How FIIRO directors frustrate Nigerian SMEs
Date was January 27, 2015. Jon Kachikwu, chief executive officer of a small-scale food processing and export firm known as Jon Tudy Interbiz, addressed a letter to the director-general of the Federal Institute of Industrial Research, Oshodi (FIIRO), requesting the fabrication of groundnut frying and chaf removal machines, otherwise known as groundnut roaster and dehuller respectively. The letter was acknowledged on that same date by one Abraham C.O., a staff member of FIIRO.
It took FIIRO 17 days to reply this letter on February 13, 2015. The institute, through one of its directors, W.B. Asiru, sent a quotation to Jon Tudy Kachukwu. A document seen by BusinessDay showed the price of groundnut roaster (680kg/ hour) as N680, 000 and that of groundnut dehuller (800kg/hour) as N650, 000.
Kachikwu paid N770, 000 into FIIRO’s account as part payment for both machines on February 18, 2015, a document seen by BusinessDay showed.
The entrepreneur later completed the money to N950, 000, which, according to him, was acknowledged by FIIRO.
Till April 24 of that year, FIIRO did not supply the said machines to Kachikwu, prompting the entrepreneur to write to the agency.
A letter addressed to the director-general of FIIRO read: “With reference to the above subject matter which was dated February 13, 2015, we wish to remind you sir that the delivery date and installation of the machines have elapsed.
“As per your quotation, we were requested to make a 70 percent down payment and 20 percent after four weeks, balance 10 percent after installation and testing. On our part we made the mandatory 70 percent down payment, after four weeks, we contacted the relevant department in order to make additional payment and we were asked to hold on. It is over eight weeks and our machines are yet to be delivered.
“This delay has messed up our projection for the year. Our workers are redundant and salaries are not being paid. While we are still waiting for your organisation to sort things out, we would suggest you allow us to make use of your machines in order to cushion the effect of this unfortunate delay.”
The institute did not make any machine available to Kachikwu as requested.
Due to FIIRO’s inability to produce the two machines paid for, Kachikwu temporarily requested a contract with the government agency whereby it could dry groundnuts on his behalf pending when the machines would be ready.
Kachikwu requested that FIIRO dry between five and 10 tonnes of groundnut within the next 30 days.
“But they could not deliver on this,” Kachikwu told BusinessDay.
In 2016, FIIRO supplied the two said machines to Kachikwu, but they were faulty and could neither roast nor dehull groundnuts.
Kachikwu addressed a letter to Dele Oyeku, director of extension and linkages at FIIRO, complaining that the machines fabricated by the agency were not working. This letter was acknowledged by one Omolayo J.O, a staff member of FIIRO, on March 17, 2017.
Kachikwu wrote another letter the same day indicating that the two machines had been returned. The same Omolayo J.O acknowledged the return of the faulty machines in the said letter.
Due to, once again, FIIRO’s inability to supply functional machines 32 months after, Kachikwu engaged lawyers at Coronet Legal, who demanded the immediate supply of the machines.
A letter written by the lawyers to FIIRO revealed that the institute conducted two tests on the two machines returned by Kachikwu but both failed.
“Our client has suffered great loss and untold hardship due to the delay as it had secured a loan facility to pay for the machines with running interest and yet got no value or its money owing to the unwarranted delay by your establishment.
“We therefore demand an immediate supply of the said machines which must be functional to 100 percent capacity,” the letter, signed by Sophina Ozougwu, a lawyer, read.
The lawyers threatened to take legal action against the institute, but all their warnings fell on deaf ears, it was gathered.
After pressing for his money from the institute, Gloria Elemo, director-general of the institute, sent contradictory text messages to Kachikwu.
The message sent by Elemo read: “Good evening sir. The institute does not have funds with respect to the situation in the country. We are not even able to meet our obligations. It is unfortunate that we cannot meet your demand right now.”
The message continued: “More so, you did not channel your fabrication directly through the institute. You worked with a staff on private basis. There was no record of the transaction in the institute.”
BusinessDay called the phone number of Gloria Elemo many times but the calls were not picked. Text messages were sent to her phone number but she did not reply.
This correspondent visited W.B Asiru, the director at the centre of the whole transaction, whom the director-general said handled the transaction on private basis.
Our conversation with Asiru took place at Frontline Guest House, located opposite FIIRO office at Oshodi, Lagos.
When asked whether the transaction was done on private basis, Asiru said: “The transaction was done by me, and everything went well. I am surprised that the DG (Elemo) could say that it was not done through the institute. What happened was that they asked me to hands off at some point, that I am not in charge of that. If the DG said that, I am really surprised.”
Asiru acknowledged that Kachikwu made the payments needed but the machines were not supplied to him.
BusinessDay contacted Dele Oyekun, who took over the transaction from Asiru.
“I am aware of the whole thing,” Oyekun said.
“At the end of the day, the DG asked me to take charge. At a point, we eventually produced the equipment. During installation, they were little errors. We said the head of engineering should work on them. They have not finished working on them. I know there was a time Kachikwu wrote to the minister, but I told them to fix it.”
Analysts wonder why a government agency, which should key into government’s ease of doing business efforts, seems to be sabotaging it.
“What baffles me is that what you just told me happened when Nigeria was desperately in need of foreign exchange. Kachikwu, being a reputable exporter to the United States, could have exported packaged groundnuts and repatriated dollars into the economy,” an analyst told BusinessDay.
Another small-scale food processor complained to BusinessDay that when she applied for a fruit juice processing machine at FIIRO, it took the institute over one month to reply her.
“They later could not even produce the machine I requested. They gave me a quotation running into almost N2 million, but when I was ready, they became reluctant. This was an institute claiming to fabricate local machines.”
Nigerian government recently instituted reforms to ease the harsh business environment in Nigeria, which are mostly man-made.
“For us, it is more important that we are able to create an environment where small businesses and big businesses and everyone is able to do business effectively in this environment and to do so with ease. And I think that that is the target we have set for ourselves; that the time must come, a day must come that anyone who comes into this country will say ‘I was able to do business easily and effectively’ and local businesses can confirm that it’s just a breeze to do business in Nigeria and I think that we can really achieve that. A lot of it has to do with our bureaucracy and the way that the bureaucracy works,” Yemi Osinbajo, vice president, said at the Presidential Enabling Business Environment Council (PEBEC) Impact Awards ceremony held in Abuja last December.
“It is important we change our orientation in this country and begin to support businesses. Businesses are suffering and government agencies do not need to worsen the challenges. Government should be an enabler and this must start with all government agencies and parastals,” Ike Ibeabuchi, chief executive at MD Services Limited, said.
ODINAKA ANUDU