SMEs need to invest in raw materials – Onwualu

Prof. Azikiwe Onwualu is the Director-General/Chief Executive Officer, Raw Materials Research and Development Council. In this interview with OKECHUKWU NNODIM, he explains how entrepreneurs can seize available opportunities in Nigeria’s raw materials sector.

Why do investors shy away from the raw materials sector of the economy?

A lot of investors are scared with respect to going into new areas. What we have done in the past to address this is to get involved in joint ventures, pilot plants and even commercial ventures. We did these in order to showcase that these things can work.

Once we show that they are working, we conducted investors’ forum and through it we encouraged people to go into similar projects. At the end of the day, we sold the factories from these projects to people and they are all operating now. For example, we have a fruit juice plant built in Kaduna and today is being run by a private sector organisation. We have a vegetable plant as well as a phosphate plant in Sokoto and many more factories in different parts of the country. All this is to boost investors’ confidence in the sector and make see reasons why it is important to venture into new areas of business.

 However, the major challenge I see facing SMEs is lack of technology. For you to be able to make good products, you need technology and skills. So the major challenge of most SMEs is how they get the machines. And when they get it, how do they get trained. Many of them do not have the money to acquire the technology and the banks, though ready to give money, but at short term loans and very high interest rates. All these affect entrepreneurs that set up industries. But one way we try to help is to give them support through our technology acquisition programme.

Are there truly opportunities for SMEs in the raw materials industry?

There are a lot of opportunities for SMEs. This is because every raw material we have in this country, you have the opportunity of setting up a small scale factory for processing and for value addition to that raw material. Take tomato as an example, you can have a small scale plant for making tomato paste, dried tomato powder and lots more.

 If you pick other agricultural commodities, there are opportunities for processing them. And it is only when you process them that you can now have them into different products and they can last throughout the year.

Many SMEs tell us that they don’t know what to do, but we are telling them that there are a lot of opportunities. With as little as N500, 000 or N200, 000, you can start a small scale processing business. You don’t have to start big. When you start with this small amount, you can now gradually improve until such a point that you will have all the machines that you require. So I encourage small businesses that they are so many opportunities to process agricultural products, to process minerals and even in the area of marketing of these raw materials.

Somebody can start a business of picking or collecting one raw material from the place where they are supplying them to people in regions where the materials are not found. You can provide information, for some of the information we have here are free and a lot of investors are looking for these information.

So someone can setup a website to supply information on Nigerian raw materials; that’s a business. People who subscribe to that website pay, or you can have people advertise through the website. And the more traffic you get on the site the better for your business. So, there are a lot of opportunities here, from harvesting or mining these minerals to processing, transporting, handling and packaging them.

Investors complain of lack of information, what would say about this?

Any investor or SME that needs information on how to start, where to source raw materials, what are the problems, and how to solve them, should be free to contact the RMRDC. We are ready to help. In fact, not just giving advice, in some cases where we are convinced, we actually give technological support. In other words, if you are trying to develop a product and you need a grinder, which is the technology needed, we can actually give you some assistance in terms of providing the machine and the training required.

In what way is the council aiding entrepreneurial investment decisions in raw materials?

Now what the council has done in the last 25 years is to identify these raw materials. Today we have the Natural Raw Materials Resource Centre located here in Abuja. You can get any information, especially technical ones for value addition to any of these raw materials. For instance if you are looking for raw materials used in making paints, you can get all the necessary information from the centre. The information is available and they will be very useful to those who prepare feasibility studies and individuals who want to send technical details to their partners to boost investment purposes. We have tried to make this available in all our state offices through what we call the State Raw Materials Display Centre.

There is also a research grant scheme through which we give research grants to various institutes, companies and individuals. In the last 25 years we’ve given out about 200 research grants, ranging from N1m to N20m, depending on the type of research the individual is interested in. Most of these researches came out with commercial results. At least, 100 of them came out with results that can actually hit the market and about 50 per cent of the results have been commercialised.

Today a number of products in the market were as a result of these researches and the technologies transferred to some SMEs. And the SMEs are currently producing products which at times you will mistake as imported products.

How do you address some of the economic challenges faced by investors in this sector?

The way we operate is that first of all we try to study the economy and based on the studies, we commission projects to try to solve some of the challenges we notice within the economy. Essentially the council was set up to tackle the challenge of local sourcing of industrial raw materials.

You are aware that most of our industries import most of what they use for production and the raw material used here is a major component, though there are other inputs like power, human resource and others.

So, the major challenge we have is that most of our natural resources in this country are actual raw materials in their raw forms.

They occur as minerals, agricultural products and commodities like maize, rice, cassava and so on. The minerals will include granite and stones. In their raw state, none of these commodities is useful and we have shown over the years that we have a lot of these raw materials within the country. But because they are all in their raw form, industries cannot use them. So most of the large scale industries that manufacture the goods used in this country, import their raw materials. We are, however, addressing these challenges headlong.