This Day (Lagos)

Nigeria: Hinks - Travel Warnings Don't Deter Me From Visiting Nigeria

interview

Paul Hinks is the chairman of the Board of Directors of Corporate Council on Africa (CCA) - an organisation at the forefront of strengthening and facilitating the commercial relationship between the United States and the African continent. In this interview with Nduka Nwosu, Tokunbo Adedoja and Sunday Aghaeze, Hinks speaks on the activities of CCA in Africa, the Nigerian business climate, his views on the numerous travel warnings issued by US on Nigeria, the activities of his company, Symbion Power LCC, in the Nigerian power sector, and how Nigerian companies operating in the power sector could access the $1.5 billion Exim Bank guarantee

Could you tell us about the organisation you chair and its activities?

Since its inception, the Corporate Council on Africa, which is primarily an American not-for-profit organisation that represents the interests of its members and generally the United States private sector is the largest organisation of its kind in the United States that promotes trade and investment and partnership with Africa. At the moment, we have maybe, about a hundred and fifty members. It fluctuated during the year but we expect the membership to rise even more this year. The members, you can find on our website. Since 1992, the members had been, almost entirely, American companies. One or two companies from Africa joined because they have affilliate offices in America. For example the South African Airways, the United Bank of Africa, has a New York office and they joined because of that. But there had been no promotion of getting African members and the board has generally consisted of American companies or these affiliates of African companies who have their affilliates in America. So, two weeks ago, we approved in our board meeting that from January 7, 2013, that we will change our by-laws and we would have 25 per cent of the board, which is approximately 30 people, come from African companies and we are opening up the membership to actively encourage members from Africa. So, we are hoping that companies across the continent, I am giving you this information first in Nigeria, woud join CCA in the hope that it would further encourage American companies to partner with them and do more business in Africa. Also, of course, there are some African companies that have invested in America and what they do is they us AGOA, for example. They manufacture products in Africa and they sell them to America. We are hoping that instead of just relying on the networking that takes places in our big conferences, by having African members on an equal status with American companies, that partnership would become stronger, there would be a much deeper link between the US and Africa. And then, in our next nomination for board members, African companies who joined would nominate leaders from those companies to be on the board of CCA. What that would do is that it would encourage greater collaboration and friendship between people from the continent of Africa, that are living in Africa and not living in America. We are really excited about it, that this huge change is going to bring about massive results.

What do people stand to gain from all these?

What people stand to gain is about everything. Business is about knowing each other; it's about partnership. By having the African companies as members, its means that we can associate, we can match-make, we can introduce a guy who owns a manufacturing facility in Nigeria, he wants to sell his goods to the United States, we can introduce him to other members who may want to buy his goods. By board members coming from Africa who will represent the interest of Africa, because they are not just coming from one country, they will be coming from across countries on the continent, by having those people there, this will better educate the existing members of CCA, new American members of CCA, who want to do business in Africa and through the organisation, they will match-make, they will meet each other. We believe that it is going to be added value because you will see American investment coming in and having partnership with African companies. In order to do business effectively in Africa, you really have to have an African partner or a local partner. It is about education, teaching US companies on how to operate in Africa is what we are trying to improve.

Was your decision to give Africa slots on the board of the CCA a result of a request from African companies or just a decision by the CCA?

It was a decision made by the leadership of CCA which is myself, Steve Hayes, Ambassador Robert Perry. It was a decision we sat around, we the members, the existing members of CCA and we went through a long process. A process from March 2012 to January 2013 where we had to get the agreement of the whole board that we should change the by-laws of the organisation. We are not allowing the European members, or the Asian members, we are only allowing the African companies and Africans to join the board of the CCA because CCA is a US organistion promoting trade and investment with Africa. So, there are many European firms that would want to be members, there are many firms in India that would want to be members. It is a partnership between the United States and Africa. You know it is a fact of life that America has not been so active in Africa for decades. We all know that Africa in the last two decades has been so attracted to Asia, China, India. Now we see the BRICS countries coming into Africa and America is behind. But I can tell you America is waking up right now.

How much of Nigerian manufactured products find their way into the American market?

That I do not have the answer to that, but I can tell you that a lot of companies in Africa use AGOA in order to export their products to the United States. The problem we will have with that is that AGOA has mostly southern Africa as the beneficiary. South Africa has benefitted tremendously from AGOA. They have taken advantage of AGOA. There are other parts of the continent where they could also take advantage of AGOA and they haven't done so to the same level as places like South Africa, Lesotho, etc. But there are people using AGOA but it could be used much more than it is being used today.

Since inception, what would you say, in specific terms, is the greatest achievement of the organisation in doing business with Africa?

The greatest achievement of CCA is that the member companies of CCA, we did the study, the member companies of CCA represent 85 per cent of all US investments in Africa. So, I think the greatest achievement is that the members have actually done things on the continent and we get new members everyday who are interested in doing things on the continent.

A country like China is making inroads into the Nigerian market and it is everywhere on the African continent. Except maybe in the oil sector and lately, in the power sector, the US is not making similar inroads. Looking at the focus of your organisation, what is CCA doing to ensure that US does not lose out in Nigeria?

You have to understand, and I want to be clear about this, there is no competition between the United States and China as to who is doing the most in Africa. It is not a competition. My personal opinion is that China has done a lot of very good things in Africa. It has built fantastic roads across the continent, there are many good things that have come out of China to Africa. And the cost from China is often competitive, very economic compared to cost in the west. There are certain things which I believe the US offers better value. I think that we are very much about working with local people, while Chinese contracts involve importation of large expatriates. In our case, American companies, we are about training local people. So, if you look at what Boeing does today, for example, you will see that they all have training programmes, they are all investing in local people. So, I think we stand out when it comes to those other things. But it isn't a competition. The other thing I can tell you is that we may not reach quickly the level of penetration of Africa that China has achieved in the last two decades, but it will improve dramatically this decade. There is a huge interest in Africa in the United States today. The problem is, the American companies that are reading about Africa, hearing about Africa, don't themselves understand Africa. Not all of them. So, they come to CCA and they ask, or they join CCA and they want to gain access to African markets or they want to meet African leaders and they want to meet African private sector leaders, but the thing is that this exercise of bringing in the African membership and African board members is a response to that. We want to help with the education of the American private sector so that they can matchmaker and work with good African partners.

The objective of your organisation is to promote trade and investment between US and Africa. Take Nigeria, for example, how would you reconcile this with the frequent travel warnings issued by the US government and how much impact does it have on your objectives?

This has been something that affects not just Nigeria. It has affected many places over the years - the issue of terror alerts. But I am here today and I have been to Nigeria many times in the last two years, it hasn't deterred me. It hasn't deterred the many people that I have had to travel in their company. There is a high-level delegation today in Nigeria from USA. It hasn't deterred them from coming to Nigeria. These are, I believe, travel warnings and the US government is responsible in that they would tell somebody that there is possible terrorism in the country. There is possible terrorism in many countries today. So, those warnings are there. So, Nigeria shouldn't think that the US is singling them out, not at all. The company that I run, Symbion Power, we've worked in Iraq and Afghanistan. If you look in Iraq and Afghanistan, (you will see) the amount of Americans who are in those countries. Of course there are terror warnings about Iraq and Afghanistan because there, there is really terrorism. Here, the situation is not so bad in my personal opinion otherwise we will not have people living in Abuja, we will not have people living in Lagos. So, it is relative. The fact is that there are some terrorist activities from Boko Haram but if you look across the whole continent today, you can find other places with similar situations.

Including America, though it is outside the continent?

Terrorism has happened in US too. It is up to each country to inform its citizens of what is going on in the country they might visit. I think that if African countries want to tell their people that they should be careful in a situation, they will do that. But I think that it is because some people in America may come and may not understand that there are certain risks in some places and may be they might do something foolish. It's a standard thing.

Can you give us some information on Symbion Power and what it is doing here?

Symbion Power is here because of the severe shortage of electricity. There is a big privatisation programme and this is what we are doing. We build electrical infrastructure, we build power plants, we build transmission lines and we build distribution systems. We also own power plants and we generate electricity. In Tanzania, for example, we have three power plants. So Nigeria is a huge market. We did some analyses and my view is that Nigeria was the biggest market for power in our sector in Africa, for sure. May be one of the biggest in the world at the moment. So I thought it was a great target market. I came here, I read the alerts, I checked for myself, I didn't see a problem and I think the issues we just talked about are minor, they are not serious, and it is a place where we can do good business. And to be honest, I travel all over Africa constantly and in the entire continent today, the biggest excitement I get is about Nigeria and to be honest, it is also a place I much enjoy coming to these days. It's fabulous.

What has Symbion Power been able to package for itself in the power sector here?

First of all, the word Symbion came from the word symbiotic. Symbiotic means inter-relationships. That is the business model of Symbion. That means we don't go about, we don't think we can teach people how to do everything. We partner with different people. So, here, our major project that we partnered on was with Transcorp, the owner of this hotel. Transcorp Energy, which is a division of Transcorp today and Symbion and several other partners joined together to form a consortium to bid for the Ughelli Power Plant in Delta State. So we bid for that. We won and as the selected - preferred bidder they call it - bidder for Ughelli, I am here today because we are in negotiation with our partners, with BPE to discuss the details of the agreement that we have to sign to take over that power plant in June this year. We are also following some other smaller, emergency power plants and we are looking at them at the moment.

How soon do you think you would be able to translate your plans into action to the extent that power supply would be a 24-hour affair in your area of operation?

The plan at the moment is that the power plant would be given to us in June. We are hoping that the BPE or the government would accelerate that handover so we could get it earlier. That is the discussion which is taking place at the moment. But I will say that from June, we will be ready and very rapidly, we will bring add more capacity in terms of electricity output. I will say in the first two years, we are expecting to bring the existing power plant's output from 300 to 600MW and that will make significant difference for that area.

What is your perception of the Nigerian business environment?

I am very happy with it. It has its own challenges but it is nothing like people say it is. You talk about Nigeria and you get confused looks. But I tell everybody, you don't make comments about Nigeria when you don't know Nigeria. I have been coming to Nigeria now for two years, often I have been doing business with Nigerian companies, I have Nigerian partners, and I think they are fantastic. I do business with Transcorp anywhere in Africa, not just in Nigeria. It's a fantastic company that has fantastic leadership, by name of Tony Elumelu. He is an international, world-class businessman and we feel totally comfortable. Again, it is a symbiotic relationship. Symbion is not the leader. Symbion is the second or the third in this group. We are one of the technical partners. We haven't been greedy. We did not come in and expect to take everything. We are taking a small piece of the cake. My attitude is that it is better to have a piece of cake than no cake.

In the area of small and medium businesses, CCA seems to be keen as well. What have you been able to achieve in that area in Nigeria?

Nigeria is CCA's most significant international partner. The events that we run for Nigeria in Washington are always the largest. We get fantastic support from Ambassador Adefuye in the Nigerian Embassy in Washington. There is a very close collaboration and we see a very positive action from the government. We hosted the President in New York, we have hosted the Vice President. From the government side, it is a fantastic partner. When we have events, we get a lot of Nigerian businessmen come over and they are great to deal with. People are so impressed these days. The fallacy that Nigeria is just a corrupt, terrible place is changing. There is still a long way to go, but it is changing very positively.

Apart from Symbion, which other organisations from your end are here right now?

I know that there is investment coming in from AGCO, they are building factory here. There is Proctor and Gamble, there is Chevron, there is Exxon. These are major companies. There is also much greater engagement by US government agencies in Nigeria than I think you have ever seen before. Today as we speak, the leadership of USAID is in Abuja as we sit here. And that is sending a very strong signal that the US administration considers Nigeria as an exceedingly important partner in Africa.

President Obama was sworn in on Monday. What is the significance of his re-election for Africa?

I can't speak for the White House. I am from the private sector.

Yes, you are going to speak as a businessman engaged in Africa. I know there were a lot of things that he did in his first term, for example, I know of the Nigeria, US Bi-national Commission. So what does his second term portend for Africa?

It is my personal opinion. I am optimistic that you will see a much more increased focus on Africa in the second term administration than in the first administration. There were many things done in Africa. USAID has always done good things in Africa. What I am hearing is that there are new initiatives some of which CCA are involved in. There is the Doing Business in Africa initiative developed by the Commerce Department, which was announced recently in South Africa. I think you will see much greater activity because of that initiative. USAID has a new initiative called the Private Capital Group for Africa. On that initiative they have the Partners' Forum, which has industry leaders. So with those new initiatives and I think a desire on the part of the administration to support Africa as much as it can, I think you will see a very different situation as we go into this year.

There are some initiatives of the administration like the Exim Bank guarantee of $1.5 billion, I think for the power sector of Nigeria. But some Nigerian companies are complaining that they don't really have access to these funds. What is responsible for this?

I don't think that is correct. Is that different from the way Arik (Airline) applied for the Exim Bank loan? I don't think that there is any difference from how Arik applied for the Exim Bank loan for its fleet.

Yes, we know of Arik, but I am not aware of the companies in the power sector that has benefited from this facility...

(Cuts in) I think you will see a very different approach from US Exim Bank, USTDA, Department of Commerce, USAID and OPIC. There is going to be a much more attention on Nigeria. They are very interested in what is going on in Nigeria. It is up to those power companies who want to buy goods and service from the United States to go and find those goods. For example, they want to buy a generator, a gas turbine from GE, then US Exim Bank will support those companies. It's there to support American products. And this is where the US has an edge over China. People still want to buy American hi-tech products because they trust them. I think we are ahead of China on that.

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