Home Latest Insights | News Nigeria needs to further reduce interest rate to boost local production and stabilize the economy – Bayo Ibrahim

Nigeria needs to further reduce interest rate to boost local production and stabilize the economy – Bayo Ibrahim

Nigeria needs to further reduce interest rate to  boost local production and stabilize the economy – Bayo Ibrahim

Bayo Ibrahim is a graduate of Food Technology from the University of Ibadan, Nigeria. He currently co-runs a processed food company in Osogbo, Osun State Southwest Nigeria. He spoke with Rasheed Adebiyi on the impact of the COVID 19 pandemic on startups and other issues affecting entrepreneurship in Nigeria. Here are the excerpts.

Tekedia : Tell us about yourself  

Bayo Ibrahim: I am Bayo Ibrahim. I am a food enthusiast. I love to see well processed and packaged food products. I am a co-founder of Plantation Foods and we are the producers of Premier Custard.

Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.

Tekedia AI in Business Masterclass opens registrations here.

Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.

Tekedia : As a business owner, how could you describe the government response to COVID 19

Bayo Ibrahim: The Federal Government has shown great responsibility with its attention and responses to Covid-19 especially to businesses with several intervention programs declared to ensure ease of doing business in the country.

Tekedia: At this point that it looks like the CoronaVirus seems to be here to stay with us, what do you propose for the government to do?

Bayo Ibrahim: Yes, it’s appearing as if the effect of the virus will not be subsiding soon and this has really affected businesses so hard. First, it is understandable that a larger number of businesses in the manufacturing sector depend greatly on importation. The federal government should provide and sustain incentives and waivers on the importation of critical and essential manufacturing materials especially in the food and drug sector. This should not be limited to packaging and plastic materials used in manufacturing.  The government should as a matter of importance ensure availability of forex and control of exchange rates to minimize the rate of inflation. Finally, on this, the government should also reduce the interest rates, especially from government-initiated business loan facilities. All of these will ensure a stabilized and controlled economy that may be caused by the effect of the Covid-19.

Tekedia: In specific terms, could you describe how government response affects entrepreneurs like you?   

Bayo Ibrahim: At first, I will like to talk about the lockdown policy. There is no doubt that it is the best alternative to avoid or reduce the spread of the virus. However, as good as it is, it has really affected businesses especially young start-ups like our own. In the first week of the lockdown, we did not have an idea of what would happen. The pre-existing news about other countries in relation to the virus shaped our responses. We couldn’t go out and business couldn’t run despite the fact that we are a food manufacturer. As a matter of fact, nothing worked during the first week of lockdown. Then, after we realized there are waivers for food manufacturers and a few others, we set into actions. Unfortunately, open markets across the country where we have our distributors and customers especially at the state capitals were all locked up. So, the waiver was absolutely of no value. So, for the first one month of the lockdown, nothing worked and we couldn’t make any substantial business.

More so, when business is supposed to resume with the partial lift on lockdown, the prices of production materials have drastically gone up and inflation has already set in.  The average cost of production was about 30-40% on the rise. The implication of this is that more working capital will be required to be able to sustain your regular production capacity. Going further, customers/consumers’ resistance had set in with a sharp rise in production cost which directly affected prices of our products at the consumer level. So, if care is not taken, this is the best time for a start-up to lose business. Many businesses will have to restart or even crash out of the system.

Tekedia : How is it like running a business in Nigeria and in Osun specifically?

Bayo Ibrahim: Nigeria and Osun, in particular, is a good place to do business. People like us have really benefited from the peaceful coexistence of the Nigerian people. Our good population is a great advantage and a good strength of marketing to any serious-minded manufacturer. You will not be surprised that there are some product brands in Lagos today that are multinational standards and have never gone beyond Lagos. The reason for this is that the population in Lagos alone is more than enough to sustain their businesses. As an emerging business owner, if I can capture the southwest market successfully I am in good business. Doing business in Osun especially in Osogbo is one thing I love to propagate any time I have the chance. Because you can have an average of 18 hours of power, a fairly good road network, affordable and ready to go and diligent youth as human resources. Government policies on small businesses here are enduring. The only thing I think the Federal and state government need to work on is encouraging local content for raw materials for the production and manufacturing sector to reduce high cost of importation. For instance, about 95% of our production materials in Plantation Foods are imported. So, everytime there are threats on importation like this, we are always affected and it runs down the value chain.

Tekedia : What would your advice be for young Nigerians who seek to be entrepreneurs?

My advice is that they should start now. If you have any enterprising idea that can change narratives, please start now. The most difficult part is getting started and you can only start at a time. Let me also say this, I have always believed that the benefits in entrepreneurship are far more than engaging with a monthly paid job. Every Government of the world has programs for young businesses and entrepreneurs. So, start-up capital can’t be an issue, you only need to open your eyes widely to know where the money really is. Young intending entrepreneurs should take that bold step to change the narratives of joblessness and all.

Tekedia : There are a number of government economic stimulus packages for businesses. What specific areas would you want the government to intervene for start-ups in Nigeria?   

Bayo Ibrahim:  In all fairness, the federal Government is on top of the talk in sustaining the economy especially during this pandemic and they are really taking good actions to ensure economic activities do not enter comatose. For instance, they have provided waivers on importation of medical and food production materials, so they should sustain that for a good number of months or years and should be exclusively extended to packaging materials too. Moreover, governments at the central have extended moratoriums to businesses who benefited from the Bank of Industry manufacturing intervention funds. That’s a very good one and they have also reduced the lending rate on the same platform from 11% to 7%. To be honest, it’s the best any serious minded business owner can have at the moment. They have really put the economy on the acceleration gear. It’s only left for our youth to tap into those initiatives and leverage on them. Government should sustain that initiative until everything works well across the world. Moving further, I think one big deal the government needs to do is ensuring availability of forex for easy importation of manufacturing materials. It is understandable that the cut in crude oil supplies due to the pandemic really hit us hard on the state of our foreign reserves. Notwithstanding,  the government must work on controlled exchange rate so as to reduce the level of economic instability and inflation. Finally, Nigerian government should really learn from this scenario and build the nation’s economic strength by encouraging local content and sourcing for manufacturing raw materials locally.  We are over relying on importation and this is not just affecting businesses, it is killing us health wise. Government should be determined and sincere on economic policies.

Tekedia: Thanks for your time

Bayo Ibrahim: Thank you.

No posts to display

2 THOUGHTS ON Nigeria needs to further reduce interest rate to boost local production and stabilize the economy – Bayo Ibrahim

  1. Well said by the experienced entrepreneur. I think Nigerian youth, myself included should make use of these advice rather than castigating government for what they know nothing about. Politics of government is bad this government is bad that is blindfolding most of us to opportunities. Thanks CEO

Post Comment

Please enter your comment!
Please enter your name here