Tony Elumelu: You Cannot Create Legacy by Just Keeping Monies in Banks

Heirs Holdings marked its 14th  anniversary on Wednesday this week, and its founder, Mr. Tony 

Elumelu discussed some critical developmental issues with journalists. Dike Onwuamaeze who was there brings the excerpts:

Heirs Holdings Operations and FX Challenges

The glass is always half full and one can see either the part that is empty or you see the filled side. I think that there are challenges but for us as a group, we say that we want to succeed despite the challenges. The ability to confront, mitigate, and navigate the challenges compelled us also to some advantages. We try to generate foreign exchange (FX) as a group. Every day we produce oil and we sell, we earn FX. We also sell energy to other parts of Africa. So, we also earn FX from that. But the kind of business we do to a large extent the FX component is not as much as it is for others. So, we understand the challenges some people are facing. There are deep challenges but what we do as a group is that we see challenges as present opportunities. So my message to entrepreneurs and everyone is that there are challenges but can we try and see how we can navigate these challenges?

Strategy Driving Heirs Holdings

You know that there is what they call corporate strategy and competitive strategy. I do not look at competitive strategy. The way we see it, we just see Africa as our operating theatre. We see Africa as our market. We do not just see Nigeria as our market. So the overarching driver in all of this is that we have a huge market in Africa because of the population and we have the demographic. So, why should we limit our access to one market in Nigeria? So let us see Africa as our total market. It is about what opportunity we see in our sector and how we play in that area to achieve our objective of improving lives and prosperity. There are so many opportunities even though there are lots of challenges. Yet no one but us Africans will develop Africa. You must also remember our philosophy of African capitalism that the private sector must do something as a way of galvanising others to come up. At the Tony Elumelu Foundation (TEF), we know that as a foundation we do not have solutions to all our continent’s challenges. And we know that we have millions of our young ones who are in need. But by supporting 20,000 and amplifying it and those 20,000 going on to create more impact, people are watching. Others who are even richer than us can do something to help Africa. In everything that we do we see Africa as our theatre and starting from somewhere we grow from that place to other areas.

Power Distribution Company

There is a consortium led by Transcorp that has acquired Abuja Electricity Distribution Company and I think it is the number three already in the country. So, we are in that space but it is a tough place, a very tough space but we are in that space and we will do what we know how to do. We turn around businesses and create value for all. We will do that definitely.  

Investment opportunities and ongoing  banking sector recapitalisation

The good thing about bank stocks or the equity market is that it is almost like an annuity that is there forever. The interest rate regime we have today is a result of the monetary policy. But for equity, if you invest in the right stock, it might not give you that upper band but it is consistent. Always be aware of the elementary investment advice that you should diversify your portfolios so that if there is a shock in this area the other areas will support you.

Challenge of Talent Retention Amid Youths Migration

I should ask you to read my interview with the Financial Times of London on my blog or social media handles. They asked me this question there. As a person, it affects all of us. When we are interviewing young people I do not know who is going to stay for 12 months or two years. But that will not stop you from interviewing, hiring and training them. At the UBA we train thousands almost every six months. At Heirs Holdings, last week we had our induction session here with some of our young new employees. We need people to execute our strategies and visions to make them come alive so you cannot stop hiring young people. At the same time, you cannot stop people from going if they believe that Canada holds better prospects for them. You cannot stop them. All we can do is to make our environment attractive to stop them from going. There are some economies like India and others that remittance from their diaspora is huge every year. In Nigeria, I am sure we are crying now but there will come a time when it will be beneficial to us. When a lot of foreign exchange will start coming into the country from our people in diaspora. So, I support it. I am not against it.

Legacy to leave behind

If you had listened to what I had said you would know that it is all about legacy. The reason we do what we are doing today is not because we want to feed or train our children but to a large extent we want to keep on improving lives and giving hope to our society. What we do at the TEF is just a demonstration of our commitment to legacy. We are trying to help others, democratise prosperity and eradicate poverty. We are trying to ensure that we bring our women into mainstream economic activities. We are trying to see that we help humanity. We do all of this because we want to leave the world a better place and we believe we cannot achieve that by keeping money in our bank accounts. We will do so by touching lives.

Concern that Nigerian billionaires prefer to establish endowments in universities in America and Europe rather than Nigerian universities 

Let me use this opportunity to comment on something. A week or two ago some guy wrote about Nigerian wealthy people not endowing local universities with funds. I want to use this opportunity to respond to him. My response is that there are a lot of problems in the world but you will just choose the ones you want to solve. If you look at the Gates Foundation, they focus on health; some focus on other areas of interest. Some are focused on conservation and climate issues. For us, we are focusing on economic empowerment. We are focusing on economically empowering our young people because we believe that the future of the African continent lies in the hands of our young ones. And we believe that by giving them economic hope, training them and empathising with them, giving them valuable seed capital, appointing mentors for them etc., and engaging in advocacy to create the right enabling environment that all these will help to first develop people and also communities, nations, and the continent. It will not be right to just sit down to pontificate and just label people unnecessarily. People are playing their roles. Let everyone come to the ring and play his or her role. But for us, we have chosen entrepreneurship and economic empowerment. We have limited resources. I said earlier that what we do is not out of the abundance of wealth. But just the need to do what we believe is right: to share prosperity. And we have chosen to do our own through entrepreneurship. Having said that, one of our businesses, the United Bank for Africa has the UBA Foundation and they are strong on education, which is one of the three pillars of the UBA Foundation.

Insurance sector recapitalisation

I think I was the one who started the journey. I addressed the insurance association last year and there I made a call that we should recapitalise by up to N50 billion for composite: N20 billion for life and N30 billion for general insurance. We made that call because we deemed it important for the sector. And of course for the Heirs insurance we have prepared ourselves ahead of time. But it is the right thing. For any reason, we believe that is the right thing for the sector to be well adequately capitalised so that insurance will play the role it should be playing in this kind of economy.

Listing on the Nigerian Exchange Group

Yes, we will. But we need to make sure that the macro investment climate is right otherwise it can destroy value. But we will definitely. All our businesses in over 20 African countries that we are operating are privately owned and we like to democratise prosperity by listing them. People have benefitted significantly what we have listed. We will do some listing but it will be at the right time.

Why invest in fossil energy at this time

In the world we live in today there are some answers that you will give and it may be controversial. But the truth is what I say to people for us in Africa at a time like this we should set our priorities right. Access to electricity in Africa is almost zero. There are current conversations in the world about how to provide energy. But if you look at where we are in Nigeria and Africa we need all the energy combinations. There is hardly available capital or funds coming to the energy space, especially in developing countries. That is not good for us. We have so much of natural resources that we need to annex to enable us to deal with the energy deficit or insufficiency in the continent. So before we join certain conversations we need to assess properly and know where we are and what we need to develop. Everyone comes to the energy conversation table with their priorities and challenges. Yes, there is no more capital going into that space now, which is not good for us.