I’ve written about Innoson recently, so it was quite nice to see a long interview with Chief Innocent Chukwuma in The Vanguard this last weekend. It’s a very interesting interview that I think is far more important than the kind of ‘testimonies’ that are more common in Nigeria today.
The piece is delightfully long so I am going to pick out the things I found most interesting.
Apprenticeships and True Federalism
He was interested in reading engineering at the university. While he waited for his result he decided to report to the medicine store of his elder brother, Gabriel to occupy his time. He immediately discovered that he had a natural talent for trading. When his result came out he was unable to make the grade required for him to go for further education. By then, he had made up his mind to be a businessman, anyway.
His elder brother wanted him to learn how to trade on motorcycle parts. He was given to Chief Romanus Eze Onwuka, who became his Master. Eze Onwuka is otherwise and more popularly known as Rojenny, the founder of the first private sports stadium in Nigeria. Rojenny Stadium is located at Oba, near Onitsha
Last year, 530,700 young Germans started apprenticeships in the country. In the same year, just under 500,000 Germans started a University degree. The German apprenticeship system is legendary and so many countries have tried to copy the model with varying degrees of success. During my MBA, I had a German classmate who never went to University but instead completed his ‘degree’ via an apprenticeship with Siemens.
When a policy is that successful, you instinctively know that the policy/law trailed extant behaviour i.e. the policy would have arrived to support something that was perhaps a cultural practice. Indeed, the roots of German apprenticeships can be traced as far back as 1300 to the guild system of trades.
Today one can look at the German system that pays €650 per month to apprentices and marvel at the ‘genius’ of policy making in that country. Yet, the system would surely have started not much different from what Mr Chukwuma described above with government policy arriving much much later to lock and institutionalise the practice. A policy has a greater chance of being successful if it gives state backing to something people are already used to doing (this is why banning things in Nigeria hardly ever works).
I don’t know what the Igbo apprenticeship system is like today but at some point government policy should have stepped in to back it up and turn it into an institution. But the diverse nature of Nigeria means that the way apprenticeships work in the South East is different from how they operate in the South West or North so a one size fits all policy would never have worked (another thing that kills policy making in Nigeria).
In short, this is the kind of thing we need proper federalism for.
Jack Be Nimble, Jack Be Quick
At every juncture that Innoson broke new grounds, he was always led to it by necessity. The old sayings that necessity is the mother of invention, and that in every crisis there is opportunity fit his circumstances like a glove.
For instance, in 1984 when the military intervened and introduced an economic regime that led to scarcity of all categories of goods, many companies closed down. Leventis and other companies were no longer able to supply goods and Innocent had to look for greener pasture in Asia.
He went to Taiwan and applied the same business principles he had used to win over Rojenny in Nigeria: honesty as the best policy. His Taiwan partners started giving him credit sales. The banks in Nigeria started scrambling to loan him money because he never defaulted and his business was booming
For me this was really refreshing to read because it is the same trajectory of success you would normally get in most other countries – where you start has absolutely no bearing on where you will end. Today Mr Chukwuma is settled as an industrialist – given the size of the investments that have gone into his businesses now, we can safely predict that in 10 years time he wont be selling pure water or making jeans.
But the early days were characterised by him doing all sorts of different things as the opportunities came to him. Whereas back then he was at the mercy of crazy government policies and having to react to them as quickly as he could, today he can more easily influence government policies.
Indeed, before he became an oil baron, John D. Rockefeller was an accountant. The ability to spot opportunities and seize them – taking the current when it serves – is a skill on its own. And it is a pattern that you’ll find in the most successful people across the world.
I’ve previously referred to the Nigerian government as the enemies of enterprise and traducers of trade. You always have to run your business on the assumption that the people in government are totally brain-dead and can be relied upon to do something to destroy your business. See the recent 62.5% tariffs on books as an example.
Sadly, until we can get to the point where society at large is strong enough to resist government’s madness, being nimble will always be a requirement to doing business successfully in Nigeria.
Talkin’ Bout A Revolution
I found out that the motorcycles from Leventis were expensive because they were only able to pack forty units into a 40-foot container. Because of the experience I had in motorcycle spare parts, I went there and asked them to strip it down to pieces.
That way I was able to pack over 200 units of motorcycles into the same 40-foot container, while others were packing 30, forty pieces. I will bring the spare parts down here and couple them manually. Because of my experience in motorcycles I found it very easy.
You’ll often hear of how very successful people stumbled on a simple insight that handed them a profitable opportunity. It is said that Rockefeller was watching men manually offloading barrels of oil off a train when the idea of a pipeline to transport the oil came to him.
In the case of Henry Ford, he did the revolutionary thing to double his factory workers salaries to $5/day when the market rate for their labour was $2.25/day. This has been greatly misunderstood to mean that Ford wanted to pay his workers enough to afford the cars he was making. But was this the case?
In the year before he raised wages, Ford hired 52,000 workers but actually never had more than 14,000 workers at any point in time. In other words he had huge staff turnover. Given that this was factory work, he must have been spending a fortune training workers only for them to leave after a few months. By raising wages significantly – beyond what his competition could cope with – he got rid of this problem while saving costs and increasing production from 170k to 202k cars the year after the pay rise.
Looking at what Mr Chukwuma did now – it does look obvious. But then the question to ask is why didn’t Leventis do it?
He has been using it [Peugeot car] and the car is still good. When it becomes old he will pick up an Innoson car. He doesn’t have to throw away the car now
I have recently been reading The Triple Package by Amy Chua and her husband Jed Rubenfeld. It’s a really fascinating book that I cant recommend highly enough. One of the three things they highlight as recurring traits in successful groups is ‘impulse control’ – the ability to reject/resist the dominant cultural narrative in your society. So for example if you live in a society where the prevailing narrative is to live and enjoy the moment, paradoxically such a society will reward you for doing the exact opposite i.e. being frugal and saving for the future.
Or as Rudyard Kipling famously put it – if you can keep your head when all about you are losing theirs […] yours is the earth and everything that’s in it.
I doubt that he suddenly became this way – it must be something he has had with him for a long long time in his business career and now, even when he can afford to splurge, he can still control the impulse to buy a Bugatti. People like him always manage to have seed capital to start something new if they need to.
The Robots Are Coming
I know that a businessman always wants to reduce cost. Reducing cost is good. But there are some costs I don’t want to reduce. There are certain things we must give a human being to do. People are looking for work. They are begging you for work.
You have work but you decide to give to a machine. I don’t want to do that. The land where I built the motor factory in Nnewi was given to me free by the community just to make sure that I employ people.
Now if I decide to use automatic where will the people work?
This bit of the interview was quite interesting. When I wrote my earlier post, I talked about using export markets as the ultimate industrial learning. The thing is that the ‘costs’ he is referring to are not just the salaries paid to the people assembling the cars (Vanguard noticed that everything was being done manually in the factory). If your competitors are automating processes and you are still operating manually, your costs are much larger than just the salaries you are paying your staff.
Whereas they can run their factories for much longer with practically zero mistakes, you will have to deal with human errors and lower efficiency. As admirable as it is that he wants to provide employment to as many people as he can, the moment Innoson becomes a global company, all bets are off and he will have to do as everyone else is doing to compete.
Furthermore, it is not always the case that technology takes away jobs. Yes, in some obvious ways, jobs will disappear but as the economist Tyler Cowen points out in his book ‘Average Is Over‘ – whereas it requires less than 100 people to support an F-16 fighter jet for one mission, a Global Hawk Surveillance Drone requires 300 people working in the background to make its mission possible. In this case, fighter jet pilot jobs have been ‘demised’ obviously, but technology has created even more opportunities that were not there before.
Mr Chukwuma need not be too worried – he will always create jobs. The problem to solve is that as his business grows and requires newer and more advanced skills, he can find the talent locally. To this end, he will have to invest in education and training such as partnering with the local University to ensure he has a steady supply of talent.
Or just build his own school even.
Why Rhetoric Matters
I liked this interview for many reasons. To turn Nigeria into a serious country, we have to consciously celebrate counter cultural people who go against the grain by manufacturing things in a country where it is more fashionable to be ‘into oil and gas’.
It’s also important to see that there is absolutely no magic to the man’s success other than sheer hard-work, street smarts and delayed gratification. There is no evidence that he ‘tithed’ his way to his achievements either or the wealth of sinners being forcefully and spiritually transferred to him.
It’s very important to elevate stories of those who played the long game and got rewarded for it to the front page. The less we hear about people throwing 40thbirthday parties costing billions when we have no idea what it is they invented to make their fortune, the better. These things corrupt the body fabric of a nation.
One fascinating economic research I came across recently is by an Indian Professor, Nimish Adhia. He trawled through Bollywood movies starting in the 1950s and tried to plot the characters of heroes and villains.
What he discovered was that as economic liberalisation started to take hold in the country (especially after the Licence Raj reforms in 1991), the good guys in Indian films started to change from government officials to business men. Simultaneously, the bad guys changed from factory owners to policemen. Try to watch the whole video below if you can.
Especially around 11mins; you will see a clip from a movie called ‘Guru’ with the protagonist giving an impassioned speech in court.
The things a society talks about has serious effects on shaping the culture and attitudes of the people. The more normal it becomes to see (Hi Nollywood) and hear stories of people who did nothing more than build a business from ground up, the more people see that as a viable road to travel.
So shout out to Mr Chukwuma and Vanguard for doing this. More please!