An old conglomerate tests governance structure in ‘change of guard’

Recently, there was a ‘change of guards’ at one of the oldest conglomerates in Nigeria, the 45-year-old Odu’a group, which had actually existed much longer (even before the country’s independence 62 years ago). The two chairmen; immediate past and newly appointed, who had both served on the board gave insights into navigating the terrains in an institution with high public expectations, but underperformed for many years. Governance was its Achilles heels for much of its existence and recent efforts had been to set it right.

The current transition would see the continuation of a five-year strategy to revive the company which has all the six southwest states in Nigeria as owners (and shareholders). Their thoughts on the transition at the company; the past, present, and what the future holds, show where investments from it would head, those it would also seek to attract.

Segun Aina

With decades of experience in the banking industry, Aina served as chairman of Odu’a Investment Company limited for two years (from May 2020 to June 2022), during which the company’s five-year strategy (SRC2025) was unveiled. In excerpts below, he shares insights on leading the 45-year-old company and helping institute corporate governance.

If you look at Odu’a group as a 45-year-old institution that even inherited assets (significant amount of landed properties), I will say that the performance that we have seen today is not where Odu’a should be

Expectations when taking up appointment on the Board

About two years ago, when Segun Aina was informed by the Osun State governor that he would represent the State as a director and chairman of Odu’a Investment Company Limited, he recalls he hadn’t really had much engagement with the company and was curious about its condition at the time. “I was reassured that yes, they are still working, and the reason why we are bringing you and your colleagues on board is to revive the company,” he recalls from that initial notification. “Bring it up, transform it and make it (capable of) competing with other companies that are in the same line of businesses that they do.”

With his charge received, he had his work cut out for him in ideating ways to transform the company from its position at the time to a new (more viable) one. His expectation was that of a long journey with a lot of hard work lying ahead, one he would have to devote a lot of time and attention to, in leading the board to achieve the kind of mandate he had been given.

Prior to joining the board, the previous one had been dissolved, so there was nobody to hand over to him and his colleagues on the new board. “We didn’t meet any board but we started on our own. I knew that it was going to be hard work, but I knew that it is human beings that change things especially when you are determined,” he says.

“When you really believe that you are working with a group of people, you also (need to) share common vision,” he says, crediting the state governors with a good decision of appointing people with a common purpose, people who believe in the same thing. It wouldn’t have been easy if people have contrary opinions, he notes.

In as much as he saw it as potential hard work, looking at the profile of the people appointed to the board with him, he was convinced the team would work well together and achieve any set objectives, an expectation he considers to have become a reality.

Odu’a group’s existence and government ‘having no business being in business’

“When you say government has no business in business, what it means is that government should not be running business, but it does not mean that government should not invest in the business,” says Aina. He further explains there are times governments invest in the stock exchange to buy shares in listed companies, but they are not running such companies.

The knowledge about people that are managing those businesses and the belief in such businesses they’re investing in is what drives their involvement, and this, he says is not different from the Odu’a group. Emphasising, he said, “When you say ‘involved’, it doesn’t have to be in the idea of day-to-day business, but starting from the type of people on the board, how detached they are from politics and the internal governance structures put in place.”

This reflects in one of the earliest acts by the board under his leadership, which spent time working with KPMG, a global consulting firm, to help in designing a corporate governance structure. Part of this, in managing government influence, included a provision that when somebody is appointed to the board for a term of four years, that person cannot be removed except the person is not performing, unlike in the past where if the government changes hands, a new governor comes in or a new party, removes the representatives on the board, and brings in ‘their own people’. That cannot happen anymore in Odu’a based on the new shareholder agreement, he explained.

Do the company’s achievements justify its existence?

“If you look at Odu’a group as a 45-year-old institution that even inherited assets (significant amount of landed properties), I will say that the performance that we have seen today is not where Odu’a should be,” he says, with a tinge of regret in his voice.

However, Aina believes that should not take away from the contribution of people that have served on the board, insisting the fact that the company is even existing gives cause to be happy and proud about. For similar organisations in other parts of the country, it is hard to say whether they are existing or not, he says. “The fact that Odu’a is still existing today shows the resilience of the institution and shows the contribution of people in the past, but what we are now saying is that we are not happy with just existing, we want to be the best in all the areas that we operate,” he adds.

The goal is to make Odu’a the engine room for economic development in the Southwest and by extension, Nigeria, which has driven the company’s vision and its programs in the last two years in ensuring it operates like a commercial entity that it is.

“Even though a lot of years have gone, I believe that if this trajectory continues in the next 5-10 years, we will all be happy and proud of the company that we have all been part of,” says Aina.

Abimbola Ashiru

The company’s new chairman worked in the banking industry for almost 30 years before taking up appointment as a commissioner in Ogun State for eight years. In excerpts below, he also discussed the transition at the company; the past, present, and what the future holds.

Where it started, where it is heading

Growing up, Ashiru recalls Odu’a was a conglomerate that was competing with others like UAC and wonders aloud, “what happened”? It was bad management, he says, which led to the company losing much of its assets including some abroad.

The founders of Odu’a had visions, probably in their 30s (including Obafemi Awolowo at the time), they built the Cocoa house, once the tallest building in Africa at 25-storeys, the first television station, and the University of Ife, all through money raised from Cocoa, he says.

According to him, some of the things the ‘forefathers’ were unable to do, are now being achieved by the company, including the acquisition of an oil licence. The company, he says, is already looking for technical partners, and the shortlist includes Chevron.

The plan is to do a minimum of 4,000 barrels of crude oil per day. There’s also significant interest in generating gas from the marginal field as well.

On the hospitality side, he recalls the business has existed for over 40 years ago, but not quite at the level it should be. “I have good news for you, Premier hotel is as good as sorted out,” he declared. There is to be a joint venture arrangement with a company (valued at over N10 billion), which would see Premier hotel turning into a 5-star hotel, he says.

In the next four years, the company will be changing a lot of things, he says, “we will go to our individual subsidiaries and see how they doing things over there, we will just give one day’s notice because it will be impossible to do an emergency turnaround.”

To make the best of the company’s situation, he says that the first requirement is to have commitment and then integrity.

“Integrity is when you are doing the right thing (even when) nobody is watching you,” he says.

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Investment direction going forward

Ashiru recalls that even while serving as a commissioner in Ogun state, he had a focus on agriculture which he believed will lead to industrialization. “We must be able to grow, and then convert to something,” he says.

He credits himself as being one of those that commissioned the first ethanol factory in Nigeria, recalling that facility secured raw materials from a cassava farm that was producing over 250 tons per day but mostly rotting away until the factory was established.

“Our focus is to go back to what the late Chief Obafemi Awolowo and Ladoke Akintola did to achieve success,” he says.

The plan is to bring in investors such as private equity firms, and not to own 100 percent of any of the businesses, but focusing on lean operations with high turn around. Following a charge by Rotimi Akeredolu, governor of Ondo State, Ashiru says the board will go to each state in the southwest and look at areas where they have comparative and competitive advantage when it comes to different agricultural products.

“In the area of agriculture, you need to invest more, you need to get the proper infrastructure in place. You can have agricultural farms, and roads that link there, and I’m happy our state governors are now supporting,” says Ashiru. “All our farm areas, we will put proper infrastructure, good roads and put proper security in place for them.”

The investments are however expected to go beyond agriculture to include mining in states where resources are available.

There would also be interest in IT, and in particular Fintech. For Ashiru, “IT is the way to go in the world (today), and we are looking at all strategic places, we have invested so much in it, infrastructure wise and so on.” But even as he advocates encouraging the youth to venture into technology, he says it is important they do not embrace the illegal aspects of it.

“Integrity matters to me, I will do what I can do and make sure we achieve a lot,” he says.

Intended legacy

“I want our name to be written in platinum, not in gold,” says Ashiru. Odu’a will start producing crude oil, has already started creating an environment where agriculture has met with industrialization, has created a technology hub for young people, and these he says are to the credit of a board he has been a part of.

On completion of his tenure on the board, he expects the revamping of the group’s hospitality business to be at an advanced stage and other major strategic achievements across the group’s subsidiaries.