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Why pharmaceutical sector needs special intervention fund –Obi



NNamdi Obi, MD/CEO, Embassy Pharmaceutical and Chemical Industry Limited, takes a critical look at Nigerian economy in recession. He wants President Muhammadu Buhari’s government to immediately introduce some stimulus packages into the economy especially in the pharmaceutical sector to prevent avoidable deaths of Nigerians arising from scarcity of essential drugs. He spoke with Daily Sun recently in his Lagos office. Excerpt:

What recession means for pharmaceutical industry
Well, as the name implies we are on a backward march. That is what it portends for the economy or any economy whatsoever. It therefore means that we are really in a very big trouble which has really been acknowledged by all well meaning Nigerians.

Nigeria in big trouble?
Yes, Nigeria is in a big trouble. All Nigerians are in trouble. All Nigerians with no exception, except those that have access to the powers that be. But if they are honest to themselves they should know or they do know rather that even when you have access to our common wealth that not all members of your family will have access to that. So, all Nigerians are in problem. I do acknowledge the fact that we are not the first country to go into recession however, the policy of the government, to a very large extent, re-booths the economy to bounce back. America had that prior to President Obama’s assumption of office. What did he do? There were certain government policies that were injected into the economy that kick started the economy back to where they found themselves today-positive growth. Stimulus packages were marshaled out. Money was made available to certain sectors of the economy that kick started the economy and they are out of it. In our case, I don’t even know what government policy is. No person has told us what the government is doing to have it re-started? Very often I hear diversification of the economy, agric sector and what have you. These are long term policies, not short term. There has to be a short term and a long term policies side by side for the economy to bounce back. The diversification of the economy by way of agriculture and what have you cannot in anyway be a short term measure. No way. Industries are going down. What do we do to help them come back on track? We have to cater or catch up for today to make provisions for tomorrow. You don’t tell somebody who is hungry to wait I am planting or that I have a very sound agriculture farm that I am paying for now and I am going to plant tomorrow just wait the harvest period is going to be about six months or seven months. He wants to be taken care of today so that he looks up to the future with optimism. That’s what most Nigerians are saying. I am saying the same thing, too.

So what short term measures are you looking at?
With due respect to those that are presently called the economic advisers to our president, we need to have the industries on track. Let us take a cursory look at what happened in the past. I read the interview granted by our respected Chief Agbakoba (SAN) who said that the TSA, Treasury Single Account, where government pulled out its accounts in banks and have them domiciled in Central Bank (CBN), to a very large extent is one of our problems.   For any economy to be vibrant there must be money available. I am not saying the money that is taken by individuals to put into their pockets. Make available money to the real sector. The banks are lending at about 30 percent interest rate. Now tell me who, which outfit is going to borrow at that rate and produce something in Nigeria when you have virtually all components imported. Tell me of any sector, even the person selling so called pure water. The packaging of pure water, the materials used for it are imported. So is going to be high. So there must be money at very affordable rates. There has to be a conscious effort to make money available to the industries. Most industries are laying-off their workers. If we continue with the way we are going now in the next six months I see 80 percent of the Nigerian workforce in different sectors being laid off. And that would spell disaster for this economy.

Buhari’s claim that FG has tackled insecurity
I don’t want to base my optimism on promises made by anybody with due respect to the president. I want to see tangible efforts that are being made for me to have that confidence. I have not seen any. I have not seen any economic direction of this government. If any person has seen it I want to be educated. No person has monopoly of knowledge. Even the CBN monetary policy is squeezing money out of the system. How does that in any way help the teeming number of factories we have in Nigeria to survive? How does it help?  As much as I want to share the optimism of Mr. President have not seen the practical steps that being put in place to get us to that promise land. But I am very hopeful that something has to be done and done very quickly to get us out of the woods.

Source of stimulus package
For me I still believe that we have money in this country. Look at how much it is taking us to run National Assembly and the Presidency? What percentage of Nigerians earns as much as National Assembly members? Tell me who? After spending four years in National Assembly, a person goes off and gets severance package. He comes back again later spends another four years or more and leaves he gets another severance package in addition to the fabulous take home package as salary. If we cut to a very large extent our budget in National Assembly, that is, part time basis, a lot is saved. That in addition will help us to get committed individuals and seasoned technocrats and other intellectuals to serve our nation. Let us run a lean budget for National Assembly as well as the Presidency. That way a lot of money would be released to put in other sectors. Even if a barrel of oil sell for $30 if we manage it well for goodness sake this country is going to be a great nation. Look at the governors. Look at their convoys. Those vehicles consume fuel. The fact is we are leaving above our income in this country. Even if our income were to be $50billion per day we are not going to get anywhere because there are so many loopholes and which people spend so recklessly at the expense of the nation. And they go scot free.

Why Fiscal Federalism may end insurgency
First and foremost I want to condemn in its entirety the approach of agitators who have taken up arms against the government. Dialogue should be the way out much as one would expect that the government would be so sincere in its approach. However, we must accept the fact that restructuring of this nation is the way forward. It does seem to me that we are all suffering from secondary amnesia, we forget so easily. How come in the first republic, the western region was much richer than the federal government. It was the military that dealt a very heavy blow to us and we have not come out of that abyss to which the military pushed us into. If each of the six geopolitical zones as promoted by his excellency, Dr. Alex Ekwueme, former vice president of Nigeria, is followed to the letter there would not be any need for any state to be jumping to Abuja end of every month for stipend in the name of share of federation account. That sense of industry would be inculcated and incorporated in every one of us. When a state knows that nothing at the end of the month will come from Abuja the state will be forced to look for alternative source of revenue perhaps viable internally generated revenue. That was what first republic guys did-Awolowo, Zik, Okpara, Bello. The north had groundnut. But tell me who is talking about groundnut now? Yes, we have groundnut but not in that quantity that will earn us good foreign exchange. Who is talking about cocoa now? But this is something that gave the west enormous foreign exchange that made our revered elder statesman, late Awolowo to build the first television station in Africa. In the east, Okpara had a very good agricultural policy or plan that led to palm oil plantation and what and the rest. So there was that healthy competition among the regions. They were just giving a fraction of what they produced or earned to the centre.

Dividend of democracy
They say the eye does not see itself except by reflection. If the APC guys are honest to themselves and they feel this is a very sound economy, good luck to all of us. All of us are suffering. Hunger is not gender sensitive or party sensitive. If you are hungry, you are hungry. Whether you are APC, PDP, PRP, APGA, etc you are hungry. Nobody cares about your party affiliation.

Why more Nigerians may die for lack of medicare
You don’t need to be a soothsayer to tell you that. I completely share the sentiments expressed by the president of Pharmaceutical Society of Nigeria, Alhaji Yakasai. As we speak today over 70 percent of drugs are no longer available. The ones that are available are too expensive. As we speak today the hospital consumables are getting off the shelves. Let me give you a typical example. A box of syringe containing 100 pieces used to cost N600. Today it is N4000. What is the implication? Disposable needles have gone from N400 to N3000. Let me just dwell on this two. So what that means is if person goes to hospital for instance there might be a tendency, for any hospital that wants to be phony, to start re-using those syringes to save cost. If a hospital so decides to boiling syringes or needles to disinfect them, you can guess the health implications. There might be a situation wherein diseases would be transferred so recklessly. Most Nigerians cut corners irrespective of class. And for pharmaceutical products, whether it is manufactured locally or imported, a friend of mine had an order to supply drugs, 40 of them, only two were found. The other 38 were not available. And when I made contact on his behalf to local manufacturers and importers, no person was expecting any of them.

Is it because of the high exchange rate?
Of course, yes. So the very few that are readily available, their prices have hit the roof. So what this means, as far as I am concerned, is that the churches are going to have a field day. Are you surprised with what I am saying?

You mean people will turn to churches for healing or miracle?
Yes, of course people would now turn to churches for remedy. You are laughing but that’s a fact. You only need to visit some of these ‘born again’ churches and see for yourself. I lost a town’s man recently because he spent so much time in the church expecting healing until his ailment deteriorated before going to hospital.
What you just said is tending towards what is called ‘out of stock’ syndrome, not having drugs to buy? That is a statement of fact.

This might even lead to fake drugs syndrome where charlatans take over the market by bringing fake drugs into market?
Yes. As much as I do concede the fact that all sectors of the economy should be given priority attention but there are certain sectors that are so vital. One of the submissions of PSN president was that the pharma sector should be taken as a very critical sector and even the manufacturers of these essential products within and the importers to be given foreign exchange as quickly as the demands are to address the looming shortage of drugs soon to be experienced.

You mean a special package at a reduced rate, a kind of concession or at official market?
What is happening is that the funds are not there in the banks. Let us call a spade a spade. Foreign exchange isn’t there.

Even when you have your money, the naira equivalent?
No way. You can’t see it to buy. That’s a fact. I stand to be contradicted. I have been making a request but getting allocation that can hardly suffice. I have been having LC (letter of credit) for which I have been giving foreign exchange in piece mills of allocation running for the past two months now. They are yet to complete it.
What is there reason? They can’t get from the Central Bank?
I don’t think Bank has it either. The interventions are done once in a while. We have a problem on our hands.

So you think you need special intervention by government to make the dollar available?
In very critical areas and pharmaceutical sector is one of the areas. Pharmaceutical sector as critical as it is to our economy should be subsidized. Why can’t the local manufacturers be given tax incentives? That is why I am saying I have not seen on ground what is being done to encourage people to continue to do what they are doing. Why can’t manufacturers be given tax holidays? With due respect, this is real sector? This money that is locked up in CBN as TSA of what use is it for the economy?

Within your sector there is debate to ban or not to ban the importation of the drugs we have local capacity to produce. The manufacturers are giving their support while importers are not in support. What is your position?
For me the problem we have in this country is that we do not have the requisite data. Even our population, Nigerian government cannot tell you with degree of certainty the population of the country. Some say we are 170 million and others say 200 million. They are all guess work. If it is proven that we have the local capacity for any pharmaceutical product, so be it. Let it be banned. But most often than not, and I have said it repeatedly, the installed capacity is not the same thing as production capability. I might have installed a machine in this premise to produce one billion tablets a day. That does not mean I have the capacity. Do I have the wherewithal to produce to that capacity-the money to buy the requisite raw materials at probably 30 percent interest rate from the banks? So if you take decision based on installed capacity to ban importation then there’s going to be acute shortage of the product in the market. Look at what is even happening presently. There are lots of products in the market produced locally for which only local factories have the exclusive preserve for production that you cannot find. Not because of the installed capacity but because of the dynamics of the present situation. The exigencies of the moments have really made it absolutely impossible for them to produce or bring the drugs. The question you asked me can readily be answered very easily with what we are facing now for the products for which local factories have exclusive preserve to manufacture you cannot find them. If you name 50 products that are manufactured locally in Nigeria you cannot find up to five of them in Nigeria market as we speak. So those products are scare. So what are we talking about?

Let’s look at the National Drug Distribution Guidelines. Some of your members are complaining about the aspect that deals with mega distribution provision. That having a mega distributor might give room for discrimination where the distributor might decide the drugs to distribute or not to distribute and so on and so forth. Where do you stand in this argument?
Initially when the National Drug Distribution Guideline was put up they were only concerned with the mega drug distribution centres, having states drug distribution outfit. But the wholesalers were not factored initially. So the new modification now has taken cognizance of the wholesalers. There’s no way you can wish them out of existence because they are critical stakeholders in health care delivery system. And that was what prompted our going to climes that have similar set up, for instance, India. We saw that they do have coordinated wholesale centres. That’s what we are adopting today. And government in its magnanimity looked at the policy and reckoned with the fact that it was not properly put in place by virtue of missing a very critical sector and now factored it in. If you are in a coordinated wholesale centre why not if not you do your business within the confines of the law? There has to be a NAFDAC office. There has to be a PSN office. There have to be places where products like vaccines and what have you will be stored within that same complex with banks and police post and so on. So it would, to a very large extent, make it impossible for any person to distribute spurious products in this environment. So it is a very big plus for the entire nation when it gets kick started next year.

Do you think government should declare a state of emergency in the pharmaceutical sector as far as this issue of making essential drugs available is concerned?
Well, for me, yes and at the same time no. Yes in the sense that we need to have drugs readily available in all places where they are licensed to have them because very soon most pharmaceutical products would be completely off the shelf. If we do find them, I know of a product that used to sell before N10,000 now sells for N80,000. This is an injectible product that is used in the hospitals. So what I am trying to say is that we should not be having this knee jack approach to issues. There has to be long term planning. State of emergency to me is responding to the spur of the moment. If we have planned adequately by having very sound men and women of impeccable character chosen as members of the economic team they would have delivered. I don’t mind where they were coming from. They can be white men or people from a particular ethnic group as long as they would deliver.