Mr. Dideolu Falobi is the Managing Director of Kresta Laurel Limited, an engineering firm and one of Nigeria’s major elevator companies.
He outlined some of the challenges of doing business in the country and how the company has survived for 34 years.
It’s been 34 years of operating in the elevator industry in Nigeria, what has the experience been?
It’s been quite exciting. I mean these are years that span into different eras of Nigerian history. The company was incorporated when the country was just coming out of the second republic and things were tough. There were issues of import licences and so many others at the time.
However, we didn’t start operation until 1990. Even then, it was still at the peak of the challenges during the Ibrahim Babangida regime. The economy was falling apart and there were a lot of uncertainties. But we had to start our operations.
Then, Otunba Gbenga Daniel, a former Ogun State Governor and I were at HEB Schroeder, a German firm, which had also been affected by all the problems in the economy. At a point, there was a vacuum in the industry and that was what we stepped in to fill. That was how Kresta Laurel started.
The first year was successful but stressful because we had to work ourselves to the bones to properly announce our arrival on the scene. We literally worked from 7am to about 2am every day even on Saturdays and Sundays. Soon, the results began to show.
Right from the outset, we had a clear vision that any Nigerian company could compete globally if properly managed. We identified what we needed to put in place. We had a very good foundation and it is that foundation by the grace of God that has seen us through the different challenges. We bless His name.
As a new company coming into the elevator industry in Nigeria at that time, what were some of the government policies that affected your operations?
Well, I think the problem was not just about the policies but more about their inconsistency. You could wake up one morning and hear government say “we’ve devalued the naira.” I remember at a time, General Ibrahim Babangida decided to match the autonomous market with the official market. I think this was around 1992 or 1993 if I remember well. Overnight, the rate went from N18 to N65. So, you can imagine the challenges you will have with ongoing projects; the impact on the cost of executing such projects. At that time, a lot of people lost their money and businesses and the same thing applied to us. It was an issue of inconsistency.
More than two decades after the period you just mentioned, has anything changed as regards the inconsistency in policies and how it is affecting businesses?
Regrettably, not much has changed. It’s still affecting businesses because you cannot do long-term planning. One of the reasons we’ve not had the right level of investment in a market like Nigeria where there is barely a high return on investment is because of this type of policies.
From 2005 to 2007, all what we were crying to the world about was that we needed help. We needed to privatise our power system. There was a roadshow marketing the potential of the economy in Nigeria. By 2006, a lot of people were interested. A lot of major power players in the world were looking forward to investing in Nigeria. The only thing that held them back was that there was going to be a general election with transfer of power in April of that year. They were told not to worry because the new government coming in was going to be from the same party and a lot of people said ‘okay, let’s wait’. But what happened? Yar’Adua came in and the next thing we heard was that they were going to start a probe and everything that had been done was criminalised. That was when those that would have invested, who knew how to run the business, who had access to cheap funds, stayed away.
As it is today, a lot of people are holding back investment funds because there is going to be another general election early next year; and in Nigeria, usually one year before a major election, the entire system is already shut down. This attitude has not helped a lot of businesses.
How is the lack of regular electricity supply affecting the development of the engineering industry in Nigeria?
There is nothing you can do without power supply. It’s not just critical; I wonder what word we can use that is stronger. It is the life and blood of development. If you don’t have power, you create so many problems. Firstly, it is the problem of the cost of production, making locally produced goods uncompetitive. Secondly, it is the fact that a lot of people are unemployed. I’m not even talking about those that worked in industries that have shut down. I’m talking about the small-scale players like the welders, carpenters, and even tailors.
So, there are quite a lot of challenges when we don’t have power. It is actually what has deterred our ability to rise above where we are today.
As a company, what are some of your policies on health and safety?
I am proud to say that arguably within the elevator industry, we probably have the best HFC policy. We don’t go for any project without doing the hazard analysis. We look at the risks and try to mitigate them. We have received awards from various professional organisations as a result of the high premium we place on health and safety.
How would you rate the elevator industry in Nigeria in terms of expertise, operation and service delivery?
I will say that we were not doing badly because some major projects have been successfully delivered. In sub-Saharan Africa, Nigeria has quite a lot of high-rise buildings and it’s only South Africa that might be comparable. If you look at that and the number of well delivered projects in Nigeria, you will know that we are not doing too badly.
The only thing I’ve noticed is that we probably don’t even have enough hands for the potential within the industry and that is why Kresta Laurel has just set up a training school to bridge that gap.
For us, we believe this is part of our contribution to the industry. We are doing the training free and by the time you come out, you become employable within the industry.
What are some of the factors hampering the local production of elevators in Nigeria?
I would say there are two major factors but the first one is that our steel industry has been a mess. We’ve not been able to get it right. There is no way you can do production without steel.
Secondly, it is the issue of power. The cost of powering production lines for engineering with diesel is crazy. But I think the government is now looking into that and I’m hoping they will be able to take care of the problem as soon as possible.
The third factor, which you must not forget is the issue of finance. How do you go into a bank to take very high loans to finance production? It’s not possible.
The best you are able to achieve here in Nigeria at the moment is the assembly of elevators. In terms of regulation, how effective is this to ensure high level of standard and quality in the industry?
Well, I would say that there are rules and standards, but are they enforced? That’s where the problem is. By the time you bring in a product that does not meet the requirements and it is allowed at the point of entry, it’s delivered to your site, and you finish installing, how many times are you going to go back and check? The problem is that these regulations are in place but nobody bothers to check. There is no deterrent.
Do you think Nigerian universities are doing enough to equip engineering students with the right type of skill sets that would allow them compete with their counterparts in other parts of the world?
Let me say that Nigerian engineers are not doing badly. There is a misconception about the quality of engineers we are producing. They come into our company nowadays and we see that quite a lot of them are very good. But the real issue is that the world is moving into a talent-driven approach than theory-driven, which means that there should be higher cooperation between industries and engineering schools. It shouldn’t be limited to students on industrial training alone.
At every point in time, we have had at least 10 IT students here but I cannot remember in the last five years when any official from their schools came to check on their progress. I cannot remember when officials of the Industrial Training Fund, which is supposed to monitor them, has ever come in to say let us see what you are giving these guys. So, this is a huge problem that we need to look at.
There has to be higher cooperation between industries and schools and this is something that personally we are working with the Faculty of Engineering at the University of Lagos to see how we can address. It is going to be mutually beneficial.
In China, 99.9 per cent of their research and development is done by the universities. They concentrate and do research and come up with new innovations and use the industries to test them. So, if there is a product that the industries are working on, they collaborate with the universities to achieve a greater result. The same goes for Finland. So, basically that is the future I want to see, a better working relationship between industries and institutions of higher learning.
If given the right type of support, how many jobs do you see the elevator industry in Nigeria creating annually?
If policies are addressed and bank loans come in, power is regular and the raw material is available, I can tell you that the industry has the potential to create about 50,000 direct and indirect jobs annually. If everything is working well, we would see a lot more growth in the industry which would translate to thousands of jobs annually.
What future do you see for the elevator industry in Nigeria in the coming years?
The future I see is continuous increase in local content. We might not be at a stage that we can say that this is a Nigerian-made elevator but we can be at the stage that we can say that 60 to 70 per cent of the materials used in this are made in Nigeria. But I can see more and more local content in the coming years and I can assure you that Kresta Laurel will continue to play a leadership role in getting those things done. – Culled from Punch.