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Goodie Ibru: Our Secret Lies In Long-Term Plan

01 Jun 2013

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Goodie Ibru

At 71, he is still remarkably jovial and sure knows how to put his audience at ease with jokes and historical narratives. A lawyer by training, Mr. Goodie Minabo Ibru was born in Kano in 1942, had his primary education at Yaba Methodist School, Yaba and later attended Ibadan Grammar School for his secondary education (1956-1960).  He proceeded to the Holborn College of Law, London and graduated with LLB (London) in 1965.  He was called to the English Bar (Inner Temple) in 1966 and enrolled at the Supreme Court as Solicitor and Advocate in 1968.   As a young lad then, Ibru was restless and determined, not about to be straight-jacketed by the narrow confines of law, he set his eyes on the future.

Ibru was quick in identifying business opportunities in the course of providing legal services to his clients. In the course of his professional practice in his area of specialisation, he formed and developed several companies in various areas of the economy. Ibru is the Chairman of Ikeja Hotels Plc, owners of Sheraton Lagos Hotel, as well as the Chairman of the Tourist Company of Nigeria Plc, owners of Federal Palace Hotel. He is also the Chairman of Hans Gremlin Nigeria Limited (a subsidiary of Ikeja Hotels Plc) which acquired 51 percent equity stake of Capital Hotels Plc – owners of Abuja Sheraton Hotel, under the privatisation programme. He is also the Chairman of Capital Hotels Plc and sits on the board of several companies.

He is the Honorary Consul of the Consulate of  Lithuania to Nigeria. On this warm Saturday evening in his office at Ikeja Sheraton, you get a panoramic view of the lush green valley behind the hotel overlooking the bustling splendour of Opebi, Lagos, cluster. SHAKA MOMODU sat down with the President of the Lagos Chamber of Commerce and Industry for a few minutes out of his busy schedule. Excerpts...

How does a typical day begin for you?
On a typical day, I get up between 6.00am and 7.00am after a good night’s rest. Because you see, I always like to get a good night rest. My working day starts between 8.00 and 9.00 o’ clock in the morning. My morning hours are my most productive hours and so I try to put in as much as possible. Another reason that I do most of my work in the morning is that I start getting other engagements from early in the afternoon either from within the office or outside. So I have to give assignments to my staff to be ready in the evening for me to go through before the end of the day and that is basically a typical work day for me.

How challenging is it running the Lagos Chamber of Commerce and Industry and your personal businesses?
I must say that it is quite easy to combine both for the simple reason that I do a lot of work at my office in the morning and get my staff occupied with some assignments. Then I can attend to other Chamber business and attend meetings, conferences, seminars outside. So, it is not that difficult to combine. But one very big help is the fact that the chamber has very good staff. The chamber is well established, it has a long standing history as the oldest in West Africa, which is over a hundred years old. At the chamber we have a very good DG and very good managers. Also, the governing council is also effective and helpful. So when you have a good management staff and a good governing body you are playing the role, not of a figure head but a primus inter pares. So any member can step into the position if I am not available and that helps a lot.

How would you rate the ease of doing business in Nigeria?
Looking at the Doing Business indicators as initiated by the World Bank, we can still say the rate is low. Among the indicators, Nigeria is still low in respect of paying taxes as there are troubles of multiple taxation burdens. Construction permits are still difficult to obtain. Getting electricity is dismally low and it’s crippling almost all the sectors in the economy. Registering property is also cumbersome. Trading across borders cannot be said to have significantly improved as our borders are left porous for all sort of things and even terrorists to have safe trips into the country. The only indicator that has recorded some improvement is the ease of starting a business with the commencement of the 24-hour company registration by the Corporate Affairs Commission (CAC). We would need to do more to improve on these indicators and meet the Millennium Development Goals targets.

As president of lcci what would you say is responsible for the spectacular failure of some major public-private partnership arrangements in nigeria?
To start with I would say the future of this country depends on public-private partnerships. This is obvious from the annual budget of the government both at the federal and state level except Lagos where there is a marked improvement of about 40 to 50 percent devoted to capital projects as against the federal government and many other states where 80 percent of the budget is for recurrent expenditure leaving little for capital expenditure. When you have that you’ll have very little growth because if you don’t invest in capital projects you cannot create new jobs and new streams of revenue. The only way out of that now is through public-private partnership where the government will participate by providing an enabling environment and encourage the private sector to invest in infrastructure with incentives such as tax holidays. Now, some of these PPP initiatives fail because contracts are not being respected. You can see what happened between Bi-Courtney and the federal government to rehabilitate the Lagos-Ibadan expressway. Somewhere along the line there was a misreading of the contract and the contract was terminated. You can imagine the loss to the private sector and if Bi-Courtney is not strong it will fail.
Enforcing contracts in Nigeria is still very poor. Breach of contract is very common among business partnerships due to selfish interest instead of the interest of the nation. Many government officials take for granted terms and conditions of public-private partnerships and this gives room to breaches which eventually leads to court actions, injunctions, delays and uncompleted projects. These are the areas where the government must make sure problems do not occur because it defeats the purpose of PPP.

What are the most serious challenges facing the private sector?
The greatest challenge facing the private sector is lack of infrastructure. If you don’t have infrastructure you end up being a consuming nation, which is what we are today. So far we can pay for all our imports, thanks to oil and gas money, but one day that will disappear. Maybe not in our lifetime but that of our children or grandchildren and then we will really have problems unless we fix our infrastructure, which include roads, electricity, water and other necessary infrastructure for the development of a modern economy. Also, we have the issue of government regulation. Someone said to me, which is not far from correct, that Nigeria is one of the most over regulated economies in the world. The government is unnecessarily regulating every corner you turn and giving some government officials unnecessary powers which fuels corruption. This is very bad for business

If you were not a nigerian would you be comfortable investing in the country as much as you have done?
If I don’t know Nigeria I would not invest in Nigeria, but if I know Nigeria I would definitely invest in Nigeria and that is what is happening. There are people who would say the country is not for them but for those who know Nigeria and have been in Nigeria are doing business in Nigeria. Note that in spite of all these problems there is still the upside to investing in Nigeria. Part of the upside is that we have a huge market. So whatever you produce you have a potential market of a hundred and sixty million people and you have access to the economic sub-region, which is ECOWAS. I used to think that the ECOWAS market was as big as three hundred million people, but I am seeking verification from our statistics department at the Lagos Chamber of Commerce after some new data that pegs the market at over 500 million people. So if you produce quality goods and provide quality services Nigeria is the place to be. Secondly, the return on investment is high. In some other climes you would be lucky to get between two to five percent return on your investment. In Africa the average is between thirty and thirty five percent return on your investment. So if you don’t know Nigeria you would not invest, but having been in Nigeria and lived in Nigeria and known what I know, I would surely invest in Nigeria.

How have you improved the lcci since you took over as president?
Since my assumption of office as President we have made interventions in three broad areas. One is advocacy, through our various stakeholders’ forums and engagement with governments; we have been able to make some reasonable contributions towards improving our economy. Secondly, we have achieved some form of business development through training and capacity building of our members and SMEs. We have a unit within the LCCI which is called BEST, which stands for Business Education Services and Training. We made this available to our members and also to SMEs to promote and develop their small businesses to become big businesses. We are also involved in trade promotion. Every year we hold an international trade fair. Those are the three broad interventions that we have made. Through these initiatives we work towards having a better business environment by engaging government to put in place the right policies and also serving as watchdog on the government on behalf of the business community. We see ourselves as a voice of the business sector. We put in our best to ensure that the business climate is friendly and inclusive. So when I mention inclusive I am not just talking about growth but we are talking about how the growth impacts the life of the ordinary man because there is no use having a growth rate of seven percent when the man on the street is hungry. The benefits must cascade down to the man on the streets. Those are the areas in our own modest estimation we feel we have impacted our economy.

The lamentation has always been that the financial sector doesn’t support the real sector, which is the engine of growth in any economy. Has there been any improvement in financial institutions supporting the real sector?
Well, it is a perennial problem and again this emanates from poor infrastructure. If you don’t have infrastructure your cost in the real sector is bound to be high and the cost of services are bound to be high. I was shocked when I learnt of the cost of underwriting in insurance, 80 percent of which is management cost. That leaves very little opportunity for risk to be as low as possible. So the problem that the real sector has is poor infrastructure. Until the government can fix electricity, roads, water and so on, the real sector is not going to be attractive to banks. Another factor is the high interest rates in double digits. The banks will tell you that they can’t charge any less because of high costs due to lack of infrastructure so they can’t charge interest in single digit. Having said all that, there has been some government intervention funds and it is interesting to know that these intervention funds charge interest rates in the single digits and is therefore attractive. This, at least, has been able to address a big problem for industrialists.

What is your take on reports that businesses have been relocating from Lagos to other states expecially Ogun State?
My guess is that it’s because land cost in Lagos State is higher given that land is very much in demand in Lagos. Secondly, my guess is maybe the tenement rate and other taxes are lower in Ogun State perhaps done by Ogun State government to attract businesses away from Lagos. But it is a balancing act. Those who relocate to Ogun State because of lower operating cost may also lose out on the market of Lagos. Lagos is a very strong market with a population of about fourteen to fifteen million people.

What is the lcci doing about the problem of multiple taxation which is a major problem for companies especially in Lagos?
You see it is because there are many tiers of government all of which are imposing taxes. So the average businessman in Lagos feels he is over taxed. But the problem is being addressed. The LCCI has led the business sector on several occasions in discussions with the government through the Business Economic Forum. We have interactions once or twice a year with the governor of the state. The Lagos State Government has taken this into consideration with intent to streamline taxation by the state. I think from that point of view one should congratulate the present governor of Lagos State, Babatunde Raji Fashola that he is doing something to assuage the concerns of the private sector to ensure that multiple taxation will be brought down to the barest minimum.

There is this impression that the power situation has improved; is this really true?
There was a time that we at LCCI noticed that there was an improvement in power generation and distribution. In one of our quarterly reviews we did congratulate the federal government but it appears the federal government is having problems in sustaining that tempo. We have seen a relapse in recent times. So I think the government still has to work really hard in sustaining its achievements in that area because there can be no real growth without improvement in power.

What has the experience of being president of lcci taught you?
First of all, it is a privilege to be at the helm of affairs, but it is a team work and an office that one shares with the governing council and the president is just as I said Primus inter pares. But I think it has been an eye opener into the opportunities that exist in doing business in Nigeria and in Lagos. Lagos is unique. The GDP of Lagos is equivalent to that of Ghana. In fact if you take away oil and gas the economy of Lagos is half of Nigeria’s GDP. In other words the economy of Lagos is equivalent to about sixteen states in Nigeria. So by being the President of the LCCI I have been opportuned to see the huge potentials in doing business in Lagos. This has consequently influenced my thinking and encouragement in doing business in Nigeria. I believe that the future of Nigeria depends on the entrepreneurial class. We cannot all be working for government and the multi-nationals. We must be thinking about building our own business that will employ other people, of course driven by the prospects of profit. When you know that the prospects are good for profitability in Lagos because of the huge market you understand how vital and vibrant Lagos state as a business hub is. I think it has been a very pleasant experience and something that I cherish.

It will not be appropriate if i dont ask you this; what is the secret to the success of the family business?
All I can say is like many other organisations that have done well, we try to focus on whatever we do and not do so many things at the same time. We focus on what we do, we work hard, we don’t believe in short cuts, we look at the long term not short term business which is buying and selling then you make a profit and continue in that cycle. Whereas the long term investor is thinking of how he is going to produce the goods he is buying. So he sets up a factory to produce those goods that he buys and sells using the profit he has made from buying and selling. You will find that the first Nigerian industrialists were involved in buying and selling but they took the profits and ploughed into production of the goods they were selling which now has become a long term business. A long term business, if well managed, will give you the kind of success and legacy that our organisation has achieved.

The hospitality sector has become very competitive. tell me what you think about this as a leading investor in the area and what you’re doing to stay above the pack?
Nigerians have begun to realise - and not just the government but even entrepreneurs - that Nigeria has to diversify. We cannot continue to rely on oil and gas because; like it is happening in America our market for exportation will reduce. I understand that oil imports in America are reducing to the point that in another decade or so we’ll be competing with America for markets and America will become a net exporter of oil. So unless we diversify our economy we will be hurt so bad because the competition will be hotter and the market will shrink. So people are looking for other areas of investment and one area which is becoming very attractive is the area of tourism and hospitality. When the economy grows at the rate of seven percent which is an impressive growth rate by world standards it attracts more foreign direct investment and when these investors come, they stay in hotels. So we start building hotels and there are so many hotels opening up in Lagos that you start to wonder whether there is the market, apparently they are all doing well because the more hotels we build the more people will come. So that puts a lot of pressure on existing hotels in terms of competition but competition is good. Competition benefits everybody because if you don’t have competition you tend to rest on your oars and nothing pushes you to put in your best for the consumer and for the business. Competition is also good for the overall economy and we are very much aware of that and doing everything to continue to render quality services from our own end to retain our customers.

How did you get into the hospitality business?
It all began in the early ‘70s after the civil war had ended. The Federal Military Government was vigorously pursuing its reconciliation, reconstruction and rehabilitation programme. Many foreigners were coming to Nigeria either as tourists, businessmen, oil speculators, journalists or contractors. At that time in Lagos, there were shortages of hotel rooms of high international standards. Only Eko Hotel could boast of such standards, but their rooms were not enough to cater for the needs of local and foreign visitors. It was then that we set up a company known as Properties Development Limited whose major objective was to provide finance and manage the construction of the then proposed Sheraton Lagos Hotel and Towers. That was how I got into the business.

What advise do you have for young people going into business?
My advice is for young people to look for an area of business that gives you satisfaction and what you like to do that gives you joy. Then try to create a niche for yourself. As I said before, Nigeria is a huge market and so anything you do, do it well and do it with passion, be focused and you are bound to succeed. You may not make as much money as someone in another line of business, but if it is going to give you fulfilment then you are better off. After all as long as you are able to meet your demands and get a good return on investment, what is your problem if someone is making ten times as much as yourself. The satisfaction you get over compensates for any differential that may be. My best advice is to look for an area where you have a special interest and carve out a niche for yourself, be focused, work hard with passion and take advantage of the market and I am sure you will succeed. That is my advise to young people.

Having come this far, and looking back in life generally, is there anything you would have wished you did differently?
I’ll like to say that God has been very faithful. Even where one took some wrong turns, God has turned everything out in our favour. You know the scripture – everything works out for good to them that love God. That is our testimony.

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