Martin Middernacht is the Managing Director of Cormat Ltd, makers of popular local consumer and industrial brands. Four decades ago, the Belgian took a bold decision to relocate to Nigeria.
Seeing Nigeria’s huge potentials, Middernacht bought large acres of land, planted an orchid and today is a leading player in the production industry. In this interview, Middernacht shares how he built the multi-million company in Nigeria where he calls home.
Share with us, your sojourn here in Nigeria.
I left Belgium in 1979 for the first time in my life, and straight I came down to Nigeria, Since then, I have not left the country. Even my children studied here. This country is my home now and I have no regrets coming here. Fresh from the university, I took an opportunity to come to Nigeria as a sales representative for a Belgium firm in 1980.
Although I am an engineer by training, I have passion for the production industry. The huge market I saw in Nigeria, motivated me to introduce Capri Sonne drink into Nigeria.
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 government policy was geared towards the growth of local industries and I began buying oranges from local farmers.
Soon I started planting my own orchard. I bought some land close to Ibadan, brought seedlings from the right orange trees abroad and started planting. 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. I was not making any money at that time, so I started a poultry farm on the land. Two years later, a new government lifted the ban. Yet, no money was made from the orange trees, I had only 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 company in Nigeria and a member of the Tropical General Investments (TGI) Group.
How did you capture this opportunity?
World Bank believes in liberalization and no government involvement. They told countries back then that it would not mind giving people or investors some facilities 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. READ ALSO: Insurers provide N11bn life cover for COVID-19 health workers 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 with activities which gave us export proceeds.
We started with fishing feed. So, that gave us access to forex. What has been the key challenges you faced in running this business? One of our major challenges is manpower. The second challenge is power supply. In this company, we invest huge amount of money in generating our own electricity.
We do not rely on the national grid for power because the quality of the power is poor. In our factory in KM 51, Lagos-Ibadan Expressway, we have a generating plant, rather than using diesel or petrol.
It makes production and operation cheaper. The third constraint we have is finance. Surmounting this, the interest on loans (finance cost) is between 11-14 percent depending on the bank. But we went through periods of 25-30 percent. There is no place in the world where a business establishment can survive at high financial cost.
The fourth challenge is the availability of a favorable foreign exchange market. In 2019, we had stability and the economy was better, the interest rate dropped from 20 to12 percent. Despite all the challenges, we grow 30 per cent every year. That means there is a way out of all of these challenges if you do it the right way. What areas of diversity is your company focusing on in the coming years? We are continually planning to diversify.
The TGI group and cormart have wide range of products. The latest area of diversification relates to concrete hardeners and tile adhesives. In the second part of our journey, we intend to go further into diversification. We organize all our activities not as cormart, but the entire TGI Group. The slogan of TGI is diversity.
The main goal of cormart is not profit, but sustainability. The drive is that we have planted here will still exist in the next 50years time. What we will like to have is sustainability not only because of our legacy, but to ensure that people who work here are sure about their jobs and in 20-30years they are here. Moreover, the goal is to ensure that our operations still continues and go further.
It is also to contribute to the industrial development of other companies. What is your projection for Nigeria’s economic growth? Yes, I believe in Nigeria’s economic growth. However, there is a shift.
The shift is tending more towards to agriculture which is very good. The government made a 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 become bigger and bigger.
In 20 years from now, we have to focus more on alternative source of energy, therefore the need for electricity will still be there and it will have impact on your income. Then you will have more mouths to feed, so investing in agriculture is very important.
Moreover, to shift from the oil and gas industry is why there should be increased investment in agriculture. To develop the agro-value chain, the sector has to be better positioned to compete globally.
The yield of maize overseas in a one hectare of land, you can get eight, nine to 10 tonnes per hectare. While here in Nigeria, you get maybe two tonnes in a one hectare of land.
Cormart will be 40years in August, how has the company been able to scale in terms of growth and investments? If you look at the last 40 years, the development was not even.
Our growth to this scale was gradual. Much of the progress we have made as a company started in the 90s. The biggest jump of growth began when our sales moved to a higher level and we started to have our own depot in the Nigeria.
From the investments we made, we started seeing increase in growth and volume of businesses, and this made the difference. Cormart initially began reselling Chivita in Nigeria.
Later, we diversified and bought equipment to make Chivita locally in Nigeria. It was a gradual process. In terms of business, World Bank believes in trade liberalization which means there is no government involvement.
The World Bank said to Nigeria and other Africa countries that they do not want to give loans and facilities to them, but to take a step backward out of the private industry and sell off some State owned companies. In that period, we bought some of the State-owned companies and that gave us some increase of turnover.
What measures will you suggest to position the agro-allied industry?
The industry needs certain level of technology, human resources and development of human capital, access to capital and protection for producers. 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,