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Multiple taxation, duties killing Nigerian manufacturers –Nebe, Pharmatex MD

Managing Director of Pharmatex Industries, Prince Christopher Obiora Nebe, was the sole representative of a multinational pharmaceutical company in Nigeria – Hovid Industries – before he ventured into drug manufacturing business, five years ago.

Notwithstanding the harsh economic environment and unfriendly government policies, Nebe was determined to make his mark in his chosen profession with a view to saving lives and uplifting the society.

Less than five years into drug manufacturing, Pharmatex has towered above some companies that existed years before it with its state-of-the-art facilities in Lagos.  

Nebe listed some of the challenges of Nigeria’s manufacturing sector to include exchange rate instability, heavy import duty/taxes and deficiency of infrastructure in Nigeria, among others. Excerpts:

Exchange rate challenges facing industries

Yes, Naira exchange rate has been hectic. Initially, when we started this business, it was fine because there was stability in exchange rate and you can work with a stable rate, whether high or low. But let it be stable. Stability matters. But when you don’t know what the exchange rate will be, how do you plan? In the last two years, it has been terrible. We have managed to scale through but a lot of people closed up, while others retrenched some staff. We were just managing, struggling but it was tough for us to really manage the situation. So, I think the issue of rate stability is important. It was fine before now. The problem started two years ago. Right now, it is becoming stable and things are coming back to normalcy.

Breaking even in the face of daunting challenges 

Terrible obstacles. It is suicidal. It was not very easy to survive the last two years. Some people folded up but we were just able to manage ourselves. Besides, you are fighting this along with power challenges. It is more difficult for some of us that are into importation and manufacturing. It was terrible because all our raw materials are imported.

Can you quantify your loss in naira and kobo? 

It runs into millions and I cannot put a figure to it. We cannot quantify it. But I think it is in millions.

Doing business in the ports 

Doing business in Nigerian ports has been terrible. Everywhere is blocked and nobody is saying anything about it. The Apapa Port is closed. How can you go to Apapa? Cost of transporting goods now from the ports is about N350,000 for one trailer. It used to be N50,000. The trailers will stay on the road for almost four days before they can get to their destination. So, all these things are costs to the importer and manufacturer because they have to bring in these things before they start manufacturing.

Glut of anti-malaria drugs in the market

So many of these drugs are imported. Importation of anti-malaria drugs is necessary because malaria is very rampant in Nigeria. Trust Nigerians; once they hear that there is money anywhere, they rush. Everybody is looking for money. So, you have so many manufacturers and there are no buyers.

Problem of quacks 

There are a lot of quacks and fake drugs and we are the victims. We spend millions of naira chasing fakers all over Nigeria. You know we are exclusive agents to Hovid (a multinational pharmaceutical company) products in Nigeria and we have represented them for 30 years now.

Effect of import policies on industries 

Policies are not right. Import policies for manufacturers are killing local manufacturers. For example, manufacturers should be given incentives. We are the employers of labour. How can you employ about 200 to 300 people and the government is not giving you encouragement. The government should ensure manufacturers are given foreign exchange any time they want it. In fact, they should be giving manufacturers incentives. We have what we call PMG at MAN. This is an arm of our manufacturing unit in Manufacturers Association of Nigeria (MAN). The issue is that you must work through them. They know the real manufacturers. If you don’t go through them, many things will enter the wrong hands.

Coping with high import duties

Manufacturers are supposed to be given zero import duty because we are giving people employment. We have to be given incentives. Made-in-Nigeria goods are also having problems. Some people prefer foreign-made goods. But what is in foreign goods is also here.

Are there no waivers for manufacturers for duties and taxes? 

There are no waivers. Instead, they are increasing the duties on imported goods and raw materials everyday. For instance, we are not supposed to pay VAT but they introduced VAT. How can you say you are introducing VAT for somebody who is employing people and putting food on their table by the employments he is creating and taking people off the streets of Nigeria. We are supposed to be given concessions. There is this National Environmental Standards and Regulations Enforcement Agency (NESREA). They say we should be paying for NESREA. How can we be paying for NESREA? Most the products NESREA is collecting money on are not worth it. How can NESREA collect money on paracetamol? What is harmful in paracetamol raw materials? This is an additional levy to the manufacturers because, apart from VAT, we now pay for NESERA.

Your star products 

We have Paratex. We have Lumapil for malaria. We have other life-saving drugs on our list. We registered over 40 products. You know, we just came into the market four, five years ago. So, we met others in the market and it was not easy breaking through. We are trying to force our way through our intensive marketing strategy.

Collaboration with NAFDAC

We collaborate with National Agency for Food and Drug Administration and Control (NAFDAC). But these people (fakers) are not visible. They will smuggle their products into the market – both in Onitsha and Lagos market. Before you catch them, you must spend a lot of money. But NAFDAC will tell you that the law on fake products is not effective since nobody has gone to jail for faking products.

When you catch them, what do you do to them? 

When we catch them, we lock them up to know their source of supply so that we can close it. So, it is not very easy. You close one source, they open another one. They also bring these products from Ghana. If Hovid has another distributor in Ghana and they go there and bring it, it is still fake because we are the ones that registered it in Nigeria. But there are real fakes too, from China.

Apart from VAT, which other tax is hindering your performance? 

Payment for NESREA should be scrapped. There should be no VAT and it should be zero-duty. Go to India, there are lots of incentives for manufacturers. They (government) could give power rebate. You may not pay for light for 10 years. They can give you land free of charge to establish your industry. That five per cent VAT is not necessary. If you are not encouraging the manufacturing sector, you are not going anywhere. The government should deal with PMG MAN. PMG knows the number of pharmaceutical companies in Nigeria. If you want to get foreign exchange, you go through them.

Manufacturers closing shop or relocating from Nigeria 

You can see the enormous investment here. By the time you go inside the factory you see what we are talking about. When you borrow money from the bank to establish these things and the environment is harsh, what do you do? If you borrow money to establish your factory under a harsh condition, how do you pay back? As I speak to you, some other companies are having issues now.

Effect of lack of infrastructure  

I think there is need for them to look at the manufacturing sector and know where to encourage them.

Manufacturing for export

We have not started. We are trying to do that. It is in view now.

What about other drugs. I know only paratex?  

The issue is that you can only advertise over-the-counter (OTC) drugs. But you work through the doctors for other drugs. We have pharmacists all over the country working through the doctors to create awareness about the drugs. 

Power 

We have power problem, although we have gas plant and we used to get gas from Gaslink. They generate to us and we transmit through our gas plant. We were enjoying light for two years but at a point, this Niger Delta problem started. So, for two to three years now there is no light. We went back to diesel and diesel is a killer.

Power spend 

We spend more than N10 million monthly on diesel and that affects the cost of production and cost of goods which is also the reason imported products are cheaper.

What is your take on cancer. Is it real or factory-manufactured thing? 

There have been a divided school of thought on this matter. Some claim that there is nothing like cancer. In reality, we know that there is cancer. What is cancer? Cancer is a cell that is supposed to be normal but started dividing abnormally to the extent that you cannot control it. There is a scientific evidence. Dr. Carl Meyer, who is one of the major proponents has his drugs, which he claimed is from herbal origin. He is saying that there is nothing like cancer as claimed by the big manufacturers. But why is he producing drugs to treat cancer? I have friends that are oncologists in Lagos University Teaching Hospital (LUTH) and also in Lagos State University Teaching Hospital (LASUTH), Ikeja. The occurrence of breast cancer is known to everybody.

The cervical cancer is known to everybody. Why are we always having issues of cervical screening for women which are being proposed by Non-Governmental Organisations (NGOs)?

Which ailments are the biggest killers in Nigeria and whose drugs are in high demand? 

The incidence of cancer is becoming rampant now. We still have the stroke issue. It is very high. The age range for high blood pressure differs. As one ages, the range of blood pressure increases. But when it is above the normal level, there is a problem. In this part of the world where we are looking for what to eat, how do we go for check-up? The issue of high blood pressure now leading to strike is high.

Diabetes 

It is coming up. There are so many things that are not supposed to be killing us. You have the incidence of malaria. Of course, if you hear about the World Health Organisation (WHO) statistics of mortality rate of children, pregnant women and other adults, it is still alarming. We are trying to promote Lumapil to make sure it penetrates the rural areas so that such occurrences are minimised.

WHO rating for your products

We are working seriously. Two of my members are just coming from Copenhagen, Denmark. We are very serious about it and by His grace, we will get it. We are looking at next year.

Is the rating for the factory or for the products? 

You will have to qualify for one product. It is for Good Manufacturing Practice (GMP), which a few other companies have including May & Baker. It is also related to the product you have to qualify yourself with. Then you have to also be working on those products and they are making it compulsory now that you must qualify on those products before you are given the GMP. They are making it tougher. That is why we didn’t get it this year. We have to do a lot of things again. So, we are hoping by next year we will get it. Your laboratory has to be qualified. You have to buy a lot of equipment. They check a lot of things before they qualify you.
Multiple taxation, duties killing Nigerian manufacturers –Nebe, Pharmatex MD Reviewed by Aderoju Olaitan on 10:47 am Rating: 5
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