70% of Nigerian companies die within first four years – Adebutu

Ajibola Adebutu

Ajibola Adebutu trained as a Civil Engineer at Trinity College in Dublin, Republic of Ireland. In this interview Segun Adeleye, the brain behind JB Farms, Odogbolu town, Ogun state, speaks on how he ventured into farming and various challenges being faced by entrepreneurs in Nigeria, particularly multiple taxes and policy somersault by government. Excerpts:

Tell us about your background?
I studied Civil Engineering but now I am Finance Director for Premier Lotto, and I am also a farmer.
So how did you venture into farming, being an engineer?
It is a long story. When I finished school and returned to Nigeria, I joined the family business which was a pool (staking) business then. But you know that pool is at the weekend, so from Monday to Friday, I was just idle doing nothing. Therefore I was looking for something to occupy my time so that I would not be wasting away, and I realized my dad had about 100 hectares of land in Iperu. I approached him one day and I told him that I would like to use the land for farming and he said it was okay.
So that is how I got into farming. My first foray into it was planting of maize but that did not really work out as I did not make much money. I also tried cassava and I found out all that types of farming was not something I wanted to do. I actually wanted tree crops that will be permanent, and we thought of cocoa and palm tree. We later settled for the latter, because it is easier to manage than the former which is highly prone to diseases. That was how I opted for oil palm business. I started it in 1998.
What are the challenges confronting you in this line of investment?
Well I have been lucky in the sense that apart from the oil palm business that I do, I have other ones I am involved in, hence, funding, really, have not been the issue. And we are lucky enough now that the Federal Government is really interested in agriculture and ready to extend assistance to farmers.

When we started at first, it was more of a learning curve – to learn the business and understand the business which we did over the first few years. I think in the last six years, we have garnered enough experience and have been able to expand more. And to God be the glory, the business is a big business now.
If I want to talk of any challenge, I would say government and the community. Unfortunately in Nigeria government does not understand that business is not the only source of revenue for it. A business also provides social services. For example here in our company, we employ about 1,200 people and that is a lot of jobs. Instead of government to now sit and think of how to encourage JB Farms to expand and thrive so that it can employ like 5000 people which will then have multiplier effect on the whole community, it will rather be looking for ways to make money from the company. If government can really help out- more people will be employed, the employees will pay tax and I will pay tax too and everybody will be better for it. Also there is the issue of multiple taxes; local government will come, state government and Federal Government will come. Also policy somersault kills businesses. On the challenge of community, when you start and run a business in Nigeria and it is a bit successful, you are seen as the second government. Communities around you expect you to perform government’s roles by providing this or that. They fail to realize that there is a limit to what cost a business can carry before you can break even. That too is an issue.
What is your attitude to corporate social responsibility?
We believe strongly in corporate social responsibility, and as of today, any community we are based in, we try to provide for what they need. In Odolowu where we have a plantation, we have taken over the neglected medical clinic and have been paying the medical personnel and staff of the clinic. At least the residents of the community do not have to travel far before they can have access to medical care. We also looked at the town and realized water seems to be an issue. Few boreholes dug there are powered by generators and once there is no one to buy fuel, there won’t be water for the people. So we are in the process of providing two solar-powered boreholes for the community.
We have also decided that certain percentage of our annual profit will be committed to a community project. Where we want to be careful about is a situation where some individuals will think they should be the beneficiaries rather than the general populace.
Specifically, what are your thoughts on this issue of multiple taxes, so that entrepreneurs like you can grow?

For me what I want to say to the government is that business is a long-term process. They should not be killing businesses with percentage; they should rather create the enabling environment for businesses to grow, and if you take a small percentage then, we won’t have any problem.
Do you believe in tax holidays for budding entrepreneurs?
Yes I do. We are actually enjoying one right now that will expire in
2017. It is a five-year tax holiday. You know, starting a new business is not a piece of cake especially in a country like Nigeria where you have to provide the entire infrastructure by yourself. Here in this complex I have five generators – three 250kva generators, one 350kva generator and one 40kva generator. I have boreholes all over the place to get water for the business and I spend a fortune on security. So all the things government provides in other climes, you now provide them by yourself from day one, till government stands on your neck and tells you bring this and that. It is not easy to run business in Nigeria and if we want to grow as a country, we cannot continue to import. We have to start to produce; when we produce we engage all these young men and women we are pumping out of universities every year. And of course the economy of the country will grow. What should be the focus of the government today in Nigeria is how to empower companies to grow. Tax holiday is a good incentive for fledgling businesses… Government will say okay whatever you make within the period, keep it and use it to stabilize.
I don’t have the actual percentage but I would guess that 70 percent of new companies die in the first four years by going bankrupt. Therefore government should do all it can to nurture new businesses to maturity.
What is your take on African Growth Opportunity Act (AGOA)?
But you see, there is a Yoruba saying which says “ti a ba fi agbo fun eegun, a maa nju okun e sile ni” (We ought to give without attaching unnecessary). If all these incentives are not tied to any conditions, they are fine for our economy. For example, if you tell me now that you are giving this relief, but I have to buy some things from you, then that grant or incentives are conditional. That means they have hidden clauses. If I am given a grant to purchase tractors to help my farming business, but the provider is asking me to buy such tractors for example from Italy when I know those ones from
France can really work here, then the purpose of such grant has been defeated.
Some of the problems of exporters in Nigeria are certification, packaging, coding and so on, what are you doing to ensure your products meet international standards?
At any point in time we make sure we use the best equipment, we train our staff and periodically we carry out audit when we call in independent assessors to come and look at what we are doing, if there is any need to improve in particular area. But I will tell you something, the barrier to export in Nigeria is not really about certification and things like that. We have to look at whether we are competitive. There are additional costs I have to bear to produce palm oil. Now if I compete against a Malaysian company which does not have to pay other costs- run on generator… there is 24/7 (constant supply of) electricity, spend on security because government has done that, and no bad roads to destroy vehicles all the time, how will my price be competitive?
It is not possible! So apart from certification, we must also look at how the government can help us to be competitive in the international market.
How do you cope with personnel integrity in your company?
Let me say here that an average Nigerian is not really a bad person. It is the circumstances that lead them to vices. Okay, we have people who will loot, but if you trim down to an average man who is just interested in being able to take care of himself and his family, you will find out nobody is that really bad. If you as an employer pay decent wages, you won’t have problems. I was talking to somebody one day and he told me an average petrol attendant gets N8000 monthly, and I exclaimed that you are giving that person liberty to steal from you.
Such amount is not even enough for transport in a month! My General Manager said that we are all creatures of emotions, and if somebody works for you and you are treating him well, such person will surely have a sense of belonging. Hence it will be difficult for him or her to turn around and steal from you. Although there are few bad eggs that are greedy; no matter what you do for them, they will still pilfer and you pray God expose them and you get rid of them. For me really, if you take care of your workers and fraternize well with them, you will get the best of them in terms of loyalty, dedication, commitment and transparency. I go into the farm and in the factory and people call me Mr. JB. Nobody is saying **oga** (boss) or whatever; they all realize they have a stake in the company. I keep telling them, if the company grows, all of us grow together, and if it fails, we all fail together. It is as much of your business as my own and a lot of my staff have keyed into that philosophy.
I look at our leaders and I say they are missing small tricks. During Christmas last year, I went to buy 50kg bags of rice, two liters of groundnut oil and we had our end-of-the-year party. I distributed the items to all the 1,200 of my staff and after
Christmas even in the New Year people were still coming to thank me for that token. How much did that cost me? At most, I spent N3 to N4 million, but it espoused so much goodwill among the staff. So if at the end of this year I add one live chicken to the package, commitment and prayers from staff will quadruple! You don’t need to give everybody a house on the moon; just make sure basic needs of the people are met. And everybody will be happy. Let us take a look at the delegates to the confab (ongoing national conference), it is being said that they will receive N30, 000 daily for feeding and N4 million for hotel accommodation and other logistic expenses. Yet, workers cannot be paid a decent minimum wage.
I believe if we are fair to our employees we will not have many issues. There was a day I was traveling out of the country and I was at the airport. A call came in… normally I don’t pick strange calls, but that day I did, since I was about to leave the country. Then the caller who was a woman told me that her younger sibling who works in my company informed her that some members of staff have been stealing kegs of palm oil from the company. She said the sibling was afraid to approach me, hence, she decided to call me and tell me herself. She even told me where the stolen items were being hidden. I then called my GM to cross check and it turned out to be true. The people involved were later apprehended and they confessed. This scenario shows clearly that there are people who are upright and ready to protect the company since their basic needs are not toyed with. This means if you take care of your staff properly, you will get maximum cooperation and support from them.
Some people are canvassing for the privatisation of our refineries as a way out of this perennial fuel scarcity…
For me, government has no business in business. So any government-owned business should be privatized. It is private sector that can drive economy. We all know the era of NITEL when phone was the luxury of the rich in Nigeria. But when telecom sector was privatized and GSM service providers came in, everybody has access to mobile phones.
Imagine that NITEL is still in existence, do you think we will all have phones to use?
So it is the private sector that can drive things to work properly. What government should concern itself with is the provision of basic amenities and infrastructures like roads, security and so on. And when the refineries are in the hands of private investors, it is the duty of government to ensure people are not exploited or cheated. That is all government needs to do and allow the private sector to run the economy. If we can do that and can tackle corruption, there is no limit to our progress and development as a nation.
Some advocate adding value to farm produce for export, prevent capital flight and aid job creation. Do you believe in the concept?
I believe strongly in that and at the same time, you need to be competitive. For example, if I take cocoa made in Nigeria now and covert it to chocolate, by the time I convert it, the cost of production is more the cost of chocolate in the international market. It is a sheer waste of time. So how do you add value? Today we have rubber and tyre companies, but because there is no stable power supply, factories have moved to Ghana. So what are we talking about? Provide electricity and check your tariffs and make sure they are in line with international standard so that by the time I produce my tyre and send it abroad; it will be sold at a competitive rate.