‘Construction firms need FG tax break’

Construction Kaiser Limited started with a N40,000 project, what is the level of the company’s project execution now?Well, I don’t want to talk about figures now but I can tell you that we have done major infrastructure projects, building projects that have national impact. If currently Nigeria is producing 4,000 megawatts of electricity, and our […]

Construction Kaiser Limited started with a N40,000 project, what is the level of the company’s project execution now?
Well, I don’t want to talk about figures now but I can tell you that we have done major infrastructure projects, building projects that have national impact. If currently Nigeria is producing 4,000 megawatts of electricity, and our company is involved in 1,000 mw. I think that is worth celebrating. We have had our challenges too.
What do you think is responsible for slow growth of the nation’s construction industry and what major advantages do the expatriate construction companies have compared to the indigenous companies?
Firstly, construction is a high assets business but the margins are very slim. You need to invest in the business because it takes time to earn a reward and that is what a lot of Nigeria’s entrepreneurs in the business does not know. Entrepreneur needs to show discipline. When a client gives an advance payment of N1 million for instance, you cannot take N500,000 to buy a car, because every amount of money paid is meant to buy something for the project so, i will say our Nigerians in the past did not show discipline, secondly is the scarcity of well trained people. In the western world research work goes on daily, training and retraining day and night but look at what is going on in our educational system, we don’t even have educated people any more even when we employ people we have to train and retrain and we as a company, we have identified that area that we need to invest in. We have invested in training and equipment. The multinational companies they have access to loans in their home countries at single digit rate and long tenor but if we want to buy equipment we have to run to local bank and borrow at double digit sometimes at 21 per cent with repayment rate of two years when our competitors are borrowing at 3 per cent with 10 year payment schedules. This is tough. The multinational companies can come into the country with their staff, though educated, Nigerians go to their countries and do better than them in schools. We have sponsored people to various courses around the world.  We need to invest more in our business, show more financial discipline and trained. However, we also need support from government in the area of tax break. If we are spending so much more in educating people, then the country should appreciate us and give us some tax break. Anywhere in the world, construction and manufacturing sectors are the most employer of labour. We need to be supported in order to be able to continue to employ people. If there is no project how do you employ people?. Why are we having insurgencies, kidnapping today is because they are jobless. If those who are busting the pipelines, terrorism etc are gainfully employed, they will not do all those things. Another advantage indigenous companies have over expatriates is that we have local knowledge. Nobody understands our country more than us. So, we have something to offer even though they have better technology than us we need to aspire to improve our management, show good corporate governance.
One accusation often levelled against indigenous building and civil engineering contractors is that they are more likely to abandon projects, what’s your take on this?
Let me tell you that things are changing. Companies like ours and our contemporaries are beginning to understand that an advance payment is not your money, it is the money that is to be used for work and this day, the industry is involving whereby they will ask you to go and bring a bond, a guarantee. In those days, they used to ask for insurance bond, but now is bank bond. If you take a project and you are paid advance payment you need a bond from the bank and before you can get that bank has you to bring a securities, a property as collateral. If you take money and you divert it bank will be after you for repayment and your property is up for grab. So if people are giving jobs they deserved not on the basis of whom they know then we won’t have all these problems. I think you will agree with me that abandoned projects are reducing especially in the private sector and that because procurement system in the sector is improving. Government too is making stride, improving.
We noticed that construction business is an all comers’ affair and incidences of building collapse are increasing daily. Does it mean that the industry is not regulated?
I want to apologize on behalf of all qualified engineers. Any time I hear of building collapse I’m embarrassed. Why am I embarrassed is because I am an engineer and I feel that it is our responsibility to ensure that people are safe. It is one of the things we learnt in the school to build for the safe of the occupants. Not only they are safe but feel safe and get value for their money. We are in the society that has its problems and engineering and construction sector cannot be separate of the society in which it operates. We all know that we have our laws and regulations but our biggest problem is enforcement.
There are some states that are doing very well with approvals, monitoring constructions because before you build you need to go for regulatory approval, construction engineer check it, architect carries out its own and mechanical engineer too. Let me say that about 10 years ago, controls were weaker but thing are getting better. So I think that there should be more enforcement of laws and also again, those who are not qualified should not be allowed to build more than bungalow. COREN should use that but again, education. Students come out of school they tell you they made two one they don’t know how to read a drawing and translate it to reality. This is unfortunately, though that does not mean they are not intelligent but we have a systemic problem in our educational system. Lecturers go on strike today tomorrow they call it off, the next day they start their examination, how can they understand the fundamentals of what they were taught.