Tunji Tolani is the managing director, Abuja Leasing Company (ALC) Limited. In this interview with DAVID ADUGE-ANI, he spoke on the challenges his company and others businesses are facing in Nigeria, submitting that businesses in the country go through avoidable difficulties.
The Abuja Leasing Company Limited (ALC) came into existence about seven years ago. What is the mandate of this organisation?
Well, the initial mandate given to the company was to provide Abuja with a world-class taxi system. When we started in 2007, under a former minister of the Federal Capital Territory, Mallam Nasir El-Rufai, the major mandate was setting up a reliable taxi system that is world-class in nature.
When you started out Abuja residents felt the impact of ALC because your vehicles were everywhere in the city. But now the reverse is the case. What has happened to those vehicles?
When ALC started, our aim was actually to provide something different.? We wanted to provide Nigerian-made cars, so we bought Peugeot 307 cars. We also bought the popular London black taxis. In fact, we are the first transport company in Nigeria to start a taxi system with brand new cars.? We have those cars up till today.
But where are these cars because Abuja residents hardly feel the impact of your company at the moment. What is the problem?
There are so many problems. Again we should not expect it to be like when we started. We should expect that when you buy a new car and after seven years, such a car should have depreciated to the extent that you should replace it.
We have had some challenges, especially in the area of funding. First is the high cost of funding from the banks, since we don’t entirely depend on government subvention. We all know what interest rates are like in Nigeria today. It has been killing and we have not been able to replace those vehicles as at when we should replace them.
Then number two is the tendency for Nigerians to default on loan facility repayment. We have a lot of people who collected our cars and have not been paying back. They have defaulted in payment. This is what is all over the country. So, that also has been a major factor that is affecting us – repayment from operators who have collected our cars.
The number three challenge is that we don’t really have the kind of support we deserve. We could have done better with more support from government. That has not really come as we had expected. Anywhere in the world, if you are into transportation, the government has to subsidise it.
We cannot efficiently run a transportation company using a private sector-led model in its entirety, so the government has to subsidise transportation, and that has also been lacking.
In the early days of our operations we had some support from government in the areas of import duty waivers. We had strong support from the Federal Capital Territory administration. The present administration is trying but we would have done more with better support.
What is your relationship with? the FCT administration? Is the company part of the administration?
No. When ALC started in 2007, it was actually started by the FCT administration, specifically, the Abuja Investment Company. They had the majority shares. But along the line, based on the vision of the then minister who wanted the company to be private sector-led so that it would outlive the administration, some people were called in from the private sector.
So currently, ALC is owned by Abuja Investment Company, which represents the FCT administration, the United for Africa (UBA), Fidelity bank, Aso Savings and Loans. Currently, the FCT administration just has about 20 percent stake, hence ALC is mainly owned by these financial institutions, which have 80 percent of the shares.
How many taxis did you start with when you commenced operations in 2007 and how many are in your fleet today?
When we started we had over a thousand taxis and buses. What we do with these cars is that we lease them out to individuals and organisations who want to run taxi schemes. And after four years, the vehicles become theirs after they must have finished paying. Those who do not want to continue running it as a taxi scheme can run it as a private scheme. That is the template we operate.
Of course the number of vehicles in our fleet has continued to go down progressively and unfortunately we have not been able to replenish our stock with new cars. Today we should have about half the number of vehicles we started with that are supposed to be running but not all of them are on the road.
We have serious cases of people who have defaulted in payment. As a result, the company has collected back quite a number of vehicles from operators who have not been able to pay. This is because we also owe banks. The issue is that Abuja Leasing Company also collected loans from banks to purchase these vehicles. These banks have been on our neck to pay their loans and operators are equally owing us millions of naira. The fund we used in buying these care was not from government; it was from banks, which we are expected to pay back.
There are so many badly damaged, broken and abandoned vehicles within your company’s premises. Why is this so?
You see, that is part of what I was saying. Right now we have a lot of people who have defaulted in payment. We have collected back those cars from them. The principle is that if you cannot pay us, we should be able to collect back the asset.
There is also the issue of spare parts. When we started this scheme, people said we went to buy London black cabs, where will you get the parts from? But unfortunately we also have the same issue with the 307 Peugeot cars. We have a lot of them. There are no spare parts. The truth is that even these Peugeot cars are not entirely made in Nigeria; they are just being assembled in the country.
We have difficulties with spare parts. So this is the main reason why a lot of them are abandoned in our various garages. We also have situations where people collect cars from us and come back to dump them.
What efforts are you putting into loan recovery from your debtors?
Yes, we have launched an aggressive debt recovery drive. We have hired a lot of debt recovery agencies. We have also involved the police and security organisations. We have also taken quite a number of debtors to court. We have a lot of cases we are pursuing to ensure that all those who owe us pay up.
How much do your debtors owe you today?
I am not in a position to give you the figures right away. What we know is that people owe us, just like we are owing the banks.
Some people believe that other transport companies in the FCT have taken over your job, thereby making your services almost irrelevant. What is your reaction to this?
It is not exactly so. This is because the line of business for other transport companies in Abuja is not the same with the ALC. For instance, some of them are into long buses. We are not into long buses. Yes, people said licences have been granted to some companies to embark on transport business in Abuja, but how many of them are on the road today?
A lot of these transport companies come to us to say they want us to finance their project for them. We still remain number one despite all our problems.
What are you doing to reposition the company so that it would overcome its current challenges?
When we started, the basic aim of the ALC was the taxi scheme. The company is undergoing complete restructuring and overhaul now. We are going beyond leasing taxis and into leasing vehicles and generators to individuals and organisations. This is another line of business we have accommodated as we restructure the company.
The company is also into granting short-term credits to people who have businesses to finance. And, we have set to repair some of the cars we repossessed so that we can give them out to individuals and organisations for personal use at cheaper rates.
Apart from the ones you mentioned earlier, what other challenges do you face as an organisation?
The main challenge is funding. We need more government support because anywhere in the world if you want to do this kind of business, government has to support it for the people’s sake. If a private person puts money into this business, the tendency is for him or her to seek maximum profit, which would hurt the people.
Also, there is the need for Nigerians to understand that when you collect facilities like ours, you must repay them. The tendency of people wanting to collect things and refusing to pay must stop for the country to move forward. Anything short of that, we would keep having problems and challenges all around. Nigerians have to be very honest.
And, there is a need for a credit data base, especially using the national identity card and national security number. This is very important in order to facilitate tracking down people who take loan facilities and disappear from their given addresses. We have instances of people collecting loans facilities and you cannot locate them because they have moved from their known locations to unknown abodes.
There are issues affecting businesses in Nigeria. The government must actually have a national security number for all Nigerians because it is going to help all businesses. It is also going to help the security situation in the country.
Also, the Nigerian judicial system has not helped matters. You go to court today and you will be there for five years. Courts also give injunctions in favour of loan defaulters, which is not good for businesses like ours. Sometimes the court would order you to bring the repossessed car and it will be there for two years, rotting away. Nigeria businesses operate under tough, avoidable problems.