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Multiple taxation, high interest rate, challenges facing Nigerian entrepreneurs

Multiple taxation, high interest rate, challenges facing Nigerian entrepreneurs

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Do I want to keep paying multiple taxes to Lagos State government? I can list over 20 different taxes we are paying to both the state and Federal Government

Ayo Alonge

Chairman of Suru Group, Edward Akinlade, reserves the opinion that start-ups and entrepreneurs alike plying their trade in Nigeria are faced with a litany of challenges ranging from multiple taxation, high interest rate and poor power supply.

READ ALSO: Poor power supply: Discos owe NBET N103bn

The successful businessman, who owns several hotels and a real estate outfit in Nigeria, spoke with our correspondent about his business, while also baring his mind on issues bordering on entrepreneurship.

Excerpts:

Discovering the entrepreneurial part of you

My background in entrepreneurship can only be traced to the days I was with my mother at Tejuoso Market where we were buying and selling second-hand furniture. That was from the late 70s to 1981.

Challenges as entrepreneur and employer of labour

I have been an entrepreneur in the UK before coming back to Nigeria in 2006. The Nigerian challenge is just too much. Do I want to keep paying multiple taxes to Lagos State government? I can list over 20 different taxes we are paying to both the state government and the Federal Government. They include land use tax, consumption tax and so on. In advanced nations, all you pay is just one and they share it. Another challenge is finding a staff that has honesty and integrity. Corruption has eaten into everyone in the country. The next is that if we need to borrow from Nigerian banks, they start demanding 25-30 percent interest rate.

Dependence on loans and grants to survive

That is in order to expand. There is a limit to what your money can do. What if you have to build 10 hotels? You may have to go into equity and that is about giving out 30 percent too. Truth is that there is nobody in Nigeria that wants to be successful in business that won’t get involved in one form of borrowing or the other. In the UK, interest rate is less than one percent. Another is electricity. We have at least two generating sets in each of our hotels. We keep on spending millions on diesel that could have been used to expand our business.

Staying afloat in business

I am a believer. It is those who don’t believe in God that their businesses will collapse. We know that Nigeria is going to be better someday and we have that hope. A lot of businesses have closed down and some have even died, but we are still in business.

Our stake in Nigeria’s hospitality business

We own three hotels. Best Western Hotel and Suru Express Hotel. Western Hotel was designed for Lagos, Abuja and Port Harcourt while Suru Express was designed to be seen in every state of the federation. The Lamido Sanusi intervention of 2009 cut that off. We were supposed to go to the Nigerian Stock Exchange (NSE) to raise funds for that but that intervention turned the NSE market to be on its knees.

READ ALSO: NSE: GT Bank, Access Bank, others push equity volume up N13bn

Interest in real estate business

My first call was in real estate. That was what I was into in the UK before I came back to Nigeria. It was later that we delved into hospitality in hotels. If you know real estate very well, you will have to segment it and focus on one. In the real estate business, there are three levels – the luxury, the middle income and the affordability level. The luxury market now is on its knees. Don’t even go there. If you must go there now, just go into buying and selling of lands. In the middle income, you need to come up with an easy payment plan. For the affordability level, whatever you put up, you can sell off in one day.

Profitability in real estate business

There is no doubt it is very profitable. If you are building a block of four flats, for example, you expect that to cost you N60 to N70 million. I am talking about high breed areas like Ebute Metta, Surulere and the rest. You can’t go to a Nigerian bank and borrow that because by the time they cut out their interest, the profitability will be almost zero. We do billion naira transactions at a time and we get out our money before moving to the next one.

Regulating the real estate sector

For me, I am not clamouring for regulation. I am saying they should encourage investors by giving the enabling environment. If the enabling environment is there, things would work fine. If we build massive houses, we can eradicate poverty. Why has government not done that? It doesn’t cost government a kobo. We can build hundreds of thousands of houses every year and here is how. Call people like us and say here is free land, go and build 10,000 units and when you are done, bring some flats to the government. Whatever is left, I will sell it for my own money. Imagine how many companies are into real estate in Nigeria. In effect, we can build four million new homes every year. All the government needs to do is to provide free lands that can then be paid back with a number of buildings. What is the cost of that to the government? It’s zero. The Federal Government shouldn’t be constructing affordable housing. People like us can do it. So, I can say that government’s will is lacking.

Future of hospitality business in Nigeria

At the moment, I would say it is not bright. For example, in Ikeja GRA alone, it is so sad that we have about 35 hotels and you ask – who are staying in these rooms? Nobody! Yet, more hotels are still under construction in same environment. If you talk about a street in Nigeria where we have most hotels, it is Joel Ogunaike.

Surviving in Nigeria’s competitive hospitality industry

Well, I am not going to say that because I am part of it. What I am saying is that if you are in this line of business, you will be thinking of where all the customers are coming from.

Contribution of hospitality business to GDP growth

I may not be able to say the exact figure but I think it is meant to contribute so much to the country’s GDP but it is unfortunate that that record is not there. In advanced nations, tourism contributes about 45 percent of the country’s GDP. So, if I have to say it, I will say that we are contributing about 1 percent to GDP.

READ ALSO: ERGP: More questions trail declining GDP numbers

The post Multiple taxation, high interest rate, challenges facing Nigerian entrepreneurs appeared first on The Sun Nigeria.

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