Odu’a Investment will be world-class conglomerate —GMD

Mr Adewale Raji, Group Managing Director, Odu’a Investment Company Limited, in this interview with Sulaimon Olanrewaju and Justice Nwafor, speaks on the plan to enhance and build on the legacies of the company’s founding fathers for the benefit of the governments and people of the South West. Excerpts.

 

How is Odu’a Investment doing?

Thank you very much. As we speak this month of November, I’ll say it’s on a very solid foundation. I’ll relate it to an aeroplane that is on the taxi lane about to take off. To take off to realize those expectations of our various stakeholders and, essentially, to realize the mandate of our shareholders. So, I’ll say more than ever before, the organization as it stands today is in a better shape to deliver on this mandate. The mandate is quite clear. Our shareholders have a clearly defined and very simple statement. That statement, though is being re-echoed today, I think that is what it was at the beginning. It is for Odu’a Investment Company Limited to be the engine room of economic development in the Southwest. And if you cast your mind back to the Western Nigeria Development Corporation (WNDC), that was the goal. We found our origin in WNDC. So essentially, it is for us to position ourselves and live up to that mandate in terms of our footprints, and in terms of our economic and social impact in the lives of our people, the people of South West.

 

When you say the company is just taxiing after 44 years, isn’t that an unexpected turn in the expectations of the people?

What you will agree with me is, just like our dear country, Odu’a too has faced its challenges, and the depth of understanding those challenges varies. Some people see Odu’a as an extension of the government. It is never an extension of government. This is a business. It’s only the ownership that is different. It’s like any other business fighting for the market; that’s what it is.

Nobody looks at your origin, your state, your religion when you are competing in the market place. It’s the value proposition on the table. So, what I’m saying, in essence, is, getting the organization to actually focus on that core mandate of doing business that is the essence of this taxiing I mentioned because all this while the thinking was that we were an extension of the government. But we don’t receive any subvention from the government, so why should our thinking be like people working in the government. Government has a responsibility for social delivery. That’s for the government. The primary aim of the government is not for profitability, it is the social well being of people. The primary aim of a business enterprise is solid and sustainable profit that secures the future and meets up with the expectations of its shareholders and stakeholders alike. That is the way a business, irrespective of who owns it, should run.

 

Is this what informed SRC 2025, the new strategy of the organisation?

Let me say we are lucky with our shareholders who have a commitment and a conviction that Odu’a Investment and the Group as a whole should run as a dynamic and sustainable business and a lot of gratitude to them for their own courage to make sure that they can put the enabling blocks that will make us realize this in place. That aspiration and that core thing about the enabling block relates to the governance structure. More than ever before, the issue of governance has been addressed by the shareholders in the last one year. And it’s not only that it has been addressed, but the study and the report have also been thoroughly digested along with the board and the shareholders and decisions have been taken, and execution of those decisions has commenced.

And when you talk about the strategy itself, you’ll find out that all the very critical segments that are responsible for delivering a very sustainable and very profitable business are all being taken into consideration. They’re being reshaped and that has to do with the shareholders themselves redefining what their roles and responsibilities are, making sure that they constitute a board, a business-facing board, of distinguished people, diverse background, people who have track records in business. Last May, the shareholders constituted a board, comprising experienced people. The shareholders have put square pegs in square holes. The other element relating to the board is to make sure that the relative diversities and the strength that is required in a board is also in place, so you find out that management has been re-enforced. While all along it has just been one single member of management who sits on the board, that is the Group Managing Director, we now have two new executive directors, appointed through a very competitive process and we hired the best in the industry.

So, you will find out the management has two additional posts on the board, as chief financial officer and as a chief investment development officer at executive director level, meaning that from a capability point of view, management itself is also resourcing to be capable. The third segment as far as the board is concerned, was to bring in independent directors, to try and balance the board, the element of gender, the element of experience, diversity and what have you. They brought it on board and you have two independent directors also on the board. So, we now have a board of 11 members, but it is now a balanced 11, people that have tons of experience.


With the reconstitution of the board, the board called for a retreat where we came up with a strategy which we called SRC. It means ‘Sweat, Revive and Create’ 2025 over the next five years where we anticipate that we should grow this business in terms of revenue by more than 500 per cent of what currently we are doing. And it’s quite clear that if you have a strategy and you deploy from a resource point of view to support yourself you’ll achieve it. The principles are all very simple. Very successful companies in Nigeria and all over the world, follow very strong governance rules and depoliticize decision making.

In the former board, we would be talking about a project and you’ll find board members arguing why we should duplicate that project in every state. The people you are competing with, is that what they do? We are privileged to have Dangote as the biggest conglomerate in Nigeria. Why did Dangote not put his refinery in Kano where he comes from? He puts his refinery next to the market; that’s what business is. Frankly, the kind of goodwill and capital he has attracted, if he had located it in Kano, he would not have been able to achieve that.

That’s the kind of decision that Odu’a, with the star-studded business-facing board, and attraction of the right talent and resources, will be taking. There won’t be any emotions. It’s all about the bottom line. It’s all about the people and how sustainable these decisions are going to be.

 

In real terms, how will this SRC 2025 translate into 500 per cent growth over the next five years?

Thank you very much. We are saying we are blessed with the assets we inherited, so we need to sweat those assets. I’ll give you an example of how this is going to happen. Just using a sector where we are playing, S stands for Sweat, the R there is to Revive, while C is to create, this relates to what we can say is new in our portfolio. This means while we are dealing with what we have, we are also going to enter into new ones, and the reasons are not farfetched.

Let us use our hospitality business as an example. What do we want to do with it? We have a clear vision to be a world-class conglomerate. So, clearly from a visioning point of view, the vision is this: our hotels should become world-class hospitality destinations. So, we have seen the signpost of where we are going, in which case we want to make them world-class, so there are funds and assets that we need to revive. Then to sweat it because in our books you see tons and tons of money but it’s tons of money that do not translate to revenue. So, by reviving it, and making sure that we meet that aspiration to be a world-class organization, we will turn it into a world-class hospitality destination.

What that requires is that you have to change your mindset about it. First of all, it’s called Premier Hotel. The practise all over the world is that hotels don’t go as individual entities, they go as part of a chain, and those chains have what we can call global standards. They even have segmentation; you’ll have for example in the Radisson brand, Radisson Boutique, Radisson Park In and Radisson Blu, which is their flagship. But they’re all in a chain that is defined. Once the name is mentioned, you know the standard to expect. That is what we want to do with our hotels.

So, you find out that in that situation, we are trying to sweat the asset and we’re also trying to revive it, the point is still hospitality and it’s an area we have decided we are going to continue to participate in. There is a need to create new entities as hotels that we’ll build from scratch, to increase the chain of hotels that we have, when that is now happening we are creating. So if you look at hospitality, I have taken you across how we are sweating, how we are reviving and how we want to create, in all of this, we don’t want to be jack of all trades, we have said that strategic partnership with other entities who have competence in those areas will go a long way. So if I say it’s a Marion Premier, for example, that’s a strategic partnership, we might end up that it is we and Marion that own it. So, in which case, it is a bigger entity owned by two parties. So, it’s more like you come across a N10 billion asset, where maybe our ownership is 30 or 40 per cent compared to a N2 billion asset where our ownership is 100 per cent and it’s a disgrace to us because to make it N10 billion, requires the injection of N8billion, and we don’t have the money. So this time around, we have the courage and the boldness to take those steps. By so doing, we will not be losing ownership because we will make sure that part of that name is maintained and that’s why I’m mentioning Marion Premier, but we are better off if at the end of the day, it is 40 per cent of N10 billion that we own, that becomes N4billion compared to 100 per cent of N2billion and we just keep struggling.

I’ve used that as an example, but there is a whole lot of other new businesses that we have to enter and the perspective from the board’s point of view as part of the strategy is also that, if you look at our mission statement, it talks about delivering sustainable returns to stakeholders but there’s an underlying tagline there which is ‘enhancing the legacy for future generations.’

Unlike the past which is like preserving the legacy of our founding fathers, in which case we are always looking back to our founding fathers. They’re great. They’ve done it but now they’re no longer there, what is the future going to be, so it means that the current generation should leverage that to create a future where future generation will have identification with Odu’a. So you’ll find out that along that line it is imperative that the business needs to enter into segments where the younger generations are interested. I mean we are doing real estate now, we’re doing hospitality and what have you. What are the areas of interest to young people? You find out that fin-tech, e-commerce, innovation and technology are things that interest the young people.

We are also considering pharmaceutical and healthcare. The population is growing by about three per cent every year and they need to be healthy. It is a fact that nobody prices drugs. So you find out that this is a cheap area to make money. We are also looking at participation in energy and energy varieties.

Finally, you can’t leave out agriculture and food security. So, if it’s actually to drive the economic development of the Southwest, we’ve got to be in charge and for that reason, it has been identified as an area where Odu’a will play a great role, creating multiple joint ventures that will at the end of the day partake across the agric value chain of cultivation whether it is cash crop or food crops; be involved in livestock because you need protein from livestock and at the same time make sure that different levels of processing which is the value-added that actually makes farmers be billionaires, you allow it to happen. And you do all of these that you do through strategic partnership. You actually build on the competence of people who are aligned to do what we call modern mechanized, innovation and technology-driven agriculture. Tons of money will be made, in terms of value addition.

 

Have the staff bought into the SRC 2025 vision?

Yes. All the management staff participated in and made input into the formulation of the strategy. We didn’t hold that strategy retreat until the board was complete, the group executive directors were already appointed and attended, though they had not officially assumed duties then. The same thing also happened with the independent non-executive directors. We then took time to engage employees and the level of engagement was to take it to a level where they appreciate that every individual in the organization has a role to play and that what we are going through is a change process and that people should have an open mind because none of us will remain the same. What we are now and what we want to become are different things so we cannot become that and still remain who we were, that’s quite clear.

Also, we assured that because what we are trying to attain looks new to us we don’t expect that people are going to be perfect and from nowhere, like wizards, they’ll possess the capability of the new one. We have said that we are in the building process and in that process, there is the process of old and new. We will demonstrate courage, fairness, and objectivity.

 

Recession is here, and you know businesses don’t operate in isolation. With the reality on ground, how do you intend to achieve these lofty dreams?

You know we have just gone through COVID-19 and lockdown but throughout the period, everybody was eating, they gave us a lockdown but they made that window that food and transportation would be allowed even in the lockdown. Participating in those critical sectors which no one can do without allows you to beat recession. If you are in agriculture that spans the whole value chain, it allows you to process output and you elongate the life, what that does is that you have the stability of pricing compared to if you’re just in primary production, you’re relying on rainfall and you’re waiting for the climate and weather concerning when to plant and when to harvest, which is what everybody is relying on, your productivity is low. And when it comes to pricing, the market is cheating you because all of you are presenting at the same time. But when you add value to agricultural produce, it’ll cost you more money to put equipment and factory in place, but ultimately, once you produce you’re giving the outputs of such production a minimum of two years shelf life. With that kind of situation, it allows you to sell over a long period of time compared to primary produce harvests that you are having within one and a half to three weeks to sell. So these are the ways to beat recession.

The second one about recession and how it is positive is that you always realize that when there is a downturn of the economy from the Nigerian experience it has to do with what we call paucity of foreign exchange. What that does is that it limits what can come into Nigeria and even what comes into Nigeria becomes more expensive. It’s an opportunity because in recession there is scarcity of foreign exchange, that is when they are looking for what can be used locally. So if you have positioned yourself in agriculture, for instance, it allows you to get a benefit, there are quite a lot of entities that are beating recession on this basis because of how they position themselves.

The third process we have gone into is being involved in critical sectors that allow you to mitigate the impact of recession. People are still eating. A lot of manufacturing entities, whose costs have escalated because of the depreciation of the local currency, are looking for local alternatives. They have the capacity to absorb raw materials, that is what will keep you going because for them also it’s a strategy for survival, it’s a way to manage their cost down such that their products will still be accessible and affordable to people. The breweries, for example, part of their tagline is that no sugar added, it’s a smart marketing tactic, the previous product had sugarcane acting as sugar in it and they were paying for that in hard currency. Under the current regime where they are telling you they’re giving you less sugar, the sugar is being sourced from industrial starch, which comes from cassava, and that’s why they are telling you no sugar added, not only have they gotten their cost lowered because they’re still putting what role sugar is supposed to play through cassava starch which they turn to sucrose, but they are doing it at a lower cost that makes their product more affordable and more importantly they are exciting consumers with their no-sugar campaign.

 

The telecom and IT sectors are very big in Nigeria. Odu’a Telecom was licensed to operate some years back. What is the position of that company right now?

The challenge is that we went to a sector on the basis of emotions and we thought we could ride it. In addition, our governance was very weak. We entered the sector, localizing everything, even people that were leading that business were people working with us before that technological revolution came and of course what you know is what you know. So we missed it. It was a feel-good sentiment that went into it and regrettably the courage to retrace our steps was also lacking, so we pumped in more and more money, leading to not just loss of money but equally affecting our reputation as an organization. So, we have learnt from this and we will not get involved in those things without applying the rules as I’ve mentioned and that’s why governance is very strong.

Such things cannot happen now because the board will ask the right questions. So, by every description, it was a misadventure and it remains a challenge on how we will fully tidy up that misadventure. It’s not fully tidied up at this point in time. The situation is that the entity still exists but we are minority shareholders. We wanted to solve a problem by becoming a minority shareholder but unfortunately, the problem still persists because, again, we lacked the courage to take the right decision. However, with the strengthening of governance and a very clear understanding from the shareholders’ point of view, we will not approach things like that in future.

 

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