As Nigerians head to the polls to vote in a new government in less than a fortnight from now, there are various economic challenges that await the country’s newly elected officials. These include managing an oil dependent economy and curtailing long-standing terror activities perpetuated by the dreaded Boko Haram. Eleni Giokos of Bloomberg TV Africa spoke with Tony O. Elumelu, founder of Heirs Holdings and one of Africa’s most influential businessmen, on the sidelines of the just concluded World Economic Forum (WEF) in Davos, Switzerland. The serial entrepreneur aired his view on the upcoming elections. A highlight of this discussion is that “democracy is good for business”.
Tony Elumelu (TE): We continue to see Nigeria as a very hospitable investment destination despite what you read in the media and because we have invested historically in Nigeria and returns on our investments have been fantastic. And so we are extending that to the hospitality area where I believe you know we own the Transcrop Hilton hotel which is the biggest hotel in the country. And now we are doing more investment. In Lagos, we are opening/building a 310-room Transcorp hotel and in Port Harcourt we are building a 290-room Transcorp hotel, and so in the first instance, in the next two years, we hope to complete this building, then we will move on.
In the real estate side, we also are developing one of the biggest malls in Nigeria – the Falomo mall. So we are investing significantly in Nigeria in the real estate and hospitality space but not just in that area, also in other business areas. Key thing to our investing is that in the long term our returns must be very good and it has to be socially relevant to the community.
Eleni Giokos (EG): What returns are you expecting?
TE: We expect financial returns and we also expect social returns. As you know I am the proponent of Africapitalism and I believe in long term investing that creates good economic prosperity that returns and social wealth. So to us it’s a combination of both economic profitability as well as social return. In Africa and in Nigeria we have seen this to be very lucrative investment destinations in terms of returns, both capital growth and profit and also Social. We are very good and that’s why we keep investing in these markets.
EG: We are seeing the oil price coming under pressure; it’s hurting the Nigerian economy. As a result we are seeing the naira coming under pressure. Do you see this as a negative? Is it worrying you?
TE: I think that in ever challenging opportunity – as we have now – all presents significant also investment opportunities. The first is the Nigerian government has been diversifying away from oil but what’s happening now will quicken that diversification space which is good for the country and good for the continent also, so I see positives in it. However, the slight adjustment in the exchange rate, what you call the devaluation, is something that we are all adjusting to. But we hope that the broader economic diversification that the government has embarked on should help to cushion the impact of this and, if you look at agriculture for instance, agriculture is contributing significantly to the economic growth of the country. If you look at the entertainment sector, they also do. So the truth is, Nigeria will not be so adversely affected by this, but there will be an impact.
EG: We have elections in Nigeria next month and of course we haven’t seen any Nigerian government officials, it seems that it’s just the private sector that is holding the flag. What are you expecting from investors with regards to sentiments towards Nigeria and as we head closer towards elections?
TE: I just finished a session with Aliko Dangote who said CEOs and global fund managers to tell them about investment opportunities in Africa and somebody raised this point. And what my response to the point is – it is indeed a sign of the advancement and maturity of our political systems that we are talking about elections. Democracy is good for business so we should all encourage a healthy and competitive political election and I think the election of Nigeria is going to be smooth and it’s a phase in the life of a country. You go through elections, someone emerges – may the better candidate or the best candidate emerge – and then we move to the next stage and continue to grow our economy.
credit:BLOOMBERG TV AFRICA
