The billionaire business tycoon and the Chairman UBA Group, Mr. Tony Elumelu has told the federal government to hands-off the management of its businesses and allow the private sector to manage them to profitability.
The FG has a basket of investments under the Ministry of Finance Incorporated (MOFI), a special-purpose vehicle to manage all government investments. MOFI is in charge of the management of a significant portfolio of Federal Government investments, spanning a wide range of about 130 asset classifications, including government-owned entities (GOEs) and government-linked investments.
Mr. Elumelu was a Guest Speaker at the Public Wealth Management Conference organized by MOFI in Abuja on Tuesday. The theme of the conference, declared opened by the Vice President of Nigeria was Championing Nigeria’s Economic Prosperity.
Examining how MOFI has fared he said even though it has the same colouration as TEMASEK of Singapore, the success stories of both entities are many apart.
“TEMASEK started out in 1974 with the same aspirations as MOFI. It was established with state-owned assets worth $300 million, today those assets are now worth approximately $300 billion.”
According to him, this happened because 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” he explained.
The Heirs Holdings Chairman further explained that this “arrangement allowed the government to focus on its core role of policymaking and regulations,” a model he said Nigeria should adopt if government assets will become profitable.
“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” Mr. Elumelu declared.
This principle works even in private sector investments he said adding that he adopted a similar principle in building his business empire.
“In the Heirs Holdings 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’ he noted.
Thus from his experience, he said there are certain lessons that MOFI can learn. They include:
Africapitalism: 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 of Africapitalists.
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 by the government.
He pledged Heirs Holdings support and partnership with MOFI in whatever way 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” he stated.
