We recently caught up with Akinwole Omoboriowo II, an entrepreneur, a value-driven businessman and an intellectual. He is the Chairman and CEO of Genesis Energy, an energy solutions firm with experiences operating in a variety of African countries. Mr, Omoboriowo II shared with us his background, as well as inspiring thoughts on entrepreneurship and the Nigeria’s power sector. Excerpt:
Please share with us your background
I grew up in an intelligent environment in the University of Ife, living under a lawyer and politician father. My mom is very spiritual. So that helped a lot. I have a lawyer, historian, and spiritual father with a focus on how to better our people, and how to add value to the society. How to make your life valuable to others was the principle I grew up with in the 1960’s and 70’s. These were the principles Nigerians lived by at the time. So, having a mother who is also religious, imbibing in you the tenets of faith, not in the religiosity way, but as a practice, also helped. So, you have your intellectual side, your drive, and then the religious side. I want to say I was blessed to have a good background, growing up as a decent boy, passionate and committed to what I do. That helped to shape me.
Please tell us about your entrepreneurial journey. When did you become an entrepreneur?
To be honest with you, I am not sure I know when. There was no apparition, no vision from heaven. It was all a combination of nature and nurture. So, the nature for you and me is the genes of our ancestors past. The habits that they formed; the lives that they lived; the passion that drove them. All of these that are exposed in your genes and mine form part of our genes. I come from a royal class; a royal family- hunters, doers.
They never learn how to sit still. So that forms part of you as that is your family line.
So, nurture is what happens in your environment. The home you were born to; the experiences of your family, father and mother; what you do in school; the experiences you gather; and the friends you have. My ambition was to join the army to make a difference. And as a young man, those kinds of things interest you- noble causes. I did vigorously pursue that ambition. And my father was very helpful. But if you want to do good; there are many ways you can do good. You could be a medical doctor or an engineer.
Interestingly, I didn’t want to become a doctor or an engineer. I choose the social sciences; I was always good with the numbers. To try and understand how the society works, I studied economics. As far back as when I was in the college, because of how close I was with my father, I worked in his businesses. When he was a lawyer, I was in the primary school. I worked with him; weekends, we go to the chambers. We went there and played with books. I started reading law books as novels. Being an entrepreneur is part of nature, being a doer, and how do you add value to the society.
By working with my father, supporting and assisting him, then in the university, I became very active in business. All of these activities keep your mind busy; keep your hands positively engaged. So, in the downstream of the oil and gas sector, I went from marketing tin kerosene in trucks, and moved around in trucks from Kaduna to Lagos. So, I started at the bottom in the downstream and being blessed by God to have the opportunity to meet friends and much bigger individuals in the society who are more willing to give a helping hand; and a father that was attentive to your ambitions, always help.
Considering your background, and your start at the bottom in the oil sector, did you feel you weren’t supposed to be doing this?
I didn’t even know the difference at the time. There was no special thought; there was no special vision; and there was no special gift. It was just the way it was meant to be. There was an opportunity to moving kerosene from Kaduna refinery, following your father to NNPC; and it thought I will like to get into that. Can I get the allocation? So, we started moving kerosene. I feel proud of my family; my father was a deputy Governor, and elected governor; he was a lawyer and he was a community fighter. I am proud of those good things. But that was him, and this is you defining your own path. He was not a rich man. He was just focused. The money he had, he gave back to Ekiti; his ambition was to facilitate the growth of as many people as possible. He lived for that; 90% of his life, post-active politics, he lived for the state.
Was money your drive?
Money is important. Every commercial endeavor is geared towards profitability. And profitability is money. You can’t add value in business, if you can’t make money, because that business will not be sustainable. We have bills to pay. You have your own physiological bills to attend to. But do you start business, just because of the money, no. People make money, and money has never made anybody. You need dedication, resilience, a positive attitude to life. I am assuming you all know that God is first.
Your ideas, finding the right people who will believe in you, and every thought comes up sounding very simple; and people will wonder if this is what you really want to do, most people won’t believe in you, including your friends and family, not because they don’t want to, but because you just said something and they wonder how you are going to do that. But your ideas, commitment, discipline, sacrifice are what you need. The get-rich-quick syndrome, you must get it out of your head and focus on adding value. When I build a pot of value that is N100, and I decide to extract N10 from it, it means I have shared N90, with so many people; the man that supplies the raw materials, the transporter, and all that. Value has been shared and then you take some of it and you go to whatever you do with your money. And then you enjoy the benefit of your hard work. So, these values have to be in all of us, as youths.
Youths go to school today to get a job. With the experiences you have, how do you give back to the society in terms of mentoring and supporting entrepreneurs to add value to the society? We know that if we have more entrepreneurs as you, the society will be better off. So how are the youths getting it wrong?
You have asked so many questions which you think are two; but I will start from what should be the fundamental. I don’t believe anybody wants to get a job. I have meant many fine young men and decent ladies. And they just burn to be entrepreneurs. But are we giving them the chance? Are we giving them that helping hand? For those that want to get a job, remember what I said in the beginning about the nature and nurture, we are not all born to be an entrepreneur. There are those that are systemic. Whatever is in their genes, generations of thousands of years has made them that way. So, first is to find your place on earth. Where is my place in this earth? Where has God put me? Under God, life is a pursuit of happiness. There is nothing else to life. Everything you do and everything you think you own, are all but memories; nothing more.
A lot of youths have found who they are. They are very entrepreneurial. Some are system builders; they will support you as an entrepreneur to build systems and ensure that the hard work you put in is not a waste. Otherwise, you will keep working hard and keep putting water in a basket. So, there are those, by nature, who are good with work; they have to be employees. But it is a partnership between the entrepreneurs and the man or woman who has decided to be your support structure. It doesn’t make them less or you more; it is just their place in life.
So, if you take a cup of tea; it is what we have created together; you, as an employee, and I, as an entrepreneur as partners. The first step to consider in this pot is the staff and team, their salaries and welfare. The next step is the cost of running the business. The third step is the government- tax; and the last step is the profit. So, the entrepreneur is the last to be paid. But the reverse is the case in most African countries. The entrepreneurs are the first to take from that pot. That is why businesses fail. They are like- “why should I pay you first”; they don’t understand that it is not going to work. It is “us” that are doing this; it is a team work.
Now to take your specific two points, I believe that there is not enough private sector support. I will speak again about the power sector; my very sincere opinion. The government has created a very sound enabling environment for the power sector to thrive. There are some countries, without mentioning names, that if they have the kind of enabling environment that we have, they will be net-exporters of power in their countries. This means they will produce all the power they need and then become profiteers of the sale of electricity.
Nigeria is the first African country to completely deregulate the power sector. They have put in a very strong regulator. But it is a work in progress; so, it is not going to be perfect. They privatized the sector; the government has brought in serous interventionism in terms of policies. The system is not working because the private enterprise is unable to meet its obligations financially.
Here, they give you concessionary loan that is working capital. Who does that? You try that in western world, you go bankrupt; that’s your business. So, the government has done so much to enable the sector. But we in the private sector- some of us are highly responsible; some of us are yet to understand what it means to create value, and to then take a part of it.
And so, the power sector has not had the right mix of persons that should be there. So, that has not made the young entrepreneur to be able to step up; because we have some of us blocking the way, neither going out of the door, nor coming out. So, we are a liability to the country. There is what we call economic sabotage, it is a treasonable offence. So, for whatever reason, you take electricity, which is a social product, the life blood of any modern society, and you become obstructive to that. I agree that there is not enough being done. But that is in the private sector. There are others who can do better. So, what can the government do? Can they take over the business? Government is not in the business of running enterprise, creating the environment is their own job. So, we need to speak to ourselves.
So, a hundred or thousands of people focused on creating value will create a significant change. The essence of governance is improvement in the lives of the people. There is nothing else about governance. So, when government then creates an environment, the environment has always been created, but how does private enterprise utilize the opportunities given? How do the so-called business leaders truly give opportunities to others to thrive and to grow? So the value system in the private sector, I think the few individuals that have it, should encourage their compatriots.
How am I involved? I think we have been blessed with a platform. We have had challenges; we have failed in some businesses. We have never made any deliberate mistake or broken the laws. So, we are very proud of what we have been able to do. We are very proud of the global partners we have been able to bring to the country, despite the very arduous environment we operate.
I think some of us in Nigeria and some parts of Africa are engaged in negative competition. As soon as I see Ehis Enterprise, for instance, prospering, we will begin to spread lies about his business. I will seek to destroy him. I will start to use my energy negatively, instead of going to Ehis and collaborating with him. But when you attach Ehis and you destroy his business, you are pulling down lives, homes. When you take away jobs, you destroy lives, and you wonder why crimes have increased. We need to do more to encourage others.
I sit in mentorship platforms that seek to encourage others with our past and ensure that others to make those mistakes. This also falls within my faith. We create jobs; we ensure we train our teams; they do more work than I do.
Nigerians anticipated an improved power sector with the deregulations. But over the years, there have been no significant improvements. What is your assessment of the sector?
First of all, infrastructure takes time to build up. Infrastructure is hard work. It is not for the get-rich-quick. The results are not always immediate. Let me give you an example, a small power project of 100 megawatts will take you maybe about a year to develop, assuming you have agreeable counterparts that are professionals, committed, and all this red tapes and obstacles are not in the way. Yes, It will take you about a year to structure it and then you will need to go and raise your capital; it is a combination of your debt, loans and then your equity, which is the money you will use to stabilize that debt, otherwise the business will not thrive.
This is what is wrong with the assets that were purchased; they were largely purchased with debt. This is to the credit of the Nigerian banks that they put their backing to it. So the banks, like the government has supported the power sector. But again, most of us have disappointed the banks; so the banks are sitting on huge negative projects that are dying or dead. We just needed to have brought in more equity players; so I just needed to share value. You must look for partners that will share your ethos and value and you bring them in.
In the power sector, the anticipation of people was wrong. When the government privatized and sold the infrastructures, the expectation of the people was that there will be improvement over night. No. It was the same infrastructure that the government had that was sold. Nothing has changed. There is no miracle there.
The private sector also thought that power is the next big thing. I am going to become a billionaire; they were driven by greed and not enterprise. Enterprise will let you understand that you need to give value to gain value. Greed, on the other hand, just takes; greed doesn’t share. On the part of the private sector, some actually thought they will become billionaires overnight.
Power is not like telecoms. With telecoms, you put up a base station; and from that base station, you can serve the entire Maitama. However, for me to give you power, I must go and buy cables; I must buy the poles; I must spend serous capital to connect just one person. I am not demeaning what our folks are doing in the telecoms sector.
So, some in the private sector got it wrong and the public got it all wrong in thinking there will be a miracle after the privatization.
So, these two are set for disaster. It is disappointing for the private sector as they later discovered that they need to invest 20 times more to get it working.
Kindly tell us some of the projects your company has completed in Africa?
First of all, the first real project that was built by us was in Guinea-Bissau. We started in 2005 and we installed in 2006. And at the back of the project which was a 100% equity investment, zero-debt, the government then decided to form a joint venture between Genesis Energy and their national utility; and elected me as the Chairman of their utility. Because for several years, they had not had national power and we did that with the help of our teams, partners and the government that gave us the opportunity.
We have been working within the Calabar free trade zone. Nigerian government through NEPZA gave Genesis the opportunity to take on an existing mini grid. I want to call it the first industrial mini grid in Nigeria. That mini-grid had 9.3 megawatts of existing heavy fuel fire power plant. We took over; overhauled those assets; expanded the grid; and from there, take Calabar port to that grid; and sign our gas contract in order to make sure that we can reduce the cost of production. But it was very challenging, using heavy fuel or diesel because it is very expensive.
And the sustainability of that is that if it costs you 10million naira every month to produce power; and all you collect from your customer is 2 million naira, you know you are going to go bankrupt. Just to give you a sense of the cost profile, from that 10 million, the majority of that cost is fuel. So let me pick a number. Of that 10 million naira, 7 million naira will go for the costs of fuel. That is the fuel you will put in the power plant to produce and run; then, you need to be able to buy spare parts to service that generator; then, you need to be able to pay your operations people, who are working tirelessly to make it work; and then you have the costs of running the business; eventually you get a profit of 600, 000 from that enterprise, assuming you get that 10million naira; this will give you a sense of how tedious the business is; but what if you get 2million naira, instead of the 10million naira?
We have been able to run it for 10 years because it was a strong partnership between Genesis and NEPZA. NEPZA understood the pains of producing electricity. Some customers thank us every day because they are exposed and they are firm and committed business people themselves who understood that we are making sacrifices every month. You are subsidizing the system and acting in the place of government. Some don’t just understand. You have to be patient. Out footprint is there in Calabar. We have invested huge capital, and our commitment has kept us going.
We also built the first gas-fired power plant in Banana Island, Lagos, with the single ambition to bring down the cost of electricity by 50%. We did successfully.
We built the first clean gas-fired power plant in Ikoyi and Victoria Island, Lagos. Built it up with our partners in the UK, Cummings UK, who has invested heavily in Nigeria. But we had to move out the brand-new power plant. For 4 years, some individuals prevented this phenomena investment and its benefits from getting to the people they claim they serve. The tariff of this gas plant was N25, at a time the residents were paying N33 naira for what they took from the grid. Whoever that stopped it waited for us to build the infrastructure, and before commissioning it, they stopped it. This is what I mean by the challenge the private sector creates for itself.
The government has already created the environment. The success of the Banana Island means that you can build thousands of mini grids across the country. What NEPZA has done in Calabar, the PPP partnership that has worked can also be replicated across the country. It was not the government that stopped it; the government till today is still baffled.
We have over 85 megawatts plant in full operation in the country, running non-stop with other partners. We have power plants running in Sao Tome. It produces majority of the power in that capital. We are operating successfully in other locations. We have a subsidiary now in East Africa, and we have set up shop in Benin Republic. We appreciate our partners.