Fagun: Manufacturing Sector Pivotal to Nigeria’s Economic Growth

The tough operating environment in Nigeria, has led to many manufacturing firms struggling to survive while some, including multinationals have relocated or closed shops. In this engaging interview,  the first female Group Managing Director and Chief Executive Officer, of Berger Paints Nigeria Plc, Mrs Alaba Fagun identifies some pain points of paint manufacturers and proffers solutions. Alaba also explains how Berger Paints has continued to sustain its leadership position in the paints manufacturing  sector. 

How would you assess the state of the manufacturing industry, especially the painting and allied sectors in Nigeria today, when compared with other sectors of the economy?

The manufacturing industry is pivotal to the growth of the Nigerian economy. Reports have it that as at Q4 2023, the manufacturing industry’s contribution to Nigeria’s GDP was about 8.23% This underscores the sector’s importance in driving economic diversification and reducing reliance on oil revenues. The painting and allied sectors,  being a subset of manufacturing, plays a critical role in this narrative. It supports various industries, including construction, automotive, and marine, by providing essential products that enhance the durability and aesthetic appeal of infrastructure and goods. 

However, the sector faces challenges such as inadequate infrastructure, high cost of power supply, and regulatory hurdles. Investment in technology and skills development is crucial to modernize the sector and improve productivity. Collaboration with educational institutions for research and development can foster innovation in the sector. Addressing these issues is crucial for harnessing the full potential of the manufacturing industry and bolstering the non-oil sector’s contribution to GDP.

How is the industry faring in the face of several economic reforms such as forex unification, oil price deregulation, tax, etc.?

The current macro-economic restructuring has indeed been challenging. forex unification, for instance, while aimed at stabilizing the economy, has led to increased costs for raw materials and production inputs, as many are imported. Oil price deregulation has similarly driven up transportation and operational costs due to higher fuel prices. Tax reforms have added another layer of complexity, requiring companies to navigate new compliance landscapes. Companies are exploring alternative energy sources to mitigate the impact of oil price deregulation on operational costs. Tax incentives for manufacturers could help offset some of the financial burdens caused by economic reforms. Enhanced government dialogue with industry stakeholders can ensure that policies are well-aligned with industry needs. 

Adoption of lean manufacturing techniques can help companies reduce waste and improve efficiency. Organizations that will thrive in this environment must be creative, dynamic in problem-solving, and adept at adapting to these changes. This might involve adopting cost-saving technologies, optimizing supply chains, and exploring local sourcing options to mitigate forex pressures.

What are the peculiar challenges confronting the sector, and what do you think the government should do to address them?

The sector faces significant challenges, including the forex crisis and escalating power costs, which have greatly increased production expenses. Rising inflation and high interest rates further strain consumer purchasing power, impacting sales and profitability. 

The government can play a vital role by implementing policies that stabilize the forex market and reduce power costs. Infrastructure development, particularly in transportation and logistics, is essential to reduce production and distribution costs. Additionally, investment in infrastructure, such as power generation and transportation networks, would alleviate some of the operational burdens on manufacturers. Public-private partnerships can drive investment in critical infrastructure and technology. Simplifying regulatory processes can attract more foreign direct investment into the sector. The National Assembly’s support and initiatives like the Bank of Industry’s manufacturing sector fund are positive steps, but more sustained efforts are needed to create a conducive environment for growth.

As a Member of NECA, how would you react to the issue of minimum wage being considered by the Federal and state governments and its impact on businesses?

The issue of minimum wage is multifaceted. On one hand, higher wages can improve the standard of living for workers and stimulate economic activity through increased consumer spending. On the other hand, it poses a challenge for businesses, especially small and medium enterprises, which may struggle with increased labour  costs. It’s crucial to find a balance that ensures fair compensation for workers while maintaining the financial health of businesses. A tiered minimum wage system could be considered, where wages are adjusted based on the size and profitability of businesses. Implementing productivity-linked wage systems could incentivize higher performance and offset increased labor costs. Government support for SMEs through subsidies or tax breaks could help them manage higher wage bills. Engaging in regular consultations with businesses to assess the impact of wage policies can lead to more balanced decisions.

How has Berger Paints been confronting substandard and adulteration of paints in the country?

Berger Paints combats substandard and adulterated products through various initiatives. Our Colour World and Colour Mart centers offer genuine products directly to consumers, ensuring they receive quality paints. Additionally, our online sales platform and authorized dealers provide secure purchasing options. We have incorporated distinctive packaging features and advanced technology to help customers identify authentic products. Continuous consumer education campaigns about the dangers of using substandard paints can increase awareness and demand for genuine products. Collaborating with regulatory bodies to ensure strict enforcement of quality standards can deter counterfeit products. Implementing a traceability system for products can help in tracking and authenticating genuine products. These measures, combined with consumer education and robust distribution networks, have been effective in maintaining product integrity and customer trust.

How would you describe the role of the painting industry in national development?

The painting industry is a significant contributor to national development through job creation and economic contributions. Direct employment within the industry and indirect jobs through suppliers, distributors, and service providers generate livelihoods for many Nigerians. The industry also supports other sectors by providing essential products for construction, manufacturing, and infrastructure projects. 

Also, the painting industry contributes to urbanization and infrastructure development, enhancing the aesthetic and functional value of buildings. It supports the tourism industry by providing high-quality finishes for hotels, resorts, public spaces and in addition,plays a role in health and safety by producing paints that are environmentally friendly and safe for human health. It fosters entrepreneurship through a network of distributors and retailers who market and sell paint products.

Since you took over the management of Berger Paints as the Chief Executive Officer about two years ago, what are the key challenges that you have faced and how have you addressed them?

The initial phase of my tenure involved organizational restructuring to align with our strategic goals. This process was made smoother by the unwavering support of the Board, shareholders, and the dedicated Berger Paints workforce. Key challenges included navigating economic uncertainties and adapting to market changes. We addressed these by fostering a culture of continuous improvement, enhancing operational efficiencies, and strengthening our market presence through strategic initiatives. Strengthening corporate governance and risk management practices to navigate economic uncertainties was crucial. We also focused on enhancing stakeholder engagement to build stronger relationships with customers, suppliers, and investors. Expanding training and development programmes to upskill employees and prepare them for future challenges has been instrumental. The collaborative effort and resilience of our team have been key in overcoming these challenges and driving the company forward.

What informed your management’s decision to embark on rebranding and customer-centric strategies last year, and how has the initiative impacted the company?

Berger Paints has built a legacy over six decades, but we recognized the need to stay relevant to younger demographics. Our rebranding and customer-centric strategies were driven by the principle of “innovate or die.” By refreshing our brand image and focusing on customer experience, we aimed to connect with a broader audience and enhance our market appeal. The rebranding was also aimed at aligning our corporate identity with global best practices and trends. We leveraged digital marketing strategies to enhance our online presence and engage with customers more effectively. The initiative included revamping our customer service protocols to ensure a seamless and satisfactory customer experience. These initiatives have yielded positive results, as reflected in our improved financial performance and stronger customer engagement. Regular feedback and market analysis have confirmed that our efforts resonate well with the target demographics, positioning us for sustained growth.

Berger  Paints recorded growth in its fundamentals last year. How will the company sustain the trend, and what is the company doing to manage the economic vagaries to put it on the path of sustainable growth?

Despite the challenges, our commitment to delivering consistent value remains steadfast. We employ a blend of financial acumen, operational resilience, and strategic foresight to navigate economic uncertainties. While our key strategies remain trade secret

our focus on customer-centric values ensures that we meet and exceed customer expectations, fostering loyalty and driving repeat business. By maintaining a flexible and proactive approach, we are well-positioned to adapt to changing market conditions and sustain our growth trajectory.

Is the company looking inward to reduce the level of importation of inputs to manage its forex pressure?

Yes, we have established a cross-functional team that continuously reviews our sourcing options to identify opportunities for local procurement. By reducing dependency on imported inputs, we aim to mitigate forex pressures and enhance supply chain stability. Developing local suppliers and supporting them to meet our quality standards can enhance local sourcing. Investing in local raw material processing facilities can reduce reliance on imported inputs. Engaging with government agencies to advocate for policies that support local manufacturing is also part of our strategy. Exploring the use of alternative materials that are locally available and sustainable is another avenue we are pursuing.

What are the new things that customers of Berger Paints should be expecting between now and 2025?

Innovation is one of our core values, and customers can look forward to new product launches, enhanced service delivery, and innovative customer engagement methods. We are committed to leveraging technology to improve the customer experience, I would not want to let the cat out of the bag for now. You can follow our social media handles @bergerpaintsng on all platforms to get updated on how we would be making our customers experience their world in colour

What is Berger Paint’s plan for the regional market, especially for West African countries, to maximize the trade liberalization of the ECOWAS Group?

Berger Paints is strategically positioned to leverage the trade liberalization of the ECOWAS Group. We are exploring opportunities to establish regional offices and distribution centers, enhancing our market penetration and customer service. Forming strategic alliances with local businesses will facilitate market entry and growth. Participating in regional trade fairs and exhibitions will showcase our products and build brand awareness. Customizing products to meet the specific requirements and preferences of different West African markets is also a focus. These efforts are part of our broader strategy to expand our footprint not just in the West African region but the entire African market and capitalize on the benefits of trade liberalization. We are keenly following developments regarding African Continental Free Trade Area (AfCFTA) as we believe it would unify the African market.

Where do you situate Berger Paints in the next three to five years?

In the next three to five years, Berger Paints aims to solidify its position as the leading paint brand in Nigeria and expand its influence across Africa. We will continue to innovate and set industry benchmarks for quality and customer satisfaction. Our commitment to sustainability will see us adopting green manufacturing practices and promoting environmental stewardship. We plan to be at the forefront of digital transformation within the industry, leveraging technology to enhance all aspects of our operations. We will strengthen our corporate social responsibility initiatives, contributing to community development and social welfare. By maintaining a strong focus on professionalism, integrity, innovation, customer focus, and teamwork, we aim to remain synonymous with operational excellence and a beacon for sustainable development goals (SDGs).

 What are the factors that have helped you to place Berger Paints on the market leadership ladder in the industry?

Our market leadership is built on a foundation of core values: professionalism, integrity, innovation, customer focus, and teamwork. These values are embodied by our people, who are the cornerstone of our success. Our robust research and development capabilities enable us to innovate continuously and stay ahead of market trends. Strategic marketing and brand positioning have helped us build a strong and recognizable brand. Customer feedback and market research have been integral in shaping our product development and service delivery. Strong financial management and prudent resource allocation have ensured our stability and growth even in challenging times. By fostering a culture of continuous improvement and innovation, we have maintained our competitive edge and market leadership.