Sir Ademola Aladekomo, a pioneer in the telecom sector, founded Chams Plc in 1985 and nurtured it from a start-up firm to a public-quoted industry giant. As he retires in September, Aladekomo, past president and Fellow of Nigeria Computer Society (NCS), in this interview with Capital Market Editor Taofik Salako, shares his thoughts on the economy, information and communication technology, entrepreneurship, and the company he is leaving behind.
From an entrepreneur perspective, what are the things you think should be the immediate priorities of the Buhari government?
A major one is this impunity about corruption. We have spoken about it over and over, corruption is bad and it is bad. And what is not good is just bad, corruption is bad. It creates massive turbulence not just for the economy but also for ethical organisations like Chams. If you look at our projections when we went to the market in 2008 and 2009, the turnover we projected to be doing now is almost like 10 per cent of the turnover we projected then. Unfortunately, because of corruption, it has been impossible to meet our projections. Due to corruption, companies like Chams have been highly victimised because of our refusal to pay bribe on major national projects, we were blacklisted and back-stabbed due to our inability to compromise on the issue of corruption. How many companies have we lost in the country because of corruption, how many innocent lives have we lost. We do not say people should not make money, at least we should create a lot of multi-billionaires, multi-millionaires in the system, but let them do it clean. So, the major priority for any government today is just to resolve this issue of corruption. The next one I think they should look at is security. There is no way people can survive and thrive in any environment without looking at security. Closely going along with security is something we call rule of law. At least if you do certain business, there should be certain rules that should guide that business. Where those rules are not well kept, doing business becomes difficult. For us at Chams, we also had issues with that. The other one is employment for this government; and it will only derive when we reduce corruption, when there is security and rule of law in the environment. These are the three main priorities that I think government should focus on. But there is one that a lot of people may actually put as one of the three that is infrastructure. But I still put it as number four because once you reduce corruption, improve security and ensure rule of law and employment, I believe a lot of the infrastructural activities can be resolved. But infrastructure is also pretty urgent, so I will say four priorities for the government. When I was in Chams, you will find us using three generators for almost 24 hours a day and if you look at yourself at management, you wonder, are you in the power business or the information technology business whereby you have to be taking care of generators? Apart from power, you have to take care of water. So, the issue of infrastructure should also be looked into. But that to us is a massive opportunity for businesses and I’m not considering it as one of the top three because once corruption is reduced, security is taken care of and there is rule of law and there is employment, people will actually come up with solutions for power, for water, for health and for education among others.
You founded an Upstart company, nurtured it into a major company quoted on the stock market. What is your experience?
I strongly believe that this environment today gives a lot of opportunities for people to thrive. We have 174.5 million Nigerians that is a huge market for all of us, massive market that we should tap into. There will be challenges as we have mentioned, infrastructural issues, corruption; all those issues, but they should not be mitigants for people to get into business. I believe there are opportunities, and from what we have heard of this new government, I believe they are going to tackle a lot of those challenges and issues militating against businesses – corruption, insecurity and absence of rule of law. Once these are tackled, I think people should consider more going into businesses. At every point in time, I lay emphasis on the 174.5 million Nigerians, that is a huge market for anybody that is serious. Be that as it may, there will be obstacles, but obstacles are supposed to be overcome in life. Business is about tackling the obstacles and conquering your environment, and for the futuristic minds, the more obstacles you have within an environment, the more the opportunities; the more undeveloped a market is, the more entrepreneurs that it is supposed to have; because if a market is already matured, then why are you into it. That is why you find a lot of businesses finding it difficult to survive in advanced economies of United States and Britain. But in Nigeria, when you have a very serious business person, he will survive and thrive in Nigeria.
When I was starting, I was fortunate that the market was very big and underserved, just as the market is underserved right now. In those days, we didn’t have any company maintaining computers, so it was only Chams that was maintaining computers in those days. So, that was an opportunity for me. When we went into the area of local area networking, it was only Chams that was dominating that area; when we went into wide area networking, it was only Chams; when we went into payment system, it was only Chams; we went into identity management, only Chams; up till now there are certain areas that it is only Chams that is into it. So, the market favoured us very well and we strongly believe that this major opportunity is still very there. We would have been able to do much better if the issues of corruption, infrastructure and rule of law were not there, but we still thank God we have done very well.
One of the refrains when it comes to foreign partnerships and technical assistance is technology transfer. What is your experience?
I think technology transfer is a myth, because no country, no company, no individual will voluntarily transfer his technology to you because if the technology is transferred to you, what advantage will the person, country or organisation has any more? no more advantage. So, you have to acquire the technology yourself one way or the other; and the best way is to learn, understand those foreign technologies very well and adapt them to your own local environment. I am yet to see anybody given out a blueprint, as in – this is my technology – go and copy it, even when you are paying them, they still hold something. It is up to you to understand your environment, understand the global technologies and then bring in the ones that you think are relevant. You still need to invest a lot on research and development, you need to invest your own resources, you need to train yourself, and you need to train your people before you can understand any technology. So, we should forget the idea of anybody transferring any technology to us; it is not going to happen.
In period of economic constraints, especially in developing economies like ours, one of the first lines of casualties is the innovation industry like the information and communication technology sector. How do you foresee the outlook of the sector in the immediate to short term period?
Yes, when you have crunches, organisations usually reduce their expenditures on research and development, you are very right. But in our own environment, we have not spent so much on research and development; I believe we can still get that done now. We can leapfrog on a lot of technologies and, fortunately, those technologies are not that expensive to acquire. Let me take social media, even for journalism. As a journalist, you can establish your own newspaper online. What will it cost you? It will cost you a website or you register a blog which is not as expensive as registering a website, it will cost you having internet access, having laptop or a smart phone; spending less than a N100,000 you can almost establish a newspaper online. But imagine in those days to establish a newspaper, you will be looking at if not billions of Naira, hundreds of millions of Naira before you can do. But today, there are a lot of online media. Today, you can always stay online, get your news sources and stories, compile them and publish online, after given credits to all the sources. The research and development cost is pretty low, the cost of getting into businesses is also pretty low these days.
Why did you decide to list your company on the Stock Exchange in spite of the fact that most of your peers and other major companies in the same sector are reluctant to go public or list on the Exchange?
Very good question. One of the major advantages of listing is reporting your results. If you are not messing around with your books, if you do not have anything to hide, if you want to be very transparent, if you want to be held on to your projections, your budgeting performance by the public, then you should list. For us in Chams, we decided to be opened, more because we do not have anything to hide. We believe that it is by exposing ourselves, by letting the whole world know what we are doing that we can improve. And you would have seen it in our results. In 2010, 2011 and even 2012 when things were really tough and bad, we were declaring results that were like a disgrace to us, but faithfully every quarter – I think it was only in a period that we didn’t report for some three quarters, I think it was in 2010 and immediately we corrected that, we were reporting all our results and it really helped us. Because our accounts department is highly independent, exactly what you do is what you report, so nobody is messing around with any figure. For us, being opened has really helped us.
For one, our stakeholders can trust us knowing that we are not hiding any figure. It also makes corporate governance very easy for us. If we had been a private company during those periods of turbulence, if we didn’t publish our results, it would have been so easy, even the members of staff we won’t need to declare anything to them, everybody will just be wondering what is happening, the results would just be may be between the managing director, the chairman, a couple of board members and the head of finance. But companies have been known to die such way by keeping their secrets because most people won’t know what was happening. But for us, it is there in the public – in the open; this is the reason you are not doing well, this is the reason you are going to get out of the problem, this infuses a lot of confidence. Also, going to the public allows management to be separated from ownership. It looks a bit easy theoretically, but once you are able to separate management from ownership, your managers can now become professionals. Take, for instance, where you have the owner as the chairman and managing director, the person can come on Monday and demand N10 million; of course, nobody is going to know because your books are not published, even if the chief finance officer knows, that is her own headache. Tuesday, the person also comes and demand N27 million; then also Wednesday, I have a party, give me another N15 million to go and spend.
Before you know it, because the results are not published, nobody is holding anybody accountable, because management and ownership are not separated; the owner has actually wrecked the company without even he himself knowing. But in a situation whereby you get listed, the owner knows these are his limitations, the managers know that if they do anything untoward, they will be held accountable and they may go to prison; so even if any shareholder should come and demand N10 million, they will say: excuse me please, which accounts are we going to put it, we can give you as the chairman, but which account are we going to write it. Even as the managing director or a director, the director’s account is limited and it must be declared, the shareholders are going to be looking at that at the end of the year, and then everybody will be careful. In that way, you have proper corporate governance. So, the advantage of separating management from ownership is enormous. We actually regretted in Chams that we didn’t do it 15 years earlier because if we had done it earlier, we would have been in much better place than we are now.
What is the outlook like for the economy within the medium to long term, and, specifically, the information and communication technology sector?
For the economy generally, there are lot of hopes on the new government. If in the first couple of months they are able to come up with some key pronouncements and follow these with major policies, including if needed to make some scapegoats, then there will be a lot of confidence in the economy, you will find a lot of money coming into the economy, you will find a lot of energy being generated in the economy, which will then make the markets to blossom again, which will make productivity to go high and make people a lot more enthusiastic to go for their goals. I believe it is going to look very rosy in the medium to long term. We shouldn’t expect any kind of miracle, the government is going to do its best, but I don’t see them performing magic, they are going to require some time before some of their policies will turn into results. So, you are right, we should be looking at the medium to long term before we should start seeing a very good outlook on the economy.
In our own sector, we believe the opportunities are still very massive. Unfortunately, we have not taken information technology the way United States and Europe are taking it and I keep wondering why, despite a lot of efforts, we don’t have major and massive information technology companies in Nigeria. We consume more from outside the country. If you look at hardware, possibly because we do not manufacture as such, so the impact is not that felt on the turnovers of the local companies. But I know that in the medium to long term, we are shifting, moving from being contractors, from being suppliers of hardware to becoming solution providers, towards writing our own applications, towards delivering solutions that will resolve local problems. So, by doing these, we believe that our input will be higher in the solutions that we will be delivering than hitherto. Right now, most of our solutions have a lot of foreign components, up till now if you have $1000 spent on information technology, about 70 per cent of that will go to importing hardware, and so the effect will be more in the economy where you are bringing those things. But you would have noticed that a lot of our people are delivering software locally. We believe that in the medium to long term, things are going to work out very well because a lot of us are there. We see the market growing. I take Chams as an example, most of our input used to be with foreign partners and input, but now we have started to develop solutions locally, we say let’s start gradually and we believe this will come on stream for us very well.
In all these, are there any need for incentives for the government to support the growth of the domestic information and communication technology sector and indigenous companies?
Yes, of course, most economies rely on their governments to get out of the gridlocks of their imperial powers. Nigeria is not different. Because we are a net consumer of technologies, we need some kind of protection locally and the government has started doing some few things in that area. If you look at the local content, they have set up two bodies, one at NITDA and the other one in the oil industry; I believe the government should continue with those policies whereby we practically force governments and organisations to give priorities to local content. We, particularly, like the one at NITDA, whereby one major impact will be on sim cards. They said by July, this year all sim cards should be manufactured locally and it is something that is possible. With production of sim cards locally, it will come with a lot of software input into those sim cards, a lot of applications being developed locally, that will really help us. I remember when a similar policy on recharge card was published a couple of years ago, Chams was one of the very few companies to start up a recharge card plant. They thought recharge cards cannot be produced locally, we produced it easily, simple technology. We are also geared towards the sim card policy, we have the plant coming up now, we just certified it for the payment side, and then we have started working on the sim card. If that is done, there will be local employment and empowerment.
You had grown Chams over the years as mainly as an indigenous company, do you foresee a possibility of taking on foreign investors or partnership going forward?
Yes, it is a possibility and we are always on the lookout for partnerships. In as much as we believe a lot of things should be done locally, don’t let us forget that technologies are global, a lot of these innovations and inventions are not done in our own environment yet and where we have to do it in our environment, we are going to need a lot of funding. So, in these two areas of acquiring foreign innovations and developing our local innovations, we are going to need partners, either in terms of technical knowledge or in terms of funding. To do that, we will be able to open ourselves up to investments by foreign companies. I also see the possibility of local companies coming together even though we all want to be king on our own. I think it is high time Nigerian companies should start coming together to form larger entities that will have either the innovative capabilities or the necessary financial capabilities to fund major research and development.
You have a substantial public sector portfolio, what has been your experience dealing with the government sector?
Very tough one, no thanks to issue of corruption. It was almost impossible dealing with them; one can talk freely about them now unlike when I was the managing director. Except you are ready to bend the rules, except you are ready to bend backward, things can be very tough doing business with the public sector. It is not an area that is meant for the feeble-hearted, it’s tough. But we are praying that the new government will be able to deal with issues of corruption.
Why are you leaving Chams at this time?
You will have noticed that since 2012, we became profitable again despite the losses of 2009, 2010 and 2011. In 2012, we became profitable, we became more profitable in 2013 and by 2014, and we have become so profitable that we were able to declare some dividends for 2014 business year. The company has stabilised, we are growing and, more importantly, our products and solutions are growing and maturing. By this year, I have spent 30 years in Chams and I did think that one, with the company turning into profit and stabilising, with the products coming up strong, and having very good set of staff and, more importantly, being able to declare that dividend, I believe it is high time I leave the stage for fresh brains, more agile people, the younger generation, with better ideas than we do to carry on the mantle and do much better than we can do.
Emotionally, it is tough leaving after 30 years; it has become almost second nature staying there working with my colleagues. As we always say in Chams, we spend more time with our colleagues at work than even our family at home. This week will be the first week that I stayed at home and most of the people I saw at home, they looked like strangers to me. I mean the regular faces I used to see during the course of the week I did not see them. However, the company must move on, one cannot stay there forever and ever. Moreover, we have also grown a lot of the people in the system; there has been a lot of succession plan. For instance, take the guy that is taking over from me, he has been with us for 25 years and we have people that have been with us for 24, 23, 21 years, they are all capable people and if they have been groomed for that long and we know they will be able to hold their own, some of them have run our subsidiaries successfully, so why is it that one will not give them the opportunity. The more one stays in there, the more difficult it will be for them to show up what they are capable of doing. We also believe very much in Chams that there is no sole arbiter of knowledge, being managing director for 25 years does not mean that someone is probably the best to run the show now, it only means he was the best person 25 years ago, is he the best person to run the show today, I don’t know. Yes, he may have the experience; does he have the expertise in modern technology, cutting-edge techniques? The more you expose the younger generation to the position of leadership, the better for the organisation and the better for everybody.
How confident are you about the future of the company you are leaving behind and what is your message to the shareholders?
I am very confident about the people I am leaving behind. They are core professionals that have been very well-trained, vey well-groomed to run our company successfully and they have demonstrated that they will be able to do it. We are also confident that we have a very good board that has a knowledgeable oversight of what is happening. We believe the future is very bright for the company. To the shareholders, I think they should also be very confident that the future is very bright and I think the company will do a thousand times better than it has ever done when I was there. Shareholders have nothing to worry about. I believe that in 2015, very good results will be declared and subsequent years, the results will be improved upon.
