WE CAN ATTRACT MORE INVESTORS TO ONDO STATE WITH SME FRIENDLY TAX ADMINISTRATION – Safe Oluwafemi (STONESWORKS Boss) Mr. Safe Oluwafemi is the
WE CAN ATTRACT MORE INVESTORS TO ONDO STATE WITH SME FRIENDLY TAX ADMINISTRATION – Safe Oluwafemi (STONESWORKS Boss)
Mr. Safe Oluwafemi is the Managing Director of Stoneworks Industries Ltd, Akure. The quarrying Industry set up about ten years ago is one of the most stabled employers of labour in the mining sector in Ondo State and a major source of internally generated revenue for the state government. In this interview with Olaseeni Oyesusi and Kehinde Ajayi, the America trained Financial Expert turned industrialist, bears his mind on different problem mitigating against establishment of industry and the pattern of governance in Nigeria.
Can you lead us into your background?
I’m originally from a very big family at Uso, Owo Local Government. From my father side, a family of twenty-three children, from the mother side nine in total. My early childhood was not different from most people that grew up in very small rural areas. I was much involved in a lot of physical activities and involvement with farming and trading. My father was a Cocoa farmer; my mother was professionally a Tailor and of course was also involved in other commercial enterprises like trading, food, and so on.
I had the privilege of being involved in many of these things at an incredibly early age where I got hooked with trading and doing business. Because my mum of course by her lifestyle, got us involved in everything that she did. So, at an early stage we got involved in trading and other commercial activities. So, this quickly defines the adult that I eventually become.
Elementary school was at Uso, started secondary school briefly but later, I left for All Saints Unity Secondary School, Usi Ekiti. At reasonably early age, I was in boarding house. In fact, I started off senior secondary school in science class, at second term of SSS1 I recalled going to the Vice Principal admin to have a very interesting conversation, I said “see I don’t want to be in science class anymore. I wanted to go to commercial class” and he was quite hesitant and his question was “why would you want to do that?” And I told him “I think I want to be an industrialist when I grow up. So, that’s where I want to be” it was a tough one but they reached a comprise with me and said “you’ve lost the first term already, if we allow you to migrate to commercial, you will have to catch up on your own, can you do that?” And I said “sure, I’ll do it” and so anyone that knew me knows that when I’m determined to do something, you don’t want to stand in the way because I’m going to get it done. Of course, I moved on to commercial class and I excelled.
I finished secondary school and went on to the University to study Business Administration, subsequently accounting, and post graduate study in Finance. I started off my career in public accounting. I later spent some time in Pharmaceutical finance, IT distribution finance and many years in the banking industry and eventually went on to establish the businesses that I manage today.
You never told us the institutions you attended?
Well, I can give you more details about that. I got my first Bachelor’s degree from Babcock University. At the time it was Andrews University from United States, an Extension Campus in Nigeria. It was an American University in Nigeria and they were going through the accreditation process to become a full fledge Nigerian University which eventually happened the very year I graduated in 1998. Babcock became the first accredited into Nigerian Private University. But we still graduated with The Andrews University certificate. But technically speaking, that first degree is from Andrews University in United States. But the physical campus I attended was Babcock University here in Nigeria.
I left the country after graduation. Though I was supposed to leave immediately, but we had challenges obtaining Visa to proceed to the United States to do my masters at that time, and then there was a change in plan, I then enrolled for MBA programme at the Federal University of Technology Akure (FUTA). I was in the then MBA Programme for one semester and then my admission to go to Canada instead of US then came through, so, I had to leave that programme. I later reapplied for another Bachelors Degree in Accounting. So, that’s how I ended up going to Canadian University College in Canada and then obtained another Bachelors Degree; Bachelors of Business Administration with emphasis in Accounting. Finished that again in 2001, I started off my career in Public Accounting, stayed one year and then moved to Pharmaceutical Finance and then to IT sector, then I spent another three years in Toronto working with one of the biggest names in IT Distribution at the time. It was Tech data, Fortune 500 IT Distribution. I did costing for most of the OEMs, IBM, Toshiba, Western Digital, and all the big names in Information Technology.
Then I moved on to Synnex Corporation; another major competitor. We became a big player in the sector; I played significant roles in vendor financing project and later outsourcing as part of cost management team. Most people at my age would feel comfortable with my career trajectory, I believe I should be in my early twenties. I started feeling a bit restless. I wanted to do more. So, I walked away from that career. I returned to graduate school in the United States, I enrolled at the Merrick School of Business at the University of Baltimore where I obtained my MBA in Finance and Business Advisory.
So, immediately I completed my MBA in 2005, I moved straight to Banking. I was at Bank of America for few years thereafter; I left them as an Assistant Vice President. In late 2008 when I was called by UBA to join the franchise, I then came in as Assistant General Manager in UBA, managed several portfolios for them, Mortgages, Secured Loan, consumer credit products, later on head of retail products and sales for northern Nigeria before I left. I went back to bank of America and then became the regional manager for their consumer real estate market for the entire greater Baltimore market with responsibility for over hundreds of millions of dollars in real estate finance and did that for another year plus before returning back to Nigeria to start Stoneworks Industries Limited; which was our first incubation into building materials supply here in Ondo State.
The company started off in 2011. So, we are about getting to our 10th years of operation. I currently employ about one hundred people today. Then the logistics part of the business was established thereafter with logistics and freight managers which I also run concurrently.
What informed the decision to set up Stoneworks in Ondo State?
Like I said, with few years in the real estate and infrastructure finance side of the banking and finance world, I was extremely exposed to construction and infrastructure business. I love it because it returns some of the best profits in the portfolio businesses at the bank, and when you think about the long term nature of what we do, and its annuity income there is no way you will not take interest in its growth potentials. So, when I sit across the table with my developers, l learnt about some of the challenges that they faced, especially when it comes to sourcing building materials, etc.
So, for me, if I was going to transition from finance world to the real sector, it was still going to be in the same line of work. I used to provide money for you to build, now can I provide you with the materials that you would use to build especially when there was a lot of deficit in terms of provision of raw materials for the infrastructure development which is the major problem in the country. I spoke at major events on behalf of the bank as head of mortgages and you throw up all these statistics in which you talk about all the housing deficits and everything. One of the major challenges is that the cost of building is so high that a lot of people basically cannot afford to build. And why is it so? Because there are not enough players in the sector. So, naturally I got attracted to it, we begin to look at it, there is a lot of barriers to entry, technical knowledge, the capital requirements, and so on. We worked to identify a technical partner from the United States, they’ve been doing the business for about 35years and had a lot to share with us like the challenges of running the Quarry business and the fact that we had all it takes to do it, then I got emboldened. We assembled investors and the capital and we established the business and thank God almost 10years later we are still here.
In the cause of establishing Stoneworks, can you give us some challenges you encountered?
As you would think especially for some of us that have had the privilege of working and schooling in advanced society, we are used to systems that work. We are used to infrastructures that are functioning. We are used to regulatory environments that are very accommodating and very business friendly. We are used to having access to the best of human capitals in terms of people. We are used to best of everything that enables businesses to succeed. I am not exactly sure that if you come to do business in Nigeria, that is going to be your story. So, we quickly learned that even at Stoneworks Industries Limited that the regulatory environments is not only weak but the burden that the government imposes on small businesses can be stiffening.
We have a lot of sealed up businesses in Nigeria because of regulatory environments. You must also deal with infrastructure deficits. Imagine you are going into business and you must invest in energy, capital expenditure of about 200million just on power generation. That is money that could have gone into buying machineries for you to focus on your core business. I do not have to go into power generation if the infrastructure was there. So, you must deal with that. You must also deal with the environmental issues. So, in the process of conducting the environmental impact and assessment, you will see that there is a lot of misunderstanding from people in the government as to what your intentions are, whether you are supposed to be seen as a value addition to the community versus being someone that should be extorted and so on.
But to me, I just think this is part of the challenges of doing business in Nigeria. They are not enough to chase you away, you just have to look very critically and identify all these downsides and put in place adequate mitigation to ensure that your business does not only get set up, but it will strive even despite all these draw backs. The human capital part too cannot be under emphasized. At some point we relied heavily on our technical partners from United states to come down and help us train local work force, so that we can optimize our operation to the level where we can minimize wastes and inefficiencies and run profitably. It has been challenging, it’s being tough and not to talk about inconsistencies in government policy. Many of the contractors we deal with rely on the government to pay them before they can pay us, and often time even when government awards the contract, they do not have capital to execute the project. Despite all these odds, you are expected to maximize output so that you can run efficiently.
We have seen a lot of competitors exit the business because of these challenges. It is about learning very quickly about the nature of market you find yourself, the challenges that goes with it, where the opportunities are, so that you can strategize and make use of the opportunities.
Despite the obvious challenges you have enumerated, 10years down the line, how will you describe the success of Stoneworks? Are you getting there and getting it right?
We had a different kind of vision when we came in. We thought we were going to invest adequately, grow, expand and all that. Take for instance when Dangote Cement came to us when he wanted to establish his refinery in Ondo State. So, because of that we said it was the time for us to start our expansion process. We shun out almost $2million (USD) in expansion spending already. Acquired a new location at Igbado; outskirt of Ondo town, and then purchased a brand new 350tons per hour crusher to be able to take advantage of that new demand. Well, we learnt very quickly that in Nigeria, it is not a deal until it’s a deal. At some points that deal was pulled, and Dangote Refinery had to move to a different location; Lagos State. But we had commenced investment. So, Stoneworks is a successful story in the sense that despite all the challenges we remain in business with almost a hundred employees receiving their wages as and when due. Even the bank of Industry loan that we took to start the business is fully liquidated. We are quite committed to the chart we map out for ourselves and we know that very soon, we will be able to execute some of the plans that we have. So, if I were to give overall assessment, I will say it is quite positive.
When you were talking the other time, you talked about some government Policies being challenging to you. Can you please talk about one or two of them?
There is a lot, but I can speak about taxation and I can also talk very quickly about commercial explosives. The explosives are needed in mining operation. Without commercial explosives we cannot have mining; it goes hand in hand. When we started this business, it was a lot easier to get access to commercial explosives through the ministry of Mines and Steel development which is the major regulatory body. But because of Boko haram unrest, the issuance of commercial explosives has been centralized to Abuja. And this means every time we need explosives; we must get the approval from the minister and you can only imagine what that means especially for small businesses. There are ways they do it in other countries like Israel where they have terrorism at the back of their head on daily basis which I do not think Nigeria will be more concerned with security than them.
All it takes is technology. If you can trust one man in Abuja to regulate 36 States in the issuance of explosives, we should be able to trust the head of security agencies at the State level. Because when you centralize all these to Abuja, the implication is that everyone must move towards Abuja then it delays businesses. Take for instance I have a request in Abuja since October/November last year which has not been approved up till now. So, should we shut down business and lay off workers because there is no response from Abuja? Very unfair. So, if we are going to grow, we must figure out different ways of doing things. We cannot do it the old way; that is what technology is all about. So, that is one problem that at one point the ministry will figure out how to position itself to encourage business owners and operators all over the country.
On the taxation side, it is an ongoing battle and it remains a big problem. Multiple demands from all sorts of sources that you cannot even begin to figure out. As at today, we are paying to maybe 9 or 10 government agencies both Federal and State. In other countries, the primary concern of government is how to help business owners grow because they pay taxes to the government and take people off the street through employment. Stoneworks business has helped in the building of most of the infrastructures that has happened in this State in the last 9years; the Airport road, Ondo Township road, Owo township road, Arakale road, among others. So, we are a significant player in development; we are partner and not enemy. How I wish we are seeing as such; you can’t see industries and business a piggy bank to government.
Imagine a civil servant telling you constantly that he/she will shut you down all in the name of taxation; it is as if they were employed to shut down businesses. Sometimes, you are in doubt whether the environment is indeed ready for businesses and entrepreneurs. I do not think we have vibrant and well-functioning government agency that takes inputs and feedbacks from small and medium size enterprises here in Ondo State and feed such information to decision makers in other to help shape public policies. The government must find a way to engage with business owners and incorporate feedbacks into policy making in other to drive growth in the private sector.
Can you imagine that I have not attended any round table meeting in this State in 9years about what is going on in the business environment; nobody has ever asked us. But it will interest you to know that even the Federal government asked us. Federal government sitting in Abuja is interested in knowing how our business is going and the challenges we face, but at the State level, zero. But they have forgotten that it is the small and medium enterprises that determine the fortune of the economy of a State. It is as if nobody cares. I remember a colleague telling me that I should establish my business elsewhere because it is not going to work in this State. But I gave him a sentimental reason why I had to do it here; because I’m from Ondo State. Why would I rather invest in another State and not my State?
I believe if we are going to make it in this state, we must think beyond politics and create an environment that is business friendly. I strongly believe we can attract more investors to Ondo State with SME friendly tax administration.
As someone that has seen it all, what do you think Nigeria can do to get it right especially the fact that they do not allow industrialists to be in government?
Normally, I stay out of the political terrain because of the nature of our environment. Your intentions can be easily misunderstood. When you want to genuinely give feedback to people in positions of authority, they may think you have a political agenda. They do not understand that it is okay to have divergent view; it’s okay to disagree. There is nothing wrong about that. I had the privilege like you rightly say of studying and working abroad, not just working at a junior level; at least rising to position of policy level. And I have also done that in Nigeria. One of the things I cherish about my time is the fact that I travel across the country and Africa. Let me be as clear as I can. We are still running for whatever the reason may be a unitary system of government that is not consistent with the principles of our constitution. Even in the minds of the people that talk about Federalism, do we even know what Federalism means? As a federating unit as a state 99% of the problem we have today is not about Abuja; it’s right here in this Alagbaka where we are seated, and nobody is talking about Alagbaka.
So, the Governors are getting away with murder because you are not looking at them; nobody is talking about them. Every state can choose to chart his own course as to what kind of environment to create for businesses to strive. Governors should look at what the other states are doing right that makes businesses flourish that is lacking in their own state. But, if you convince the citizens that the problem is Abuja, then we are running a unitary system of Government. Does local government even still exit? When was the last time that local government election was conducted in this state?
We are in this mess because of the individuals that are power drunk. I am speaking as an entrepreneur who is frustrated. Because how can a Governor be so big that he cannot even call a meeting with those people that do businesses in his state to have a 1hour review of the business environment. Even once a month? He has nothing to lose; he can only gain from that. Why don’t we have a broadband in Ondo State? This covid-19 is telling us that the world is changing. Everybody relies on technology to do business now. You are saying people should work from home, what do you use to work from home in Ondo State? Where is the connectivity?
In other countries, leaders are accountable to their people at the local level so that things can run and function. If I can have all I need to be attended to in my state, why do I need to go to Abuja? It should not always be about the issue of sharing money in Abuja which the only thing that everybody wants to talk about. How many businesses can you point to in Ondo State today with significant payroll taxes other than bank branches? I think it is about the mindset of the people. If people recognize that the problem that they face is within the power and authority of Alagbaka to solve, then they will talk less of Aso rock. President cannot do all for us, most of these things are the duties of State Governors. We need to invest in our local communities, we need to invest in our people, we need to have serious government that is ready to keep fate with the people. You need to know that you don’t have to become a semigod if you become the Governor of a State. You need to make yourself accessible to the people.
Why is it that people like you are unwilling to come up to saddle the affairs of the State?
It is the political structure, the system! A man that I have a lot of respect for in the business community found himself encouraged to come into politics some few years back and he got played. He had established a very vibrant business and retired. Just running NGO, empowering, and encouraging young entrepreneurs like me. So, you would think that such invitation means something. If others look at his example and see what happened to him eventually, they may think this is a no-go area. Let us start with the structure that I said. For example, the cost of getting into politics in our country today, it is very difficult for you to go in unless you have some money stacked up somewhere or you have somebody that wants to bankroll you.
So, if you are a businessman, it will almost be a mistake for you to just venture into such a thing because politics is not supposed to be a business. Neither is it supposed to be a profession or a trade. Public service should be for people that willingly want to serve the public. But unfortunately, people go to public service to be served. They are only interested in all the titles and benefits that go with it which is why people are willing to kill for it because the price is huge. Who is going to spend 5billion naira to run for an office because he wants to serve? Unless you are willing to change into something else, it is almost impossible for you to venture into politics in Nigeria. The system today is very unlikely to produce good leaders. So, what is to be done is massive political reform. What does free and fair election mean in this current atmosphere? We have made a mess of democracy in this country. In fact, those who designed democracy, if they come and study Nigeria for one week, they will burst into tears because there is no resemblance of democracy around this place. Nobody cares about the existing laws. The price of politics is so big that people are willing to kill and die for it.
So, if you want to reform the system, limit the spending; I do not know how because people that are to review the law are the beneficiaries of the existing chaos. Enforce the law; let INEC perform its duty and prosecute electoral fraud. Lower the price and make the leaders accountable to the people. If we can do all of that, you will see that a lot of people that are ready to serve will go into public service. But until then, people like us will just rather stay away.
Apart from the fact that you have been able to employ hundreds of people, it is not possible to employ as many as possible because of your limitation. How have you been able in one way or the other empower some people from your environment?
One of the things that you know very quickly as you come to settle here is that you are going to see a lot of poverty around you. And unless you do not have heart, there is no way you won’t be worried and concerned about it. So, all of these informed my decision in late 2005 to establish a centralized approach to attending to some of these problems. A foundation was then inaugurated in 2006 in my late mother’s name. Thankfully, we have been able to have a lot of impacts. The foundation focuses very specifically on education, empowerments for youths, and healthcare. With a lot of deficits around the healthcare space, we thought of little we can do to help alleviate some of it. So, Beatrice Oluwasanya Foundation (BOF) was then founded to address some of these issues specifically. On Friday, May 29, as part of what we are doing to assist during this covid-19, we saw a major gap in the way government was responding. Government is seeing an opportunity for them to make political propaganda by donating rice and in most cases cooked food for the people. And my response is that who thinks like this? This is unfair. There are local health centers and hospitals that workers there are not even equipped with Personal Protective Equipments (PPE). So, to address all that BOF has donated some PPEs to the local hospitals in my own community. To be shared and delivered to all the health workers. We donated medical scrubs, coveralls, Gloves, nose mask, hand sanitizers and face shield. Our leaders must know that the chair of the office they hold will be there forever. The occupant will someday have an opportunity to look back after leaving office either to regret or be happy for what you did or failed to do. If some of those things come to my attention, I try to address it. But how much can I do? I don’t have enough resources to do as much as I would have loved to do, but the little we can do, we are doing it. The easiest thing for everybody to do is to spend money. But the question is what are you going to spend it on? Is it something that can add value or cause liability? But any idiot can spend money.
On a final note, in the next couple of years, let say 10 years precisely. Where would you hope to be?
Well I would say that we would be able to endure the challenges of our time, and we would have been able to establish brand footprints in multiple locations beyond our current operational areas and listed as one of the highest employer here in Ondo State if not the highest employer. I am deeply passionate about putting people to work. The truth is that we have a young population in Nigeria with average age of 18years. But if we do not put this young population to work, it will be a liability instead of asset.