Seminar: How to Unlock Values within State-owned Assets, By Tony Elumelu

REMARKS Delivered by Tony O. Elumelu, CFR

Chairman: Heirs Holdings Group, Transcorp Group & UBA Group

Founder, The Tony Elumelu Foundation at the

MINISTRY OF FINANCE INCORPORATED (MOFI) PUBLIC WEALTH MANAGEMENT CONFERENCE

Congress Hall Transcorp Hilton Hotel

Abuja – FCT

Tuesday, February 20, 2024

REMARKS

Introduction & greetings

I am here to share the private sector perspective on public assets.
Let me commend the Ministry of Finance for this initiative of bringing together the key players and stakeholders as we chart a course to position MOFI as the strategic institution that will support the Federal Government’s efforts to address economic challenges and drive growth in the Nigerian economy.
Let me begin with a very important point:
There is no rush to see immediate profits; we must have that mindset if we are to fully unlock the value contained within these state-owned assets.
First set the strategic intent, prepare the milestones, know how you will be judged, and then execute, execute, execute – with discipline and always with that strategic intent in focus.

Temasek as a case study

When I was told of the subject, I instantly drew a parallel with TEMASEK in Singapore
TEMASEK started out in 1974 with the same aspirations as MOFI.
Temasek was established with state-owned assets worth $300 million, today those assets are now worth approximately $300 billion.
How did this happen? In 1974, following independence from the British, the Singaporean government found itself as the owner of a variety of new state-owned enterprises.
The Singaporean Government felt that it was necessary to separate governance from business management.
This stemmed from the principle that it was not the business of the government to operate the businesses it owned.
This principle led to the establishment of Temasek in 1974 to own and manage the assets held by the Singapore Government.
The arrangement allowed the government to focus on its core role of policymaking and regulations.
Today, Temasek has investments in the strategic sectors of its economy to unlock significant value: Transportation, industrial, financial services, technology, telecommunications, real estate and consumer goods.
Temasek typically owns significant stakes in companies, often with a focus on strategic investments that align with Singapore’s economic development goals.
Temasek also actively manages its investments, engaging with portfolio companies to drive growth and value creation.
Meaning that they are not a passive investor that sits back but more like a Private Equity firm that works closely with management to unlock value.
We need this approach in Nigeria.

Our Turnaround Success in the Heirs Holdings Group

In our Group, we are known for how to turn around businesses.
Our expertise is in unlocking the value in the assets we hold.
And our track record speaks for itself.
The turnaround of a defunct Crystal Bank birthed into Standard Trust Bank, which is now part of today’s United Bank for Africa (UBA).
This was not a state-owned enterprise but the same principles for turnaround occurred here.
We had a clear vision from day one of what we wanted to achieve in the financial services industry.
We set out clear goals which we labelled our strategic intent and worked assiduously to ensure we met them.
Today, UBA Group operates in 20 African countries, the UK, France, the UAE and the USA.
We are the only African bank with a deposit taking license in the USA.
In 2010, following my retirement as the CEO of UBA, and in looking for new opportunities and ventures, the Heirs Holdings Group, my family’s investment firm acquired Transcorp Plc
At the time, Transcorp was formed to lead the industrialisation of Nigeria.
The only asset Transcorp Group had back then was this hotel in which we are all gathered today.
Today, Transcorp plays in the hospitality, power (both in generation and distribution) and in the oil & gas sectors.
In Power, we acquired the 972MW gas-fired Ughelli Power Plant and ramped up its generations from 160MW to 701MW within four years of taking over the plant.
Our Ughelli Power Plant is the first privatized power company to be discharged from post- privatization monitoring having surpassed all set targets by the BPE and the National Council on Privatisation.
Transcorp Hotels has also been issued a Certificate of Discharge by the National Council on Privatisation.
We are confident that once we fix the issues of gas supply in Nigeria, we will be able to generate enough electricity to significantly power our country’s industrialisation.
AEDC
We have partnered with the FG to unlock the value of state-owned enterprises and we have shown how private sector efficiency translates into profitability and increased prosperity.
I think that from our experience there are certain lessons that one can learn.
There are key success factors to note if we are to truly unlock the value of our state-owned assets.
In our group, we are guided by the philosophy of Africapitalism, investing for the long-term, not the short-term, in strategic sectors of the economy that not only create profit but also create social wealth for the communities we operate in. It is the philosophy that drives our business, but it is also what drives the Tony Elumelu Foundation – why I have catalysed thousands of young entrepreneurs across Africa – why we have funded, trained and mentored them, to create a new generation fo Africapitalists.

Key Success Factors

In no particular order, there are a few I have listed out that we should strongly pay attention to

Leadership Capacity – Assemble the best in the industry who possess a turnaround mindset to transform the state assets and set performance targets for them.
Create a high-performance environment.
Culture of Excellence – You have to have an improvement mindset, a hunger for operational excellence.
Corporate Governance – Build strong governance structure including a strong board with seasoned private sector professionals and an empowered executive management team. Balance this with non-executives, who bring objectivity and experience.
Risk Management – Continuous review of the operating environment to identify and mitigate emerging portfolio risks.
Non-interference in management.

Conclusion

I think that MOFI should be saluted for setting out these goals, for looking widely for models and approaches – and for bringing a private sector mind set to the stewardship of public assets.

First of all, setting the strategic intent of the institution is critical.
Decide early – What kind of institution should we intend to be?

For me this has to be one that is long-term in thinking, one that values excellence in all areas, and is strong on corporate governance. The focus on execution, execution, execution – and reward!

Value Creation Mindset
Thank you again to the MOFI leadership and our Chief Host for this very important convening.
Our Group stands ready to support and partner with MOFI in whatever way we can to ensure that this initiative is a long-term success.
Times are hard for Nigerians everywhere and we must come together and act in unison to catalyse significant socio-economic development for Nigeria and all our people.
I am assured that this team of professionals under the leadership of Dr. Armstrong are more than capable to lead MOFI on this journey.