'Indigenous Construction Companies Need Gov't Intervention'

'Indigenous Construction Companies Need Gov't Intervention'

Tuesday, April 7, 2015 3:01 pm

In this interview, Managing Director, HardRock Construction and Engineering Co. Ltd, Engr. Akinbola Fatiregun tells Henry Ojelu and Edikan Ikpeme about the challenges faced by indigenous construction companies

Your company was established 11 years ago. What has been your experience so far?

My experience in the construction industry has not been rosy. This is because of the difficult terrain we find ourselves here in the country. It has not been easy at all but with the help of God we have been surviving.

Give us a little insight about your company?

Hardrock Construction and Engineering company is an indigenous construction company with interest in construction and engineering works. We are into water engineering, road construction and building construction. We also have our hands in oil and gas and dams construction. Basically, the company started before 2006 but we began operation around 2006. We have constructed so many structures for both government and private sector. We are virtually in all the regions in Nigeria. We also have some contact outside Nigeria. Presently, we have major projects in the Northern, southwest and in the eastern part of the country. We are presently constructing a major market in the east. We are also presently working with the Lagos State government on the construction of the Lagos Homs project. In the northern part of the country, Niger State precisely, we are building a five-star hotel for the state government. That project has almost been completed. We also have an ongoing project in Ghana and we are hoping to embark on another one soon in Niger Republic.

•Akinbola Fatiregun

•Akinbola Fatiregun

What would you say are some of the challenges indigenous construction companies face in the country?

The major challenge most indigenous companies are facing here in Nigeria is finance. There are so many projects but the financing structure is very difficult. The requests from our financial institutions is too much for new and upcoming indigenous companies to meet. The requests to access fundings is often times very difficult. To access international funding is even much harder. The documents for accessing international funding is never completed. Our banks often can’t meet the requests of the international funder or financier and that has been a major problem too. Even government often times would not be able to release the necessary document that is requested by international financiers. The loan structure has been a very difficult one to maneuver. At the beginning, it looks very easy but by the time you get to like 80 to 90 per cent completion of the contract financing process, you will suddenly realize that there is one document that is requested for that you don’t have and can’t even access. Take for instance a situation where an international financier says you need a valid guarantee from your local bank. Imagine a situation whereby after you have provided the local guarantee, they now say the guarantee has to go through a correspondent international bank. This is even more difficult because they don’t rate our banks here high. They need that guarantee from one of the first top 25 banks in the world. That means our bank will have to go through another bank overseas. For them to do that they have to deposit an equal amount of fund to the correspondent bank. The question then is, if I have that money to be deposited in the correspondent bank, why do I need overseas finance. Our local banks here also make things difficult for us. They would insist that you must provide almost an equal amount or more than what you’re requesting before they can release sub loan to you. You can see how difficult it is? But we in Hardrock have adopted a unique approach because we believe that any big thing starts little. So we started little and we’ve been moving from stage to stage.

How true is it that the foreign companies get more local construction jobs than our indigenous companies?

Yes, it is true because our people believe in foreign things. Maybe one day, we will even say we need foreign president. The issue is that our people believe that anything foreign is better. But it is not so. We have some indigenous companies that can even do better than the so called foreign companies. It is just a misconception and it’s affecting our local contractors.

Do you think our local companies have the expertise and technical skills like their foreign counterparts?

Yes, we have the technical skill and we have the manpower. In the first place, when the foreign companies win these big construction contracts, they still come back to the indigenous company to do the job. This is an unfortunate thing that needs to be urgently corrected. Government needs to really empower our indigenous construction companies.

Some people have suggested merger of companies in the construction sector. Do you subscribe to this?

It would not be a bad idea to have indigenous companies come together to challenge the foreign companies. I know some local oil and gas companies that have merged and with time they have become mega companies. Merger for local construction companies is a good idea but I personally think we have not gotten to that stage. We still need time to get to that stage.

At what stage would merger be appropriate?

Before companies can merge, at least the two or three different companies will have to look at the structure that is in place in the individual companies. They need to grow to a certain stage. That growth is what is actually needed. They have to work to a certain stage to be appreciated by one another before they can decide that they want to form a mega company. Exxon and Mobil did not just come one day and say they want to merge. It took them time to study each other and appreciated each other before one of them agreed to come in a lesser percentage. I remember when government had to force the bank to come together because they want to achieve a certain goal. For construction companies, I think it can happen but I don’t see it happening now.

What is responsible for delayed project execution in Nigeria?

The major problem with completion of projects is finance and disbursement of funds. Some small companies get contracts without initial mobilization. Such company would have to source for fund before government is ready to pay. People only look at when you were awarded the project but not when the money was released. If you give me a project and after 6 to 7 months, you have not paid me a dime as mobilization, how do you expect me to deliver that project on time. Abroad, before you even embark on a project the fund is there. But here, even after getting the contract, you still have to fight to get the money that is assigned for the project.

How would you assess our fresh graduate engineers?

In the engineering sector, an engineer needs to be trained to meet the standard of the industry. Getting your certificate is one thing and having the practical working experience is a different thing. You need the university knowledge but you also need the experience of the field to guide you. The field experience is paramount so as a graduate engineer you still need some level of field experience. This is why Council for the Regulation of Engineers in Nigeria, COREN cannot register an engineer if he does not have field experience.

Are foreign engineers better than our local ones?

Nigerian engineers are unarguably among the best in the world. Any engineer that is trained here will excel anywhere in the world. Our university curriculum for engineering is still standard and all we need to do is to maintain the standard.

What would you say is responsible for cases of building collapse in the country?

One of the major reasons for the rising cases of building collapse in the country is that most clients don’t engage qualified engineers. They just find an experienced bricklayer who metamorphise to builder to construct for them. If we all engage qualified engineers or engineering companies I don’t think there will be any building collapse.

What about substandard building materials?

It is still the same thing. If you engage a qualified engineer, such an engineer will know the implication of using substandard materials. He will not use it because he knows and understand the implication. But if you engage just a builder or bricklayer he will simply tell you the building will stand without testing the strength of whatever you want to use. Some people engage in this practice because they cannot afford the money to building a standard house. But the truth is that anyone who cannot afford to build a house with proper building materials, should not think of building a house at all. A quack can accept anything but a qualified engineer, will not do that because he understands the implication for himself and his company.

So what is the solution to the problem?

Government needs to work with the body that regulates engineering in the country. First anybody that must practice engineering must be a member of that body. The body too must guide the profession very well . Government also needs to engage qualified professionals to monitor all structures that are being built around the country

What do you suggest government should do to encourage indigenous construction companies?

Like I said before, our major problem is finance. We cannot go to government directly for fund but government should have a way of strengthening our banks so that they can support us more. Our financial institutions are too weak for now. A situation where the assets of three or more of our local banks cannot equal one or two foreign banks is bad. Government needs to strengthen them. Our banks should not be doing round tripping. You bring 10million in the morning and you want to collect it in the evening and they will still collect their charges. That is not banking. They should do real banking and finance major projects.

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