills and in fact, even in Europe, paper mills are shutting down; the reason being that they are not able to cope up with the massive investment and large scale operations involved in the running of the sector. In china and the Far East, so even the Europeans are not finding it easy as well because paper mills is really capital intensive. To compete with that and have a paper mill in Nigeria is not realistic and not going to be a practical thing to do. The paper industry in Nigeria is giving jobs to a lot of people. It’s very big. It gives a lot of employment. May be after the oil and gas industry, government, the paper industry is one of the most lucrative sector in terms of the value chain. And Nigeria is going through a phase where we are changing, getting more quality conscious. They understand this and newspaper quality is getting better, so everybody is moving forward. I think it would be a difficult exercise to set up a paper mill here in Nigeria; it may not be the right thing to do. It is better to import the paper and do it here because it is not going to cause any pollution. You can bring the papers here and do the conversion locally.

What is the value of the paper industry in terms of revenue generation?

One of the problems we have in Nigeria is the lack of the right data and statistics. We are not able to access and have statistics of what is required, what is happening everywhere. We have porous borders, so nobody knows what the consumption rate is. It’s very difficult to analyse that. And when you say paper that’s a very large spectrum of things. If you talk about paper, you have to look at tissue paper and all that. It is a very large spectrum. There are lots of craft paper manufacturing happening in Nigeria because you have a lot of waste from which you can manufacture craft. In the packaging printing industry, you could be talking about 300, 000 tonnes a year in terms of importation. So everything gets converted and everybody gets jobs done.

Hitherto, we had two or three paper mills in Nigeria including the Iwopin paper mill, Jebba, Oku-ibokun. What is your company doing to bring them back as part of inward integration?

If you ask me whether that is a viable business? I will tell you I don’t think so. Even many paper mills in India are shutting down because they are not able to cope with the advance scale of infrastructure that is required to run its operations and you need raw materials. The forest in India is not so good, so they are trying to use other materials to make papers. It doesn’t produce the same quality of paper that is made from pulp.

In Nigeria we have cheap materials being produced?

I agree. But you don’t have infrastructure, like power, you don’t have the right species required to produce the paper and you need good pulp.

Can you tell us about your investment in Nigeria in the last three decades?

I don’t have the figures in my head. But I know we have brought equipment from overseas. We are going to be boosting our manufacturing arm. We have brought in investment in terms of machinery. It is huge investment. But we hope to scale that up to about $10million in the next two and half years.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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