Albert Folorunsho, the Managing Consultant and Cofounder of Pedabo Professional Services, an indigenous tax, audit and advisory firm, gives insight on the policies that can help grow Nigeria’s tax contribution to the nation’s economy and also shares his personal career journey and how his company has remained competitive in the last 20 years of its existence in this interview with BusinessDay’s Endurance Okafor. Excerpt:
Tell me about yourself and your career journey so far
My name is Albert Olaniyi Folorunsho, I am the Managing Consultant and one of the founders of Pedabo. I was born on the 10th of November October 1967 in Iffe-Ijumu in Kogi State of Nigeria. Obtained an OND from The Kaduna Polytechnic in 1987 and afterwards was opportune to work briefly as an Assistant Executive Officer, level 6 at the National Commission for Museums and Monuments in Lagos in the year 1988. I worked there for two years during which I was introduced to ICAN exams and became a Chartered Accountant at 22 years of age, before leaving as Accountant.
In 1992, I moved on to join the tax and audit firm of Babington Ashaye & Co., where I trained and became a Senior Manager. I left after seven years and having agreed with my friend, Ajibade Fashina, Pedabo was formed.
That was how we set up Pedabo on 1st November 1998 and that was how the journey began. Thereafter, I obtained a first degree from Ambrose Alli University where I studied Business Administration and later a Master of Banking and Finance from the University of Ibadan. I am a Fellow of The Institute of Chartered Accountants of Nigeria (ICAN). I am also a chartered banker, having completed the CIBN exams. I am also a Fellow of the Chartered Institute of Taxation of Nigeria, where I am the current dean of the International tax faculty,, as well as a fellow of the Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN), where I am the current Treasurer.
In 2008 I decided to expand my tax knowledge in the area of International Tax, so I registered with the Chartered Institute of Taxation (CIOT) of the United Kingdom and I obtained an Advanced Diploma in International Taxation (ADIT) and currently an international affiliate of CIOT UK.
After my qualification as a chartered accountant in 1990, I started lecturing taxation at Mayo Associates Limited and later Safe Associates before I joined 12 wise men to form Wyse Associates Limited where I am still lecturing Advanced Taxation for ICAN and Business Taxation for ACCA exams.
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How were you able to start up Pedabo at 29/30 and what were the challenges you had to face?
The company is a professional firm, so what we sell is intellectual expertise, it is what we have learnt from school and our experience in practice; like I said I trained with Babington Ashaye & Co., a professional firm that specializes mainly in taxation, insolvency, debt recovery and management. I was in the tax and insolvency unit. After seven years my partner (Ajibade) and I decided to setup our own practice and all we needed was a small office to start with, and we also started with one staff, who is now a senior manager at Pedabo and we did not quite require too much capital.
We needed to get one or two people to believe in us and then to remain consistent with what we do. If you are an expert in your area and you know exactly what you are doing, you just need to convince people with your performance coupled with focus on service delivery and not on immediate gratification, because our focus was not to make money quickly but rather we wanted people to know that we understand what we were doing. My partner was in charge of audit while I was in charge of insolvency and tax, so we concentrated on what we know very well.
With one or two people giving us opportunities, we delivered on them and with referrals from the few clients and friends, we are where we are today.
What therefore is the success story of Pedabo?
The success has been massive; like I mentioned in 1998 we started with just one staff and today we have 115 employees with an office in Lagos, Abuja and we have a representative office in Ghana. The number of clients have also increased tremendously and I hear we are even seen as a viable competition by the top four international firms. For instance, transfer pricing was considered exclusive to the top four but we are experts in that space and that has really given us that big break.
We represent most of our clients in all the states of the Federation and FCT and we manage tax for banks with branches all over the Federation. Our clients include major companies in telecoms, construction, insurance, regulatory and every sector of the economy. We started off with some clients that were small and since we were small, we have grown with them.
Pedabo is gradually becoming a household name in tax, audit and advisory services in Nigeria and we have grown with a number of clients that were paying us N50,000 some 20 years ago now paying us as much as N5million.
We have some clients that we have worked with for over 18 years, including financial institutions and if you have done that for that long, it means you must be doing something right.
What is Pedabo’s strength?
Our strength is basically being available for our clients at all times and to equip ourselves with knowledge in our field, that is our strength – I have time for all my clients both big and small, as we are just a phone call away and we try to meet our clients’ needs, coupled with the fact that we have very good relationship with our clients, the tax authorities and other regulatory authorities.
When it comes to taxation service, about 80 percent depends on relationship management, so if you are able to build that relationship, your clients’ problems are virtually solved, and that is one of the things we have built over years. You must ensure your clients have full confidence in you and the tax authorities must also have faith in you and your approaches. For example, during the recent VAIDS programme, we filed individual returns for over 200 HNIs in Lagos and Abuja, with very high tax yield for the government. That is an evidence that people have confidence in us and they rely on us to keep their information confidential.
You were a member of the VAIDS Steering committee; how successful do you think the initiative was?
Yes, I was a member of the steering committee, and studies were carried out in countries that have implemented similar programmes in the past, like South Africa, Turkey, Indonesia and India before the structure was finalized. We were also involved in training the Community Tax Liaison Officers used in propagating the programme.
For me, I think VAIDS was successful, and the Nigeria tax to GDP ratio at below 6 percent was ridiculous, hopefully it has increased. I believe that more people are now more aware of their tax obligations, more people are interested in paying their taxes and more people have come to agree with the fact that we need to pay our taxes in Nigeria.
A lot of people do not think that they should pay tax, a lot of people complain about the structure in place, others complain about what tax is being used for; but the truth is that there is need for them to pay their tax before they complain, and not the other way round.
So to that extent, I think VAIDS was one of those things that have exposed Nigerians to taxation and I think this is really impacting the economy and based on FIRS information, several entities are being captured into the tax net now.
What policies do you see that is working in other countries that Nigeria can implement to help spur tax revenue?
To start with, I think we need to restrict the number of taxes that people are expected to pay, people complain about multiplicity of taxes and that is one thing that is not prevalent in those other countries whose tax to GDP ratio are significantly higher than Nigeria’s.
In the UK for example, there is only one tax authority, Her Majesty’s Revenue and Custom (HMRC), they collect taxes from everybody but in Nigeria we have FIRS, state internal revenue service, local government revenue committee, and all sorts of other government agencies now pursuing tax collection, including those who are not even supposed to do that. For example, I see no reason why the Presidency or the Ministry of Justice will be by-passing the FIRS to set up panels to carry out tax audits. So you really do not know who the tax authority is anymore.
The tax authority should either be the FIRS or the various State Internal Revenue Services, including FCT IRS. Definitely we have to harmonize our tax collection system, with a centralized tax identification number, and automatically the level of tax compliance will increase to a level comparable to other countries.
Again most of our tax laws are outdated and totally out of tune with current economic and technological realities and advancement. But there is no commensurate response from the National Assembly on tax matters.
Also, other countries are progressively reducing their income tax rates but in Nigeria it has remained at 30 percent for over 20 years. While our VAT rate at 5% since inception in 1993 is low, though not all input VAT suffered are deductible. So we need some structural adjustments on the tax base and rate, just like in the new national tax policy, it emphasizes increase in indirect tax because it is the only way to bring in the informal sector.
What are the challenges of the industry and what policies do you suggest?
Presently, most significant audit assignments are awarded to the top four international firms (KPMG, Deloitte, PWC and EY). That is not helping the indigenous firms at all. The Financial Reporting Council (FRC) mooted the idea of compulsory joint audits with local firms. I think government needs to look at that direction as has been done in other countries, to support the growth of indigenous firms.
We are an indigenous firm with an international outlook and so government have to put policy in place to be able to support such firms, so that they can grow and become more independent, confident and well established to be able to carry out these services, and that will go a long way in helping the economy. I think that is very crucial.
So there should be a policy that will give room for big multinational companies in Nigeria to make use of the services of indigenous professional firms, or even in collaboration as joint auditors with the international firms and from such assignment they can gain more experience and exposure to handle such jobs.
Where do you see your company in the nearest future?
After 20 years, we are three partners and we have moved this business to this level, we have a whole lot of our managers that are coming up and I see some of them becoming partners in the very near future, starting from next year. As the number of partners increase, the clientele and staff strength will also increase. Our policy is to grow from within, so we spend time training our employees in order for them to have the technical competence to perform and lead the firm to greater heights.
And as we follow through with our plans in the next 20 years Pedabo will definitely be one of the top four firms in Nigeria. Everything is in place for us to surpass our dreams, in terms of clients’ satisfaction, personal development, relationship management with both clients and government authorities. We are expanding our services outside tax, audit and advisory. Our accounting services for SMEs are growing very fast, payroll management is expanding and internal control is growing. To be able to meet the growing needs of our clients, we are also looking for firms with specialized skill that we can absorb or merge with.
How do you engage yourself outside the Boardroom?
I like listening to good music, I play football every Saturday as my main exercise. I also play table tennis. Also, in the last 28 years I have lectured virtually every weekend and I like reading a lot.
Any advice for young professionals
My advice is for them to continuously develop themselves, believe in their capabilities and uphold integrity at all times.
