We overpay VAT to the government as manufacturers — MD, Fundamental Technology Limited

Tijanee AbdulGafaar Adeneye, a Fellow of Institute of Chartered Chemists, is the current Chairman, Chemicals Society of Nigeria, Lagos chapter, he is also the MD/CEO, Fundamental Technology Limited, the producers of Funda Paints: a rising on-demand coating Company with diverse subsidiaries. He bagged a Master in Business Administration from Ladoke Akintola University, Final Diploma in Chemistry and Biochemistry upstream from the University of Lagos and also studied Science Laboratory Technology in the now Moshood Abiola Polytechnic. In this interview with Omolola Adeyanju, he enumerates how the coating industry is travailing under the current economic downturn and ever increasing duty payment of manufacturers.

What conceptualised the name Funda?

When I joined the paint industry in 1993 at International Paint for West Africa (IPWA), we were taught the fundamental principles of paint making. Even though as at then I never knew I would become a paint manufacturer. I noted that whatever you want to do in life there are fundamental principles and steps to be followed, so all that gave me inspiration towards the name FUNDA when I decided to establish this firm.

What can you cite as the major challenges facing the coating Industry?

There are many but to cite a few I will highlight free entry as one. Many untrained people have delved into the production of paints. A professional colleague and I were discussing it recently and she said the paint industry has failed. I opposed that and gave tangible reasons why she shouldn’t generalize his submission.

This submission was based on her witness of low quality products used on a majority of projects round the country. A person who buys a low quality paint and hasn’t gotten hold of the quality paints manufactured in Nigeria will also generalise. Fine, people opt for cheaper products but they don’t bother about the quality and this challenge is birthed from the trend of free entry and no control. Hence, anyone can go on-site, mix anything of his choice and get a poor quality but cheap paint for public use.

We also cannot overemphasise economic challenges such as the high cost of materials, energy, duties on manufacturers, to name a few.

How have government policies affected your firm and which of the policies has affected this industry the most?

Despite our business falling under the small scale category, government doesn’t consider the levels of businesses. If you want businesses to grow, there ought to be certain opportunities or things that should be put under consideration for small businesses to leverage on for growth such as standards and waivers in some areas of operations.

Policies affect all manufacturers at different levels.  The policy on VAT is one that should be looked into. If you buy materials you pay VAT, you calculate your own VAT on your sales and try to pay the net value. Presently, the FIRS is charging you to get the VAT of other companies (suppliers) before they can deduct it from your VAT. It means where the suppliers have failed to remit the deducted VAT you will be responsible to effect another payment to the government again. Also if you don’t pay at the stipulated date you will have to pay a fine of N50,000 a day after the due date and subsequent monthly charges of N25,000 if you default payments.

Therefore, for small businesses that are trying to be patriotic, we realise that we are deep into our capital gain to pay the government while the government is being overpayed. This is one of the things the government needs to look into.

 Regarding raw materials sourcing, last year the Raw Materials Research and Development Council (RMRDC) revealed that they sourced out the production of carbonate in Nigeria and we understand that the five basic elements for producing paints are imported. How do you think we can improve in research and sourcing of raw materials for the industry in Nigeria?

Yes, the five major components of paint are not produced in Nigeria, only calcium carbonate is produced in the country and the volume of it is still very limited that it cannot meet the demand of the market hitherto, a bulk of calcium carbonate is yet being imported.

In respect to importation, since we now have a refinery in Nigeria for our crude oil, if the refinery is not centered on fuel production alone, it can be used to transform other components of the crude oil into materials for industrial use. Solvent, for instance, also can be gotten from crude oil.

Your opinion on Nigeria paint Industry in the Africa Continental Free Trade Area (ACFTA)?

Many paint manufacturers still buy materials from third parties, I mean the suppliers, so the suppliers get benefits more than the manufacturers. We can only start competing well enough in ACFTA when the issue of importation and other factors earlier mentioned are resolved.

What are your expectations for the Paint Manufacturers AGM this year?

As it has always been; Training of members, presentation of reports and probably election of new excos. It is believed that a new concept that will project paint manufacturers will be discussed during the AGM.

What solutions would you proffer in light of present economic downturn, as it concerns the paint industry? 

We just had a change of government, hence, we can’t be too sure of what it will yield. Nigeria’s economy is driven by a global economy so in one way or the other, the effect will still surface. We are waiting on the newly appointed ministers. Let’s see how their policies and strategies will incite  change, and I trust that the Manufacturers Association of Nigeria will not stop giving their opinions on the way forward because we are more powerful collectively.

What is your advice to start-ups in the paint industry and people who have plans to venture into the coating business?

Whatever business you wish to venture into, ensure you get a vast knowledge of it first. The problem we have today is that majority of the people going into businesses today do not want to go through processes. In life there are processes, even God created processes for us before we came into this world and while in it. If you decide to boycott the processes you may likely cause havoc. If you come to learn from us, you will have to be acquainted with the theory and practicals, which is of course, not a day’s job.

What is your scope towards an expansion of Funda coatings? 

We are using our technical ability to woo clients. We have been awarded big contracts, we are producing for clients who are contractors to GTbank, Airtel. Our paint was used for the majority of LASUTH since 2019, and is still standing. This is the same for many other big brands we have worked with. Since we give quality, we are in for a lift in this industry.

Paint manufacturers versus wallpaper manufacturers. Is the wallpaper a discouragement to the paint industry? Will wallpapers phase out painting with time?

It is a business idea and a good innovation. Yes, it has, in a sense, taken a market share of paints. However, wallpapers can’t be used solely. Even for interiors there are so many places that wallpapers can’t be used, only paints. That is why as manufacturers, we don’t base our production on decorative products alone, we have industrial paints, marine and every other aspects of paints.

I believe that as a technical person you must be diversified in your innovations so we can reach any sector with our products. Notwithstanding, the wallpapers and aluminum bonds are taking the market share of the paint industry, the PVC, as well as tiles also have their share from the paint market.

We in the paint industry should not be complacent on the level we are now, we have to keep innovating. Most people use wallpapers to satisfy an urge for a combined pattern of decoration, don’t forget that people will also opt for that which will last longer and the crackle effect paint can fit into this to satisfy our clients perfectly, it can be used as against using the wallpaper. Some people also prefer the paint called stucco which is like a glassy paint with colourful design. So all these are birthed from creative innovations to best fit into our clients desire

On manufacturing viz-a-viz the application of Paints?

The application of paint is also a technical skill that needs to be learnt. As an applicator, you may not necessarily know the chemicals or the means of producing a paint but you must learn the skills as well as surface preparation technique so you don’t make a mess of a good product. For instance, when you want to coat a room with a switch box, you need to tape the box, if you are painting a room with frames you must tape the edges of the frame to give a good finish and so many other things to be learnt when applying paints.

What is your word to the government in respect to the paint industry?

People should be discouraged from importing finished paints into the country and encouraged to patronise our local brands. We keep complaining about increase in dollar but thatis part of the challenges that we are placing on our naira.

If we don’t patronise what we have, no one will patronise it for us. If the government wants to paint any of their structures or projects and they insist on using Nigeria made paints, it will also encourage the local manufacturers.

I remember when I joined the paint industry, PTF wanted to paint their projects and they insisted and clearly specified that they must use Nigeria made paints and such was used all through. Today, however, many brands when they have a project, they tell us they are importing the paint which will be used.

In addition, the duties on materials too should be reduced so that our paints can be affordable, not for paint manufacturers alone but for all manufacturers. At least they do waivers for some imports of raw materials. So if not total waivers, we can have a reduction of duties.