• Friday, March 29, 2024
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‘Nigeria needs to coordinate tax payments better in order not to distract entrepreneurs’

‘Nigeria needs to coordinate tax payments better in order not to distract entrepreneurs’

The co-working space market in Nigeria is increasingly gaining traction driven chiefly by millennial demographics and growing tech start-up community in the country. AYO AKINMADE, executive vice-chairman of Regus Nigeria, a major co-working space supplier operating under the franchise of International Workspace Group (IWG), in this interview with CHUKA UROKO and KELECHI EWUZIE, speaks on the co-working space in Nigeria. Akinmade, a trained economist and chartered accountant with over three decades of investment experience in West African markets, also shares the five-year plan of the company, as well as challenges and opportunities of doing business in Nigeria. Excerpts:

 

To many people out there, Regus is just another company in Nigeria. But beyond that name, what else would you like people to know about the company?

The brand, Regus, is actually an enabler. We are an interface that enables people with a business idea to be able to function in a professional space in a co-working environment where they have like-minded people in the same space doing what they are doing.

We enable people to do that work in a professional and safe environment at a fraction of what they would need to be in that space, if they were doing it themselves.

But I can be in this one office, it has light, water, internet, tea, coffee, all of the likes but we say to you, just pay monthly versus a landlord that would ask for one or two years’ rent upfront, after you scale that hurdle, you have to buy your partition, furniture, get the internet working, and anytime something goes wrong, you either have to stop what you are doing to get involved or have an admin person or an office manager to do those things.

This is what REGUS does for you. Beyond doing it in one location, we’re also a network. We are not a local network; we are an international network. So, taking an office that could be a third of this place gives you access to the shared spaces in Dubai, Hong Kong, Japan, etc. We are a natural habitat to incubate people, give them succour in a professional environment. Secondly, we are a global network; so signing up with us simply means you have become a member of a global club, and you have access across the world.

 

You talk about REGUS being global, and we are in an era of technology. Do you see technology standing in the way of your operations?

No. In fact, it’s the opposite. Technology is what enables our operations. If you go to London, nobody is going to ask you, they won’t even call Nigeria from London. Once you get to the reception, from your phone, you would have a tag which you would or show it to the reception. They would go and type in the number and it would show all the information.

The technology knows that in this office I have used this device or these two devices; they plug in the network. If I go to Lisbon in Portugal, Pakistan or India, once I enter the reception, all these devices will automatically be online, that’s technology.

For our own work, we have in Nigeria about 300 customers across all our locations. All of these customers are invoiced from one location in Philistines. We do invoicing in Nigeria. Somebody sends them a statement every month from Manila; somebody sends them a reminder, if they have not paid, and tells them we are going to lock up the office; all these are because of technology.

When you go on Facebook or LinkedIn, if you are to type in office space, our search results will come out. That is technology. If you click the website, within the next two days, you will start getting images following you. Any time you go online, it will be popping up, that’s technology that we have. If you go on and click on our website, it will ask you, ‘where do you want an office?’

We have a building in Barcelona that houses 3,000 people. It is a call center. The people take information, call the person to ask whether he is in Lagos or Japan, and also what type of space he wants.

As the people talk, they have a map of the city on their computer. So, there is a dot of where all the locations are, and with this, they are showing clients these locations and asking them if they have preferences. When they are done and they key all the information in, the technology that we have behind will take all that information and determine the person that should get the email.

On my own dashboard, I have something that is showing me that from the first day of the month till today, as at yesterday, we had 197 enquires for office space. There is a pie chart that breaks it down to which locations. I can double-click on it and see the names of the people – who they are, what their phone number is, and what they want.

 

You are reputed to be the largest provider of flexible offices in the world. What are the things you do that make you the largest space provider?

It is in basic statistics, the number of locations that we are in. When I say number of locations, I mean countries. We are in over 130 countries. In those countries, we have over 5,000 offices in 5,000 locations. It is about the square meters that those 5,000 offices cover. The nearest company to us called WeWork has 582 locations worldwide now but they are in fewer countries.

A couple of years ago, we opened 260 new locations. Regus pioneered co-working space, having started over 30-40 years ago and we have not stopped. So, everybody else is just coming behind. It is one of the advantages of being first to an idea. Early mover has its advantages but you should continue because, if you don’t push on, others will come and overtake you.

Read also: Ogun moves to tackle multiple taxations, decaying infrastructure across industrial zones

The Nigerian economy is slowing and that impacts negatively on the country’s real estate market. Is this in any way affecting your operations in the country?

With every economic slowdown, there is hardly any part of the society that doesn’t feel impact of the slowdown. Activities are generally lower; we expect it to go much slower. But generally when there is economic slowdown, that is when we tend to see a bit more activity.

This is because, those people that did not consider a serviced office before, when the economy slows down and funds are scarce, they will have a rethink. But in cases where one has signed a 5-year lease, and he has paid the lease; except he finds someone to sublease to, he will have to keep it.

I have told you that we only ask people to pay for one month at a time So, at the end of the month, you just think about it; you see that times are hard; you just give notice, after one month you go. But at the same time, we are losing people, those that are going from other businesses. They are thinking about it and saying, look at all our furniture and office inventories; we are not going to renew our rent because the landlord wants to collect one-year house rent, and we don’t even have it.  These other guys here are asking for only one-month payment; we can pay a fraction of what it will cost us to do our work and, by the time we work, the money we make, we can pay the next rent.

 

Regus is known to have some successful entrepreneurs as customers; how do you manage those people? Because you said you enable them to work wherever and whenever they want to.

There are largely two types of customers that we have—the big multi-nationals from the big technology firms, payment processing firms and the likes, they tend not to need our help in running their business, people already know them and going to them, In fact the problem they have is to fence off people from coming to them.

Then we have, increasingly, a group of people that are smaller companies looking for access to those bigger companies. So we become the intermediaries. They talk to one another asking, ‘do you need this? Let me help you get it’. I am an ambassador; my staff run the operation; my job is to do the social mixing. So, each month or in two months, I talk to the heads of all the companies; what are you into? You are trying to get this license? I know the minister who can do that. These are some of their conversation.

We believe that if we help our customers business to grow, they will take more space with us, so we like them and want to help but it will also benefit us if we help them. So, we are constantly asking, tell us what you want to achieve? This is because we may know somebody or some process that can help you. If we can link to these and you grow more, it’s to our advantage because you will take more space with us. But if you decide to get the space from somewhere else, that’s fine.

The space you leave behind for another space will open up for another person. In life, we must be open to regeneration; we have a huge multinational that has been with us since 2008 that will be leaving in December. We will miss them but somebody else will come.

 

WeWork, your closest rival, has opened for business in Nigeria. How prepared are you for the expected competition? Do you see them as a threat?

Yes, WeWork is here in the country. They have a little space in Ikeja. A few years ago, when Landmark virtual office was in operation, I called a number of virtual office operators and suggested that we should form an association to define standards, code of conduct and the likes.

There is no successful business that will be worried about competition because it will spur you to improve. If you don’t have competition, you are going to become complacent and you won’t do things right. So, for us, we welcome their entrance.

One of the advantages of the new entrants is that they publicize the sector. So, you are saying, lots of people don’t know about it, every new person that comes in has to make noise and this is what we do here. We are happy for them to take that burden and even make noise. While we ride on their making noise, we wish them every success.

New entrants don’t have first-mover advantage and the structures that we have, they are not be able to benefit from the. Apart from WeWork, there are many other smaller companies. We have a database and there is a dedicated officer whose job is to track other operators. That’s why we know where people are, we visit the locations, see what they are doing and confirm that they are copying what we are doing.

Every time a fresh person comes in, they bring a fresh perspective and they help us look back and decide if they are doing something that we have tried and it didn’t work. We leave them to try it and learn. We don’t view any specific company as a strong competitor; we just view all competitors together as a strong threat to our business. We don’t isolate and pick on any company. Remember that we have been around for decades, we have seen people come and go, and try all kinds of model and also do all kinds of things.

So, if we focus on one particular company, we miss the threat of somebody else. So, all of them together are almost like collaborators to us in the sense that they help us introspect better; they help us actually to think about what we are doing and how we are doing it. They help evaluate whether we are doing the best possible thing that we can do and then we use all that learning to improve.

We certainly talk to all our competitors regularly, cause I have interpersonal relationships. I make sure I find somebody, we go and visit them, we invite them, we show them what we are doing, we even tell them our plans. If I tell you my plans, you cannot stop it.

 

Let us take a look at the co-working spaces that everybody is doing now; how do you do it so differently that you stand out from the crowd?

The concept of co-working just means putting people in the same space. So, the label is over-used. The concept itself is different people doing different things in one space. So there is not many different ways of doing it. What we have is the style.

Regus the brand is more conservative in outlook, International Workspace Group (IWG) is the company that owns all the companies of which Regus is just one. We have another brand called Spaces, which we will be introducing into Nigeria in the second quarter of next year. This looks almost like WeWork. We have open spaces and many different brands that are all over the world but in Nigeria we have been pushing Regus. Next year, we intend to push more of the space brands.

Collaboration is constant; it is to make sure that in the same space, people can be interacting and sharing ideas, so that the person sitting next to you is from a different company; the one sitting opposite is from a different company; the person sitting by your left is your colleague but in accounts department.

Sometimes, because you are together, the guy opposite you may be talking about what they need to do this, or what their company does. If you have not been in the same space, you might not have the opportunity to collaborate and then form a have a partnership. That’s the whole idea.

Most of the time, the basic concept is to have less formal offices. Once people are in a formal office and the door is shut, you can’t collaborate with them. So, in co-working, we have less of those offices. In fact, they only have meeting rooms where  they discuss confidential issues in an hour and come back. Most of the other spaces are all open. There you work and are effectively collaborate.

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Your professional life has taken you across IT, oil and gas, etc. How has that experience shaped what you are doing now?

I worked with PricewaterhouseCoopers for a couple of years in Nigeria, and then moved abroad and worked in audit. I came back and got involved in oil & gas procurement and the likes. One of the advantages that I see is that having experienced more than a decade of working in the UK, you will understand standard and how things should work. That helps a lot in this particular business where some of the customers we have are coming from abroad where their standard is the same, and especially when standard is the same and the brand that they see is the same brand as it is abroad.

In my years working abroad, I learnt that there is power in a successful brand and also learnt that if a brand is successful and known for a particular standard, customers associate the standard across the world and they don’t give allowance. So, we have adopted that standard because the people that are using the service say if I can stand up and go to London, if they are doing it like this in London, why are you not doing it like that here?

What all that does for us is to reinforce all the things we need to do to ensure we replicate what is naturally associated with the Regus brand.

 

Looking at the growth of this space and the growing challenges, what could be the future of your company considering the challenges in the economy of this country?

We have a five-year plan 2018-2023. At the end of 2023, we expect to be in 25 locations in Nigeria. Out of those 25 locations, 12 will be in Lagos because 80 percent of economic activities in Nigeria happens in Lagos; 3 will be in Abuja, 2 will be in Port-Harcourt, and then we have Calabar, Ibadan, Kano, and Katsina. These secondary cities we are targeting.  The primary cities are the first three.

We have a second five-year plan (2023-2028). We have an ambition that every state capital in Nigeria will have a Regus. In the second half, Lagos and the other cities would have been covered and every state capital should have one. Our initial focus is to make sure that we are not in Surulere, Festac, Ilupeju, etc.  But there are three locations in Ikeja that we think we need to be in. We still have not covered those areas; we have now covered Lekki Phase 1.

In 2020, every quarter we intend to open one location; that is every 90 days. In 2021, we intend to do six locations. That will be every two months. We expect to have a Banana Island location very soon.

 

Nigeria is a difficult business environment. What is your assessment of ease of doing business in the country?

We are not directly impacted, because business is already up. My understanding of the ease of doing business is in the area of helping businesses to start up. The greatest challenge here is multiple taxations that we see in different levels which both the company and the individuals are subjected to.

If you have three or four companies, for example, the tax office will not take you as an individual, put you in a one tax office, and you deal with all your affairs in one tax office. Instead, you will receive four or five different letters from different tax offices, each of them making serious demands. They just ascribe a tax charge to you and ask you to prove why it is not the case.

Even when you have filed your tax returns and consolidated everything into one office, you have a myriad of people still making demands from you and saying that’s what they have decided. Nigeria needs to be better at coordinating tax payment in order not to distract entrepreneurs from dealing with multiple demands.

From a company’s perspective, if you have three or four different companies in your group, you should also have a system where you can have a group taxation arrangement, so you can have these four or five companies in one tax office and deal with them together.

What we see now is every two or three months, one tax office is with you auditing you, another one is writing again asking for a different kind of thing. Your resources are stressed with people trying to come to you at different times. So that’s an area we think that government will get better and we hope they get better faster because it’s very distractive.

 

As a businessman, you have seen the highs and lows of this economy. What will you say is your regrets, if any, for coming to Nigeria?

There is no regret at all for coming to Nigeria because without coming to Nigeria, we will probably be poorer. And for me, coming to Nigeria means coming home. The challenges in Nigeria make you so much more ingenious; you are constantly thinking of solutions since we have challenges all the time in the country. One needs to be smart and fast about thinking out solutions.