‘Recession helped us moderate growth aspirations and more innovative’
Alpha Mead Group is a total real estate solutions provider. The group is, unarguably, the leading light in Nigeria’s facilities management (FM) industry and the most diversified with footprints in the United Arab Emirate (UAE) and select African countries. FEMI AKINTUNDE, the Group Managing Director, in this interview with CHUKA UROKO, speaks on how the group is riding on the gains of the strategic decisions they made during the economic recession. He also offers insights on how technology drives over 80 percent of their operations. Excerpts:
The 15-month recession that Nigerian economy went through impacted negatively on every sector of the economy, but more on real estate. How did you manage the impact?
Talking about recession, its impact and how we managed that time, I recall that when it started, we recognized it. If you deny your situation, you won’t have the capacity to provide solution to it. One of the four secrets of success is that you take responsibility for your situation. Don’t look for somebody to blame. Once you get to a bad situation, you must acknowledge it. You must acknowledge that there is a problem on ground.
After that, you begin to identify how that impacts on your industry and also on our company. For us, we had a strategy session where we told ourselves that Nigeria was in recession and tried to figure out the opportunities associated with it and what the risks that would follow were. It became clear that the real estate sector would suffer severely and that would affect both the demand and supply side of the sector. Supply would suffer from reduced liquidity in the system. Low liquidity impacted on developers’ capacity to continue to deliver products.
On the demand side, those who buy some products and services from you have their purchasing power weakened. Therefore, the amount of revenue you can generate is also impacted because there is less demand from the market.
The focus of this report is on companies like yours that went through the recession but come off not badly bruised. What did you do that has kept your business going?
When we realized all these, we told ourselves that the best thing we could do was to sustain our customer base. Any attempt to grow during that period would be very difficult. With that focus, we decided to see how to empathise with the situation of our customers.
That period also made us to be innovative so that we could continue to provide services to our customers in spite of the cost escalation. We also had to find ways to maintain our position in the market and the industry. If you checked the industry very well then, you would see that many companies went down; some were downsized and sent some staff away, but that did not happen here.
So over all, we moderated our growth aspirations, focused on customer retention and became more innovative to serve them more; we also put value on the table and continued to manage with available resources and customers. However, some customers over-dramatised and amplified the impact of the recession on their business. Everybody capitalized on that. Even those that were not so much affected, were using that to force prices down in their favour.
Another thing we did was not to allow ourselves to reach a point of desperation under any project. If any project got to a point we saw a conflict between our service orientation in terms of what we can deliver to the customers and the interest of the customer, we were willing to step outside. We did well to meet customers’ expectation and also to protect our brand strength and perception in the market place. Some people thought we were not flexible, but we saw that as the only surviving strategy.
Analysts say the recession could have been better managed and the impact less severe. Where did the government get it wrong and, if you were to offer advice, what would you tell government?
A couple of things happened that aggravated and accelerated the country’s move into recession. One was the global drop in oil price and because we have not done well in terms of diversifying our economic base, we were hit by the impact of that drop.
The second thing was that around that time, crises were arising from the activities of Independent Peoples of Biafra (IPOB) and militant activities in the Niger Delta that threatened and impacted on the oil production level. So, we were losing money from price drop and also the volume was dropping. Government’s capacity to earn and spend reduced.
Another factor which we could have managed carefully but were not sensitive to it as a nation was the issue of brand management. I think we over-exposed our limitations to the international community. What we were hearing was that our country was “fantastically corrupt” and our leaders went out there to reinforce it. Internally, democratic institutions were at loggerheads with one another and the political structure was having overbearing influence on the economy. Institutional investors who invested in the economy, especially in the capital market, were worried and so withdrew their money.
What do you think government ought to do now to guard against a repeat of that experience?
The government must do everything possible to stimulate the economy. The government has to focus on foreign direct investment and also concentrate more on foreign debt than domestic. If China is giving us something, let us consider that, but we should be mindful of what they are demanding from us in terms of conditions such as employment and what we should be buying from them. The conditions attached to loans should be of more concern to us than the interest rate they are demanding.
Another thing to do is that government should not depend on oil money alone, but should continue to emphasise the diversification of the economy. What government is doing with agriculture is good because contribution from that sector to the GDP is rising. Same thing for technology and the the service sector. The government should also increase efforts at developing alternative sources of foreign income. The Dangote Refinery is a good start.
Technology is, increasingly, changing the dynamics and the way businesses are done. To what extent has Alpha Mead deployed this in its operations?
Alpha Mead is not just a development company; it is a total real estate solutions company. Our development strategy stands on a tripod. It is about our people, processes, systems and technology. We have a policy which ensures that 70-80 percent of our operations are automated. So, every segment of our operations is automated because that is the only way we can have scalable processes.
We have embraced technology as a process enabler. We ensure that every department makes quality delivery sustainable and repeatable. Technology penetration and application is a business strategy in this company. It sits in the core of our business.
There are two angles to this application. We have technology that drives what we deliver to the customer and another that drives our internal processes.
You are also into real estate development. Tell us how you deploy technology in your developments?
Our real estate development rides on the back of formwork technology. This is not prefabrication but concrete cast in-situ. This allows us to leverage speed such that we can produce a housing unit in 10 days. But both land and infrastructure must be in place before this can happen.
As a facilities management company, we also deploy technology. Our operation and management are also automated through a robust computerized management system. That gives us an advantage of being able to plan effectively such that every asset under our responsibility is maintained to the highest level of professionalism by ensuring that we keep track of what needs to be done to prolong asset lifespan. We have also deployed technology that has enabled us to track the performance of everybody on our employ. Nobody can stay in his bedroom and give us report on what he is supposed to be doing on site.
We will be launching two new systems any moment from now. We are planning to launch a 24/7 call centre that will take facility management to retail level. With this, customers will sit in their houses and subscribe to our services by just dialing the call centre. Through this, we will be able to coordinate requests from anywhere. For us technology is an integral part of our systems and processes. We know we cannot do what we are doing without a sound technology support base and we are not resting on our oars.
As company, could there be things that limit your growth aspirations; in other words, what are the challenges you face in the course of your operations?
I think funding is always an issue because it limits the extent to which you can grow and even carry out your initiatives. We should have completed our projects long ago, but we cannot because all the sources of funding that we have been expecting are not forth-coming. Some of the customers that bought from us are defaulting. Some have lost their jobs.
Even if half of them are meeting up their obligation, the remaining half is still a huge challenge. We try as much as possible to engage our customers, telling them what we want. Nothing is coming from the banks by way of debt; contractors are not able to get money from the banks too and all these are affecting capacity to roll over and build more capacity.
In the FM space, the story is not different. Tenants are owing rents and serve charge. Clients are not helping matters. Services they were supposed to do three to four times, they will tell you they can do just once so far as the asset is functioning. People are beginning to compromise on maintenance, but they don’t know that it is far more expensive than the cost they are trying to cut back. Another challenge is that people are still fixated on low cost services without looking at value erosion. People’s orientation towards quality is being affected because of financial constraints.