New import tariff ‘ll hike up price of books- Segun Oladipo, Learn Africa boss

Oladipo

The nation’s book industry may soon run into chaos! According to Mr.Segun Oladipo, the Managing Director of Learn Africa Plc, formerly Longman Nigeria Plc, the new regime of import duties on books, recently introduced by the Federal Government, may turn out to be an ill wind that blows nobody any good as it will send up prices of books. Not only that, “there will also be scarcity of books,” he warned.But how can the education sector avert this impending doom, Oladipo opined that government must revert to the zero tariff regime.

His words: “A problem is looming, there is going to be scarcity of books. As you are aware, the Federal Government has introduced 50 per cent levy or import duty on books. In the past, it used to enjoy zero per cent. But it is now 50 per cent. And the implications of that are many. One, that means there will be scarcity of books. Two, there will be price increase by minimum of 50 per cent. Not only that, there will be increase in piracy. We want to maintain that government should go back to the zero per cent import duty on books. If not, there will be crisis in the publishing industry.”

In this interview, he bares his mind on the goings on in the publishing industry.

Excerpts:

Longman divestment

Oladi

As you might be aware, Learn Africa Plc is an education solutions business with a history spanning over 50 years. The company was established in 1961 as Longman Nigeria – a book publishing concern wholly owned by Longman Group UK Limited, now Pearson Education. On July 23, 1996, the shares of Longman Nigeria Plc were listed on the Nigerian Stock Exchange. In 2008, the company became a subsidiary of Pearson Plc following the latter’s increase in its shareholding from 29 to 51 per cent . In the first quarter of 2012, the two majority shareholders – Pearson Education Limited and Longman Group (Overseas Holdings) Limited formally divested their combined 51 per cent holdings in Longman Nigeria Plc on the basis of mutually acceptable terms. Consequently, Longman Nigeria Plc organised a rebranding ceremony on February 16, 2012, during which it formally became Learn Africa Plc with a distinctive logo. This company seized the opportunity to announce its determination to place greater emphasis on customer satisfaction, product quality and value addition. We also pledged to ensure a more judicious management of the company’s resources in order to enhance shareholders’ value. Besides, we declared our intention to renew our vision with an uncommon passion to provide products of international standard that will enable the company to sustain the confidence and patronage of our ever-loyal customers. It is worthy of note that the rebranding event was attended by commissioners of education, chairmen of State Universal Basic Education Boards (SUBEBs),representatives of Pearson Education, authors, teachers, students, booksellers and other stakeholders in the Nigerian educational sector.

New titles

Oladipo

We are glad to inform you that we have successfully introduced new titles into the Nigerian market as replacements for some of the Pearson Education titles that were withdrawn from our list. Specifically, we have replaced New General Mathematics with New Concept Mathematics. Junior English Project and Senior English Project were

also replaced with New Concept English. Furthermore, Concise Grammar was introduced as a better substitute for Brighter Grammar while The Echo Series (creative writing) replaced The Drum Beat. It is also interesting to note that we have carried out a thorough revision of some of our publications to align them with the new curriculum requirements and sustain their market acceptance. These include Phonics Is Fun, I Can Read, My Language Books, Science Is Fun, Senior Secondary Physics, Senior Secondary Chemistry, Biology for Senior Secondary Schools, Economics for Senior Secondary Schools, Quantitative Reasoning for Primary Schools and Verbal Reasoning for Primary Schools. Moreover, we came out with brand new titles like Civic Education for Senior Secondary Schools, New Computer Studies for Senior Secondary Schools, Uto Igbo (Junior Secondary Igbo Course), Okachamma Igbo (Primary Igbo Course) and Hasken Karatu (Primary Hausa Course). Similarly, we released Model School Register of Attendance, Model Diary for Primary Schools, Model Diary for Junior Secondary Schools and Model Diary for Senior Secondary Schools. In addition, we have originated 96 new titles and produced over 20 million copies of our various publications.  Without any doubt, we have been able to broaden the range of our product portfolio in order to meet the increasingly growing and dynamic needs of our customers.

Yoruba is also part of our publication both at primary junior and senior secondary school levels. At the primary, we have the most successful Yoruba publications known as Alawiye. I am also bold to let you know that year in, year out, this company has sold hundreds of thousands of copies of Alawiye to schools, students and even to state governments. Last year, Osun State government bought Alawiye series worth some millions of naira.

And this year, they also have the plan to procure the Alawiye series. At the junior secondary level, we have two course books on Yoruba. We have Eko Ede ati Asa Yoruba and Iwe Imodotun. At the senior secondary, we have Eko Ijinle Yoruba and Iwe Imodotun. These books are doing wonderfully well in the open market.

Insecurity

In spite of the crisis in the country, the company managed to post a turnover of N2.3 billion. We have two segments in our business. We have the open market segment and we have the bulk market segment. The bulk market segment contributes quite substantially to our turnover. And 75 per cent of the bulk market comes from the North.

But because of the crisis in the North, we were unable to achieve the 75 per cent last year. And that is why the turnover reduced drastically. When you compare our turnover with that of 2012, the 2013 turnover has a shortfall of close to N500 million. The main reason was because of the crisis in the North. So, the crisis in the North is affecting the publishing industry as a whole. And on the first question you asked, we have our field men in all the states of the federation, including the  crisis zone. There is nothing we can do now. We are very conscious of their safety. And at the same time, I think we should be on ground. So we have our men across the 36 states and Abuja. But they have also been told to take their security with every sense of responsibility. To buttress the point further on the volume of sales that we lost due to the crisis in the North last year: In 2012, we made a total sales of N2.9 billion out of which N1.7 billion came from bulk business. And 75 per cent of this came from Northern part of the country.

Last year our bulk business recoded barely 8.9 million and of course, we did not sell a single page of these books in the North. So that  shows the kind of business that we lost due to the insurgency  of the terrorists.

Let me say this. this company has solid working capital, very solid working capital. It is true that Pearson had exited, but we have been able to replace all their titles with Learn Africa exclusive titles. I made bold to say that these books are gaining very serious adoption. And we have states that have recommended them. For example, in Abuja, FCT, we have New Concept English and New Concept Mathematics as the number one recommended books for all the secondary schools within the FCT, Anambra, Ogun and some other states, to mention but few.

Not only that, these books are written in line with the new curriculum. And as I said, we are enjoying patronage from quite a number of state governments. Ogun State, for example, bought books from us a couple of months ago. We are also expecting order from Lagos State; we are expecting from Osun and Ekiti states and so on. So I want to assure you that this company is as solid as we were. We are not under any threat. We have very solid management with vast of experience.

It may interest you to know that this company recognises that management, professionals, and technical experts are its major assets, and investments in their future and development are given top priority. Our expanding skill base has been extended by a range of trainings provided to employees whose opportunities for career development within the company have thus been enhanced. Training is carried out through both in-house and external courses. Incentives and welfare schemes designed to meet the circumstances of each individual employee are implemented wherever applicable and some of these include performance bonuses.

Furthermore, Learn Africa Plc adopts a responsible attitude towards corporate governance and is committed to implementing the best practices and standards of Corporate Governance. We recognise that corporate governance standards and practices must be balanced to protect the interests of the shareholders and of the company. The Board is mindful of its obligations under the Code of Corporate Governance issued by the Securities and Exchange Commission’s Code of Corporate Governance and the Post- Listing Rules of the Nigerian Stock Exchange.

At the open market, we enjoy open adoption. We were able to achieve an exponential growth in open market sales from N800million in 2011 to N1.4billion in 2013. That means our books are enjoying wide adoption and patronage at the open market. You will agree with me that that figure is quite substantial. And moreover, we have very solid books. We are known for quality and we have a number of very successful publications. . We are planning to have our dictionary shortly. So we have back list titles, titles that are well known, we are working hard on new publications.

So we are not resting on our oars, we are working hard to come up with new titles while at the same time revising our back list. So with the titles that we have, I want to assure our shareholders that we will give them very good returns on their investments.

Challenges

Let me clearly state this, a problem is looming, there is going to be scarcity of books. As you are aware, the Federal Government has introduced 50 per cent levy or import duty on books. In the past, it used to enjoy zero per cent. But it is now 50 per cent. And the implications of that are many. One, that means there will be scarcity of books. Two, there will be price increase by minimum of 50 per cent. In other words, if you are buying a book for N100, in the next few weeks or months, it will become N150.

Not only that, there will be increase in piracy. We want to maintain that government should go back to the zero per cent import duty on books. If not, there will be crisis in the publishing industry. Unfortunately, what the government was trying to do is to protect the local printers. Let me warn that the local printers cannot cope because, one, the infrastructure is a major problem. Two, equipment is also a major problem. Last year, we had crisis when we tried to patronize the local printers. So it is a problem which government must look into urgently. If not, there will be crisis in the book industry. As a company, unfortunately, we may not be able to do much. But as an association, we are working hard to address these problems. We had a meeting with the minister recently, it ended in a deadlock. Going forward, we will try and address press conference, we will try to bring in International Book Publishers Association like the UK Book Publishers Association; United States Book Publishers Association; we will continue to mount pressure on the government until the 50 per cent comes back to zero per cent.

Piracy

As I said earlier, (book) piracy is a major problem in the industry. The pirates can afford to sell at ridiculously low price.The reason is that they are not paying tax to the government; no royalties to the authors; no dividend to stakeholders.Even if they sell at one-third of what we are selling, they will still make profit. But unfortunately, government’s intervention is not felt unlike what NAFDAC is doing. We want government to intervene just like NAFDAC intervened (in case of fake products). If not, there will be chaos in the book industry.

The most unfortunate aspect about book piracy is that a company will invest massively, getting authors together, sponsoring them to attend workshop; getting illustration done, getting copy editors etc- it is very expensive venture- we do it locally; we do it internationally. Of course, the cost of all these is built into the cost price of the books. Someone would just wake up one day, get a copy of your book, rush down to China, pirated the book and brought loads and loads of containers of this book and start selling a book you have priced at N800 as low as N120 or N150 because he has not incured any cost on the book. You discover that in the publishing industry in Nigeria, almost 2/3 or even more of our revenue is lost to pirates. They sell more than the book publishers them- selves. That is why you discover that publishers’ revenue is still at the level of N2 billion; N3 billion per annum. Piracy is a very massive industry. They are there in Onitsha, Ajegunle and other pirate-centred markets. As an association, we have tried as much as we could. As an individual publisher, we have done all sorts of surveillance. But there is a limit to which you can achieve success at this level. But government’s coming around will do a lot more. But unfortunately, the pirates operate as a cartel.

Tertiary titles

Presently, we have about five or six tertiary titles that are Learn Africa exclusive. But it is something we are looking into. In the nearest future, we will go full blast into the publication of tertiary titles. But when you look at the primary, JSS and Senior Secondary, the population is higher. That is why publishers are concentrating on these areas. Not only that, in Nigeria we lay emphasis on curriculum–based books. That is why we have many publishing outfits publishing core curriculum- based books.

In Nigeria, our reading culture is very bad. That is why we are laying emphasis on curriculum – based books. We want to be firmly rooted at the primary and JSS before go into tertiary. As I said, we have some few lines for tertiary for now. For the tertiary business, there is another factor apart from piracy that has limited the involvement of Nigerian publishers in that area-that is the hand-out syndrome. You discover that in most tertiary institutions, lecturers prepare their handouts and sell to the students. And if they don’t buy, of course, they won’t pass the subjects. That restricts us. I know some schools where they don’t sell handouts, the lecturers would just put the handouts together and go to the printers just like that. And if you see these books, they are terrible. But the students must buy them. So that is a militating factor to our involvement in the tertiary publication. Also we have been doing research in the last two years, putting lecturers together to do some tertiary publications.

Reading culture

It is quite unfortunate that our reading culture in Nigeria is very bad unlike in the developed countries. At our own end, we have been visiting some schools and encouraged heads of schools to establish literary and debating society. Not only that, we encouraged some of them to establish reading clubs and so on. But one thing that is causing this is poverty. You discover that poverty level in this country is very high. I don’t know when last you bought supplementary readers for yourself. That is why publishers concentrate on the publication of core books. You see, our business is seasonal and one can understand them. From January to June or July is our lean period because nobody buys books. And from July, that is when you start receiving list of books of students promoted to new classes. And that is the peak of our period. At the lean period, that is when we are supposed to sell more of the supplementary readers, but you hardly get parents to buy supplementary readers. So  poverty is a major problem. The poverty level is very high in Nigeria.

Internet challenge

The internet challenge definitely is there particularly at the tertiary level of institutions. But we have discovered that the downloads (e-book) cannot be substituted for hard copy itself. There is no way it can reduce the volume of business. But in an attempt to be involved in that, that is why we have started developing e-book component of our business. And very soon, we will place them on the internet for purchase. So no doubt that the technological age has changed and we must not solely restrict ourselves to the hard copy although many studies conducted so far are still in favour of hard copy. But as a company, we have started the strategy to embark on the publication of e-book. The future of publishing is the e-book, no doubt about that. But in Nigeria, infrastructure is major problem. Even if we are there, the hard book will still have high demand. We were in the UK recently for book fair and 2/3 of the participants or exhibitors came with the hard copies despite the fact that it is a developed country. You discover that in the train, in the cars, you see average readers reading hard copy. I hardly see any of them with laptops, or i-pad. You see students walking down the street, you see them in sitting arrangement reading the hard copies.So it means that the e-book itself is not a threat to hard copy. But as I said the future is in e-book.