Dr. Michael Omolayole, in his mid 80s,was the first Nigerian CEO of Lever Brothers. He is a Management Consultant of over 50 years experience in business. In an interview with Taiwo Abiodun, he laments that Nigerians are no longer positioned to be CEOs in multinational companies as foreigners remain dominant in businesses in the country.
WHY do we still have many expatriates as Chief Executive Officers of companies in the country? Are Nigerians not competent enough?
I have to go a little back into history. In the late 50s, all through the early 60s, Nigeria had a major focus on the development of human capacity. And the reason for that was that Nigeria had been a colonial territory for a very long time. She was about to become independent. And it was decided the independence would be in 1960. Most of the administrators in the colonial era in government were expatriates. Most of the professionals were also expatriates. The same thing happened in the private sector, most of the top managers were expatriates. The CEOs of most of these companies were expatriates. So as Nigeria was preparing to be independent, a lot of focus was put in developing people to the highest level. The terminology for it at that time was ‘Nigerianisation’. You couldn’t go through any newspapers for a period of one month without the policy of Nigerianisation being discussed at length. The general public and the politicians wanted to see Nigerians at the commanding heights. And the process had to be gradual because we couldn’t replace thousands of the expatriates overnight. That process was rapid in the public sector. It was so accelerated and by 1963, there was not a single senior expatriate left in this country in the public service, in the administrative cadre. If you had expatriates in the public service, they might be in some specialised areas such as in medicine, in aviation, or in highly technical areas. And every effort was made so that Nigerians could replace them. The same process was going on in the private sector. In the 70s, in the private sector, we had arrived at a situation where a number of Nigerians were now becoming executive directors of companies and becoming the CEOs in companies. That really was the progression.
I was the first Nigerian CEO of Lever Brothers Nigeria Limited. Dr Abebe was the first CEO of UAC. Mr. M. A. Makinde was the first CEO of Nigerian Breweries. Dr Christopher Kolade was at Cadbury, and Chief Olusegun Osunkeye was at Nestlé. So, you can see how the progression produced the first Nigerians. It was a good policy in my own opinion for a variety of reasons: Reason number one, the Nigerian CEO is more cost-effective than the expatriate CEO, even if both of them should earn the same salary. The expatriate earned something that we called inducement allowance because he was not working in his own country. He was paid a lot for that at the expense of the company. It also allowed for him to have his children educated in his own country. He used to go on leave every six months while the national would go on leave once a year.
So you can see that from cost effectiveness, the national is more cost effective. In another way, a citizen of a country where he is also CEO could have a lot of political doors open to him because those at the helm of affairs are his own kith and kin. He had gone to the same primary school with some of them, went to the same secondary school with some of them, the same university with some of them, and goes to the same club with some of them. When you talk about management, it is both of science and as well as an art. And art relates to culture. Whoever is a national will understand his country better than an outsider. Consequently, a national can interpret his own country and company better to each other.
Having talked about the advantage of having a national at the head, it is therefore in my own opinion an aberration if you have to bring a foreigner if there is a competent and virtuous Nigerian or national. The logic of it is that you want the best person on the job, the best person who is cost effective and who can deliver most. All things being equal, a national should be able to deliver better than the non-national. All things being equal, it’s a prerogative of a company to ensure that you put somebody who can deliver.
Let us ask ourselves the same question: If there are companies in Nigeria and some 70 years ago, and all the top people were all expatriates, why must they continue to be expatriates till today? I can’t understand that. Why must we continue to have them again? The majority shareholders are here not just for the profit they can make and take away, they are here to help the country develop. And the only reason they are welcome is because they help the country to develop. There is no development if the people here cannot reach the top. That really is the crusade we are about – to understand why is it that some 30 years or 25 years ago, we had several large companies that had Nigerians who were chief executives.
I have another angle to it: A lot of businesses that invest in our country do so because of our population. We have a large population and, therefore, we have a large purchasing power. I think we welcome investors as our friends, not as exploiters. And those who are friends must be interested in leaving good legacy behind.
We even have some foreigners, especially Chinese as artisans in Nigeria when we have Nigerians who can do the jobs. Why is this happening?
Well, we go on inviting foreign investors. They bring a lot of good but they also bring some bad. A number of people believe you’ve got to take the rough with the smooth – that is the good and the bad. And I personally don’t believe in that. I believe in welcoming the investors but setting out the guidelines, setting out the parameters that would make their job easy and make them highly welcome. If you are going to be let us say a missionary who would be welcomed with open arms in this country, we would tell you first believe in the people, befriend them on what I call basis of equality not because you feel you are superior to them. And when you are already friendly with them, you can then begin to propagate some ideas. You are likely to win. If you come, sitting on a high horse, saying we know better than you do, eventually, you will not succeed.
My advice is, when we invite foreigners into our country, we should set for them the parameters. If there is something peculiar in their operation that a Nigerian cannot do for now, they should bring someone from their country whose main job should be to train a Nigerian to be able to do that thing as quickly as possible. And the moment a Nigerian can do that thing, then the trainer goes back to his country because it is always far more expensive to maintain a foreigner than a Nigerian at any level. So if the purpose is to benefit the country and not just to be spending money, the sooner a Nigerian can replace him the better. So, if a Chinese comes because there is a peculiar way by which a company does its job and no Nigerian can do it within a year , for 18months at the lowest of level, that Chinese should go back. If he is still here two to three years after then the company does not mean well for Nigeria.
Some Nigerians front for the foreigners in some business concerns? What is your take on this?
That is most despicable. Now I often say the government has no reason to go into business, whether it is a state or federal or local, it has no reason to run business. We should have an enabling environment to allow businesses to run. It should be concerned about law and order. It should have laws relating to safety of lives and property. It should put in infrastructure like electricity that is constant, road that is well maintained, transportation, railway system, among other things. Having set the parameters, the government should invite truthful and honest businessmen to come but the authorities should monitor strictly what they are doing. There are some good businessmen you can trust; there are some sharp practitioners in every country. It is up to the government to ensure the business people are monitored. If you allow a company to do anything, it can produce something and say the quality is high while it may be rubbish. A company can just do anything, produce something and tell you the quality is high but it could be rubbish. The company can produce something that is toxic. If the company produces something that is dangerous, and government officials take bribe and allow the products into the market, it may be killing people. It is the duty of government to police all the processes. What I am saying is that if the government is checking, it would know that somebody is a front and it will plug that hole. If somebody says I am coming to train and he is not doing that and he is found out, the government should say, ‘No way, this is the last set of expatriates to be here.’ We don’t want a revolution in this country. The way we are going, 50 percent of our young people have no job. Don’t you think this government will fall?
What was or is the role of our Indigenisation Decree in all these?
The Indigenisation Decree of 1973 has to do with indigenisation of ownership of shares. It didn’t have to do with management succession. Management succession is controlled through expatriate quota. And that has been in existence for a very long time. Now, the process by which the expatriate quotas are renewed is a very defective one, otherwise there is no reason why a company should have been in Nigeria for 100 years and cannot produce one Nigerian as a CEO. What has it been doing here for 100 years? There are about 120 universities in this country now. And there are lots and lots of young graduates totally unemployed and not just for a period of three or six months, sometimes for two whole years, sometimes for four years. That is an explosive situation that can eventually lead to revolution if it is not nipped in the bud. So it is not in the interest of people who can train Nigerians to the very top and don’t do so. They can only operate in a peaceful and harmonious country. So, I can’t understand, I really don’t. The excuse is that some Nigerians had gotten to that top and failed. I would be the last person to say every Nigerian who got to the top most position succeeded wonderfully. Some have failed.
Now, one of the reasons we are interested in what we are doing is to find out why they failed. After I would have talked to those who interacted with them when they were working and by talking to the same employers who now feel that they cannot have a Nigerian at the top. What did you find in those people? How can we find the right? if a multinational or a globalised company says, no this is what is wrong we can never get it right we would say leave our country, if any of the multinational companies say this is what is wrong and cannot put it right or they cannot improve or the country cannot improve then you leave the country. If you tell us what was wrong we would tackle it. Some of our people when they get to the top they become very loud, they become very ostentatious, they spend extravagantly.
Auditors are supposed to play important roles in public and private sectors, but why do we still experience fraud?
Well, auditors invariably come from outside the company. But a very good company will also have what we call the Internal Audit Unit. So you have two types of auditors. You have the external auditor who comes from outside and in many cases, statutorily, they are required to certify that the accounts are alright in accordance with the law – that is the Company and Allied Matters Act. Good companies are encouraged to have internal audit of their own. It is not compulsory but many good companies would have internal auditor. The internal auditors, are very good where corporate governance is close to what we call best practices , will report directly to the board so that he is not at the mercy of the CEO of the company. If he is at the mercy of the Managing Director, if he investigated the Managing Director himself and he found some financial malpractices, he might be coerced to suppress it one way or the other. They will find fault with him and sack him.
So it is better for the chief internal auditor to report directly to the board so that the board will get a copy of everything that he reports. That is the only way we can have checks and balances. Some companies do it that way, some don’t. But any company that really wants to get benefit of the good internal audit system must make the internal auditor to report straight to the board , that is to the chairman , but he would still have to report to someone within the company for his ration and his discipline. If he is going to go on tour, somebody must approve that. If he wants to spend money, somebody must approve that. Since the chairman of the board, if he is not the executive, is not there all the time, he will still have to report to the CEO of the company.
Now talking about external auditors, they come by the virtue of the law and they are powerful in the sense that the company cannot remove them without hearing from them, the shareholder. They can only be removed at an annual general meeting and the shareholders must vote on it, but they can resign on their own if they don’t want to do that anymore. Although they are important statutorily, they have limited access to information. I said limited. A company’s operation is over a period of a whole year. The external auditor is not there every day. You cannot ask him to come and audit all that had happened in a whole year over a period of a month. He can only pick documents at random; he cannot go through every single document. He will go through at random and he will then use the specimen of what he had seen to build an opinion.
Sometimes, the opinion may not be entirely right because they didn’t look at every single thing and it is the internal company that gives them all of those documents they ask for. If the company didn’t give them the document they asked for, there is no way they can get it, so there is a limit to what an external auditor can do. And a lot of people don’t appreciate that there is a limit to what the auditors can do. An auditor can’t be everywhere. But sometimes, some of the external auditors are not firm enough. Every external auditor, apart from going through all the accounts and writing a report of all the accounts, should also write what we call a management letter to the board. All the things that are not quite right should be in that letter, and all these should be in their financial report. In most cases, the letters sometimes would get there late. Sometimes, there would be a number of questions, and the management of the company will be expected to react to those questions. But by and large, most external auditors do their best to comply with the provisions of law. There is no account that will be accepted if it is not audited by external auditor who is qualified to do so.
You were involved in running the National Bank. Why did the bank crash?
Well, I was invited by the owners because the bank was having challenges at the time I was invited. The owners then were the government of Western State, (Western Region in those days). The Western Region had asked a consultant to go and look into the operations of the bank, and the consultant came from London, the economic intelligence unit. And they discovered that the bank had been in existence for a long time , it had its own clientele , it also had a niche , and it could be put on really good footing if certain things were done. The board has to be restructured, they should try to increase the capital and then generally manage it better.
So I took that offer as a chairman. They sent down an expatriate as managing director. That was part of the recommendations. The bank had never had an expatriate before. So they had go to the Ministry of Internal Affairs and got the expatriate quota. The expatriate managing director was exceptionally good; he had been in the banking industry for 45 years. When he came, we used his influence to get in touch with some other financial institutions, from Kuwait in particular. The financial institutions in Kuwait in particular were willing to help us. They wanted the federal government to guarantee us. The Federal Government then decided may be they could help. We wrote a memo and the FG looked at it and decided somehow to help the National Bank.
We took the soft loan in 1974, and somehow the new managing director turned National Bank around and it was doing very well. So the government of the West wanted him to do same thing with Wema Bank, and then he retired. Subsequently, the National Bank wanted to help the ACB. They wanted him to do the same thing with WEMA Bank and then he retired. Subsequently, WEMA Bank continued to grow from strength to strength. By the time I became the chairman of Unilever in 1975 I told the government that I had done enough so I left the National Bank.
Why did the bank eventually crash again after the Federal Government assistance?
That was the help the FG gave to all those banks at that time. A bank is a very important institution in any country, and it has to be managed well. If it is managed well it helps the economy considerably, if it is not managed well, it will draw the economy down. In my time, we managed to revive the National Bank and I left it fairly healthy. The bank was owned by the government. In most cases, governments are run by politicians, and sometimes the objective of the politicians may not be exactly the same as what I would call long time interest of the bank and the society. Politicians are not there for long time, they run for election every four years. They have to renew their mandate. And in most cases, they will have to be there four or five years. They tend to have a short time or medium term view of business but a professional manager takes a long strategic view of business. You want to be there in the next 10, 20 or 25 years. This is not something that will make you take reckless decision, because you will be there to see what you have done right or wrong several years later. If it is a short time of five years, you will be there to see what you have done right or wrong several years later. That is the difference between the view of a professional manager and the view of a politician.
