The Second Science with Africa Conference

1. The Second Science with Africa Conference Presentation Title: CHALLENGES OF INNOVATION AND WINNING IN THE MARKET PLACE BY DR. UZOMA K. ACHOLONU (PhD Bio organic Chemistry) FOUNDER/CEO BIO-ORGANICS NUTRIENT SYSTEMS LTD(BNSL) NIGERIA

2. INTRODUCTION INDUSTRIAL PRODUCTION OF VITAMINS AND MINERALS PREMIXES (BLENDS) � WHERE IS AFRICA IN THE DELIVERY OF HIGH VALUE ADDED PRODUCTS AND SERVICES?

3. The world market for vitamins exceed US$10 billion per annum, and there are thirteen vitamins used in all industries, especially for livestock feeding, fortification of foods to enhance nutritional quality and the pharmaceutical application as multivitamin capsules and tablets. Also, there are over 18 minerals and trace elements produced industrially for both the food and livestock industries

4. Technologically, the thirteen vitamins are now industrially produced by organic chemical synthetic reactions with the matching chemical engineering processes. Vitamin A is produced in Denmark, Germany, Switzerland, China and India. It must be emphasized that no nation is self sufficient in all the vitamins and despite high production rates in China, imports account for over 40% of their industrial requirements.

5. Also various food and livestock minerals are produced in India, China, Europe, Brazil and USA. On a lower technological level vitamins and their minerals counterpart are blended in various formulations to produce vitamins and mineral premixes. This lower level technology is now available in Nigeria through Bio-Organics Nutrient Systems Ltd (BNSL)

6. Economically and politically, most nations wish to be vitamins and minerals secure in order to be food secure. Food security here applies mostly to animal protein security which is eluding our growing population especially those slightly above and below the poverty level.

7. China now produces nearly 100 million tons of livestock feed against USA�s production of 134 million tons and have targeted industrial production of vitamins which underpins their astounding growth of pharmaceuticals, food processing , poultry, beef, milk , fish and pork production. Nigeria in particular and Africa in general must think and act accordingly.

8. IMPACT OF DOMESTICATED TECHNOLOGIES Creates high wage labor Expands industrial technology bases Increases GDP rapidly because of high value added outputs ($15 �$50 /kg; vitamin B12 is $5000 / kg) Gives Africa science & technology visibility as regards chemical and bio-chemical production processes

9. INNOVATION DEFINED INNOVATION IS WIDELY RECOGNISED AS A SIGNIFICANT CONTRIBUTOR TO ECONOMIC GROWTH (The Economist 2006) THE ECONOMIC APPLICATION OF IDEAS, TECHNOLOGY AND PROCESSES IN NEW WAYS TO GENERATE WEALTH AND THUS GAIN A COMPETITIVE ADVANTAGE (Helmut Traitler � VP Innovation Partnership, Nestle, Vivey, Switzerland)

10. THE INNOVATORS� DILENMA AND THE INNOVATORS� SOLUTION Two famous books out of Harvard Business School go by these names! The author is Christopher Christensen and his books have challenged me and I am sure many others to forge ahead and create a sustainable market value for our innovative products and services despite daunting challenges.

11. 11 OUR MISSION PIONEERING VITAMINS AND MINERALS TECHNOLOGY FOR HEALTH AND WELLNESS FOR OUR PEOPLE AND ALL MANKIND, USING BEST PRACTICES WITH A GOAL TO BUILDING A CENTENARY BIO-ORGANICS NUTRIENT SYSTEMS LIMITED (BNSL)

12. THE INNOVATORS� INTERNAL CHALLENGES Setting up with knowledge capital and near zero financial capital. Protect your idea with a patent. Emphasis must be placed on a patent attorney with a doctorate or masters degree in the sciences before law school.

13. Draft a non-compete clause with all employees to send a signal that what you have is valuable and share the fruits with all key employees when the company wins Develop and exploit your relationship capital with Friends, Family and Fools (The famous Fools, Friends and Family of many Venture Capital Stories)

14. Institute a credible accounting system as your bankers will always need it when your inventory runs out or you lose valuable inventory or equipment due to both natural and unnatural causes. Hire a good materials manager to buy and monitor your inventory. Engage a financial auditor and make sure you train yourself in management and financial accounting!.

15. Execute your sales and marketing strategy. Look for a good production manager Engage a human capital manager as soon as your staff strength is above 15!

16. EXTERNAL CHALLENGES AND MITIGATING STRATEGIES Regulatory Strategy Use it to expand your market but protect your knowledge with confidentiality clauses and develop deep relationship with all regulatory authorities

17. (2) Technological Partnerships � In our case it did not work. Our partners said � You are building a world class food and pharmaceutical blending plant so you are competing not collaborating� Translation: Remain our distributor for life while we produce in Europe and ship to Africa!

18. (3) Political Strategy - Get to know the Ministers , Head of State , all Directors and pray you meet a Dr. Umar Bindir who is now DG NOTAP under the Ministry of Science and Technology in Abuja, Nigeria.

19. (4) Financial Strategy If your products win in the market place according to your sales & marketing forecast, financing is easy. If it fails, your bankers will desert you and to rub it in you will hear the inglorious aphorism -�We gave you an umbrella when the sun was shinning and we remove it as soon as the rain starts to fall�

20. It is important we push for 5% to 10% interest per annum for loans. The 20% to 25% that we pay in Nigeria has nearly choked BNSL to death (5) And if you have shareholders or venture capital support, the demand on you will be relentless as capitalism and the market place knows no friends unless you are winning.

21. LEADERSHIP CHALLENGE (6) Above all, as a leader you must conclude successfully, which means, training your managers in best practices, showing leadership by example being fair to all, and avoiding the ever real temptation of favouritism.

22. THE NEED FOR GOVERNMENT SUPPORT Jack Welch the famous leader of GE for 20 years said it clearly after having a brush with Government Regulators in The USA � � Companies must demand that government authorities set the rules of the game and ensure good companies win and when bad companies start winning (through fraud and corruption) good companies must have the integrity and money to fight bad government�.

23. CUSTOMS TARIFFS AND UNDER-DEVELOPMENT We import a lot of materials we should not be importing. And we export what we should be using to add value. The African customs Union must be formidable in intellectual capacity in order to decipher what we must not import. Moreso most of the imports can be made locally especially through domesticated technologies where BNSL excels.

24. Importing single vitamins and minerals for the next ten years as we do is pardonable to the extent that all of Africa needs two Vitamin A plants by year 2015 (China has three and still imports from Europe for their shortfall) HINT: Cost of a vitamin A plant = $30 million private sector driven and payable in 15 years

25. Vitamins and minerals as mixtures called premixes is what we produce with ISO 22,000-2005 AND HAACCP certification. Our cost / expenditure so far? US$6.5 million Additional cost needed? US$3.5 million (grant payable in 10 years)

26. So why do we register importers of vitamins and minerals premixes when our capacity to produce same is over 100% of local demand and actual production is 20%? This is the meaning of underdevelopment!! Africa import what their local companies can produce at same or above global standards.

27. Tariffs should be 35% for all vitamins and mineral premixes � Deadline � September 2010. All importers must be registered and their duty payments made public. Otherwise local producers (blenders) will not survive

28. WTO AND INDUSTRIAL COMPETITIVENESS Do we file commercial injury in Africa? Americans, Europeans and all Asian countries file against each other on a daily and weekly basis. The fact is that WTO is good for countries who understand that they must protect their local industries through enforceable high or low tariffs and protective quotas.

29. Also their internal large private companies have linkages to their growing small and medium scale companies so the need for protection is diminished. Africa does not have this luxury of large private sector � small private sector linkages and cannot grow by exporting commodities worth less than US$5000 per ton and low wage labour average of US$0.5 per hour.

30. Large companies in Africa including multinational food and beverage companies must be encouraged to collaborate with value added suppliers such as BNSL.

31. Alleviating poverty means that our high wage labour force replicate more success stories and diminish poverty. At present, we are caressing poverty! Commercialization of research results is not possible without entrepreneurs with deep business and science background

32. However we must establish best practices such as ISO 22000-2005, HACCP and a laboratory with ISO 17025 certification. The cost is about US$2.5 million and BNSL must have this by January 2011

33. COST OF RECOMMENDATIONS The cost of all my recommendations are as follows Government / Political will � ZERO cost to Africa Good Laboratory (with Diaspora human capital) for micronutrient analysis in Nigeria � US$2.5 million (payable in 10 years as grant)

34. QUOTES The future will be built on a strong investment in education, tax relief to encourage new investments, notably in science and technology� - Luiz Inacio Lula Da�Silva � President of Brazil �The Economist, March 4th � 10th 2006

35. Governments face a knowledge-based future and have inherited a historical emphasis on finance. - Lester C. Thurow - Fortune Favors The Bold Harper Collins publishers Inc, New York, NY10022, 2003

36. THE POWER OF INTELLECTUAL CAPITAL IS THE ABILITY TO BREED IDEAS THAT IGNITE VALUE J. P. Morgan chase ALL KNOWLEDGE IS CAPITAL. THE REST IS JUST MONEY - Deutche Bank CEO, Germany

37. WHAT DO WE NEED IN ARICA? Individuals � bold enough to explore the scientific terrain with commitment and courage A society � bold enough to support the scientific explorers� Chief Knowledge Officers (CKOs) charged with the responsibility of growing each of their African economies by a minimum of 10% per annum in collaboration with all ministers and regulatory agencies

38. THANK YOU ALL AND MAY THE LIVING GOD GIVE AFRICA MORE WISDOM TO CREATE WEALTH AND STOP IMPORTING POVERTY DR. K. ACHOLONU LAGOS, NIGERIA JUNE 12TH 2010