SUNDAY AKINTOLA: HOW MUSHIN HOME BOY GREW MULTI-MILLION NAIRA BUSINESSES IN MUSHIN, LAGOS

SUNDAY AKINTOLA is specially proud of beating all the odds as a home boy growing up in the densely populated Mushin area of Lagos State to become a successful owner of business chains that span micro finance and telecommunications. In this interview with GOKE OLUWOLE, and TAI ADEWALE SHOFELA, Chairman of Sovereign Micro Finance Bank, AKINTOLA shares his journey to conquering the litany of challenges that littered his path to business success.

How would you describe yourself?

Yes, by His grace, I am Sunday Akintola, a gentleman who happens to be one of the lucky entrepreneurs whose company is positively impacting on Nigeria in the area of poverty alleviation. I am the Chairman of the Board of three companies; Covenant Perazim Investment Limited, a multi-facetted company established to operate in the Oil, Gas and Agriculture sectors, Sufi Enterprises Limited, which is a company involved in the sale and distribution of GSM companies recharge cards, and Sovereign Micro-Finance Bank. I am a graduate of Accounting from the University of Lagos. I am also an ex-banker having worked with one of Nigeria’s fastest growing banks Zenith Bank Plc.

Briefly, can you tell us the background to how you grew this multi million naira business empire?

Most big businesses always start in small ways. This multi-million business concern, like you rightly said, is a business that was registered first as Covenant Perazim Investment Limited in November, 2003 while I was still in service with Zenith Bank. It was then the thought occurred to me on what I could do to change my life and touch the lives of other people around me. I thereafter initiated the venture, but we started operation with four staff which included my wife and my brother in-law in a shop here in Mushin from where we sold telecoms recharge cards.

I resigned from my banking job six months after we commenced operations, to be precise, July 1, 2004, two days after securing the NCC dealership licence. In fact, I got my licence on a Sunday and I put in my resignation the following Tuesday, and by August, 2004, I was already able to raise the mandatory N5 million to join the recharge card dealership community of the then V-Mobile Network with Sufi Enterprises Ltd.

All these while, my colleagues, some in the banking halls and some from other companies like Chevron, Exxon-Mobil and other multi-nationals, were greatly disturbed about my decision to go into business; they asked if something was wrong with me and how could I leave certainty for uncertainty; leaving the bank to go and sell recharge card. For them, it sounded absurd. But I told them I wanted to go and develop my business.

Things started to crystallize for us because all we were doing then was to get some money to buy and sell recharge cards until we had our breakthrough when in 2006 the V-Mobile Network started seeing us as a serious business entity, and in 2007, we won the best dealers award of the V-Mobile Network. That same 2007, we were among the 25 dealers selected in Lagos and promoted to the status of big dealers. However, as part of the requirements of that new status back then, we were also expected to have our own building as office complex. On the back of this, we decided to build our own building. Thankfully, by the end of 2007 we were able to build our own office complex.

Personally, how had your background influenced the development of your business?

I am a proper Mushin boy, born and bred in this community where people have the notion that nothing good can come out of the community. While we were in the secondary school, those of us from Mushin were seen as boys from homes of hooligans and thugs but to God be the glory, we came out very disciplined, because I am fortunate to have very responsible parents who gave us good up bringing.

Can you believe that as far back as 1963, my Dad refused all discouragement from others not to send my elder sister to school; he sent her to the only private boarding school then in Abeokuta, the Baptist Private School, Idi-Aba, Abeokuta. People were laughing at our parents for sending my sister to the boarding school. Ironically, I had to attend a public school, Odo Abore Primary School in Mushin. I guess my brilliance then impressed the school management such that they made me the school’s senior prefect.

After finishing at Odo Abore, my parents preferred that I schooled out of Lagos State, they rejected my preference for the Nigerian Model College at Idi-Oro, a suburb of Mushin. They sent me to Baptist High School, Saki, in Oyo State. From Saki I proceed to the Lagos State College of Education, and later, to the University of Lagos where I studied Accounting. I also taught in a primary school for two years before I joined Zenith Bank in 1993 where I spent 11 years before quitting in 2004.

Though my parents were not rich, I remember that they always struggled to pay our school fees then. They thought us about God and, my mother, especially, taught us the principle of prudence and wealth creation. All these contributed to my success today, but the secret to my business success is God. There is nothing we do in this office that we don’t ask for God’s favour, He is our Alpha and Omega. In this office there is nothing we do that we don’t tell God; we pray in the morning and we pray to close each of our day’s operations.

As a major player in the telecoms recharge card distribution and marketing sub sector, how would you describe the industry?

Yes, the industry is full of illiterate and semi illiterate people, but with the new policies from all the companies, I expect that the situation will finally change. I believe that there will be a lot of changes because it is only in the telecoms sector that some illiterate people will buy something at the rate of N400 and sell it for N250, that is about 80 per cent less than the cost price. But now, the business is getting more exciting, interesting, and rewarding than what it used to be.

What prompted your interest in establishing a microfinance bank, which is seen as very risky commercial engagements, or do we reason that you preferred this because of your banking background?

It wasn’t my background in banking that inspired me to establish Sovereign Micro Finance Bank, rather, it was due to my interaction with the people at the grass-roots of my immediate community here in Mushin while I was operating the telecoms business. The economic plight of these people rekindled my interest in empowering the people in my immediate community. You know when we were doing the telecoms business a lot of people always came to us for financial aids in form of soft loans, but there was no way we could be able to solve all these needs, so we now saw the opportunity to serve and empower our people when the CBN came out with the guideline and licensing procedures for establishing micro finance bank, that was the vision.

Again, there was this experience I once had while I was trying to establish a friend in the recharge card business in Abeokuta. I then realized that what most people need is micro-credit, soft loan, when you don’t help people within your neighborhood they will be the same set of people that will make life difficult for you. Do you know some of those my friends who thought something was wrong with me when I left Zenith Bank today are now begging us to be part of what we are doing. But we shall adopt them provided CBN reviews its policy on the board membership; we are also looking for a way to involve them through our forthcoming private placement.

Don’t you think it is easy for Nigerians to abuse the concept of micro finance banking just like the earlier banking and finances houses of the past?

The establishment of microfinance banks and transformation of community banks is a thought in the right direction by the government, it shows the government knows what the needs of the people are; forget about the bastardization of the earlier finance houses, I can tell you the impact of the micro finance bank vision is already showing on our economy. As I am talking to you now, we are highly regulated, every MFB has a CBN supervisor attached to it and every bank is mandated to do a monthly return to CBN. They will trace and check all the loans you disbursed that month, so there is no way you can give all the loans to your family like in the era of finance houses and commercial banks of the past.

You can log on to the CBN’s website and check the full list of the MFBs as they are arranged alphabetically, this is also part of the effort to showcase them (micro finance banks) and for you to know the ones you can deal with, I can assure you there is no MFB that will like to go under because there are lots of opportunities in the micro financing business

Of all the MFBs in Lagos what do you think stands your Sovereign Micro Finance Bank out from the rest?

We believe so much in God, and this is the anchor of our own business philosophy… to be the fulcrum of creating financial independence for the people. You see, all these area boys, some of them have great talents but what they mainly want is financial empowerment. One of them approached us about three months ago that he wanted to have his own bus and I told him to go and start saving, that if he can save N50,000 out of the N450,000 he needed to buy a Faragon Volkswagen Bus, we will fund it.

He jumped at the offer and each day, he deposited N1500 with us out of the N3000 of his daily income from the transport business. We also work with other professional groups on how to empower their members. All these are parts of the ways to eliminate criminality from their minds because if someone has a wife and kids and a job, his approach to life will be different. He will not be thinking that he wants to die because he already knows he has a stake in this world.

What gave you the impression that Mushin people deserve another micro finance bank despite all the commercial bank branches that populate the roads?

I don’t think there is any other community that I will want to serve than the Mushin community; these are the people that deserve to be uplifted and empowered financially. It is the rural people who need micro-credit or micro-funding; our vision in Sovereign MFB is to empower all these so called area boys, and since I grew up in this area, I understand the economic philosophy and psychology of the people.

We’ve already started some collaboration with the professional groups’ trade and artisan associations on how to serve them better, and even the National Union of Road Transport Workers [NURTW]. We hope to set them up with financial backing of our bank.

Our operations here as telecoms recharge distributor had opened our eyes to many needs of the people. We are now able to understand the need of the people of this area, ask anybody here around Mushin, if they know Sufi Enterprises Limited, they’ll tell you that they know us very well, it is the goodwill we’ve created over time that is rubbing on the bank.

I have also realized that commercial banks are too big to recognize micro financing opportunities, they will not fund or support your business when you are small, it is always the big projects of billions and millions of big establishments that they will always be interested in funding while the man whose business need just N5, 000 to survive is left to wallow in abject poverty.

Which was the riskiest investment venture you had made?

The biggest investment risk I ever took was the outright sale of my entire investment portfolio when I couldn’t secure a loan to finance this MFB project. A friend at FirstBank just told me point blank that since my office complex didn’t have a certificate of occupancy, no bank will give me a loan and the best, he advised I did, was to liquidate my stock portfolio. That was how I sold all my stocks just as if I was been pushed by a spirit but to God be the glory, I was lucky enough to escape the stock market crash now being witnessed by investors. Up till today, my stockbroker still enquire from me how I was able to escape the downturn in the market.

There is no business that doesn’t have its own ups and downs, tell us the challenges being faced by operators of microfinance banks in Nigeria?

Our major challenge is commercial banks, they are becoming jealous of our achievements, which is why you see a lot of the country’s mega banks transforming into micro banks. They see us as threats, because they know we can go for clearing by statutory order and with this the commercial banks always stalemated us. At present, we have a serious battle with a commercial bank over a facility of N110million we got from a company which the company, the bank and us decided was supposed to be given to us but when the money was ready, they sat on it, denied us access to it because of our capital base. We need more money to service the micro needs of our people. What we devised now is that we have contacted about three to four banks for our clearing, one is in charge of the financing of Okada scheme, one for the NURTW scheme, while we also get another to manage our other schemes because it would be too risky to keep all our good eggs in one basket.

We are currently working with a commercial bank to provide us with an ATM which will soon be installed to serve the people of Mushin. We are going to table most of these problems before the Central Bank Governor at the next conference of MFBs in Nigeria. Maybe the Governor can help us caution the commercial banks.

Another major challenge we are facing, like every other business in Nigeria, is the problem of power supply. Large amount of our money goes to fuelling of generating sets, and mind you, we bought our own transformer at about N1.8million while our 100 KVA generator costs a whopping N2.9million and this we fuel with N8, 000 daily. If we plough these back into our business do you know the number of people that will benefit from our micro finance bank? The issue of multiple taxation, too, is another serious challenge to business in Lagos.

As an entrepreneur what will you say is your greatest achievement?

What I personally see as our achievement may not be too fantastic to you but for a company that started in a small shop five years ago on this street, selling recharge cards, now owns an edifice housing the headquarters of all our businesses which include banking, aquaculture, oil and gas, and telecoms; all these we can boast is valued to be above N100million.

We have about 60 well remunerated staff, with at least over eight brand new Toyota cars for our staff, and in the next three months, we are going to take delivery of another set of five new Toyota cars for our middle cadre officers. Some of our staffers who were employed some years ago with school certificates are now graduates while some are about completing their choice of courses in various higher institutions. While studying, we make sure they don’t lack anything. None of our staff has been involved in stealing and none had left us. We are still one united family five years after we started. Last December, we harvested our fish pond and the return from the investment yielded about N1.5miilion because it is safer to diversify to other businesses to expand our capital base and income sources.

What is your management style?

I am a hard working person, and all my staff members know this. I am always the first person to resume here and the last person to leave. Can you believe I live in Alagbado, yet I’m always very punctual at the office? You’ll see me resume here by 7.30a.m. everyday, I mentor my staff, they’ve all imbibed discipline from me. You know, I operate an open door policy here, all my staff are well remunerated. If a CEO is not disciplined, the staff will not be disciplined. Again, let me tell you that yesterday (Friday, 9 January) I was with one of my colleagues way back at Zenith Bank and he was reminding me how disciplined we were then while employed at Zenith Bank. He said it was I who once said that I dreamt that one day I would have my own bank, but we all did not believe it then because of the situation surrounding the licensing of commercial banks. But today, both of us are owners of full fledged micro finance banks; he owns Olive Microfinace Bank on Awolowo Way, Ikeja, Lagos, while my own is Sovereign Microfinance Bank, Mushin, Lagos. What we thought was impossible is now a reality in our lives. God has done it, it is easy now to grow a micro-finance bank into a commercial bank and that is our future because in the nearest future we hope to go public.

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CHEVRON CORPORATION BACKS OUT OF SALE OF CHEVRON NIGERIA TO DANTATA

When on 19 September, 2008 the media relations unit of Chevron Corporation USA circulated a press announcing that its subsidiary, Chevron Africa Holdings Limited had agree to sell Chevron Nigeria Holding to Corlay Global SA, the press release carried a caveat in compliance with the Cautionary Statement Relevant to Forward-Looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995.

The cautionary statement informed readers that:

“Some of the items discussed in this press release are forward-looking statements about Chevron’s activities in Nigeria. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “estimates” and similar expressions are intended to identify such forward-looking statements. The statements are based upon management’s current expectations, estimates and projections; are not guarantees of future performance; and are subject to certain risks, uncertainties and other factors, some of which are beyond the company’s control and are difficult to predict. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.”

The caveat may just be appropriate because in the wake of the announcement of the agreement of sale of the downstream operations of Chevron Nigeria to Sayyu Dantata’s MRS, the intensity of the legal battle which had dogged the process of bidding for the 60 percent holding of Chevron Corporation held through Chevron Africa, moved some more notches and in the light of this, it is believed that the Chevron is considering appropriate channels to announce a reversal of its announcement.

Femi Otedola, Zenon Oil and Gas and Africa Petroleum Chairman had secured an injunction at a Lagos Federal High Court restraining Chevron from selling the 60 percent holdings without recourse to his 19 percent minority holding which, he claimed, may be jeopardized if the contested 60 percent holding was sold to another bidder who may lack the required expertise and resources to profitably operate the business.

Despite the injunction, Chevron parent office in San Ramon in the United States of America had gone ahead to announce the agreement to sell to Dantata’s company in defiance of the court order. Industry insiders reasoned that the announcement might have been a pre-emptive move to undermine the legal process in Nigeria. But beyond this consideration, industry insiders have argued that Chevron must have been emboldened to make the announcement in consideration of the influence of the backer of Sayyu, a profiled wealthy industrialist whom Chevron believes could pull the right strings in Nigeria to side-step the court proceedings and to also get the backing of the political power base in the country to talk Otedola into surrendering his claims to Chevron.

As was expected, Otedola initiated, through his lawyers, contempt proceedings against Chevron at the Federal High Court but last week Wednesday, he dramatically applied to withdraw the contempt proceeding in the court. This had sent some confusing signals to a growing population of the bid for Chevron.

A source close to Otedola, however, informed that the withdrawal of the contempt charge was strategic.

“The contempt proceeding had to be withdrawn because it may turn out to be a distraction from the main issue of the case.” The source said.

Another source believes that application to stop the contempt proceeding in court may not be unconnected with new revelations that Chevron Corporation, the parent company of Chevron Nigeria may have, indeed, stalled the process of transfer of the 60 percent holding in Chevron Nigeria to Dantata’s MRS in part, because of the on-going legal tango, and in part, because the required sum of money to consummate the purchase have not been made to it.

“The fact is that most Nigerian banks that are supposed to finance the acquisition have backed out, so it’s as if it is difficult to raise the fund locally.”

Any one of the two reasons for the reported abortion of the sale agreement might have thrown the spanners into what the initiators of the MRS bid for Chevron had planned by way of making the Nigerian public pay indirectly for the funding of the 60 percent shares of Chevron Nigeria.

“The strategy to my mind is simple. If the banks financed the acquisition of Chevron, it would have been easy for Sayyu and his backer to pay back the banks simply by selling 25 percent of the holding of Chevron to Nigerian investors through the Nigerian Stock Exchange. This way, they will still hold majority holdings in the company and they would have used money raised from ordinary Nigerians to pay back the money the banks used to finance the initial acquisition.” The source reasoned.

Meanwhile, Chevron has also made public its intention to sell its downstream operations trading under the Caltex brand name in Kenya.   According to AP, the front runners eyeing Chevron’s elaborate retail network include State-owned National Oil Corporation of Kenya and Gulf Africa Petroleum Corporation (Gapco). The two control a paltry 3.65 per cent and 2.65 per cent retail market share respectively.

Speculation is also rife that the cash-rich Oil Libya is equally an interested party, perhaps seeking a foothold in the Mombasa-based Kenya Petroleum Refinery Limited (KPRL), which has been much sought after by big multinationals, and is partly owned by Caltex.

The law, as spelt out under the Kenya’s Energy Act, requires Chevron to notify the Energy Regulatory Commission (ERC) of its intention to divest or transfer the licence to another oil marketer.

Previously, only the Treasury was notified in the event of divestiture by any firm.

“If the sale of Chevron will be through competitive bidding, this process may take some time to be concluded,” said Mr Peter Nduru, Head of Petroleum at ERC.

Treasury is reportedly pushing for Chevron to sell off only its Kenyan business unit to National Oil, despite plans by the global petroleum giant to sell its Kenya and Uganda operations as one bundle.

The AP report, however, observed that unlike in Kenya, this sale transaction on Chevron Nigeria was closed quickly when Chevron Nigeria hurriedly announced the agreement to sell to MRS.

BETRAYAL! WHY OTEDOLA, DANGOTE FALL APART

The prospect of Mr. Femi Otedola and Alhaji Aliko Dangote engaging in direct business competition is already exciting Nigerians across the economic strata.

Until about two months ago, Otedola and Dangote have been known to be buddies in both the social and business senses. A source that had trailed the relationship between the two observed that though Dangote had had preeminence in the nation’s economic sphere before Otedola, but as soon as Otedola emerged in the big league of business owners about six years ago, he and Dangote became a pair both in public places and business alliances.

 In the early days of Transcorp, Otedola and Dangote were on board of the company, positioned back then as Nigeria’s answer to the dominance of the multinationals. Perhaps the most high profile business alliance between the two was the Blue Star Consortium, a special acquisition vehicle the two had used to acquire controlling stakes in the Port Harcourt and Kaduna Refineries. The acquisitions, were, however, revoked soon after Alhaji Umar Musa Yar’Adua assumed the office of the nation’s president.

Beside, though Dangote is known to be the face of Obajana Cement Company, a cement manufacturing concern propositioned to be the biggest in production capacity in Africa, Otedola, his friend has also been mentioned to be part of Obajana in terms of stake holdings.

But now, it would seem that the business collaboration between the two may have been put under pressure arising from what sources close to the very moneyed men describe as betrayal of trust.

 “I think it all has to do with the battle to acquire Chevron Plc, the downstream arm of Chevron Oil and Gas in Nigeria.” A source close to the two said. “Of course, you know by now that Femi had an intense interest in the acquisition of the company. The benefits to him were obvious, if he had acquired Chevron, he would have become the indisputable dominant operator in the downstream sector of the oil and gas industry. He would have merged Africa Petroleum, (a downstream behemoth in its own right after it was merged with Zenon) with Chevron Plc. With the two you can only imagine Femi’s competitive edge in the market place” The source revealed.

“Before the divestment of Chevron Oil and Gas from Chevron Plc was made public, Femi had apparently got information on the move and had shared his desire to buy Chevron with his friend, Dangote. I know that initially, Dangote was all in support of the scheme by Femi to acquire. But that was until Sayyu Dantata came into the picture.” The source said.

Sayyu Dantata, aside being a former business protégé of Dangote, is also related to Dangote, so it would seem natural that the balance of emotions by Dangote would tilt in favour of Sayyu.

“As it turned out, I am not too sure if Femi thought along that line. At least, he and Dangote had been at the Chevron thing for a while so there would have been no suspicion of Dangote’s shift of loyalty. So as the negotiation and bidding for Chevron proceeded, Femi constantly updated on his next moves and strategies. As issues evolved, he got to know that Sayyu’s MRS Group, the company that eventually won the bid was always outflanking him. The long and short of it is that there is the suspicion that Dangote might have availed his cousin, Sayyu of information Femi had shared with him.”

The same source said there had been a confrontation between the two where Dangote explained that Otedola could not have expected him to go the whole hog with him in consideration of his (Dangote) relationship with Sayyu.

“You know these people are matured men, you don’t expect them to bring their small fights to the public place, what I know is that Femi has decided to review and locate any opportunity in the economic space that enable him contribute to the economic advancement of the country. So all these talks about Femi taking on Dangote in competition by deciding to go into establishment of cement manufacturing plant is principally about expanding his business horizon. It has no direct bearing on the role Dangote played in the bid for Chevron.” The source explained.