Akinlade: How FG Can Build Confidence in  Economy

In this interview with Kayode Tokede , the Group Managing Director, Haldane McCall Plc, Dr Edward Akinlade, an expert in Real Estate and Hospitality, offers some tips to address the ongoing economic challenges in Nigeria and re-affirmed the plan to list Haldane McCall on the Nigerian Exchange Limited in Q3 2024. Excerpts 

The Bola Tinubu Administration is one year old and professionals have been expressing opinions on the state of the economy. What is your assessment of the Nigerian economy in the last one year?

I will say a mixed bag. When I say mixed bag, I mean the good, bad and the ugly.  So, let’s touch on the good. The good thing is that democracy is still being maintained. Whether it is in a good economy or bad economy, our people are angry and democracy is still existing. There is no better form of government except democracy. The Tinubu-led government is still holding it together. But when you start going into the bad, you will see that at the top that, our people are suffering. The hunger in the land is in tremendous proportion and the people that are running us, particularly the legislature, for example, don’t care, because if they care, daily, they’ll be talking about how to reduce hunger in the National Assembly, rather than talking about changing our national anthem.

The national anthem took us back to the olden days. Rather, we’re supposed to be moving forward. But when you now go into statistics, everything is in red. Interest rate, Gross Domestic Product (GDP), cost of living, interest rates, inflation rate and foreign exchange rate. Everybody is closing shop in Nigeria and electricity prices have gone up without major reason. For example, in my own instance, we have an Hotel in Ikeja GRA, in April, we had a bill of N1.5 million. For May, we had N5.5 million from N 66 per kWh to N 225 per KWh.  They told us it was reduced but from the bill I got, there was no reduction.

Unfortunately, the team that APC has put together I think it’s about time they rejig them, and I mean those that are not performing. The trail approach of the CBN and the Minister of Economy Minister of Economy need to be looked at carefully. Nigeria is not what I would call a trial and error economy.

Which areas of the economy would you advise the government to pay more attention?

They need to sit down and ask how do we build confidence?. What is missing in Nigeria at the moment is confidence. If we can bring back confidence, foreign exchange will regain its strength and Nigeria will grow. And everybody will be happy. It is that lack of confidence that is making Nigeria to be what it is today. How do you build confidence? You set out a growth plan, short term, long term, medium plan, you stick to it. Before you execute any one of those plans, you will accord stakeholders to a meeting. This is what we want to do. If you’re not happy, we review it and  not that you implement it and you cancel it which is a good example of recent cancellation of increase in bank charges to cover cyber security. If the people had been consulted from day one, the cancellation wouldn’t have happened.   I’m told that it was a law that has never been implemented for a while. CBN and the Ministry of Finance’s loss of confidence is affecting our economy. Everybody is just betting, trading and speculating against the Naira. Exchange rate volatility and soaring inflation rate have continued unabated despite the on-going reform of the economy by the federal government. What went wrong? At the root of it is actually the statement that the President made that oil subsidy is gone. It’s like oil subsidy was the seed that is planted. It germinated into everything we are seeing today. Immediately he made that statement, prices of petrol started going up and people started losing confidence in Nigeria. They started withdrawing all their investments, which now leads to inflation and high interest rates. And the question I keep asking is, is it true that subsidy is gone? Compare the landing cost of PMS worldwide with that of Nigeria and you will understand how much we are paying for PMS in Nigeria. Everywhere you go, the difference between diesel and PMS is not more than five per cent. Obviously, our three refineries are still moribund and they keep promising us. So, if we can get those refineries back on, things could get better. We are now also told that the Kaduna refinery can only take crude from Brazil and cannot take Nigerian crude, which is another problem. Our problem is endemic and this one year is too short to measure Tinubu’s performance. Let’s give him more years and hope the future perspective is bright.

Do you agree with the policy of unified exchange rate?

Don’t forget that the rule of demand and supply determines price. It is basic economics. If you don’t have demand, you don’t have supply, prices will respond accordingly. So what you have at the moment, whether you unify and equalize, there is not enough foreign exchange supply and prices have to continue going up. But as supply comes in, it will start going down. It is a policy that cannot achieve anything. But in the long run, as confidence returns, foreign exchange will start coming back into the country.   I keep on saying in the short- term, rate will go up. But as we are about to enter the medium-term, rate will come down. The price will keep swinging but on the long-term trajectory, it will be downward because they are working hard on confidence building. There is foreign exchange in Nigeria and it is sitting in domiciliary accounts. They’re afraid to bring it but show them confidence, they will bring it. In the long run, just before the next election, foreign exchange will gain strength and that is my prediction.

The Nigerian Labour Congress (NLC), is still at loggerhead with the federal government on the issue of minimum wage. What is your advice.?

My own take has been a historical problem head showing up. In an advanced nation, wages are agreed and it goes up every year by inflation. If you are in January this year, your salary will be increased by the inflation rate of September last year. That is what we’re missing here. Then we’ll fix wages  and nobody will do anything to that wage for the next 10 years. Then they woke up one day and started fighting. Whatever wages they agree to this year, they should increase it every year. There’ll be no more need for us to sit down and discuss wage increases again. What the organized labour is demanding for is ridiculous. It will skyrocket inflation in Nigeria. I will also increase my house rent by 1,000per cent so I can collect my own from it. But I believe we have N30,000 and it was fixed probably years ago. Whatever  is the inflation for the past two years, should be added to it. But the problem is that the more you put pressure on wages, the more inflation, because we will have too much money chasing fewer goods that is not enough. Therefore, the goods prices go up according to the law of demand and supply. Labour has to take it softly.

How can investment in real estate enhance the Nigerian economic development?

Over the years it’s been proven worldwide, and that when the government invests in real estate,  a lot of jobs are created. If you look at just one bungalow, the number of people that you will employed. But we have not attacked the problem seriously. During the days of Lateef Jakande, there was a saying that we have about 16 million deficits and they are now saying it’s about 22 million deficits. In the last 25 years, Nigeria has not built 1 million houses and it is shame to our all governments. They will do 10,000 here and there.  Invest in home massively, create jobs, transfer wealth so that people can take ownership and then use it to assess loan. For example,   if you have done this five years ago, do you know what value those houses will be worth today?. Do you know people can use it to access loan and invest in small businesses?  It will not cost the federal government a kobo to give land to people like us to build and then we share the homes with them. I am telling them this and nobody is listening- that is the way forward.

What policy measures can attract investors?

Give whoever that wants to invest free land. For example, If you give me one plot of land, I can build six flats. For the federal government giving me the land. I’m going to give them two flats. I will use three flats to  and then keep one flat as profit. That is how it’s supposed to be done and it will not cost the federal and state a kobo. They want to build properties by themselves and it is a waste of time. Give us confidence , enabling environments and not all these multiple taxation as interest rate is a killer of the real estate industry.

How are you going to access capital to build more property? 

There is what is called developers’ mortgage now. Mortgages are given  to people who are buying homes from us , two-year mortgages. There is money and we know how to tap it. We shall pull funds together from the capital market and we will go to the international market and raise funds. We can build houses for Nigerians once government can make the business environment conducive. 

News has gone viral that Haldane McCall has applied for listing by Introduction at Nigerian Exchange Limited (NGX). Will the listing be done this year?

Yes, we are currently working on the regulatory requirements.  I believe by the grace of God, before the end of third quarter 2024, we should be able to complete it. We should be able to access more funds because we have a plan to build the huge numbers up to 10,000 units in Majidun before Ikorodu for affordable housing. We will access funds from the capital market to build affordable housing once Haldane McCall becomes a quoted company. 

Apart from Halden McCall Plc, can you tell us about the subsidiaries and what informed the proposed listing of Halden McCall?

We are only involved in two businesses which are real estate and hotels. So our hotel business, we own three hotels in Lagos at the moment one in GRA, Ikorodu, and then one in Surulere and they are doing well except that our cost of energy has skyrocketed  and this will affect our room rates going forward.  We shall continue to offer quality service to our customers. But we have to cover our costs. This  present operating environment is squeezing our profits going forward and the government is the root of it. We are looking for alternative energy and will stop using electricity from the government. Using alternative energy means revenue generated by the Disco  will fall and most of these will get busted and that’s what they don’t understand. At our hotel now, I’m looking at alternative energy. If I can invest in it in this one month, I’m going to cut off NEPA and so all the N5.5 million for me will go dead. A long time goal will be defeated and we’re back to square one because there was no adequate consultation before doing it.

As an entrepreneur, how are you coping  with the tough operating environment?

For me, it is by the grace of God that is on our side. He promised to bless the work of our hands. It is not by my knowledge but by grace. Most people who have more knowledge, their business has collapsed.

In this tough time, our prayer will always be God. Let us find a way to find a way out and it’s not easy, and it’s still going to be tough for another one year before we will start seeing results . As we enter this election year,  it will start getting better.  But for other businessmen out there, all I’m just going to say is don’t panic, dig deep, and re-evaluate your costs. Unfortunately, if you are in an advanced nation, all these decisions, they will have talked about the effect on unemployment. Unemployment in Nigeria and all the indices are negative.

In the next 10 years where will Haldane McCall be?

We are listing our Holdings company called Haldane McCall Holdings Plc.  We have two subsidiaries called Suru Homes Limited and Suru Express Limited. In our homes, what we do historically is buying big land on the mainland, Highland and Ikoyi. We cut them into small units, build it and sell. Then we go into affordable areas like Ikorodu and we do Estate.  We have done about four in Ikorodu in the past. We go into a medium class area like Ebute-metta and will build. We have history, and it is that history that we want people to come and partner with us so that in the future, we can do more and the future is very bright.