How CBN Policy Frustrated My Efforts – Edward Akinlade
Edward Akinlade
Mr Edward Akinlade, the Group Managing Director of Haldane McCall Plc is a seasoned entrepreneur who has built a reputation for his unwavering humility, remarkable generosity, and unrelenting commitment to hard work and persistence. His outstanding achievements in the Nigerian real estate and hospitality sectors are a testament to his exceptional business acumen and unyielding spirit.
In this exclusive interview with Entrepreneur Excellence magazine, Mr Akinlade revealed how government policies have had a crippling effect on his business. Despite the challenges he has faced, he remains passionate about entrepreneurship and a strong advocate for Nigerian youths to embrace the spirit of enterprise and seize every opportunity to succeed.
Introduction
My name is Edward Akinlade I am the Group Managing Director of Haldane McCall Plc, based in Lagos. We run two key operations, we are into hospitality and real estate.
Has Haldene McCall replaced the brand Suru group?
Yes! We needed to list our company on the Nigerian stock exchange, so we wanted a name rather than just being local but more international; that’s why Suru was transformed into Haldane McCall Plc.
Did you consider the fact that the Suru group is already a household name in Nigeria?
No! We have not removed Suru; as I have said, Suru Express Hotel is still there, Suri Homes is still there, and people know us in those areas. Suru itself does not do an operation, it doesn’t buy, and it doesn’t sell. What does the business is Suru Express and Suru Homes. So, it’s only the holding company that we rebranded as Haldane McCall Plc.
Tell us more about your listing on the Nigerian stock exchange
Well! It’s a process that we have been in for over 3 years. It’s one of those cases of failures and retries. You fail and continue trying again and again.
When I came to Nigeria in 2006, I decided that I was going to borrow money that set up this operation and after a few years I was going to list on it the Nigeria Stock Exchange, I should have done this in 2006, but by the time I was ready, Sanusi Lamido became the CBN’s governor and he killed the Nigeria stock exchange and that was my first failure in 2010 and 2011 because we couldn’t do it.
In 2013, I packed my load, went to Germany and got the company listed, but the German authority said they didn’t want any more open markets, and you have to do a full listing. Like in Nigeria, you have a secondary market and the full listing, so, the German authority closed down the secondary market.
In 2014 and 2015, we decided to do it again through Real Estate Investment Trust. We started, but the election of Jonathan and Buhari killed it.
Our main objective is to have a global impact. Particularly, to have a chain of our hotel and real estate businesses all over Africa.
The other one for us is to have access to funding. We are not doing an IPO; we are doing listing by introduction, and then later on, we come up with the bond programme. We will use that as an opportunity to speak to our friends worldwide to partner with us.
What should potential shareholders be expecting?
Well! As a shareholder, expectations are in folds – dividends and capital growth, evaluation and also bonus issues. Most companies in the Nigerian stock exchange are not paying any dividends. We have a dividend policy of a maximum of 30% of the shares of our net profit will be distributed among shareholders consistently. Since I have been operating this company we have always come up with profits. As we perform very well our share prices will go up, and capital appreciation.
You have achieved this much in just about 15 years in business. What is the secret of your success?
Well! It is a combination; the main one for me is the grace of Jesus Christ, which I depend on for success because, in Nigeria, you can know everything. If God is not with you, you’ll fail. We have had so many degree holders who have failed over the years.
Secondly, my experience. I grew up in the city of London. I have worked in real estate in the city of London. I have worked in the bank in London, and that is what I brought to the replicate in Nigeria. Also, I am a chartered accountant both in the UK and in Nigeria. So when I’m making any investment decision first thing that runs through my mind is cash. Is there profit at the bottom? If not I’m not going to do it. So it is the combination of all that that makes what I do stand out.
Are you fulfilled today as an Entrepreneur?
No! There can be more, I can still do more. The original business plan for this business was to have the Suru Express brand all over Nigeria and to have Suru homes all over Nigeria, but we have not done that, the reason for that was that Sanusi Lamido made cash scarce; the recession came; covid 19 surfaced, but hopefully we are still here. We will continue pushing. So, I will say maybe 10% of all that I want to do is what I have done.
The low-income earners in Nigeria are facing a big challenge in terms of accommodation affordability. How can this be addressed?
Well! It is an area that we have looked at carefully. I remember in 2006/2007, a report came out regarding the Jakande housing deficit of about 16 million. Now you can see the influx of people in Lagos at the moment, you can see the rent that they are not affordable to any low-income person. We have looked at it carefully and we came up with the idea that our government needs to change its style. We have been doing the same thing, we are not getting the result, and we need to change the style. So, we suggested to them to give the land we will build with our own money and give the government back some units, we will sell our own and make a profit, while the government can then rent or sell their own to low-income earners. That does not cost the government anything, also, it doesn’t cost anything. It is a win-win situation. So, imagine if the Lagos state government brings land and calls maybe about 1000 developers and says here’s the land, fo and build, and when you finish, give us some finished homes back. Imagine if that is done all over Nigeria. Lagos state government doesn’t need to be building homes. All of what we see today is just to create opportunities for the boys.
Have you ever proposed this idea to the government?
Well! Not directly, but the idea is out there. We have done so many press interviews on it over the years even though I haven’t proposed to them officially. The idea is so simple and noble that during the days of Fashola, he was thinking about it. Remember Fashola was the Minister of Housing for 8 years. He spent 4 years thinking of the type of units he needed to build all over Nigeria. That’s a waste of time. I
don’t think Fashola built one thousand units throughout his 8 years in office as minister. For the current minister, we haven’t seen what he’s up to. We haven’t seen anything. Don’t also forget that we have a Real Estate Association of Nigeria that these people are supposed to be tapping into.
Does anybody need to tell you what sort of homes are needed in Lagos, Kano and other cities? Why are you wasting time for 4 years telling us you cannot build high rise or bungalow in Kano or Lagos? Our Politicians know all these things but FAAC allocation is blocking their eyes.
Won’t it be a good idea if you officially propose the idea to the government?
Well! You just made a view, we will look at that after our listing. We will go to them, here is our money, give us the land for free, when we finish building, we will give it back to you, but, as I said, I know what I’m going to face because our Politicians are not interested in that.
Some developers use substandard building materials just to make excess profit without considering the lives of the people. What is your opinion?
You discover that the developer may not be at fault. Remember the case of Lekki Garden, which is a combination of developer, builder and engineer; they wanted to pile more to a land that cannot carry more than 4 or 5 floors. Also, the history of all other buildings falling. So, it is whoever is doing the construction that should be held responsible. In some instances, you are not doing the piling you are supposed to do, while in some instances, you’re not doing proper foundation, and in some instances, you can only do 3 floors, but you end up doing 7 floors. So, it is a combination. Another thing is that you contracted a developer to build a house for you say about N15 million per unit, and the builder is now asking N30million and as you can understand that prices of all materials have gone up, even sand that is local, the seller will tell you that they are using diesel for their truck. Diesel today is around N1,100. So, you can see that everything you want to use in construction has that impact of inflation into it.
When we started to develop the the 34 units we are building in Ketu, we were supposed to sell for N35m when the builder told us it was going to cost us N15m including all other costs. Our profit would have been between N5m to N10m per unit, but the contractor came back to inform us that we cannot build at N15m again and that he would only do it for N30m. So, we looked at the cost and agreed because everything in the market has gone up to about 300 to 400 per cent. So, our price of N35m is now N50m in the market. You can see that inflation has affected everybody. Now, if you ask the contractor to cut corners so that we can still do for N15m, that means that you’re looking for a building that will fall or have substandard finishing.
Recently, the Lagos state government demolished structures claimed to be built on illegality; what is your take?
Building laws must be followed. Over the years, we have cases of ‘Omo Onile’ selling lands that do not belong to them or the lands that the government has not released. So, the root of all those things is illegality. If the Lagos state government sold the land to you and you built it with approval, will they come and demolish it? No! But if they do what will happen to you is that they will compensate you.
My advice to the people is that before you buy land, investigate very well; property without a title is a no-go area anywhere in Nigeria because the government can just wake up one day and say they didn’t give you a title, and your building will be brought down, also, get your building plan approval.
Lagos state also has a problem in the sense that building plan approval is taking ages. In the UK, building plan approval takes a maximum of 8 weeks, but in Nigeria, it can take as long as a year.
To achieve this, Lagos state needs manpower. If the population of Lagos is about 20 million, don’t expect number of the houses to be less than 10 million. You can imagine how many applications are coming on a daily. So, the Lagos state government should employ more people.
We’re about to commence development in Owode at the moment and the Lagos state government said that before could give us the approval we need to go and pay a new levy called IDC, an Infrastructural development levy that used to be paid only in the high blown areas like Ikoyi, Banana Island, Ikeja GRA, etc for massive infrastructure has now been introduced in the low-income areas. The meaning is that for any number of units you want to build you will pay about N500,000. I’m not even talking of planning fees, that is, if you’re building a block of 4 flats, you’ll pay about N2m additional.
What are your challenges?
We have faced a lot of challenges over the years; some you can deal with, and some can be overwhelming. The biggest one in business is multiple taxation. Taxation right, left and centre.
Recently, President Tinubu set up a committee and came up with over 200 different types of taxes that businesses are facing in Nigeria. Now, they are working to make it a single digit in number. Another one is the issue of interest rate. Nigerian banks must charge you up to 30 per cent of you’re borrowing from them. In the advanced countries maximum is 5 to 6 percent. If you’re using the money for social infrastructure like homes, you’ll get it even cheaper. We have issues of staff not being properly trained, when you train them, they run away. Rogue staff who want to steal your money rather than work. We have issues with FX, as I said earlier. Cost of construction. Competition from the people who are using corrupt money. You came to the industry with stolen money to compete with the people who brought their hard-earned money.
How would you rate the hospitality sector in Nigeria?
Well! It was growing and Covid came and slowed down everybody. But, now, activities are back in the industry. So, I will say that as Timubu’s government settles down we will start seeing the impact of the Renewed Hope policy. The hospitality industry, particularly in places like Lagos, Abuja and PortHarcourt, will grow. It is a growing market and a lot of people are also coming to invest in the sector, but survivors are the specialists in the area. Some will just want to dump money, build hotels and put one charlatan man to run it. In our organisation, we have professionals who run our operations. So, hospitality is an industry I will encourage serious players to join, it’s indeed lucrative.
If you’re opportune to meet the President, what advice would you offer to him regarding the present economic situation?
When I meet him, what will be in my head is that Nigeria is broke, just like the NSA has said, so I will offer him some words of encouragement. Remember, he said he’s ready and that’s why he applied for the job. But, the challenge is that there’s no money to meet the needs of Nigerians.
In the short run, things will be difficult, but in the medium or long term, there will be light at the end of the tunnel. I am assuming corruption does not come back to come and take it away. Like we have an issue of fx, there’s no short-term solution. The solution can only be in the medium and long term. Remember also that the Fx problem is not just about the physical dollar, it’s more about people’s perception. If people are confident that this administration is going to perform the money in the hands of Nigerians all over the world can transform this nation, but they have lost hope. They would rather say oh! If we bring this money our leaders will squander it on unnecessary projects like refurbishing their homes, expensive cars, increasing their salaries and many more. So, if I meet the President, I will tell him to cut costs; I will tell him to change the perception of the people. You don’t need to go about borrowing money, just cut all those excessive staffing and ministries, but instead, he’s increasing them, so there won’t be a solution.
What is your advice for young Entrepreneurs?
My advice for them is that nobody makes money by working for someone else. The Bible says that there is time for everything. Our youths should spend time learning, getting experience and then setting up their operations and helping to employ the unemployed in Nigeria. Don’t be looking for work because there’s no work anywhere.
