Mr. Adewale Raji is the 10th Group Managing Director/Chief Executive Officer (MD/CEO), Odu’a Investment Company Ltd, the business conglomerate owned by the six Southwest states. In this interview with SEYE OLUMIDE, Southwest Bureau Chief, he narrates how he fought vigorously to make the company run as a business organisation rather than a government corporation. The outgoing GMD explains how he put the conglomerate on the path of profitability by instituting sound corporate governance against all odds.
What are the legacies you will be leaving behind as GMD?
Looking back, typically there is a purpose for the establishment of Odu’a Investment Company, which is a business. Part of my legacies is ensuring that Odu’a Investment has clarity and proper redefinition and focus on what it should be pursuing. There shouldn’t be any doubt as to what the organisation stands for. So, it is a business; it is called Odu’a Investment Company Limited. Its purpose is investment for the benefit of the owners, the South West states and the people of the region.
I put it to the fore that the purpose is indisputable. A business exists to be profitable and to also respond to the yearnings of its shareholders and stakeholders. So, from the legacy point of view, clearly redefining and repositioning Odu’a as a business entity is a great deal.
Related to that is that in my first year here, we put a five-year strategic plan in place (2015-2019) where among stakeholders we agreed on what to pursue as the goals of the business. This is called the constitutionality of what the conglomerate is to pursue and it is not a one-man show. It was documented and approved by the board of directors. With that, we know what we were supposed to be doing.
Now, those were the things that I believe I was empowered with as the head of management to start pursuing and, of course, we had significant push backs on that.
Push backs like how and from where?
They were essentially from internal stakeholders. In running a business, there are three critical legs that are important. We talked about push backs; it was between the management and the board members. We all signed to a five-year strategy document and when it came to implementation, it was the opposite of that documentation. That was where the conflict came from because regrettably, the interpretation that was being given was that I was running a sole administrator agenda. But the mandate had been given and codified in those documents. It’s now wrong for somebody to pull out from what he had signed. That is where the conflict came from because people had a notion of “business as usual”. Once you have codified things, you cannot operate as “business as usual” because you will have a template you will be measured against and it will show when you are succeeding or failing. A competent management knows that when those targets are set, you owe a duty to deliver on those targets.
Apart from the code, what other things would you say helped you to swim through that stormy water?
I talked about the purpose and we are talking about legacy. I will say that it is fundamental that just refocusing the business is critical and making sure you have the right engagement with shareholders for them to see value in what you are doing. Related to it also was having to get the organisation into attracting the right talent and structure – the governance structure where you now redefine. We also established a sound constitution for the organisation, which encouraged the shareholders to do a corporate governance reform of Odu’a where we promote competence, transparency, accountability, knowledge and attraction of necessary talents and resources that assisted us to achieve our goals. That documentation addressed core areas to depoliticise the running and operations of Odu’a. It enabled us to look at competences for appointing the leadership either at board or management level, promoting a culture of meritocracy and making sure that you are setting targets with what you want to do. With that, it assures the board of what we call security of tenure.
For example, it firmly established that the executive and group managing directors shall be appointed based on a tenure of five years. You have a term to serve for five years and due to performance, you can be reappointed for a second term. You will be assessed based on that term. It also meant that for board members, their tenure became sacrosanct, not linked to coming in and change of administration in the states, a practice which had created so much distraction and dysfunction in the organisation. If there was a change of government, directors were flung out. Now, directors on the corporate governance framework are nominated by shareholders and assessed by the board based on leadership competences. It is when they scale through that they are appointed. It has been tested where there were nominations that fell short of those competences; they were politely declined with the explanation that these people do not possess those qualities to run the board. So, it’s a different mindset game now. The creation of the corporate governance framework has remarkably helped in terms of the quality of people we are now able to attract on the management and also people coming on the board.
When people are now nominated, you want to look at where they have worked before, their experience and alignment. You also want to see that on the board, its members from the knowledge point of view, are highly diversified.
For example, when every state nominated their directors and they were all males, we rejected it for lacking gender reflection. So, the board could take a decision that in appointing directors now, they will try and favour women. We now have the corporate governance framework, which assures Odu’a of quality recruitment both for non- executive directors, executive directors and even recruitment on merit of regular employees. We have the huge honour of Lagos joining us also.
How did you manage to bring Lagos to join Odu’a as the sixth shareholder?
In Odu’a, what we know is that our fathers created this and when you come into this organisation, you are privileged to come across the actual history of the Yorubas.
That challenged me and I got to realise that what used to be Western Region became balkanised. Lagos State was created in 1967. That history is there. And of course, Western States now became five states that own Odua.
The whole idea about Lagos joining was the initiative of His Excellency, Governor Akinwunmi Ambode. It was Governor Ambode, who in his wisdom, could see the desire of the Yoruba to have this affinity. And he did moot the idea through the late Director General of the DAWN Commission, Mr. Dipo Famakinwa, who then approached me. He said the conversation was going on, adding that it was of interest by the government of Lagos State. I was subsequently invited to have a meeting with the governor. The governor, from the developmental point of view, felt that there are huge benefits that will accrue to the Southwest in that relationship.
Essentially, he believed that it would be a symbiotic relationship that would be beneficial to both parties. He did indicate that Lagos has congestion, but that relieving that congestion in Lagos can only come from its neighbours and I remember what he stressed that day that Lagos’ prosperity is threatened if its neighbours do not have access to progress. So, it’s important that the adjoining states can help to relieve the urbanisation pressure that Lagos was facing and that if they have that cooperation, like a joint commission, it will go a long way. So, I took him on board and assured him that I was going to work on it. It’s something I also believed in, so it was something we brought before our board at that time.
But let’s be truthful; they did not understand it. Reception was negative. It was hugely shocking to me that they could not see the big picture; people were zeroing themselves down to one state coming to dominate them. Those were the kind of comments I was hearing.
All our investments are in Lagos State. Sometimes, we are even leasing some to the government of Lagos State because they were not part of us. So, I took it upon myself to start consulting individually with the owner states of Odu’a. And I had the privilege of visiting Governor Rauf Aregbesola of Osun, Governor Ibikunle Amosun of Ogun and Governor Ajimobi of Oyo states. This was in 2015. I did those consultations and received very positive reception from each of them. So, on that basis, I went ahead and convened a Southwest governors’ meeting, which took place at Cocoa House on January 19, 2016. It was one of the items on the agenda; just like we also had the direction in which our hospitality business should go on the agenda. So, it was something that we directly put before shareholders and I was the driver and the board members were there. And because I have thought about it already, they unanimously endorsed it. And we went through due process where the transaction advisers put together were led by the PriceWaterhouse Coopers (PWC). They undertook valuation and all the checking to make sure that it was an arm’s length relationship that we had in that transaction. And I would say that, to the Glory of God, we went through that process, which led to review of the shareholders agreement, led to the review of the memorandum and articles of association of the organisation that allowed us to now be able to accommodate Lagos State.
So, in 2018, Lagos State was formally admitted to join Odu’a Group. This was a triumph for the people of the Southwest. And I feel extremely elated and fulfilled that one could be an instrument to make this happen to the Yoruba race.
How did you manage to depoliticise the board membership of the company?
It is not depoliticisation; it is more of constituting a new corporate governance framework that aligns with best practices. Depoliticisation is one of the legs of the things coming after it. It’s like you are submitting yourself to a constitution that is backed by best practices. That’s the way multinationals run. What compelled me was that the years of operations were very tough because you needed to move the organisation and reshape it to serve its purpose. There was the need to move it away from an inclination that it is a parastatal of government to say that it is a business that is competing in the market space and the behaviours and dictates of the marketplace are what should govern its actions. And that the market place whips those who don’t follow the rules.
The principle and logic of running an economy is production. The principle of running a business is that revenue has to exceed expenses and there must be a bottom-line that stakeholders must take from, including the government that takes taxes. Businesses are judged on the basis of POM .
What we do as Odu’a is to make sure we need to be judged by profit and loss account, not by trying to behave like we are parastatals and ministries. That is a fundamental thing on the governance element.
Once that is documented, it allows you to know where breaches are taking place. Once you put a strategy in place and do not pursue it, it becomes a problem and that problem is that it creates a conflict between the board and management, which was the real problem that I was facing such that the tenure of five years was difficult for me to accomplish things. The strategy mentioned that we’ll try to redevelop our hotels and that requires massive capital injection. It also requires what they call hospitality expertise, which is now global. How do we now flip our business to be relevant for the future? It means we have to redevelop. We have no funds to do that. So, we have to be ingenious on how to come across funding for business. Today, we could easily identify that through partnership. Our shortcomings can be addressed by your partners coming with the funds and in the process, through a proper valuation and governance process, determine what will be the share ownership between you and your partners because they are bringing what you don’t have and you are also bringing what they don’t have. So, you end up as joint owners and that is what we have done with our hospitality business.
Rather than thinking you are going to continue to be 100 per cent owner and you are not investing in it and it keeps going down, you are ultimately going to lose everything. And that was what happened to a lot of our business entities. If you talk about say, Cocoa Industries Limited or Nigeria Wire and Cable, that’s what has happened. We could not sustain running them and once the blood, which is money, is lacking, they are bound to go moribund. So, we challenged ourselves to say these are the things for us to address. Over the years, I realised that that understanding did not resonate with the board members even though there was a strategy document in place. Board members were willing to do the opposite of what was in the strategy document. So, it was quite clear that we were not going to make progress and my tenure was expiring and people were vouching and swearing that over their dead bodies I would be reappointed. I was wondering why that was of interest to them. What should be of interest to them is the progress of the organisation. So, I realised that those kinds of vows and swearing were not in the interest of the business and the expectations of the people of the South West.
I used that to engage the shareholders that there was a dislocation, dysfunction and misalignment here.
The people who were managing the business didn’t understand the purpose of this business. I told the governors that I was speaking to them, not because I was campaigning to be reappointed for a second term, but that in my almost five years there, we never had peace to pursue running the business. We were always distracted by the shenanigans and the inconsequential, and the reason is because you have put in place people who do not understand the dictates of running a business. I made them understand that if they didn’t change the parameters of appointing those people to bring aligned, experienced and versatile people with expertise, then this is going to continue and will never give you your desired result. They listened to my campaign; particularly, the anchor governors at that point in time, Governor Kayode Fayemi, who had just been re-elected in 2018, and the late Governor Rotimi Akeredolu, who had become governor in 2016. I said these are my views about this; it doesn’t matter if I leave here or not, any new person appointed will not know his bearing and that will be another five years of waste. So, that work was done and when it was finally done, it was commissioned in 2019. The results were submitted in 2020. And it was clear that certain steps had to be taken, which is the way all other companies operate.
This was entrenched into the shareholders agreement and the memorandum of Odu’a Group and signed by every state. In fact, the governors, after they have approved it in a session at an extraordinary general meeting, called that every SSG signs on behalf of each state and we took those sets of documents round the states for all the six states to sign them. And that is the constitution that holds Od’ua at the moment.
