In this videocast, I discuss the 30th year anniversary, in my opinion, of the beginning of modern entrepreneurship in Nigeria. The supporting article is here.
The 30th Anniversary Of Time Nigeria Started Its Finest Modern Companies
I am a student of Nigerian (business) history especially in the years 1986-1992. That period, in my opinion, represents an era of immersive entrepreneurship. Some of our finest companies were started during that period. If not for the great recession, which resulted to the failure of many banks, the impact of this era would be more evident today.
Under the military rule of former President Ibrahim Babangida (IBB), Nigeria made many policy moves, starting in 1986. The impact is huge – between 1987 and 1992, some of the finest (old) technology and (modern) financial institutions in Nigeria were founded. In my analyses, I have zero’d in on Second-Tier Foreign Exchange Market (SFEM) which made it possible for banks to make huge profits on foreign currency transfer/trading, as catalytic.
SFEM brought alternative foreign exchange which made dealing on foreign currency very lucrative in banking. Before then, Naira was largely stable and there was no money to be made, except fees, on forex. The float on treasury transfers was marginal. But SFEM, changed Nigeria. It gave us bureau de change, making trading Naira a product of itself. Nigerian Naira is yet to recover from the impact.
SFEM was one of the policy recommendations of the IMF (and World Bank) which introduced the structural adjustment program. One of the goals was to open the private sector and subsequently diversify the economy.
In one way, the policies internationalized Nigeria despite making it possible for institutions to make so much money from government. It is arguable, that if Nigeria had eliminated corruption, we could have done better on the outcomes. Around 1989, IBB cracked another policy with profound impacts on finance. He made it possible that people could open Finance Houses withe ease. He waived most requirements. Most of those firms would later collapse and many people lost their investments in them. But the survived ones flourished and created a new class of super-rich Nigerians. The financial institutions including banks made money on forex with the alternative exchange where Nigeria maintained official and black market rates.
Simply, buy dollars from Central Bank of Nigeria (CBN) for say Nx; in the evening sell to traders at N(x+y) where y is your profit. You do this without any risk. With so much lapses, CBN transferred our commonwealth to banks and finance houses .
But behind the mess, there is something good from that period. We ended up having great companies which are still very critical in modern Nigeria. Sure, most of those companies survived and flourished through innovation, but one thing unites them – they were born when Nigeria was run by a maradona (yes, IBB) and the chaos provided unbridled wealth with many lapses on control and enforcement. Yet, you need to give these institutions credits. The banks changed Nigeria for good. Without them, we might still be waiting for 5 hours to get our money from the old generation banks.
Today is July 1 2017 and it is the 30th year anniversary of the beginning of the era of immersive entrepreneurship in Nigeria. I have chosen July 1987 as the mid-time of that moment.
These are some samples of companies starred during this time. In short, the phrase “New Generation Banks”, came into the lexicon during that era.
- Diamond Bank Plc – born 1990
- Zenith Bank – 1990
- Fidelity Bank – 1988
- Access Bank – 1989
- GTBank – Jan 1990
- (STB for modern UBA) – 1990
- Access Bank – 1989
- SystemSpecs – 1992
- CWG Plc – 1991
With Board Dissolution And Exit Of Hakeem Bello-Osagie, Here Are Options for Etisalat Nigeria
Etisalat Nigeria is floating. It is like a bride that no one really wants in the middle of a wedding. The UAE investors abandoned it in the hour of need. Now, the Chairman of the company has resigned. Businessman Hakeem Bello-Osagie resigned from the Board earlier today. The non-executive Board members had already resigned from the fourth mobile operator few days ago.
But the company has to move forward. The firm had noted that it would move ahead to establish a new management and appoint a new board. The Chairman had left after the restructuring plan for the telecommunications firm was finalized. They have now a roadmap to execute, as it looks for ways, to manage the evolving crises in the firm. According to a statement, from Etisalat, all the important stakeholders had agreed on the plan.
The development reflects Mr. Bello-Osagie’s deep commitment to protecting the interest of all stakeholders. It is now expected that Etisalat Nigeria under its new shareholding structure will navigate through its current loan repayment challenge with minimum impact.
Over the last several months, the Chairman has worked extensively with critical stakeholders to prepare clearly articulated strategies and robust road maps that will mitigate the impact of the new shareholding restructuring and realignment on the operations and management of the 4th largest telecoms player in Nigeria,” the statement said.
Etisalat Nigeria owns consortium of banks more than $600 million on a $1.2 billion loan. The foreign currency denominated loan was to help Etisalat upgrade its infrastructure. Unfortunately, when Nigerian economy went into recession, its business struggled, and the situation worsened that it could not service its debts, since 2016. Cascading events led to the exit of its major shareholders, non-executive directors and today, the resignation of its Chairman, Hakeem Bello-Osagie.
This is going to be a challenging moment for the fourth mobile operator in Nigeria, despite a finalized restructuring plan. Here are options Etisalat Nigeria may consider as it works to manage this challenging moment in its history.
- Quickly setup a new Board. This board composition must comprise of leading and experienced telecom operators. Do not go into the temptation of flooding the board with bankers especially the creditors. The fact is, if care is not taken, there may be asset striping which will lead to the demise of Etisalat Nigeria. A mixed board with representatives from the banks along with industry veterans will be ideal.
- A banker with limited telecom experience should not take over the Management of the firm. Etisalat Nigeria will be making grave mistake of hiring or using a banker to run the firm. We believe only industry operators can help improve the company’s fortune. The present Management may likely be asked to depart so that a new one can come in. But the focus will not be to strip assets by putting profitability over long-term survival of the firm. Etisalat, owing to its position in the industry, will need help at least for two years. That means, it may not have to pay dividends, to its investors.
- Reduce product cost which can be attributed to the loss of more than one million subscribers in Q1 2017. Etisalat Nigeria which has one-third of MTN Nigeria subscriber base, lost nearly the same number of subscribers as MTN in Q1 2017 according to data from NCC (Nigerian Communication Commission), the industry regulator. Massive price reduction will help it tame the exodus. Etisalat, with the best QoS, cannot afford to be losing more subscribers compared to either Glo or Airtel which individually has millions of more subscribers than it. You cannot have the best service and yet be losing more customers. The simple reason is that the service is no more affordable, especially in a country on recession..
- Pioneer new sectors like AgTech to expand revenue sources. The reality is that pursuing and doing what MTN and Glo are doing will not help Etisalat in the short-term because the competitors enjoy better economies of scale. So discovering and focusing on new markets will be strategic for it to differentiate itself in the market.
- List in the Nigerian Stock Exchange and work to find capital to repay the loan. It will be a very challenging one but Etisalat may not have a lot of options. For the fact that its major shareholder, largely abandoned it for less than $600 million, is not a good sign. It does imply that they could leave so much on the table for such an amount. (Etisalat Nigeria had noted that it had paid a huge part of the $1.2 billion loan.)
- Plan for a sale once all the debt issues are managed and curtailed. The fact is that Nigeria cannot accommodate #4 operator which is way behind unless that operator has capital to spend heavily to entice new customers.Where it becomes clear after two years that it is not making progress, the firm should put itself for sale. Glo remains a strategic partner that can help absorb it. It may not be all-cash-deal, of total buyout, but something closer to a merger of two un-equals since Glo may not have the cash to buy outright..
Hakeem Bello-Osagie, Chairman of Etisalat Nigeria, Resigns
Hakeem Bello-Osagie, the Chairman of Etisalat Nigeria Limited, has resigned his position with the company which he was the promoter in Nigeria. This is a very unfortunate incident that can cripple finding a lasting solution in Etisalat. Few days ago, other non-executive directors of Etisalat Nigeria also resigned. The resignation of Mr Bello-Osagie completes the clean-up of the Etisalat Nigeria board.
The resignation takes immediate effect. A statement obtained by PREMIUM TIMES confirmed the development, saying the decision followed “the approval of a restructuring plan for the telecommunications firm.”
Mr. Bello-Osagie, the one-time Chairman of the United Bank for Africa, UBA, was the surviving shareholder in the embattled mobile operator currently embroiled in a $1.2 billion loan repayment crisis with a consortium of 13 Nigerian banks.
He was the promoter of Emerging Markets Telecommunications Services, EMTS, which controlled 15 per cent of the equity holding of the company
His resignation followed the withdrawal, two weeks ago, of the company’s major shareholder, Emirates Telecommunications Group Company, which announced the decision to quit effective June 15, 2017.
With Board Dissolution And Exit Of Hakeem Bello-Osagie, Here Are Options for Etisalat Nigeria
Suggestions for Cover of “Africa’s Sankofa Innovation” Book
This is Ndubuisi Ekekwe who has a new book coming out in August 2017. All proceeds of the book will go to support workshops to be organized by the African Institution of Technology (a U.S. 501(c)3 non profit) to help deepen AI programs in selected African universities. AFRIT, the non-profit, has done similar workshops on electronics (photos) with positive reviews in more than 60 universities in Africa.
I need help in choosing the book cover. I presented to our graphic design team with A10 but they returned with these options. You can comment on my LinkedIn page if you prefer. Alternatively, even anonymous choice is fine below. Simply, I want you to give me the choice you think will do well (e.g. A8). Yes, do well on sales. The book is awesome and will be distributed at $10 subscription online here. Thanks, always.
NB: A has Africa’s Sankofa Innovation while B is Africa Sankofa Innovation. Please consider that if possible.
A- AFRICA’S SANKOFA INNOVATION
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B – AFRICA SANKOFA INNOVATION
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