‘Battery assemblers need to import inputs at five percent duty’
Offorjoma Alex Joseph is managing director/CEO Forgo Battery Limited Company. In this interview with SIKIRAT SHEHU, Offorjoma urges the government to reduce the import duty of battery inputs to five percent to cut production costs and sustain the industry, which has only two players in the country.
Tell us a bit about Forgo Battery.
Forgo battery Limited is an innovative company that has been at the forefront of assembling quality batteries in Nigeria. Our company started operations in November, 2015. Our factory, located in Ilorin, Kwara State, deals mainly in batteries and is committed to soaring higher.
There is a perception that auto products in Nigeria cannot compete with those from outside the country. How true is this?
Battery is not a very complex product. Besides, we have a team that knows the pros and cons of it. We are backed by foreign technical partners, meaning we are focused at delivering the best quality that can compete anywhere in the world. Nigerian batteries have very good quality and can compete much better in the local and international markets. In fact, it is the even that ones that come in here than cannot compete with ours.
How do you intend to expand your company’s capacity and sustain standards?
We are thinking seriously about expansion, which is why we could also see the threat. Take note that government has made policies through the National Automotive Council and the like to improve the assembly of vehicles in Nigeria and make vehicles affordable, while creating jobs through the National Industrial Revolution Plan.
We are going along with that dream of the government and if they could support us by way of patronage, expansion is not a problem. The major issue is to start out well, which Forgo has done. We started well and we are committed to soaring higher. We hope government would listen to the challenge, which is majorly the influx of substandard products. There is a need to restrict importation through the land borders. We are going to increase our volumes, which is our dream.
To maintain set standards is not a problem for us because we are passionate about good quality products, not just in terms of battery assembly but quality batteries that people can use and be happy with.
So, we wish the Standards Organisation of Nigeria (SON) can regulate imported products by ensuring they reach acceptable standards.
How does ease of doing business in the country affect the auto industry in which you play?
Actually, we import a large number of plates and assemble them here. The raw material for batteries is lead, which is said to be available here in Nigeria but not yet tapped. Battery plate is the soul of the battery and we really need local inclusion in the industry.
The cost of the lead material required for battery assembling is 70 percent of the total, among other inputs such as labour, power and accessories that are readily here. Of course if you have something locally available, it is not wise to import them.
We are hoping to do backward integration to source lead here in the future when they are developed for exploration.
What are some of the challenges facing your industry?
Challenges are always there, such as high cost of operation, foreign exchange instability and the rest. The automotive battery assembly is a difficult industry because in this country with teeming population, there are just two batteries assemblers, which show you how difficult the industry is. That is why many people do not want to do this business.
In the past, we have up to eight battery companies at different towns but they have wound up. We found out that there are policy somersaults and lack of support from government. There has also been reduction of import duty for finished batteries, chasing local assemblers out of the market.
For us, that thing remains there and what we face presently is not something we can continue to operate with.
To what extent have adulterated products smuggled into the Nigerian market impacted your business?
If you know the quantity of batteries that come into Nigeria, you will agree with me that this is a serious threat.
We are happy that the SON has risen up to its challenge to raid the market of substandard products.
From our findings, the bulk of batteries in the market are not known by SON, which means they are smuggled in through the land borders.
What specific policy does your sector need?
What Forgo is asking from the government is that there should be a holistic policy. In the National Automotive Policy that has been gazetted, there is a provision in SKD 1 and 2 that some assemblers can even import finished batteries at a rate as low as 10 to 5 percent, whereas even for our raw materials that are being imported, we pay equally 10 percent duty.
Therefore, we think if some parts of that policy accept 5 percent import duty for finished batteries, then they will never look inwards, since the cost is going to be more.
We think government should also encourage the vehicle assemblers to look inwardly for battery sourcing and let us also enjoy the five percent for importation of products which also add value. This will enable vehicle assemblers to find battery assembled in Nigeria at moderate prices. They do not have to export that version of the job to the foreign companies.
We are pleading with government to restrict battery importation from Nigeria seaport. Restricting it from the border will be a policy that will protect us.
They should intensify efforts in ensuring that quality products are in circulation.
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