“SUSTAINING MANUFACTURING IN AFRICA: LOOKING INWARDS”. - A thought provoking article to improve Made In Nigeria products...
By Kemi Mobuse - Monday, April 02, 2018
The above titled is a thought provoking article written by talented Entrepreneur and Creative Director of African things, a brand known specially for its creation of African inspired products like backpacks,laptop bags, card holders,clutch purses among others.
The article is about her experience and observations in her Five Years of being in the entrepreneurship world, the challenges she encountered, the solutions she found to cope and the Solutions she hopes will come to make entrepreneurship appealing and easy for the masses and owners of SMES alike.....read her well articulated points below....
Who I am?
Good day, my name is Tosin Lawson. I am the Creative director and Founder of African Things; a company I started to showcase the creative beauty from within Africa. I have been in business since 2013 and I am here to share my experience and my take on what I believe would help SMEs grow faster.
I studied Product design and manufacturing in University of Nottingham in the UK and I am now doing my MBA at Lagos Business School in hope of developing myself and taking my company to new heights.
African Things produces African inspired items such as backpacks, laptop bags and other accessories using Ankara and other African materials which we sell through stores across Nigeria as well as to corporate organisation as gift packs and conference bags. We partner with various producers across Lagos to ensure we have the best quality and can produce large quantities for the store or client we are supply to.
What we have been able to accomplish
I currently have 3 amazing staff working with me, 2 full-time and one part-time accountant to manage our books.We were able to achieve over N10, 000,000 in revenue last year and are working towards doubling that number this year.
In our 5th year, we are proud to say that we currently supply to over 30 stores including Hubmart, Game, Spar, Mega Plaza, Terra Kulture and online on Jumia and Konga. We have also designed and produced corporate gift items for companies including Google, African Capital Alliance, Chartered Institute of Bankers of Nigeria. I have been fortunate to be selected among the top 1,000 entrepreneurs across Africa and received a grant from the Tony Elumelu Foundation in 2015 and just last year, received a loan from Lagos State Empowerment Trust fund (LSETF).
The challenges we have faced in getting to where we are
We have been very fortunate, but just like any other business we have gone through ups and downs. Internally, we had to deal with high turnover rate of staff. As a small company, we do not have the money to pay for highly qualified staff and when we were able to get skilled graduates, they get experience and then moved on to other companies that could pay them more.
I also had to deal with quality control problems; we went through so many producers in hopes of finding the right partners who also had attention to detail and delivered quality on consistent bases. Even now we have to ensure that we put in quality control measures to ensure our producers never get comfortable with giving the bare minimum or expect us to ‘just manage it’.
Externally I still have challenges getting my target market to be aware of the company, building up brand awareness in the mist of giants like HP, Targus and Compact who also sell backpacks and laptop bags has been a difficult. The real challenge is getting people to trust the brand and changing their negative image that Made in Nigeria products are of less quality.
The increased exchange rate also has a huge impact on the business as even though most of my products are made in Nigeria, I had to increase my prices, as 100% of my raw materials are all imported and increased in cost. I had a hard time explaining this to the stores I supplied as they felt I was taking advantage of the situation at the time.
Managing our accounts and inventory has and still is one of our biggest internal problems today. In the beginning days of the company, we did not have a company account, I was using my personal account and spending the money as quickly as it came in. I did not have any accounting system to know how much I was spending and if I was making profit or not. I still remember the ‘eureka’ moment when I realized that I was not accounting for my travel expenses and I was only focusing on the production cost and had failed to look at all the other additional cost that went into running the business such as transport, mobile credit, marketing and more. I remember feeling like I made money but did not know where it all went.
There is now an accounting system in place that we use to manage our finances and also an inventory management system to ensure that all our products are properly documented and we know where every product goes to and how much money we are spending. It is not perfect but with the aid of my training from LBS, I am getting more knowledge on what we should be doing.
What I had to help me grow
Honestly in the beginning stages of my business what I needed the most was knowledge not necessarily funds but information. I am so grateful for my mother who was and is my mentor. With her over 20 year experience in business, she was able to guide me and give me solid advice as to what my next steps should be to develop my business.
Another helpful aid was the SBA (small business administration) website, a website developed by the American government to develop small business. On the site you can get free training on how to develop your business plan put in basic accounting procedures and develop marketing strategies to reach your target market. I wish Nigeria had such a website that also has additional information about company registration, Taxes, VAT and all the information I needed to know when starting out. The FATE foundation is now building such a website but having all the government information on setting up a business in Nigeria will be great and being able to complete all the forms from one website will make getting business started in Nigeria so much easier. I was very reactive and not proactive in a lot of situation just because I did not have the right information when starting out.
What we needed (what we wished we had)
I wish there had been one form for all my legal needs, why doesn’t my TIN number come with my registration number or my PAYE information. I wish there was also a fixed amount I could pay for the first few years of business as tax so I could accurately predict how much money I needed to have at the end of the month to be able to pay my taxes.
I wonder why I need to pay VAT when I supply stores who would charge VAT again to their customers. As a start up we have so little cash and for a long time it is very tempting not to do the right thing and pay your taxes because you are trying to save the little cash you have to run your daily operations.
And most times when you start paying your taxes, you put yourself on the tax collectors radar and instead of him encouraging you for paying your taxes, you feel like you are being penalized for doing the right thing. Before you know it people show up saying you have not paid this or that in tax.
I remember when I was working for another company and tax people came and ask them to pay for TV and radio taxes even though the company did not use either of those things to run their business. The company had to pay it because they did not want the business to be disrupted.
What we need now, what will help grow the company
A resource website where all the information for running a business should be available with accurate information about all the things we need so no one can come an hustle us because we don’t know any better.
On this website can include information about funding opportunities, a database of SMEs where we can partner and build each other up. We can market our businesses to each other and support one another. An Adire producer can supply to a bag maker, a bag maker to a wedding planner as gift items and so on.
According to research done by Oxford Business group, MSMES (Micro, Small & Medium Enterprises) make up 48.5% of Nigeria’s GDP but make up 5% of the loans portfolio from traditional banks. This shows that if more investment is put into MSMEs we can grow our GDP and reduce the wealth gap in the economy. I suggest that, just as there are Micro finance banks that cater to the low income bracket, there should be banks that cater to SMEs and give various types of loans with affordable interest rates.With banks that are specifically dedicated to giving loans to SMEs they can be given lower prime lending rates which for traditional banks are currently around 17%. That is, banks give loans to companies that they feel are low risk 17% interest rate, SMEs which have significantly higher risk then get interest rates of around 25% or higher. Develop countries like the United States and Canada have prime rates of 4.75% and 3.45% respectively.
Even though corporations like Bank of Industry have an interest rate of 5%, it takes an arm and a leg just to qualify for the loan. I have gone to BOI several times to request for a loan and every time they have said I needed to use the money given to buy machinery which I don’t need, what I need is capital to run my operations. The point of the BOI should be to develop companies not to spend more money on imports.
The focus should not be on providing funds but rather what the funds will be used for. The things we need the capital for should be provided or subsidized. SMEs centres (incubators) just like Silicon Valley should be created; a place where small companies can come and get access to information, internet, business advice, administration services like printers all for free. This is possible and it can be funded by companies looking to market to SMEs,companies that offer tax services, banks looking for business to open bank accounts, printing companies looking for new jobs, advertising firms with SMEs packages, telecoms companies looking to sell CUG lines, shipping agents like DHL and much more. In this one area they will have their target market all in one place.
In this business hub, there can be all you need to run your business available at a small fee. There can be machining equipments like sewing machines, printing presses and more available for rent. Any of the numerous empty office buildings in VI can be the place.
African Things is currently working with a particular producer who buys the machines but all her workers are contract staff. They only come in when a production is needed to be done. The workers can also come in at a fee to work on their own projects and with this arrangement they do not need cash to buy their own machines. I can just imagine if this company also had trucks that you could rent for a day to do deliveries, part time staff to do your accounting, social media marketing personal, and more.
I also believe that NYSC students should also be posted to SMEs that are in the fields they studied. The graduate will be able to develop their experiences in their particular field and also add value to the organisation.
Finally, Government should make export of made in Nigeria goods easier; government should create access to markets with other countries as trade partners. I have gotten orders from South Africa, Kenya and America but because of the shipping cost my prices were too high. The cost of shipping ended up costing more than the bags they were trying to buy.
These are all ideas I believe can all be implemented within a year and help truly showcase the best of Nigeria to the world.
Good day, my name is Tosin Lawson. I am the Creative director and Founder of African Things; a company I started to showcase the creative beauty from within Africa. I have been in business since 2013 and I am here to share my experience and my take on what I believe would help SMEs grow faster.
I studied Product design and manufacturing in University of Nottingham in the UK and I am now doing my MBA at Lagos Business School in hope of developing myself and taking my company to new heights.
African Things produces African inspired items such as backpacks, laptop bags and other accessories using Ankara and other African materials which we sell through stores across Nigeria as well as to corporate organisation as gift packs and conference bags. We partner with various producers across Lagos to ensure we have the best quality and can produce large quantities for the store or client we are supply to.
What we have been able to accomplish
I currently have 3 amazing staff working with me, 2 full-time and one part-time accountant to manage our books.We were able to achieve over N10, 000,000 in revenue last year and are working towards doubling that number this year.
In our 5th year, we are proud to say that we currently supply to over 30 stores including Hubmart, Game, Spar, Mega Plaza, Terra Kulture and online on Jumia and Konga. We have also designed and produced corporate gift items for companies including Google, African Capital Alliance, Chartered Institute of Bankers of Nigeria. I have been fortunate to be selected among the top 1,000 entrepreneurs across Africa and received a grant from the Tony Elumelu Foundation in 2015 and just last year, received a loan from Lagos State Empowerment Trust fund (LSETF).
The challenges we have faced in getting to where we are
We have been very fortunate, but just like any other business we have gone through ups and downs. Internally, we had to deal with high turnover rate of staff. As a small company, we do not have the money to pay for highly qualified staff and when we were able to get skilled graduates, they get experience and then moved on to other companies that could pay them more.
I also had to deal with quality control problems; we went through so many producers in hopes of finding the right partners who also had attention to detail and delivered quality on consistent bases. Even now we have to ensure that we put in quality control measures to ensure our producers never get comfortable with giving the bare minimum or expect us to ‘just manage it’.
Externally I still have challenges getting my target market to be aware of the company, building up brand awareness in the mist of giants like HP, Targus and Compact who also sell backpacks and laptop bags has been a difficult. The real challenge is getting people to trust the brand and changing their negative image that Made in Nigeria products are of less quality.
The increased exchange rate also has a huge impact on the business as even though most of my products are made in Nigeria, I had to increase my prices, as 100% of my raw materials are all imported and increased in cost. I had a hard time explaining this to the stores I supplied as they felt I was taking advantage of the situation at the time.
Managing our accounts and inventory has and still is one of our biggest internal problems today. In the beginning days of the company, we did not have a company account, I was using my personal account and spending the money as quickly as it came in. I did not have any accounting system to know how much I was spending and if I was making profit or not. I still remember the ‘eureka’ moment when I realized that I was not accounting for my travel expenses and I was only focusing on the production cost and had failed to look at all the other additional cost that went into running the business such as transport, mobile credit, marketing and more. I remember feeling like I made money but did not know where it all went.
There is now an accounting system in place that we use to manage our finances and also an inventory management system to ensure that all our products are properly documented and we know where every product goes to and how much money we are spending. It is not perfect but with the aid of my training from LBS, I am getting more knowledge on what we should be doing.
What I had to help me grow
Honestly in the beginning stages of my business what I needed the most was knowledge not necessarily funds but information. I am so grateful for my mother who was and is my mentor. With her over 20 year experience in business, she was able to guide me and give me solid advice as to what my next steps should be to develop my business.
Another helpful aid was the SBA (small business administration) website, a website developed by the American government to develop small business. On the site you can get free training on how to develop your business plan put in basic accounting procedures and develop marketing strategies to reach your target market. I wish Nigeria had such a website that also has additional information about company registration, Taxes, VAT and all the information I needed to know when starting out. The FATE foundation is now building such a website but having all the government information on setting up a business in Nigeria will be great and being able to complete all the forms from one website will make getting business started in Nigeria so much easier. I was very reactive and not proactive in a lot of situation just because I did not have the right information when starting out.
What we needed (what we wished we had)
I wish there had been one form for all my legal needs, why doesn’t my TIN number come with my registration number or my PAYE information. I wish there was also a fixed amount I could pay for the first few years of business as tax so I could accurately predict how much money I needed to have at the end of the month to be able to pay my taxes.
I wonder why I need to pay VAT when I supply stores who would charge VAT again to their customers. As a start up we have so little cash and for a long time it is very tempting not to do the right thing and pay your taxes because you are trying to save the little cash you have to run your daily operations.
And most times when you start paying your taxes, you put yourself on the tax collectors radar and instead of him encouraging you for paying your taxes, you feel like you are being penalized for doing the right thing. Before you know it people show up saying you have not paid this or that in tax.
I remember when I was working for another company and tax people came and ask them to pay for TV and radio taxes even though the company did not use either of those things to run their business. The company had to pay it because they did not want the business to be disrupted.
What we need now, what will help grow the company
A resource website where all the information for running a business should be available with accurate information about all the things we need so no one can come an hustle us because we don’t know any better.
On this website can include information about funding opportunities, a database of SMEs where we can partner and build each other up. We can market our businesses to each other and support one another. An Adire producer can supply to a bag maker, a bag maker to a wedding planner as gift items and so on.
According to research done by Oxford Business group, MSMES (Micro, Small & Medium Enterprises) make up 48.5% of Nigeria’s GDP but make up 5% of the loans portfolio from traditional banks. This shows that if more investment is put into MSMEs we can grow our GDP and reduce the wealth gap in the economy. I suggest that, just as there are Micro finance banks that cater to the low income bracket, there should be banks that cater to SMEs and give various types of loans with affordable interest rates.With banks that are specifically dedicated to giving loans to SMEs they can be given lower prime lending rates which for traditional banks are currently around 17%. That is, banks give loans to companies that they feel are low risk 17% interest rate, SMEs which have significantly higher risk then get interest rates of around 25% or higher. Develop countries like the United States and Canada have prime rates of 4.75% and 3.45% respectively.
Even though corporations like Bank of Industry have an interest rate of 5%, it takes an arm and a leg just to qualify for the loan. I have gone to BOI several times to request for a loan and every time they have said I needed to use the money given to buy machinery which I don’t need, what I need is capital to run my operations. The point of the BOI should be to develop companies not to spend more money on imports.
The focus should not be on providing funds but rather what the funds will be used for. The things we need the capital for should be provided or subsidized. SMEs centres (incubators) just like Silicon Valley should be created; a place where small companies can come and get access to information, internet, business advice, administration services like printers all for free. This is possible and it can be funded by companies looking to market to SMEs,companies that offer tax services, banks looking for business to open bank accounts, printing companies looking for new jobs, advertising firms with SMEs packages, telecoms companies looking to sell CUG lines, shipping agents like DHL and much more. In this one area they will have their target market all in one place.
In this business hub, there can be all you need to run your business available at a small fee. There can be machining equipments like sewing machines, printing presses and more available for rent. Any of the numerous empty office buildings in VI can be the place.
African Things is currently working with a particular producer who buys the machines but all her workers are contract staff. They only come in when a production is needed to be done. The workers can also come in at a fee to work on their own projects and with this arrangement they do not need cash to buy their own machines. I can just imagine if this company also had trucks that you could rent for a day to do deliveries, part time staff to do your accounting, social media marketing personal, and more.
I also believe that NYSC students should also be posted to SMEs that are in the fields they studied. The graduate will be able to develop their experiences in their particular field and also add value to the organisation.
Finally, Government should make export of made in Nigeria goods easier; government should create access to markets with other countries as trade partners. I have gotten orders from South Africa, Kenya and America but because of the shipping cost my prices were too high. The cost of shipping ended up costing more than the bags they were trying to buy.
These are all ideas I believe can all be implemented within a year and help truly showcase the best of Nigeria to the world.
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