The birth of a giant, wholly Nigerian conglomerate symbolises the shift in emphasis from the public to the private sector
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| The Nigerian Stock Exchange (NSE), where Transcorp will place its initial public offering. Listings on other stock exchanges are eventually expected to follow. |
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igeria is a big country with big ambitions and its hopes of realising them are closely tied in to the emergence of a dynamic private sector. Up to now the country has lacked the business groups of sufficient size, financial capacity and confidence to develop a market-driven economy and compete for international contracts. It has therefore been forced to rely heavily on investment by foreign companies.
The solution, initiated by President Obasanjo, is to fill the gap by creating a Nigerian mega-company along the lines of the great South Korean chaebols or Daewoo and Samsung - companies that have had a major impact on the economic development of their own country.
Leading Nigerian business figures have been co-opted to form Transnational Corporation Nigeria (Transcorp), Nigeria’s first multinational corporation. Based in Nigeria and managed by Nigerians, Transcorp is intended to be a globally competitive industrial conglomerate, supplying products and services to local and world markets.
Launching the company in July last year, the president described it as “a bold indigenous initiative aimed at repositioning Nigeria in the forefront of the global economy by stimulating economic activity in Nigeria to unprecedented levels.”
Fully owned by the private sector, Transcorp commenced operations with an initial share capital of 56 billion naira (£260 million). It hopes to raise an additional 66 billion naira (£307 million) from the Nigerian Capital Market through an initial public offering (IPO) and will be quoted on the Nigerian Stock Exchange.
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Members of Transcorp’s board include managing directors and chief executives from a range of Nigerian companies, including Nigerian Breweries, the Dangote Group, First Bank of Nigeria, Zenith Bank, UBA Bank, Zenon Petroleum and Adonai-Net. The chairman of the board is the highly respected Director General of the Nigerian Stock Exchange, Ndi Okereke-Onyiuke. Chairman of the National Pension Commission Fola Adeola is the Group Managing Director, who foresees Transcorp as a “financially sound and profitable behemoth.”
According to Dr Okereke-Onyiuke, the IPO will be launched this year. “We are doing everything possible to ensure that Transcorp is listed on the stock exchange after the consolidation of the banking sector is finished. Later on, we will have it listed on the New York, London and Johannesburg stock exchanges, and maybe on the Egyptian stock exchange too,” she says.
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In February, Dr Okereke-Onyiuke announced that Transcorp was to float a 500 billion naira (£2.3 billion) bond to raise cash to finance its global operations. “We are encouraging Nigerians to invest because the company will make money and will also be favoured by the government. Most top Nigerian companies find it difficult to compete for international contracts because they are not financially strong enough. We are sure we will succeed because we have a conglomerate of business and financial experience. We have bankers, lawyers and business moguls on our board, so there is no way we can go wrong.”
The core areas of business that Transcorp will be targeting are oil and gas, information and communication technology (ICT), agriculture and agri-business, power and international trade. The government has pledged to help Transcorp penetrate other markets in Africa and will create opportunities for it to develop large-scale projects in oil and gas, power and ICT through public-private partnerships. Concessions already granted to the corporation, announced by President Obasanjo, include licences to build a 400,000 barrels per day refinery, an independent power plant and land for the construction of free port facilities.
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The corporation aims to purchase large quantities of goods from Asia to supply to the West African markets and has already made an entry into the hospitality industry by acquiring the Nicon Hilton in Abuja, now renamed the Transcorp Hilton.
Nicholas Okoye, Transcorp’s technical secretary and business strategy adviser, says that Transcorp will be bidding for state-run enterprises put up for auction in the privatisation process. “We will be looking for opportunities wherever they exist in the areas we are concentrating on.
“We are going to be producing in Nigeria and exporting goods and services to different parts of Africa and the world. We are also going to be a vehicle in which people can invest their savings and a company that can meet their goals in terms of savings and deposits.”
Helping local companies to reach world markets
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Within Nigeria itself, Transcorp will complement indigenous businesses rather than compete with them, according to board member Adegboyega Olulade. “We are structured to link with businesses in Nigeria, to make them stronger by forming alliances with them,” he says. “We can bring them into our fold, and re-create them in order to help them produce world-class products for markets at home and abroad.”
Transcorp will focus on areas of business in which Nigeria has a competitive advantage. “It is what we have in abundance in Nigeria that we are going to project. We have wonderful natural resources that are untapped. What people talk about is oil, but there are so many talented Nigerians in other areas, such as IT for example, who we are going to empower.”
In addition to being on the Transcorp board and Executive Vice Chairman of Adonai-Tekts Investment, a firm of financial consultants, Mr Olulade is also Chairman of telecommunications service provider Adonai-Net Nigeria.
Incorporated in 2000, the company provides a range of interactive messaging solutions to both domestic and foreign companies. One of Adonai-Net’s most recent and notable services is its Stock Trade Alert system, which is designed to protect investors trading on the Nigerian Stock Exchange (NSE).
The system blocks unauthorised transactions on the exchange by notifying investors via SMS whenever there is a transaction in their Central Securities Clearing System (CSCS) account.
Mr Olulade says: “The idea is to have a prompt messaging device that will deter fraudulent practices in the finance sector. We have been able to deploy the device in a way that nothing can happen to the shareholder’s account without their knowledge. Immediately anything happens, whether inflow or outflow, it triggers your GSM phone. So you can stop it if you did not authorise it.” The service works in any part of the world.
The regulatory authority in Nigeria has made Stock Trade Alert a pre-requisite for anyone wishing to trade on the NSE. “The aim is to provide improved confidence in the NSE for both local and foreign investors,” Mr Olulade explains. “In terms of returns on investment, the NSE is if not first then second in the world. The authorities want to make it extremely transparent and attractive to investors.”
Adonai-Net’s technical partner is Grapevine Interactive, South Africa’s leading corporate messaging solution provider. “We are going into partnerships with other bodies,” says Mr Olulade. “We are talking to Afribank about partnering them on the Financial Transaction Alert system and right now we are powering Vehicle Alert for the Lagos state government.
“We have corporate messaging solutions already deployed for insurance companies, schools and colleges, amongst others. The advantages of e-commerce are just being brought into Africa through this type of innovation.”
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