A business, which started in a garage in Ilupeju, Lagos about 40 years ago, has become a major employer of Nigerians in agro-allied and other sectors, writes CHINYERE OKOROAFOR.
It started in a garage in Ilupeju, Lagos. By August, it will be 40 years. That business, Cormart Limited, has grown into a multi-million dollar company with over 718 Nigerian employees.
When its founder, Martin Middernacht, left Belgium in 1979 for the first time in his life, it was Nigeria he arrived in. Since then, he has never left. Even his children studied in Nigeria.
Fresh from the university, he took an opportunity to come to Nigeria as a sales representative for a Belgium firm in 1980.
Although an engineer by training, Middernacht loved the production industry. This and the huge market he saw in his new country, motivated him to introduce Capri Sonne drink into Nigeria.
He said to make Capri Sonne, a special kind of orange concentrate is required and that was imported from Brazil at the time.
But in 1983, the then government policy was geared towards the growth of local industries and he began buying oranges from local farmers or planting his own orchard.
“I bought some land close to Ibadan, brought seedlings from the right orange trees abroad and started planting. But between planting the seeds and growing of its first fruit takes about five years. I had to wait but I was later allowed to continue importing the concentrate,” he said.
But he wasn’t making any money at that time. So, he started a poultry farm on the land, Cormart’s General Manager, Dr. Johannes Flosbach, told The Nation.
Two years later, a new government lifted the ban. Yet, no money was made from the orange trees, Middernacht had only his chickens.
However, this idea gave birth to Chi Farm Limited, the market leader in Nigeria poultry industry. Its processing plant at kilometre 51, Ibadan-Lagos Expressway, sits at about 80 hectares of land. There, 15,000 chickens are slaughtered every day in a disinfected environment. Chi Farm is also a sister Company to Cormart Limited, a leading chemical and food raw materials companies in Nigeria and a member of the Tropical General Investments (TGI) Group.
In the 1990s, when other partners joined, Cormart slowly grew. According to Middernacht, the biggest jump of growth came when the company had a high level of sales.
“That made a lot of difference. When we started with the drinks, we had Capri Sonne, we bought equipment to make Chivita. Then we saw other opportunities.
World Bank believes in liberalisation, no government involvement. And the World Bank told countries that it would not mind giving people or investors some facilities, loans but they have to take a step back forward out of the private sector and sell some of your own state companies. At that time, we bought some and it gave us an increase in turn over.
So, it all has to do with seeing opportunities, and having the courage to tap into it and invest in it.
“When we started, we decided to have our own source of forex. We started in activities which gave us export proceeds. We started with fishing feed. So, that gave us access to forex,” he said.
For Middernacht, Nigeria needs to develop industrially. This is one of his goals. He believes that if Nigerians go into production of goods instead of relying on importation, it will help promote employment and discourage substandard importation.
This is why the company is dedicated to providing top notch chemical and food raw materials to Nigeria industries in the paint and food industry, breweries and beverages, hospitality and agriculture industry.
“We want to contribute to the industrial development of Nigeria. If someone wants to produce something, we make it happen for them. For Nigeria to develop industrially, Cormart is basically at the centre of that development,” he said.
‘The secret of our business’
As the company which started with less amount of money grew with more Nigerians employed, the profit was always invested back to the company.
According to Middernacht, the profits were never taken out or stacked outside the country.
“But we grew, believing in Nigeria and giving employment. The secret of the whole thing is when we make profit; we didn’t put it in a stack account somewhere in London or Switzerland like some people do. But we plough it back to business. That is the secret of our success. We kept investing in the country. The secret of our business success is that we keep investing,” he said.
The ultimate goal
With hand on heart, money is not the main objective, Middernacht wants sustainability. He wants what he has planted to still exist in 50 years and more.
“The main goal is really not money making but sustainability. We want what we have planted here to still exist in the next 50 years and beyond. It’s not about taking the money and run. What we love to achieve is sustainability, not only for our company but for the people who work here. We want them to be sure about their jobs in the next 20 to 30 years. My main goal is to stay here, not like a lemon, to squeeze out, and throw away,” he said.
Business challenges in Nigeria
With more than 40 vacancies at the company waiting to be filled, the company is yet to find the right people for the positions. Middernacht said the situation has been the top challenge facing the company.
The Belgian, who expressed his admiration of the weather and people of Nigeria, said the country’s problem is not money, but education.
“The biggest problem that Nigeria has is not money, because you are a blessed nation. The biggest issue that Nigeria has is education of young people. We have more than 40 vacancies that people can start immediately but we don’t find them. No one with the right fit. The appeal is that government should train the youngsters, pay attention to the educational sector,” he said.
On power, he said: “The second challenge is power. In this company, we invest huge amount of money in having our own electricity. We don’t rely on the National Grid for power because of poor power supply. We are lucky that in our factory in KM 51, we have pipe gas which is cheaper than diesel. We are also lucky that the private sector invested in that and this makes production cheaper.
On finance, he said: “The third constraint we have is finance. We are lucky because the interest on loans (finance cost) is between 11-14 per cent depending on the bank. But we went through periods of 25-30 per cent. There is no place in the world where a business establishment, whether in the areas of food, industry, agriculture and chemicals, that can survive at finance cost.
“The fourth challenge is the availability of forex. The focus here is on availability of crude oil which the price rose to $52 per barrel. So, how sure are we that the government will be able to hold the value of the naira, devaluation and inflation?
In 2019, we had stability and the economy was better, the interest rate dropped from 20 to 12 per cent and in terms of power supply, we had pipe gas which is better. But in all, the government did extremely well. What I meant here is that we had devaluation of 50 per cent. But when you look at Venezuela, for instance, the country is completely bankrupt and also lives on loan. But the Nigerian government did well in comparison to other countries.
“There is also the challenge of port. We had a product we wanted to export to Ghana, which we had to bring back from the port because we could not get it to Ghana. This is very absurd. But everything we are bringing in compared to six to nine months ago, we are paying N400, 000 more per container to get it out of the port that is a $1,000 on one container.
“We also noticed that due to infrastructure problems, a lot of ships are waiting to come to Apapa and Tin Can Island Port. While those ships are waiting there, demurrage starts counting on them, and those amounts are huge,” he said.
Optimism about Nigeria’s economy
On the Nigerian economy, Mr. Middernacht said he was very optimistic. He said: “The government made very wise decision to stimulate the agriculture sector and pump money into facilities available because if you are importing agro-products such as soya beans, maize and others, the impact on your forex will be much.
“In 20 years from now, we have to focus more on alternative source of energy than electricity. Therefore, there is the need for electricity which will impact positively on businesses.
“To develop the agro-value chain, the sector has to be better positioned to compete globally that is the only way it can survive,” he said.
Expectation in 2020
The company expects a 40 per cent growth this year, with an investment of N2 billion.
“We are investing N2 billion in Cormart. The company is already preparing the project for 2021,” he said.
Advice to youths
“My advice for young people is that they should be patient. They should believe in themselves and see the opportunities like we did in the garage of our house. We didn’t have a master plan of how we are going to do this or that. We fell over opportunities and we grabbed them. And of cause we have a lot of setbacks. Young people should constantly develop themselves until they become successful in life. They should have career development. Success comes through hard work,” he said.
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