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Nigeria should have adequate standards for manufacturing products — Red Star CEO

By Peter Egwuatu

The Chief Executive Officer, CEO of Red Star Express Plc, Mr. Olusola Obabori, in this interview with Financial Vanguard spoke about how the company surmounted   challenges in the operating environment especially the foreign exchange scarcity and the recession.

Mr. Olusola Obabori, Red Star Express CEO

He also spoke about the company’s plan to raise further capital by way of rights issue, among others. Excerpts:

HOW has Red Star fared in the courier business in the last 25 years of its existence?

It is a journey that has been inventing; the company has travelled around the world. So, 25years in the business tells you a lot of stories; it has been up and down, we talk about survival and how we have been able to succumb to some of those challenges is what we should thank God for.

So in everything we give thank to God who have made everything possible. In our environment,  to do business, it is very tough; a typical average period to do a new business in Nigeria is 5 years, so if you have survived 5 years an above you have a lot of story to tell.

Can you specifically tell us some of the challenges you went through especially for the year 2017?

Over a year, before June 2017, as you know Nigeria went through recession and that was the devastating season for many businesses in Nigeria. As you know many businesses shut down and some businesses that have requirement for dollar to do transaction from one country to another had to pack their bags and leave the country.

Infrastructure for businesses

By the grace of God, we surmounted some of those challenges in order to meet stakeholders’ expectation of higher returns. So that is where we are today. We are bouncing back  to ensure we meet the expectations of our various stakeholders.

Can you tell us specifically some of the government policies you think will move your business going forward?

Government has a great role to play in our environment. Government should provide infrastructure for businesses to run effectively.

If you drive from Lagos to Abuja right now you will get to know how our roads are. And if you are driving up to Kogi State   to connect to Abuja you will know how the state of the roads are.

What is the state of   our airports in Nigeria?  What is the adequacy of the other line of transport that is available to connect us from one point to another? What is the position of power and ownership? Those are the things   we need to know about as all these things affect our business. So, government should focus attentively on the issues of infrastructural development in Nigeria.

When they do that it will drive everybody to put their energy back into work and then we can be able to move the country forward together from the private sector perspective.

What about security issues in the country, does it affect your business?

Safety is another concern that government should provide. Once we have safe environment, investors would want to come into the country to do business.

The security issue affects every business including ours. The government need to improve further in tackling the security challenges. If the people and their goods are not secured, how can they come to us to courier their goods?   Another thing is standard organisation.

The country should have adequate standard for products manufacturing. We observed some time ago when products produced in the country were rejected from entering into some of the European countries; meaning of that is that we have a lot of work to do in terms of ensuring that standard and quality assurance are also encouraged to a large extent as well.

Those are the things that government need to do; they should focus on infrastructure and ensure that policies that will drive trade that will promote bilateral trade or multilateral trade are also supported to large extent especially to take us from the realm of being an oil based economy to a diversified economy.

Those are the important things to worry about right now and of course we can diversify. There is room for tourism; there is room for all kinds of things that are possible in our country.

What is the progress in your quest to diversify your business?

Yes, we are diversifying. We are a company that is looking for some of the opportunities around the world. In the past we use to move telecom mask from one point to another, but that has also disappeared.   For us, we are also looking at the state   of the economy in Nigeria.

We are looking at technology,   we are looking at printing and all that, apart from the fact that we have our main business as courier which has been the main stay of our existence. We are looking around for  more opportunities to tap into. So, we want to ensure that if one line of our business is affected, the other lines will keep the business going.

So that is one of the reasons we are now having group structure. We want to ensure that whatever happen in the economy, we will keep going on as a company. You can see that   some companies many years ago they were very small , but when more opportunities comes, they took advantage and now they are big.

So we are also looking for opportunities. So with technology now coming up and also the internet, they will bring more opportunities for us to connect.

Did you have foreign exchange challenge in your line of business?

Certainly yes. Like I said before  there were many challenges and   forex was one of them.   Remember, if people do not have forex they cannot import and we cannot deliver any goods.

We also buy some equipment to do our business, we could not get the desired forex we need for such transactions. At a time dollar moved up from N200 to over N500, but somehow, we manage to survive and things are a lot better now, dollar is about $370 to a naira.

Right   now we can plan,  there is a lot of facility in the market right now and we are happy that things are looking better.

As a listed company on Nigerian Stock Exchange, NSE , how is your share performing in the stock market?

Absolutely, our stocks are doing very well. Among our peers we are the best performing stock you can talk about. Just check it out; even some of the banks that have bigger revenue and turnover are not performing well like ours.   Our shares are returning much better returns than our peers. We are comfortable with the performance of our shares considering the general downturn in the market. For the last 15-20 years of our business, we have won many awards as an industry leader on the NSE. Our consumers and shareholders   are patronising us due to our cultural values .The investors’ confidence in us is very high. If you are looking for a share to buy, certainly you will consider Red Star.

What should your shareholders expect in terms of dividend in the 2017 financial year?

Our shareholders should expect something higher than we declared in the previous year. A lot more, I mean, as we make more money, as we expand our revenue,   we will reward our shareholders accordingly.

Plan for expansion

We are restructuring to make more profit  and reward our shareholders that have invested their money in the business we are doing. Shareholders are in business of investing their money for a return. We will do our best to reward them accordingly.

Our shares are very liquid, so shareholders that can’t wait to reap from dividend, can equally trade them on the Exchange to get more money through price appreciation.

Do you have any plan to come to the capital market to raise more fund?

We are going to be doing some Rights Issue to raise some money very soon and we will communicate the NSE when the time comes up.   In the notice that would be sent to the Exchange, we will state how much we intend to raise and the period.

Like, I said earlier we plan for expansion, so  part of the money to be raised will go in  there. We need to expand the business  as there are many opportunities right now in our market

We need more money. As you are aware there are many avenues for us to raise money, but be rest assured that we are going to be asking our shareholders for more money. Since, we would need money we will call on our shareholders to give us some, though the money may not be too much. But we have to put some necessary things in place before we call on them.


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