In this interview with Solomon Elusoji, the Group Managing Director and Chief Executive Officer of Red Star Express, a logistic business affiliated to American giant, FedEx, Olusola Obabori, talks about what it takes to build a successful business in a challenging environment like Nigeria
How have you been able to build a successful logistics business in an infrastructure-deficit environment like Nigeria?
Surviving is a game of tenacity, and things will not always be perfect, either in Nigeria or in other parts of the world where infrastructure is excellent. So I would say that surviving is a game of tenacity, perseverance, making the best of what is available. In the past, in Nigeria, we used to have fairly good infrastructure, but as time went by the population exploded and there was more pressure on the facilities available â€“ coupled with the fact that there were no new investments â€“ and what used to be good became bad. So, it goes back to a maintenance culture, which we donâ€™t have as a people generally, and continuous improvement.
Besides, logistics and courier business is a major contributor to economic development. We are like the drive of economic activity in any economy. Take for example the United States: what makes them tick is their ability to connect goods and people together from point to point, either by road, air, rail or sea, and thatâ€™s what we do. So this industry is a major contributor to whatever economic picture you are trying to look at. This is what we have done for 25 years in Nigeria.
How can the government improve on infrastructure?
I would say that this government appears, to me, very serious on infrastructure. The Executive Order on the Ease of Doing business is commendable. Then, the Ease of Movement of Goods is also key for this government. This is not a day to blame this government, because from all indications, we have seen progressive movements in the right direction, so letâ€™s give them all the support and hope that they can improve the road network. And, as I travel around, I can see that the roads are also being fixed. The road from Abuja to Kaduna to Kano has been fixed; I was there some weeks ago. If they can do same in the eastern part, that means I can take a truck from here and determine when it gets to its destination. Then, business can move. The rail infrastructure is also important. Some of the things that are moved by road â€“ cement, iron rods, and other heavy stuffs – are meant to be moved by rail. So whatever they are doing on the rail should be sped up. And all of this added together will create more jobs and bigger economic activities.
Your company is organising a conference, SME1000, for businesses. Why?
What we are trying to do is to provide a platform for SMEs to connect, to grow their businesses and to tap into opportunities that we have made available to them. We are more of a global company; yes, we are a Nigerian company, but we have a global network that connects the world. Through our foreign partners, we can take you from here to any part of the world within 72 hours. Thatâ€™s the kind of strength we have brought to the table. So if you are a businessman in Nigeria, we can take it from here and deliver your goods to anyone who has made an order from any part of the world.
So, our SME1000 programme will bring at least 1,000 SMEs together across various industries, ranging from food to textile to small scale manufacturing companies. Whatever you produce, we are interested in partnering with you to take your goods across Nigeria and to the rest of world. You can display your products during the programme, network with other SMEs to see where you are lacking and gain access to bigger markets. We are going to be bringing people who have an understanding of how you should run an SME, how to get financing. The banks will be joining, and the Nigerian-British Chamber of Commerce too.
We will also organise a business clinic after the programme, where you can sit down with an expert who can mentor you and ensure that your business grows in the next five years, because what weâ€™ve found out is that, for anyone who starts a business, the most turbulent time is the first five years since nobody knows you, trusts you or would want to commit anything into your hands. But after five years, people can close their eyes and commit assignments into your hands and they are sure you will do it. If you can cross the tenth year, that means you are stable. So, our desire is to help as many companies as possible, so that in 2022, for example, we will be happy to showcase some of the guys who will join us in this first edition.
What do you think is the problem of SMEs in Nigeria?
SMEs have always been there. Most businesses that become big started small. It is the tenacity to grow to a big business that becomes a problem. So what should we do to help more small businesses make that leap? That is a job for everybody. It is the job of the government to provide an enabling environment, it is the job of people like you and I, who can help put the information in the public domain and help them get the requisite training and awareness they need to have to enable them sell whatever they are producing to the rest of the world.
I have travelled a bit, so if you go to places like Malaysia, China, Hong Kong, apart from the major organisations that drive major economic activity, the SMEs are the second-in-rank drivers. For example, in Malaysia, the focus of the government is to help those at the middle level, to ensure that they can produce the little thing they can and send them to foreign markets. I have worked in factories and I saw that the small companies were contributing too. So if you talk about giant companies like Cadbury, whatever they do, there are small companies that can also do the same, on a smaller level. But how do you help these small companies grow their market share. This is one of the things we are also trying to do with SME1000.
But we should also note that governments in Nigeria are also doing lots of work. I am aware that the Government of Abia is doing a lot of work in Aba, to ensure that what is produced there can get to other markets. Aba has made a lot of contribution to SME development and technology development in Nigeria.
Also, infrastructure is a big problem. Consistency on the part of business owners is also another issue. When people make money, instead of putting the money back into the business, they will take it and buy land. That is the kind of mentality we have in this part. We donâ€™t stay on it until it becomes big. If you travel to Europe, most of the companies there have survived for 100 years or more. In Nigeria, it is not so; it is either the man dies and the business dies with him or something happens to derail it in the short term.
But I think we can say that we have not done very badly, because even in Nigeria, you will find out that there are companies in Nigeria that have stood the test of time. For example, the Chellarams Group business; the fourth generation of the Chellarams family are the ones currently running the business. They are Indians, but they are here in Nigeria. Then also, FCMB, which started as a family business but has been there for many years. So we have good examples of those who have done well, including Dangote and Adenuga, but what is the percentage of those who have done well?
How do you innovate at Red Star?
It was the founder of FedEx that said, for him to innovate, he checks the telecoms and banking industry and introduces what they are doing into his own business. If you are going to do well in this business, you have to be up to date with technology. When we pick up a shipment and scan it, the information goes into the system, and you can track the shipment as it travels to its destination. If you have a ship that is coming from Norway to Nigeria, you can track it and know where it is at a particular time. You can use drones to do delivery today. In fact, FedEx tells us that they are a technology company not a courier company, because they have all kinds of gadgets which they also sell to other companies. They have a full Research and Development team which comes up with all kind of technology products, and we are also learning a lot from them.
We are investing a lot in infrastructure. Innovation drives us, and we also want to improve on the things that we have been doing before. I am very passionate about investments, because without that there is no future. So we are building new warehouses and we have all kinds of approval now. We are buying large fleet of vehicles, in addition to what we already have. We are responding through cold chain warehouse facilities. In fact, there is one in the works and the Minister of Agriculture will commission when it is ready.