Government needs to do more to support local contractors – Adeyemo
Mr. Kehinde Adegboyega Adeyemo, FNIQS, RQS, is the Managing Director/CEO of Oak Builders Resource (W.A) Ltd., a Nigerian firm with specialty in civil and engineering services. The company has handled various engineering projects across the country. Its experience in the construction industry has established it as force to reckon with. Apart from construction works, the company also offers project management, consultancy services, haulage and supplies. With its head office in Lagos Oak Builders Resource (W.A.) Ltd has a branch office in Ghana.
In this exclusive interview with MARKETING EDGE he x-rays his industry and reviews the Nigerian business environment.
How will you assess the Nigerian business environment?
The Nigeria business environment is not friendly for now. It’s the survival of the fittest.
How will you assess the construction and built industry sub-sector?
The construction and built industry subsector is full of quacks everybody wants to be a contractor because that’s what politicians feast on. As such, less qualified professionals are getting the jobs because of the “man know man” syndrome.
What do you perceive as the major opportunities for players and operators in this sector?
The major opportunity in this sector is that if the environment is ok there will be a lot of construction activities in form of factory buildings, schools, farm and residential houses, as well as roads and bridges. But because the economy is closed its only government that is spending and there are too many people jostling for these jobs.
What would you say are the Challenges in the Nigerian construction and built industry?
The challenges, as I said above, are basically the absence of jobs and this is so because of the nature of our economy.
How are these challenges being tackled?
These challenges can only be tackled by the government. However, players in the industry also have to be creative and reach out as much as possible.
Which of the policies impact negatively?
One major government policy or rule that impacts positively on our sector is the due process in contract awards whereby contract tenders are made open to all and sundry through the Bureau of Public Procurement; but trust Nigerians, they have found a way to corner it.
Also, in FIRS tax policy, construction attracts huge funds but that does not mean huge profits; so when the tax men will come to audit they will come with huge tax liability, based on turn over only whereas we do not know the basis of their calculation.
There is also the issue of double taxation; sometimes client removes Withholding Tax of 5% on a job that you did not make 5% profit and they say it’s the law; when they discover that you have overpaid, they keep quiet. In Nigeria, there is no policy of tax refund. This can easily put business men out of business.
What do you think government can do to change this?
Like every other issue we have asked that government should reduce physical interaction with people. Make process to be automated. Oftentimes, the tax people bring huge liabilities so you can negotiate with them and you pay part to them before they reduce the part that goes to the government.
With government’s increasing drive towards injection of local content in the Nigerian business sector, how much success would you say have been recorded over time?
For me, I haven’t seen a lot of local content injection in the construction sector. Chinese companies have moved in heavily to pick up all the juicy contracts. This is so because they have the support of their government in terms of funding for equipment. Our own Government needs to do more to support local contractors to succeed.
What percentage of local content injection would you say your sector presently enjoys?
Honestly, if we look at it in terms of materials and labour we can safely put local content at 25% which is so little compared to what we can do.
Govt attempt to encourage indigenous engineers and construction companies have often been frustrated over poor-quality project implementation. What do you think is responsible for this amongst local companies like yours?
Nigerian engineers are fantastic and they can compare favourably with their foreign counterparts; but the issue of equipment can frustrate us, foreign exchange is also a major factor. These equipments are not manufactured in Nigeria.
Finally, corruption plays a major role in bad jobs. Government agencies give you a job and they demand for bribe that sometimes is as much as 20%. This leaves the contractor with fund that cannot deliver the job; and they (contractors) resort to using substandard materials.
For some United Nations contracts that are done in Nigeria and other parts of the world, you do not need to know anyone as long as you have right qualification, equipment and a good competitive rate; they run their analysis online and a winner is announced online. If we can get to that level where you can’t use influence to win contract, local contractors will begin to deliver quality jobs.
How can indigenous construction companies regain trust and confidence of most multinational companies on contract awards?
Process that’s the key. When due process is followed in the award of contracts as against the idea of “man know man” then we can be rest assured that the right contractor will win the jobs and quality delivery will be guaranteed. Multinationals like Chevron, Mobil, Guinness and the likes are doing well in this direction.
How do you think local construction companies can change their hitherto negative image perception on poor quality job execution?
Continuous Professional Development (CPD). We can attend seminars, workshops and visit sites where standards are adhered to. There is a program exhibition I attend in the United Kingdom every first week in March; it’s called FUTURE BUILD; there you see all manner of materials and how to deploy them on building projects.
Has this type of perception or stereo- typing affected Oak LTD’s business drive and operations?
Here in OAK BUILDERS RESOURCES WEST AFRICA LIMITED we try to deliver quality job because we believe in our name over and above profit. Our watch word is “DO IT RIGHT THE FIRST TIME”.
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