Barely four months after the
death of the founder of Omatek Computers, Mrs. Florence Seriki, a bank has
taken over the company property, thereby bringing to a halt the sad tale of a
dream of another Small Medium Enterprise (SMS) in Nigeria. REMMY NWEKE in this report for ITRealms Online, wondered
if this is not a requiem for Nigerian SMEs?
Prelude:
Driving through the former Oregun
Road and now Kudirat Abiola Way, Ojota, Lagos, one thing that caught my
attention at the Alausa Bus-Stop, was the notice of take over of Omatek
Ventures Plc, the parent company of Omatek Computers Limited, the Solar energy
subsidiary, among others; I have to turn at the next available route, parked
and walked to the entrance of what has become the headquarters of Omatek.
According to the notice, my fear was
confirmed as the premises have been taken over by an order of a court, with a boldly
written notice: “FHC/L/CS/590/17 – Possession Taken Today 18/7/17 by Court
Order.”
Takeover:
Omatek prides itself as a Nigeria
SME and the first factory to locally assemble computer cases, speakers,
keyboards and mouse, in other words, computer systems and notebooks with a good
number of network for other system builders and resellers across Africa.
The takeover news, ITRealms recalled was initially in the air, a year ago and
precisely in May, 2016, when it was
gathered First Bank of Nigeria (FBN) Limited filed a wind-up petition against
Omatek, seeking recovery of a loan worth N838,337,562.69, granted the firm, two
years earlier in 2014.
N838m bank loan and wind-up genesis:
According to the petition at
Federal High Court, Lagos, the bank counsel, Mr Ade Oyebanji had alleged that
Omatek Computers, between May 20, 2014 and November 12, 2015, applied for and
was granted various type of loans in the sum of N743,224,440, supported with
personal guarantee of then Managing Director, Mrs. Seriki who also is an alter
ego of the company, in addition to corporate guarantees from two sister
companies, namely Omatek Ventures Plc and Omatek Ventures Distribution Limited.
Although Omatek initially
objected to the petition via its counsel, Professor Taiwo Osipitan, a Senior
Advocate of Nigeria (SAN), urging the court to dismiss the petition on the
ground that it was incompetent and also contended that it did not comply with company
winding up rules, because as at the time of filing the petition, the tenor of
the loan had not expired. Eventually the case went on and gave birth to the
takeover by the Bank of Industry (BoI) on July 18, 2017, now accumulated to the
tune of N838,337,562.69.
Loan brought forward:
As at the time of filing this
report, ITRealms reports, all Omatek Computers
signpost at the promises have been removed, as security officer on site was
quick to reveal that employees ever since have been barred from entry into the company premise.
Also, ITRealms gathered that earlier in July, the Nigerian Stock
Exchange (NSE) had suspended trading on the shares of Omatek Ventures over
failure to submit its account statements and operational reports as required.
Seriki foresaw bank takeover:
Obviously reacting to the bank’s
wind-up petition that broke the camel back, late Mrs. Seriki, berated the banks
on their inability to understand the difficulties of SMEs in trying to grow and
entrench their businesses, mostly when loan is involved.
On probable secrets she may have
adopted on managing bank loans, Seriki had noted that they work very hard and
believe in production of standard products, in addition to having credibility,
which is critical, but lamented that hitherto, Nigerian bank policies messed her
company up at a time, leading to sack of so many of workers. Hence, she said
they don’t know the ripple effects of some of their policies.
“Then, taking loan from banks is
a major challenge. Sometimes, the banks thought we were fighting them, but in
actual sense, we were not fighting anyone; we were only trying to explain our
line of business to them,” she declared.
On some of the harsh business decisions
she has taken to move Omatek forward, Seriki pointed out that if she had a
choice, borrowing from Nigerian banks will be a last resort, explaining that on
three occasions, they have threatened Omatek over a loan. Prophesying that “Instead of them to work with
us to see how to get their money back, the only thing I saw on the wall was how
to take over our company.” She lamented, Nigerian banks have to understand that
business is deeper than what they think.
Banks wanted us liquidated:
On the short-lived success of the
Omatek listing at Stock Exchange, late Mrs. Seriki emphatically blamed banks
over persistent pressure to take over SMEs. According to her, that incident
happened because one of Omatek partner banks tried to liquidate it. Stressing
that although the company was able eventually to raise capital to pay their
money back, adding that initial offer was oversubscribed, “the stock exchange
called us that we had broken a record and encouraged us to get listed; I didn’t
initially plan to do so. Shortly after that, the stocks crashed but I never
regret any decision I take through God. Everything I do, I first commit it into
the hands of God, so no regrets. If we didn’t take that step, the banks would
have taken over this company.”
She maintained that as SME,
Omatek did not get the type of funding needed from the bank, because it would
require huge collateral which was not available at the time. That was the
issue, reiterating that if she had her way, “I would never borrow from the
banks.”
Sunday Takeover debate:
For an industry observers, its
alarming how Nigerian banks like taking over businesses entrepreneurs have laboured
to build only for them to allow such effort die naturally without thinking
beyond mere take over to recover their fund or better seen as loan.
It took a question from an
industry observer, Otunba Ebee, at a Sunday roundtable on the state of Omatek
now the banks have taken over, perturbed by the thinking that even government
should have done something. Reminiscing on the situation, Ogbuefi Machi,
another industry observer, lamented “It's very unfortunate how bank loans kill
SMEs in this country.” Yet another
observer, Mallam Isaka asked since they took over the company, will it not be
in the best interest of the country, the business and even employees, to introduce
their own management team instead of wasting the company with attendant job
loss, without a blink.
For Machi, Omatek should have traded
softly in going for another bank loan after what happened in 2009 when Saudi purportedly
forced banks to recall their loans to companies, which led to the Central Bank
of Nigeria (CBN) decision that seriously affected the fortunes of the company.
He insisted that “It's always better to function small than taking bank loan in
this country. If you want bank loan, please take loan from abroad.” Arguing
that the interests on the loan in Nigeria is killing companies; saying that Commercial banks give double
digits interests, although Bank of Industry (BOI) is better because the loan is
single digit, but would not go beyond 9 per cent
As said by Machi, “A bank
gives you loan to run your business, it is up to you to manage the funds. If
you don't manage it well and start repaying according to the Memorandum of
Agreement (MoA) signed, it will go to court to enforce the takeover of the
collateral deposited so that it will recover its money. It's core business is
to give loan not to run your business for you. “
He posited that if the company
involved is a ‘Too Big To Fail institution,’ there could be some intervention via
the regulators to appoint new management to run and stabilize the place prior
to sale to new investors. Omatek's key assets, he noted, is the landed
property and warehouses on the land.
Whilst Ebee insisted and hoped
that something could have been done to keep this Omatek dream alive. Machi was quick to add that despite investing
the loan including into solar energy, the returns on investment was not
convincing. Thus, debts started piling and banks do not listen to excuses.
Be wary of bank loans:
“It is unfortunate that one of
the Information Technology (IT) industry iconic businesses has to go that way.
This is a company every ICT stakeholder has benefited from one way or the other
in the last two decades,” he further decried.
This position, Otunba Ebee could
not agree less, postulating that sometimes Small Medium Businesses (SMBs) take
up loans without proper insight and planning, hence, “You hear people say the
most important thing is just to get the loan first. But you must have a plan on
how and period for repayment. Let's be wary of loans, especially bank loans.
Conclusion:
Submitting, Machi believes the
CBN and Federal Government (FG) policies in the last two years finally killed
Omatek, explaining that loans were taken in Naira but the products were to be
sourced from China, which requires converting Naira to Dollar at very exorbitant
cost and “when you get to China you convert to Yuan to make purchases. Import
duties are so high at the airport and seaports.” Insisting that only if FG had implemented
the agreement it signed with China on Remnibi which is the legal tender in mainland China, the Chinese Yuan would have been available to
Nigerian banks as one of the forex currencies.
“Cost of mobile phones wouldn't
have even skyrocketed,” he alleged, contending that as at time of filing this
report, One Chinese Yuan is not more than N40, but Dollar is now N370. Grieving
that Omatek is taken over via bank loan, noting that every day he passes in
front of the company premises, he is filled with nostalgia.
For Isaka, he maintained that although
the loan went awry, is not enough to take over a promising enterprise like
Omatek for the sake of takeover. Positing that there are other assets beyond
the landed property which he thinks the bank should also be concerned about.
Wondering if it should not have been more beneficial to have a management team
takeover the remains of the company, and try to run it back into profitability.
“So that instead of job loss, we have more investment” Mallam Isaka insisted,
just like was lately done to Arik Air or even Etisalat among others.
He called on the National
Information Technology Development Agency (NITDA) to do something as respite
for Omatek and likes before more SMEs find themselves in the Omatek shoe.
Arguing if the National Information Technology
Development Fund (NITDEF) should
not have been used to save the situation?
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