Wale Tinubu: I think that the risks that truly affect investments are not in Nigeria. I think what you have in Nigeria are challenges in terms of building a business, but the ultimate aim in business is to make a good return, and Nigeria offers much better return than most economies do.
There may be challenges in you having to build a bit of your infrastructure, challenges in getting your licensing, soft challenges in terms of getting the business started, but once you are up and running, you are a success.
If you look at it from a point of view of large corporates, let's take the telecoms industry, for example, where we had in 2002 a very transparent GSM licensing process: Four licenses were issued; two local companies got licenses. MTN came in, and we became the largest market for MTN eventually, but they had to contend with many things.
BBC: The issue of infrastructure is a major one for the country because in capital expenditure an investor can’t just build their company, they have to build roads, and provide their own electricity and water, is this not a put-off for an investor looking to make quick returns? Stagnate
Wale Tinubu: It may be a put off when you write a business plan. But what you always find is that the size of your markets is much larger than you envisaged it to be. There's never been one company I've spoken to who's made an investment here who says we don't have to increase capacity. At the end of the day the question regarding poor infrastructure is not a stagnant. In Nigeria, as you would bear witness, everyday there's improvement in infrastructure. The state governments are building quite a number of roads, some states are building large scale railways, mono rails, housing infrastructure, the power privatisation just occurred. I mean where in the world do you see a country that decides enough is enough? We are selling all the distribution assets and the deal was done: 11 distribution companies were sold for the whole country and these are all in the hands of the private sector.
BBC: You are one of the largest indigenous players in the oil and gas space, what do you think the future of oil is in Nigeria?
Wale Tinubu: Oil will always maintain a good measure of stability. First and foremost for the currency, we are an importing nation as we build our infrastructure and start to manufacture, we are heavily reliant on imports. The oil sector helps us. We have a tremendous amount of reserves, which will help us drive the industrialisation of the country. For example, the gas reserves in the country; we only require 10% of those reserves. But imagine the amount of cheap gas supply this country will have once the infrastructure is done.
So we are heavily involved in building out that infrastructure. What this infrastructure requires is pipelines. The Majors have always invested in export-orientated projects. The national oil company planned to build the whole of the internal infrastructure, but there's always a question regarding what do we invest in? Oil assets? Oil distribution assets? Schools and hospitals? So, you require the private sector to partner.
BBC: Corruption is a pervasive problem in Nigeria, and it's in the oil and gas space where it seems to rear its ugly head. Recently there were reports about how the national oil company "lost" $20 billion in sales and royalties. How bad is the problem, and what has been done to solve this issue of corruption?
Wale Tinubu: It's not fundamentally a corrupt environment for operating. Yes, people will take advantage when there's the opportunity, but with increased transparency it's very hard to take advantage of a system to extract economic rent where you shouldn't be. The issue to do with the national oil company is I don't believe $20billion is lost. I think the issue really is there hasn't been enough transparency in their financials for the whole world to realise what is going on. But unfortunately the company has been forced to act as a corporation that provides subsides to the general population. And in the process of doing that you can't really account for what you are spending, because the cost of those subsidies aren't just the immediate cost. It basically means lack of capital to invest in future infrastructure, it means deterioration of assets, and in the end you are faced with a massive financial shortfall which makes it very hard to simply do a snapshot test and say X amount is missing. So, if the corporation has been made to subsidise kerosene imports for years for example, made to subsidise petroleum imports before the petroleum regulation authority began officially doing anything, it's a bit of a challenge. So it's not a simple situation like saying $20billion is missing when there are shortfalls, and I think if enough time is spent providing the audits and also exposing the audits; if we all know what the cost of subsidies are it's easier for us to tackle them as opposed to packing all subsidies in one place and saying that the place is not profitable.
, Wale Tinubu, speaks to CNBC Africa on foreign inclusive growth and job creation in Nigeria
CNBC: Africa's growth trajectory is expected to remain at 5% in the year 2014 with West Africa representing the continent's largest business opportunity. Now, tomorrow WEF Abuja kicks off in Nigeria with regional and global leaders discussing innovative restructural reforms and investments that can sustain the continent's growth. We got the thoughts of Wale Tinubu, CEO Oando PLC, on Nigeria's first hosting of the World Economic Forum.
Wale Tinubu: Well, it’s certainly an exciting time for the country. It is a great time for the WEF to be here, and we are looking forward to receiving all the guests and commencing a very, very interesting three days.
CNBC: Well, your relationship with the World Economic Forum goes back a long way and in 2008 you joined the Partnership Against Corruption Initiative (PACI), and this is very close to Oando’s heart. Can you tell us a little more about that initiative, and how you are tackling it in Nigeria.
Wale Tinubu: I think it’s an interesting initiative in which businesses look towards being able to operate in a corrupt free environment, and I think one of the key things that we’ve pushed right from Davos is an increase in transparency. For example, we do much better as economies where there is transparency in the grant of awards, the grant of business opportunities. For example, we saw in Nigeria where we had a transparent bidding process for the GSM licenses, and we have ended up with 120 million lines and over $35 billion of capital invested in our sector. So, it is something which we look forward to, and which we drive, and I think the rest of the colleagues in the forum.