The border closure by Federal Government is gradually affecting small and medium businesses in Nigeria. The latest to speak out against the closure is the co-founder of So Fresh, Olagoke Balogun, who said the closure had resulted in loss of revenue for the company due to unavailability of critical raw materials.
Balogun said the border closure was beginning to have a ripple effect on other sectors or markets that have nothing to do with rice importation or banned items. The borders were shut to tackle rice smuggling into the country.
Although So Fresh sources for some raw materials within Nigeria, the country is unable to provide all the raw materials needed to produce the menu or orders So Fresh caters to every day. So Fresh offers its customers Salads, Parfait, Juice and Smoothies through its nine outlets within Lagos and Abuja.
This is one of the reasons the company depends on raw materials imported from Cotonou, Benin, where it sources for specific kinds of pineapples and green apples. But since the closure of the border, business hasn’t been the same, as suppliers continue to call to report unavailability of these fruits.
Not a wise decision
Speaking to Nairametrics during an interview, Balogun said the decision to close the border wasn’t properly thought-through by the administration of President Buhari.
“It is affecting. There was no pineapple in the market. There’s a specific kind of pineapple we use that comes from cotonou. We got a phone call from some of our suppliers that there’s no pineapple available.”
He added that some weeks ago, “there was scarcity of green apple. It also comes in through the cotonou border. It’s a big challenge for businesses like ours because some of those produce come in from cotonou.
“It (border closure) has implications. Sometimes it looks as if policies or action from government are not well thought-out. Your focus was on rice but there are so many things that come in through those borders and it has to be a holistic view of what impact it will have on every sector.”
Border closure to affect pricing
He said to offset this cost burden, prices would be affected. “It definitely will. We use coconut for some of our products, and one of our suppliers called us last week (three weeks ago) that they had not been able to bring in coconut.”
It’s a lose/lose situation
Balogun said the negative impact of the border closure on businesses would affect both the businesses and the government’s revenues.
“So it results to two things. We are not able to sell those products, that’s lost revenue for the company and lost revenue for the economy as well. And we might need to look for other sources which becomes expensive.
“And so, sometimes, some of these policies that are not well-thought-out holistically end up even increasing the cost of food and other costs of goods and services within the economy.”
Nigeria is not food sufficient
During the interview, Balogun said with his experience in his foods market, Nigeria is not sufficient, stating that the claim was only propaganda. He explained by using his business as an example.
“Of course, we are not food sufficient, it’s all propaganda. We don’t produce enough. Let me focus on my own raw material.
“We don’t produce enough coconut, pineapples, and we still import watermelons. How can we be food sufficient when we import a lot of chicken? It (price) would definitely go up because we import a lot of them. We don’t produce enough.
“And sometimes when you even produce enough, to move them from the farm to the urban centres where consumption is highest is also a challenge.”
Economy dampening business growth
According to Balogun, even though So Fresh has continued to grow since its establishment in 2010, the company’s growth has slowed down in recent years because of the economic situation.
He said the economy was dragging the growth of the business, increasing the cost of production and affecting the purchasing power of its customers.
“The most obvious one is the rising cost. If you look at the cost profile for the business over the last nine years, it has been on a steady increase.
“In fact, within the last two to three years, we’ve had almost doubled some of the cost of raw materials of things we use. So it might interest you to know that the particular kind of cup that we use is not produced in Nigeria, so we have to import those.
“And when we had the forex crisis, the price of almost everything doubled. We are almost reliant on diesel because outlets have to be powered. There’s also less spending power. When prices continue to increase, people will prioritise their need, so it will affect the purchasing power of the populace. So that’s also a concern.
“So you find out that revenue that was growing 100% slows down. Yes it’s still growing, but there’s a slow down in the rate of growth,” Balogun disclosed to Nairametrics.