Dayo Babatunde, CEO, DB Professional Services Limited and DEB and Co-Chattered Firm, an accounting firm that specializes in consulting, auditing and providing advisory services in a interview with BusinessDay’s Financial Analyst Micheal Ani gives suggestion on how the government can raise revenue, reduce cost and grow the economy.
How can you describe the ease of doing business in Nigeria?
Yes,our country is experiencing a fragile growth with many companies closing down operations.A major concern that needs to be looked into is the rising cost of doing business in Nigeria, which has been the central of them all.
Revenue growth for most business has remained virtually at the same level in the wake of inflationary pressure on cost. Every business is now looking for ways to cut down cost to improve bottom line and liquidity position. From my own experience, my advice to what companies can do to withstand this tide is by carefully planning and sourcing in identifying the scope and the specific needs of each of its clients, by using IT to drive key business services.
What are some of the challenges facing the sector?
The challenges that are being faced by players in professional services industry in Nigeria includes: Shortages of top talents – like I said earlier, we have moved to the era of digital analytics and robotics and to source for these talents, it will not come cheap in terms of money and availability as such, there are shortages of talents. As a result of this, attracting and retaining talents with the right knowledge and skills is a big challenge and we cannot run away from it.
Another thing is on the issue of pricing, clients will want to cut down on their prices compared to the value of the services that you render, which may generally lead to a fall in the demand for services given that clients are cutting down on their pricing. In most cases, you need to discount because if you don’t discount, you may see yourself edging out of competition.
Also, competitions arising from firms are becoming stiffer and stiffer this is because you do not have very small firms participating now because of the mergers and acquisitions that are coming with big players, and with big players, the competition will be very tough for the new entrants.
Information technology is another area because the pace of Innovation is very fast and the challenges are there.
Client expectation: This is because clients are becoming more sophisticated and they are demanding for sophisticated services.
Another major challenge is with the issue of multiplicity of taxes, which to me is a disincentive to business and investors, and it is not something that is healthy for the operators in our economy.
Revenue shortfall has been a problem in this country. How can government roll out strategies to raise revenue?
The first point of call is to block and seal up all leakages within the system. As I said before, they must not be looking only at revenue aspect.
If you are raising revenue and cost profile is there to mop it up, then you can imagine. From my experience, you don’t look at revenue in isolation from cost. I will advise them to manage the cost end. So, the first step I will suggest is for them to block and seal up all leakages within the system.
Also, in as much as I believe in the efficiency of the private sector, I will not advocate a full move of the Nigerian states to a pure capitalism economic system, rather, I will advocate a balance between the two of them.
Another measure to point out that many people have been talking about but can’t see much achieved by the government in that area. That is, you avoid what I will call key sector risk. Key sector risk is a position where you rely heavily on a particular sector and so your fortune depends squarely on that sector, and if that sector crashes, then the whole economy crashes, which is what we are experiencing here.
Everything is on oil and gas, even power sector depends on petroleum. Meanwhile, we have revenue generating activities residing in each of the 36 states of this Federation. State governments are even owing workers salary because they rely mostly on one channel of revenue.
Give us a brief insight into this new firm?
DB Professional Service Limited was set up to warehouse every consulting, advisory, due diligence, bankruptcy, and so on. We also have the DEB and Co-chattered Accountant that will be coming on board soon, which is a public accounting practicing firm specializing in assurance. And when you are talking of assurance, you are talking about auditing and fees including fraud, investigation and dispute resolution services.
DB Professional Services will also cover every other consulting engagement like advisory, taxation and due diligence. By due diligence, we mean the totality of due diligence, including HR due diligence; Fiscal due diligence, which has to do with taxation; financial due diligence; IT due diligence and many more, these are some of the areas that will be covered.
Were there any flaws that you noticed in the system that motivated your drive towards establishing DB Professional Services?
It is really not a response or inadequacies to any handicap in the sector, but I feel the ultimate of a professional is to create its own input. If you are a professional, and you are yet to create your own input, then you are not yet fulfilling.
In EY, I was a partner practicing in a large practice that has over 5000 partners globally. However, having retired from that, I still have the energy and the skills. It will be criminal on my part to just go and be sleeping with my years of experience. So, I believe that I still have a lot to offer to the economy, that is why I now opened my new firm at least to contribute my quota to the development of the economy and the development of the sector.
Having spent 25 years with EY before starting up your own, what new things will you be bringing into the sector?
I have a robust experience with EY spanning over 25 years, and as I had mentioned to you earlier, I will like to equally contribute my quota to the economy in assisting the government and giving them suggestions as it affect the economy.
Also, to help businessmen in managing their business affairs, by assisting them in coming up with a very well structured and reasonable taxation. However, it should be noted that I am not talking about cutting taxes, but in making sure that they pay exactly what they are supposed to pay to the government.
Also, with the economy growing, you will have businesses that are merging, acquiring and all these are some of the services that will be expected from us which I am going to be rendering at global best practices.
What will DB Professional Services be doing differently in servicing its clients?
Part of the things I will be bringing to bare is integrity and courage. That will take us to what is called exceptional client services, which means being insightful and resourceful to your clients in managing their affairs, you want to be connected so that you are not too far from your clients. Anything that will make them not to sleep, you will want to assist them and then you want to be responsive.
It is like online real-time resource and I want to bring to bear what I call exceptional client services. Also, in DB Professional Services, we will be rendering professional opinions so that our clients and even the government can take position. Others may have done it in the past failing, but that will not discourage us from proffering solutions to the government.
Who are your target customers?
They are companies and individuals. We have the corporate clients and the individual clients. Corporate clients for companies looking for auditors or that want to change their auditors. I hope you are aware that the corporate code is that once an auditor stays for 10 years or as the case may be depending on the industry, they will need another auditor and we are available as a professional auditing firm to render services, which are the professional accounting practices wings of the business.
Also, if a company is looking for how best to manage their tax in line with applicable laws of the country, we are there to help them render taxation services. Like I said earlier, this is a great country with one company merging and acquiring one another, we are there to help them in finalizing this arrangement to enable them be on the right track.
We would do legal due diligence, IT due diligence, HR due diligence, financial due diligence, to let them know the kind of company that they are taking over. We will also be doing things in the Private Equities space but that will be in the later time because we want to stabilize first at infancy.
In carrying out these services, you need a strong and reliable team, you need the technological know-how and also the finances, how do you intend to raise finances to put up this team to deliver these services?
It is very true that we need highly skilled people since we are talking about a professional accounting firm and a consulting firm. We need people who are very skilled in research and they do not come cheap. However, before we embarked on this, we have done feasibility studies, market survey, market intelligence to make sure that once we start operations, we will not lack resources and yes we need money, but it is not such a volume hat will drive us out of operations. Before I embarked on this, I have done all things that have to do with my planning financially and budgeting, as this will help me a lot not to run into a financial trap.
What is your advice on the nation’s huge debt profile?
What the federal government don’t know is that you don’t expand revenue for the fun of the expansion of revenue, but the utility of expansion. i.e., if you keep expanding your revenue and your cost profile keeps increasing, its better you don’t do anything because it is like in and out and it takes you nowhere.
All what the government is doing is that they are increasing their revenue but they are not watching their cost. There is need to marry the expenditure profile with the income profile and when there is a perfect match, you will be able to say that yes, you have achieved a lot but most of them are just looking at the income angle.
Even the local investors are crying, you have a company, you pay tax to this level of government, that level of government comes also to collect taxes for the same service. The government both at the state and federal level should look at this, working with all their relevant agencies.
Is it a coincidence that you are opening business at a time people say they are halting because they are scared due to the build-up to the 2019 elections?
I said it before, you should not because of temporary dislocation delay or abandon your long-term projection. I know the issue of election is temporary indices, it is not something that will stay there for long, and it’s the impact. So my strategy is what I will tag prosperity in adversity. I don’t want to allow the short-term threat to scare me of the long-term benefit for the nation, for my company, my staff, my colleagues, and myself. So, I will not say because of the elections, delay my coming to the business.
What I have done is to calculate my steps so that as the election is having its own tour on businesses and economy, I have my strategies to withstand that so that after the pressure, we will all live to enjoy the benefit. I am a hardened believer of the prosperity potentials of this country.
What major reforms do you expect to see that will spur the growth of the Nigerian economy this 2019?
The first is how to manage foreign exchange. Central Bank of Nigeria (CBN) is trying all its best but there is room for improvement. You need to manage your foreign exchange because the price of a commodity is determined by the demand and supply of that commodity. So, if the supply end of your currency is high and the demand end is low, it will affect the pricing of your currency, which is the commodity in this case. We need to balance all these things and look more into it.
We need to look at how to generate the foreign investments, which is very key.
The exchange volatility in our currency is very key also. The CBN is trying, they hold it but a lot of economic and political pressure is coming to play weighing on their efforts. We need to look into the structure of the NNPC. A lot of reports have come on this.
Security in this country is a big issue. If you have money, you are not safe. Power is another area. There should be reform in this area of Power, Oil and Gas, Petroleum, Security, etc.
Where do you see DB Professional Services in 5 years in terms of revenue and client base?
I believe in this project and I know that in 5 years’ time, we will have succeeded greatly, not only in terms of revenue base but also employ many Nigerians, encouraging the youths, training the youths in highly specialized field and looking at all the constraints in the economy.
We will also device the systems that rely on IT to increase our revenue base. We will be responsive to the needs of our clients to meeting the inevitable changes in laws; regulation, stakeholder expectations, IT, and these changes will instigate the design of new products and services for us in order to meet the demands of our clients in the next 5 years through affiliation, integration. We don’t want to be a local player but global. For now, we have our offices in Ondo, Lagos as we just starting off.