Creating The Future: My Keynote Remarks At The 2021 Institute Of Directors (IOD) Annual Conference

On Tuesday, I had the honour of giving the keynote speech at the 2021 IOD Annual Conference, a flagship event attended by captains of industry and directors of both private and public sector institutions. I found the theme ‘Creating the Future: Deepening Corporate Governance Practice Through Multi-Sectoral and Multi-Generational Collaborations’, quite instructive and spoke extensively on the importance of sound corporate governance, including lessons from my corporate journey. Do read and share your thoughts and perspectives.

Good afternoon distinguished ladies and gentlemen.
Let me commend the IOD President, Chairman of the organising committee and the team for organising this event and for the timeliness of the key theme

We must all begin to think of giving back not necessarily in material form but at least in the form of knowledge and experience. If we have been on the corporate path and made mistakes, it would be bad of us to let those who come after us to make those mistakes.

When I saw that this conference is about our younger ones inculcating this culture and discipline of corporate governance practices, I said I’ll do my best to speak to it.
While reading the theme of the event, I immediately thought of the Tony Elumelu Foundation and over 15,000 young entrepreneurs from 54 African countries that we have empowered with non-refundable seed capital of $5000 each.
Last week Friday, we announced another cohort of 5,000 who will receive $24.75million.
What came to my mind was the strategic importance of engaging our young ones at this stage so that together, we can help them to build institutions that will last and surpass the ones we have built.
When you think of IBM and Apple, you’ll find that while IBM was there before Apple, Apple is much stronger today.
We want to see the businesses of our young ones – those who are here and those who are listening virtually – rise and overtake what we’ve already built.
When we talk of corporate governance, we speak about structures, policies, rules, and regulations that govern best practices. Governance is extremely important when you want to build to last
We have seen how a lack of corporate governance can destroy institutions. Poor monitoring, poor oversight, poor corporate culture, unethical business practices, lack of integrity at leadership level, all contribute to the discussion of companies and even the largest of institutions.
Examples abound all over the world, including our country, of companies and businesses, that have not embraced strong corporate governance and standards.
When you hear that a large company has suddenly failed and is facing crisis, look closer. Most times, it’s corporate governance failure at play.
So, to me, institutions that prioritise governance and the discipline to meticulously and rigorously stay on the path, always stay ahead of the curve and last.
Our own story, as I believe some of you know, started way back 1997 at Standard Trust Bank here in Nigeria.
We acquired a distressed bank, and we outlined the strategy we wanted to take while our board provided guidance and oversight.
Our number one intent at the time was to become financially viable because we were a distressed bank.
Our number two intent was to become one of the top 10 banks in Nigeria, and we fixed timeframes to achieve this.
Our number three intent was to become one of the top 3 banks in Nigeria.
This strategic intent helped to shape our activities and actions and accomplishments. I daresay we were disciplined, and laser focused on these intents and from time to time, we gathered to appraise our journey.
The strategic intent on its own is just mere ideas and dreams but what helped us – I call it the most strategic foundation – was strict adherence to governance even though at the time we were very young, and they were calling us ‘cowboys’ who probably didn’t know what we were doing internally.
But we had seen first-hand what the lack of governance can do to institutions we knew. So, to us, it was important that the basic foundation was strong adherence to governance principles.
And this governance is not rocket science. It’s more about discipline, what you put in place and how you go about it meticulously.
When you are a small institution, there’s a tendency to overlook corporate governance. You’ll just think, “Corporate governance is just for the big corporates and not for us.
When we get there, we will talk about it.” But if you don’t build that discipline from scratch, when you ‘get there’ you won’t have it.
So, it is better as entrepreneurs or as new and upcoming directors, that we get it right from day one.
It’s a journey, you don’t attain perfection on day one.
You’ll make mistakes along the way, realise those mistakes, and keep growing so that when your institutions get bigger, the principles, fundamentals, and philosophy are already ingrained in everything you do.
I recall one of the first ‘tutorials’ I got at board level.

I had attended a board meeting and my chairman then, Chief Ferdinand Alabraba said at the end of the meeting, “Let me advise you but I’ll put it in writing.” He wrote to me about board proceedings, how to sit, where the chairman sits, where the secretary sits, where the MD sits, how to prepare, etc.

I was surprised, I thought it was just to attend the meeting, talk and go. So, the learning started from there.
Thinking about this session made me remember Chief Alabraba and I hope that most of you will remember the leadership of the IOD for creating this platform.
At times, we don’t know how important this is to us but in future we’ll see.
If you look at company valuations, you will sometimes see that two companies have almost the same things but in terms of valuation, one is better because of some of these ingredients that are not immediately apparent.
They make a difference; they are not tangible assets, but they can be more strategic than the tangible ones. Governance is so critical.
Most times, the foundations we build at the early stages of a business determine the trajectory of the business in the long run.

For us then at Standard Trust Bank, it was crucial that we assembled a team of professionals that embodied the vision we had for the bank.

We assembled a team that had a high level of dissatisfaction for the status-quo and who wanted to conquer the world.

We institutionalised an environment with a culture of discipline. Everything that makes an organisation run in an optimum and professional way is all part of corporate governance.

And I dare say that culture, discipline, sacrifice, professionalism, and integrity, are basic tenets of sound corporate governance.

The institutionalisation of culture, work ethic and governance across organisations, lay the foundation for the expansion of a business ultimately.
In 2005, we orchestrated and had the Standard Trust Bank and UBA merger which remains the largest corporate combination in Sub-Saharan Africa’s financial services space.
We were much younger then and we knew were taking on a huge organisation so we reminded ourselves that this journey was so critical that it would further sharpen and improve our governance practices.
And remember what I said before: corporate governance is a journey, so you’ll make mistakes, learn from them, make further determination not to and you keep improving.
Why do I talk about our beginnings? It is because each year, there are thousands of new CEOs and companies that are founded but do not have strong corporate governance because they do not understand the importance of strategic focus and direction, governance, and oversight.
This is why we must engage these young businesses early on the importance of this.
Building to last is a marathon and not a sprint. We need to let them know that they must not cut corners trying to make a profit. In the short-term, it may work but in the long-term its bound to cause monumental problems.
We all share a common aspiration to see Nigeria and Africa develop. We want to create jobs in Nigeria and across Africa.
We want our young ones to not be misled into extremism because what creates extremism is economic hardship, poverty and above all, the fact that they don’t see a silver lining. No one who has economic hope or opportunities would be drawn to do certain things.
So, if we realise that we need strong organisations and disciplined individuals, then it becomes a collective responsibility for us to commit to becoming an Alabraba for others.
We need to let our young ones know that they must not avoid governance.
For us, the philosophy of Africapitalism is about long-term commitment to development. I have seen first-hand how that helps a lot; it has helped me to, at times, just forget the immediate and look beyond.
For our young entrepreneurs and CEOs, some of them founders of their companies, it is important that they set the tone of good governance from the top and from the start of operations.
Corporate governance is not a day’s job, leadership must walk the talk and show that it is important.
If leaders expect others to behave in a certain way but do things differently, it doesn’t work.
One of our businesses is Transcorp Hilton Hotel (the venue of this event) and each time I come here since we took over, I’ve always paid for my people’s accommodation here.
So, when someone says he or she cannot pay, I find it difficult to justify because if I put myself through that, they should too.
It is crucial for the young companies to make objective decisions early on. By virtue of our upbringing in African communities, it’s easy for sentiments to creep into business.
If during recruitment, people go through the same process, and you make a subjective or suboptimal decision so you don’t employ the right person because of family pressure or pressure from friends, you are eating away at fabric of the foundation of your business and with time, others will follow.
It’s not just the big things, the little things matter as well: the culture of excellence and meritocracy are values we should all imbibe, especially as we’re building new organisations.
Decisions such as who sits on the board, the composition and diversity of the board members and their different perspectives are fundamental to the long-term aspirations of these SMEs.
I always advise young entrepreneurs to be very careful about who you bring to your board. At time some people want to have big names on their board, but big names sometimes cause big problems.
You need to ensure that your board selection and composition aligns with your medium to long-term vision.
Forget big names, focus on the quality of decisions, knowledge and expertise of the people who will be on your board. Get the fundamentals right and business will come.
Have the right team, put the right culture in place, let people understand the destination, reward the right people, don’t reward people based on sentiment and make tough decisions when necessary.
In the long run, success will come and when success comes, the humility and the ability to manage success becomes another thing. Some people become successful, and it consumes them because they believe they can walk on water and that is when the problem starts.
We need the next generation of corporates to be strong in the fundamentals of corporate governance.
When an institution is big, corporate governance becomes even more crucial because you suddenly begin to realise that failure can become systemic. The kind of risks you could take when you were growing begin to be managed differently.
In the United States of America, President Biden was going for a minor surgery for about 30 minutes, but he handed over power to his Vice President.
It seems simple but again, it is down to discipline and sound governance.
I want to share my story with you. When I was the CEO of UBA in 2010, the then Central Bank Governor came up with a policy that required any CEO that had spent 10 years in the role to step aside.
The next day, my chairman summoned an emergency board meeting, and their reaction was quite interesting. Everyone was against the policy and argued that the CBN cannot impose a tenure for CEOs.
They wanted to go to court. I was a lone voice at the meeting that day and I said no to our board members.
I said there are five constituencies to look at.
- One of them is the customer; would they stay with the bank when they hear we’re suing the central bank? No.
- Secondly, we have the shareholders; they would likely dump their shares.
- The third constituency is our staff; if they hear we’re in court with the CBN, they would start looking for jobs because they don’t know what would happen.
- The fourth constituency is the regulator (CBN). Imagine the audacity to take your regulator to court. They would show you they’re the CBN and by the time they’re done, you may not even have a bank, not to mention being on a board. The four constituencies I’ve mentioned wouldn’t favour a lawsuit.
- There’s one more constituency: Tony Elumelu. Would he like to continue? Yes, but that makes it four to one, so I appealed to the board to allow me step aside and we proceeded to appoint a new CEO within 24 hours. That’s corporate governance in practice.
Governance is not one person’s responsibility and most times, the biggest test of governance is when it affects you. The ability to step back, look at things holistically and subordinate self in the decision you make can be a game changer.
I thank God and our board that we made the decision for me to leave at the time because I would still be in that world. However, the world I live in now is more fun and active.
Because of that, we started Heirs Holdings and the Tony Elumelu Foundation.
Heirs Holdings is a family-owned business that has interests in several sectors of the Nigerian and African economy, from financial services, energy, real estate, technology, hospitality to healthcare.
With a group as diverse as Heirs Holdings, we interact with different regulators as well as play in some of the most regulated countries in the world.
UBA is the only African bank that is a deposit-taking bank in the United States of America and it is not easy to operate in that regulatory environment but we’re able to because we started gradually long ago.
The journey to building a business to last on sound governance principles and practices is critical for sustained growth. To be continuously successful, is to be driven by core values, sound culture and practices, and corporate governance.
In 2012, following the CBN’s policy that banks should divest their investments that were not core to banking, that was another test of our commitment to governance and professionalism.
We transferred existing shares from UBA to become shareholders of those companies formerly owned by the bank.
So UBA Registrars became Africa Prudential, UBA Investment Bank became United Capital.
We did this again because of our commitment to corporate governance and the need to make sure the businesses are run properly, and that people are not short-changed.
When you do things like this, they have telling implications in so many ways, especially among the staff within the business.
My message to our upcoming business leaders and even those who are already there, is that we need to realise that to be continuously successful is to be driven by core values, sound culture and practices, and sound, corporate governance.
Corporate governance is all-encompassing in scope and in the drivers.
It requires looking at the organisation from a 360-degree perspective: from the implementation of robust policies and procedures to hiring the right people with the relevant skills and competencies objectively, to implementing the right systems, doing things in a structured and predictable manner, and keeping records.
Corporate governance has come a long way, thanks to efforts of industry regulators and bodies like the IOD for always pushing for higher standards.
But how do we imbibe the culture in our younger ones? We’ve made mistakes so we must strive, so they don’t repeat the ones we have made. Let it be that we have suffered for them so let them share from our stories.
My suggestion to the IOD is that from time to time during your programmes, webinars and sessions, to invite a few people like we have done today to share their failures and what they could have done better. It would help those coming after us.
At the Tony Elumelu Foundation, part of the business training our entrepreneurs receive is on the importance of governance systems to the sustainable growth of their enterprises.
We believe that it’s not just about giving $5,000; what’s more important is preparing and capacitating you to manage that $5,000 when you get it.
I believe there is a lack of understanding of what governance is and it is seen to be reserved for the public listed companies and large conglomerates, but we hope that is not the case.
Continuous engagement and socialisation at forums such as this will help to inculcate the right spirit in these our young businesses as they attempt to scale.

We need our own Steve Jobs, we need our own Apple, the first company to cost one trillion dollars in market capitalisation.

We need our own Microsoft. We need to start building institutions to last. We need to build institutions that will not start with Tony and die with Tony.

We need to have our own JP Morgan. To me, that should be our aspiration and the solution to that aspiration coming through is sound corporate governance.

Let me conclude here and thank the IOD for organising this event and recognising the need to engage the younger generation of business leaders on this most fundamental issue

Thank you.

Tony O. Elumelu, CON
Chairman,

Heirs Holdings Limited
United Bank for Africa (UBA)

&
Founder, Tony Elumelu Foundation

Thanks for your feedback!

Creating The Future: My Keynote Remarks At The 2021 Institute Of Directors (IOD) Annual Conference

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