Among international companies operating in Africa, Lonrho has long enjoyed a high profile. Built up by colorful businessman Roland 'Tiny' Rowland, it was an early business supporter of newly-independent African countries and leaders. As Rowland's empire grew, his role became more controversial.
He was ousted from power after the company incurred huge debts, and the company disposed of many of its assets.
Last year the company resolved to re-establish itself in Africa. In October, Geoffrey White was appointed Lonrho's chief executive officer, only months after he joined the company as chief operating officer. White, who has 25 years' experience in senior corporate management roles, is "incredibly enthusiastic" about Africa's future.
He presented Lonrho's story to the U.S. Africa Business Summit in Cape Town on Thursday. Last month he spoke to AllAfrica in Washington, DC. Here are excerpts from that interview:
Many of us who have followed African business for some years thought that Lonrho was part of history, not the present. What happened?
It nearly became history. Lonrho, as you know, started in 1909 as a company, and it became the single biggest employer and the biggest investor in the private sector in Africa. At the end of the 1990s and early 2000s, the conglomerates fell out of power... and what happened was all the mining assets were taken out and spun into Lonmin, which is now up and very successful in its own right. The rest of the assets – the idea was… [that the company] would sell [at] whatever value there was, repay debt that was in the company, and then distribute whatever funds were left back to the shareholders.
In 2003, very fortuitously, there were some far-sighted institutions, some of which were American, that got together and pulled in our current chairman David Lenigas, and said, 'Right, we believe in the Lonrho story, we believe in the brand name, and we actually believe there is a market potential for a pan-African conglomerate.'
It is a good way to invest and put money into the African economy without getting project-specific or indeed country-specific. Because what the Lonrho model enables them to do is invest in Lonrho, and Lonrho operates in 10 different countries, and in what we see as five key strategic industries.
So what are the five areas you are focusing on?
Hotel and tourism; infrastructure, which is ports; we have transport; we have services; and we have IT [information technology] structures.
That is a pretty broad range...
The key that drives them all together is that it actually focuses on the fundamental building blocks of Africa – the businesses that are not going to be cyclical in the short to medium term. They are all going to grow as Africa develops and we are very bullish on the development of Africa.
Where have you made your start?
Our biggest investment to date has been establishing the free port in Luba in Equatorial Guinea. One of the key economic drivers in the whole of Africa is the Gulf of Guinea, which is where the oil and gas industry is based.
There was a requirement, and a long-term project that had not been developed, which was to develop an oil services logistic port in the deep water port of Luba on Bioko Island. Lonhro in 2006 put together a joint venture with the government actually to bring that concept to reality and that has been a huge success story.
It is now up and running, it is the most efficient and one of the largest logistics centers for the oil and gas industry in the Gulf of Guinea. As you are aware, the American economy is looking to source between 15 and 20 percent of all oil and gas reserves out of the Gulf of Guinea by 2012. That creates a huge opportunity. We have blue chip tenants in the port and we service their operations.
What are some of your other projects?
We are also very focused on developing a regional, quality, international-standard airline that actually goes pan-African and takes you from east to west. There is a ludicrous situation just now where… if you want to go from [East to West Africa] you have to go to Europe, transit, and go back again. It just doesn't make any sense.
There's a very defined market, which is what we are addressing, for a regional, pan-African airline. We started the model just over a year ago in Kenya. That's been a very successful, and for a new start-up airline it is cash-positive in its first year. It has been awarded international designation by the Kenyan government, which is a great feather in our cap. It has also become the second largest carrier in Kenya within twelve months. That's hubbed out of Nairobi, that is now opening up flight routes to Uganda and into Sudan. It is also going to start flying to the Congo.
And… we are pleased to announce… that we have come to an agreement with the Angolan government to launch the second hub for Fly540 in Angola.
What does the future look like for Fly540?
We'll be in Kenya, in Nairobi and Luanda and these will all interconnect in due course. We are looking to put an operation into Lubumbashi in the Congo, which will support all of the mining industries which are growing in that part of the Congo currently.
We'll look in due course, when we think the economic situation is right, to put it into Zimbabwe. And we are also hubbing it out of Johannesburg as well in conjunction with our current charter air business out of Johannesburg – Norse Air.
And Norse Air mostly moves goods for companies ...
Norse Air [has] Aleutian 76s, which are the big freight planes, and they, for example, delivered all of the ballot papers to the Congo for the elections. They do a lot of government work for the South African government and military. We have charter capabilities for private jets.
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Your announcement that you are investing in Zimbabwe probably raises some eyebrows. Why Zimbabwe at this particular juncture?
Zimbabwe has got a great recovery opportunity. The infrastructure in Zimbabwe is there; it is solid and it is still in relatively good condition. The workforce was always well-educated and very industrious. We believe strongly that Zimbabwe is a country that has a very positive and strong economic future. And it was the breadbasket of Africa, and we believe that it will become again a very strong economy. Within that context, what we are doing is we're just putting a new investment fund together.
So you are really saying that there are opportunities all over Africa?
I am incredibly enthusiastic about the whole of Africa. I think the economy is coming right, the political situation is coming right. There is now international transparency as to what happens in relation to transactions and how business is done. Africa is the new frontier for really new corporates to move forward and develop their models.
When you meet CEOs from other companies do they look at you quizzically over why you see opportunity in Africa?
Only people who haven't been [to the continent]. People who have been understand Africa and they understand the opportunities. It's the people who have never gotten on a plane, and never gone ... who don't understand the growth opportunities.
