In the new series, Leading Shared Value: Personal Reflections from Global Practitioners, the Shared Value Initiative speaks with global leaders who are driving shared value strategy within their organization. Today we interview Tony O. Elumelu, Chairman, Heirs Holdings. Mr. Elumelu will speak at the Shared Value Leadership Summit: Investing in Prosperity, May 13-14 in New York.
What does the success of shared value look like at Heirs Holdings? Tell us your favorite shared value story or example.
The shared value concept to us at Heirs Holdings is synonymous with Africapitalism, which we practice and strongly advocate. Africapitalism is a call on the private sector to invest in Africa for the long term in key sectors of the economy that have the potential to create financial prosperity as well as social wealth. This is the philosophy under which we operate, and influences both the sectors we focus on, and the investments we make.
In 2011, we invested in agriculture in Benue State [Nigeria], which is considered the food basket of the nation. This is a part of the country that yields a significant amount of Nigeria’s produce, including citrus fruits. Yet, despite the high demand for fruit juice, Benue had never successfully established the capacity to convert the raw produce to a consumer product that had a ready market. In the meantime, Nigeria continued importing tons of fruit juice concentrate to serve the growing middle class population.
We invested in a local juice concentrate plant supplying makers of fruit juice, which is the first of its kind in Nigeria, and this is already having a positive and measurable impact on the community.
We purchase oranges, pineapples and mangoes that previously couldn’t be sold and would be left to rot on the ground—as much as 60% of the production was lost every year. We’re empowering the community, from farmers to the many that are directly and indirectly employed by our activities, and we’ve introduced technology to the country that hitherto never existed—that to us is truly shared value.
Why is shared value one of your priorities as the leader of your company?
Shared value is a priority to me as the Chairman of Heirs Holdings because I believe that economic prosperity and social wealth must go hand in hand for maximum impact. Success cannot be measured purely in economic terms, and our investment activities aren’t strictly driven by profitability—though our ultimate responsibility to our shareholders remains creating economic value for them. We believe that a shared value approach accomplishes this mandate as it sets the stage for continued wealth creation over the long term.
Heirs Holdings is an African proprietary investment company that not only practices Africapitalism, but also commits to active management of our portfolio companies, to ensure the growth and preservation of our investments. This underscores the importance of sustainability, which we believe is paramount for lasting development and growth on the continent.
What are the most innovative opportunities that you see for shared value in your investments?
The shared value concept is easier to implement in companies dealing in consumer goods or operating in socially-oriented sectors, like agriculture. It becomes more difficult to integrate shared value in a resource extraction business or a utility. However, we have done just that through some of our most recent transactions.
One of our most well-known investments is the Transcorp Ughelli power plant, based in the Niger Delta, which will more than double its generating capacity within three to five years. The plant is the largest gas-fired power generating facility in Nigeria, and we have a direct supply of natural gas to power it. This also gives us the unique ability to convert excess natural gas for industrial use—a novelty in a country that has been flaring gas for decades.
Our investment will create unprecedented access to electricity in the community, improve healthcare and education outcomes, and give Nigeria the ability to power industries, which has an uncommon multiplier effect in a fast-developing nation like ours. Furthermore, through the transfer of skills and knowledge, we will educate our own people to deliver for the long term.
What’s the biggest challenge that you’ve faced in adopting shared value in your firm?
I would say the biggest challenge for us has been in inspiring others to adopt shared value as part of their core operations. Heirs Holdings was founded on the principles of shared value; we have this philosophy firmly ingrained in our policies, our strategic objectives and our culture. We remain committed to making sound investments that will have a positive impact on society, in addition to increasing economic prosperity for the company and the individuals who are directly and indirectly affected by our activities.
We are somewhat of an anomaly on a continent where the economic focus for centuries has been on extractive industry and short-term output, with limited value being created locally. But we’re happy to see the trend is changing. We’ve also had some measure of success communicating to the world what we stand for and the impact we wish to have on the continent as a whole. We’ll continue to do more to share this message on a pan-African scale, and inspire more Africapitalists to take action.
What does the future look like for your organization, imagined through a shared value lens?
The future we’ve envisioned has more Africapitalists across the continent, being guided by the philosophy of shared value to derive sustainable development for Africa. Ultimately, we must all recognize that sustainable economic prosperity gets all the stakeholders involved simultaneously.
We aim to replicate a cycle of innovation, productivity and opportunity across key sectors of the economy, to absorb Africans into an efficient workforce and create shared prosperity, economic growth and societal stability.
From the interplay of the private sector providing the innovation, expertise and financing to power and expand industry; the public sector driving policies and creating an enabling environment for the private sector to thrive; and communities committing to entrepreneurship and an optimistic vision of the future, we will be able to attain sustainable economic development for Africa.
Article was first published on Shared Value Initiative