Elizabeth and Esther, a micro tax collection consultant with Lagos State government, entered a N90 million loan agreement with Fortis Microfinance Bank in early 2017. After perfecting the collateral, however, the bank only disbursed a cumulative N5 million and stopped. Now, the company has forwarded a protest letter to the Central Bank of Nigeria alleging sabotage. Its Managing Director, Mr Tunji Conde, spoke with Nigerian Tribune on the details.
How did it all happen?
I approached Fortis Microfinance Bank, a microfinance bank, for a loan because of the dynamic kind of collection I was going to do, which is informal sector tax collection. Why? Because microfinance already has the structure of the cooperative that deals with people at the lower echelon of the economy. Those are the persons to deal with. We entered into the agreement, but their board sat over it. There was one of their directors that said I was an unknown company and wondered how Lagos State would give me such a big contract. What we then did after the board had approved was that the director, Mr Deji Fisho, said he had to reconfirm with the state government. So, we flew back to Lagos for confirmation. After that had been done, we came back to Abuja.
In the loan offer, we were told that the money would be disbursed in tranches and as a businessman, I also understood what they were trying to do: it was a case of my asking, my requesting and then disbursing. Mr Tiko Okoye, the Managing Director, then sent me to the Chief Finance Officer, one Mr Biodun, who I had never had dealings with, but I felt that there was no problem. We then asked them to give us N15 million as the first tranche but it took days for them to start disbursing the funds, they gave me N3 million and then N2 million. They then kept explaining that they were mopping up cash for me. And since I am not a bank insider to know what their financial situation really was, I just gave the N5 million to my web developers. I then returned to them for more funds but they were no longer forthcoming as they kept asking me to come back.
As I then began to analyse their motive, I realised that Fortis as a financial institution would not go into this magnitude of business knowing that the contract that we have is a gold mine with government desperate for alternative revenue sources. Our contract is in a sector that is deemed to have four million people in Lagos State within that tax bracket. If we can collect N100 every day from each of them, in a month, we would have collected over N4 billion and if we had that, which will also still pass through the bank as float for the bank even as our own profit of 6.5 per cent will still be domiciled with the bank. In essence, we have been losing over N300 million every month and it became worrisome to me that if this bank knew how much we were losing it would not take the matter lightly.
We got in as sub-consultants in Lagos, they did a lot of scrutinies before they accepted that our proposal as the solution to the biggest tax problem we have in Nigeria, which is the informal tax collection. Every other sub-contractor was given a one-year contract but with our solution, they gave a contract till the end of this administration and that they would even continue with us in the next administration. The contract was given to us since February 2017. Over a year later, we have not been able to do anything because of the attitude of this bank.
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When did you get the first disbursement?
We got it in September 2017 because there were processes to be undertaken which are customary to any bank. They first asked that we go into a joint venture and later they proposed project financing. It was eventually approved as a loan. By that time, we had spent months going round and round and it was frustrating but thinking of the rigour that we are likely to go through should we approach other banks, I decided to stick with them.
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When did you first approach Fortis Microfinance Bank for loan?
I cannot recollect precisely but I think we started the talk almost a month after signing the contract with Lagos State.
But my question is: would a project which would have empowered a minimum of 1,000 people per local government in Lagos as direct collecting agents; a project that would have changed the fortunes of a state government be slowed down by a bank? I remember someone who told me after we got the contract that it is akin to getting a contract from Shell.
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How much are you projecting to collect per month from the deal and from how many local governments?
We were awarded four local governments that are the most lucrative local governments. We have the whole of Epe, Eredo, Ikoyi-Obalende and Lagos Island.
The bank itself saw that we had been able to perfect micro-collection which could apply to every sector of the economy including insurance, pension and others because we are just micro-collectors. People in that sector make money daily and you can only collect from them in tranches if you are going to collect anything because someone who sells pepper which is not more than N5,000, you cannot tell that person to pay you the same N5,000 at the end of the month. The person will run away.
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So they were supposed to remit their taxes daily?
Yes. It is collecting their taxes in tranches.
What is the target that you have per local government?
We have a target, which the bank also saw. With the benefit of hindsight now, I remember a staff of Fortis, who accompanied us to Lagos for a presentation, asking me if I collected the contract on behalf of Fortis because he had been chasing the same contract but their model was different. He confessed that my model was the best. So would it mean that they are stalling my own business after collecting my collateral- a third party collateral that has brought me trouble?
I went to the managing director of Fortis Microfinance Bank, Mr. Tiko Okoye, and told him that the owners of the collateral have gone to my house in Lagos because they refused to believe that I am yet to collect the loan from Fortis. Â Okoye himself had to speak with them.
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Have you met with officials of the bank since September 2017 to find out why they are not disbursing more money to you from the N90 million approved?
I have met Mr. Okoye. After a while, because of the body language messages, I was getting from him, I began to record every meeting I had with him, I made sure that every phone call was recorded. He sent me e-mails apologizing. All I ask him is when he will disburse the money? But the staff started resorting to sentiments that I am familiar with Mr. Okoye, that I have direct access to him, that I know the chairman, that I have direct access to him. But what has the direct access done for me?
So I have met with Mr. Okoye and Mr. Felix Achibiri, who is the chairman of the bank, many times both formally and informally yet, nobody has got back to me for answers.
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What do you demand now?
It has got to a point that I am losing money daily. We would have paid back their N90 million within six months. I am losing money every day. Will they compensate me for this loss because they also have the financials with them? They agreed to give me the loan based on the financials they have. Are they going to give me the money or are they ready to release the money which is already late? Which is the easier option for them?
There are three issues here now. I want to work, I did not approach them because N90 million is all that I am looking for. If they release my collateral, what will they compensate me with? Are you compensating me with the amount that I have lost or what are you going to compensate me with? At a point, Mr Okoye told me to write them asking for a return of my collateral. I might not be a lawyer, I am a businessman but I understand the implication of that which is that I am the one that called off the transaction. It was when he said that that I concluded he had an ulterior motive. I have written to the Customer Protection Department of the CBN and they have pushed it to the relevant department.