My Volvo, My Bank, My Credit, Our Future
I remember the Volvo 244 GL fondly. I remember her for the fond memories of traveling for two days with a night spent at the Presidential Hotel, Port Harcourt to my high school in Ikom, Cross River State as an eager 10-year-old. It was my first road trip towards the East and South of Nigeria. I remember the tears rolling down my eyes as she rolled away in the grassy fields of my high school taking away my security (my parents).
I equally remember her for the Christmas holiday trips to Kwara State. The comfy leather seats, with the car stereo blaring vibes from the Juju music maestro; King Sunny Ade, or driving into Harmony Street in the Basin area. I utmostly remember her for the day my dad rolled her into his prized possession; The Sadeni Industrial estate and Group of companies.
This estate housed an aluminum making plant, a paint manufacturing plant and 5 football pitch sized tilapia and catfish –ponds, each could house a one-story building. I was proud of seeing him in the morning joining the early chores in harvesting and sorting the fish. It felt right.
We were breaking ground, building our homeland, and working our way up the ladder of success. I imagined we would be very wealthy soon and live next to the Federal Palace Hotel in Victoria Island. The water view of the hotel at the time was incomparable.
My father was following the likes of successful Kwara businessmen like Chiefs Adedoyin of Doyin Group1, Adesoye of Okin Biscuit fame2. Sadly, it won’t be long after when the bank came for him and took all of the Sadeni group in receivership.
His word against theirs, their numbers versus his, their agenda against his timelines and so many lives and dreams caught in between because there was a mismatch in the credit request, the credit approved and issued.
Recently, I thought about all that The Sadeni Group could have become not only to Nigerians that would work the plant but to the African economy, and therein lays the stunted growth paradox. We were designed to grow effortlessly naturally. However, the people that grow well are the ones most invested in. The plant that thrives is the one tended to.
Many posit that equity favors the startup over debt. Is this credit problem a banking problem that maligns just the small upstart or could this fate also ill-fate the well planned major player in an industry. It affects all. HiTV!
HiTV was designed as a popular challenger brand in the cable TV provider industry, sort of an Avis versus Hertz Car rental and it was well on her way to succeed as a dominant challenger brand. Their offering was cheaper, lesser quality but she held exclusive rights to the golden goose of Nigerian cable TV; The English Premiership (EPL). The EPL was the key to their strategy and it was in the bag. Then they hit the crossroads; I can’t say or explain the following events better than the CEO of the defunct company.
“We paid 40 million dollars for the first year of the second term of the EPL from mostly equity. But still had to come up with a guarantee of about 70 million dollars for the latter 2 years and in Nigeria, a guarantee requires cash in the bank. The alternative bank we were forced to use despite all their assurances and being offered half of the amount by another Bank failed to issue the same on that fateful Tuesday and only offered it to us on Thursday. Meanwhile, the EPL sold it to our competition on Wednesday morning” 3
In delaying and denying the transaction, that nailed the coffin on HiTV operations, did anyone within the know and at the banks think of the HiTV brand as one that would traverse the African landscape, beaming to homes to over 1 billion Africans in 54 countries, positioning Nigerians to lead and share expertise across the continent and build out their lives and economies through just this one entity?
Clearly, the bankers docked HiTV, not their competition. Capital is very impatient in Nigeria.
There are no graveyards in the jungle, just mangled up, eaten out, dried out carcasses. The Nigerian business environment or the jungle as I see it has more carcasses than your largest graveyards. Carcasses of businesses that once thrived but live no more, some with glorified days, while others will pass without a mention in the pantheon of fallen angels. The lion in the jungle is the banks and financial institutions.
Previously we assumed the marketplace will make necessary adjustments, corrections, and favor you to succeed in the jungle. Sadly I am now of the realization that those who survive the jungle are the well resourced, so long as they meet all the other requirements of the market.
For a long while, we have told startups that funding isn’t a problem, just work your business up, secure a minimum viable product, test it out, and get reception for product and scale. Your growth will be funded. The question remains by whom?
And this is where my Volvo comes back to mind. Volvo is a 90-year-old company founded in 1927. Volvo would not make success in the American market until 1944. 4 No business in Nigeria of that scale searches for success for 20 years anywhere without been beaten out of the scene.
Her early models in the sixties stamped her authority as a safety advocate in the car business. By 1976, Volvo introduced the 240 series which my dad owned and that series had quite a run until the last unit of 2.8 million units was manufactured in 1993. 5
Between the 50s and the 80s, Volvo created the Lambdasond and three-way catalytic converter that made her the cleanest car sold in America, crumple zones, rear-facing child seats, collapsible steering columns, side collision protection, and the three-point seating belt designed by award-winning Volvo safety engineer; Nils Bohlin where Volvo waived her patent giving the right to all car manufacturers in the world to use in their cars, thereby saving over a million lives in car accidents. 6
All of these happened to the world because two friends (one an engineer, Gustaf Larsson, the other a salesman and economist, Assar Gabrielsson ) met in 1924 in a Swedish restaurant and decided to pursue their dreams and passion of building safe cars for people and most importantly because somebody financed it through equity, debt or a mix. Somebody or system said; let’s pay for this, so we can have more Volvo riders tomorrow.
Today, I can live anywhere in North America and I will have a Volvo 2021 XC90 model delivered to my doorstep with 0% APR financing over 60 months with minimal paperwork. Little wonder, Volvo, a Swedish car manufacturer, that faced the onslaught of Japanese cars in her most prosperous market (America) since the 90s has refused to die off. 7
Where is the Nigerian version of Volvo? She resides in the Plateau state home of Jerry Mallo, a young agro machinery fabricator who built his concept car; the Beenie Purri that mimics the Lamborghini and the Ferrari. 8
She also lives in Nnewi, Anambra on the factory grounds of Innoson Vehicle Manufacturing where a former motorcycle manufacturing plant has taken on the challenge of making Nigerian vehicles and has manufactured and sold 10,000 units. 9
IVM says Price Waterhouse believes there are 130 foreign used cars to every brand new car out there. The challenge for IVM is to match production, but the demand must be supported by financial institutions. 10
This is where credit inclusion tells a more different story from financial inclusion. The World Bank says “ Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs — transactions, payments, savings, credit, and insurance — delivered in a responsible and sustainable way.”11
Financial inclusion is low in Nigeria, but the question remains have we incentivized those that are already in the program? Can a Nigerian bank fund Jerry Mallo’s dream, can banks extend credit to Innoson distributors and can a young Nigerian who has banked his proceeds for 10 years of his life since leaving university and the National youth service finally have access to near 0% financing to acquire the Nigerian version of Volvo; Innoson?
This way, we develop a thriving community; the young person thrives, Innoson thrives, Nigeria thrives, and Africa thrives. There is a multiplier effect to credit inclusion. The more people benefit from their financial institutions, the more people will sign up to have their bank accounts. It should be this simple.
Financial inclusion isn’t about having the opportunity to deposit your savings. It is about joining a system that rewards your savings, transactions, and financial activities. It is time for the central talking point in all financial inclusion talks and debates to be credit inclusion (and patient credit inclusion at that). Otherwise, just invite your guests for coffee and bants.
References
1. https://punchng.com/founding-bank-worst-business-decision-adedoyin/
2. http://dawncommission.org/chief-emmanuel-olatunji-adesoye-oon-con/
3. Why HITV failed by Toyin Subair
4.1. https://www.youtube.com/watch?v=KUyq7zWZ8E8
5.1. https://www.youtube.com/watch?v=KUyq7zWZ8E8
6. https://www.volvoclub.org.uk/history/
7. http://www.realcartips.com/news/1051-best-finance-deals.shtml
8. 1. https://www.youtube.com/watch?v=Le_F-2x75nM
9. https://www.innosonvehicles.com/about-ivm
10. https://www.innosonvehicles.com/about-ivm
11. https://www.worldbank.org/en/topic/financialinclusion/overview#1
