By Yange Ikyaa
On the eighth day of May this year, I read a Facebook post published under the above headline. Again, few days later on May 11, another post emerged and was captioned “Still on the beer matter.” In both posts, which were written by one Mr. Andrew Agbese and posted on his verified Facebook page, the author expressed his avowed disapproval of what he called “the move by the Benue State government to run a brewery.”
His aversion for the plan, he said, “stemmed from his conclusion that government hardly runs such enterprises successfully.” To him, the decision of the Benue State government, through the Managing Director of the Benue Investment and Property Company (BIPC), Dr. Raymond Asemakaha, to build an N800-million brewery in Makurdi to produce beer, packaged water, and bread is only but an investment error and a failed venture from day one.
However, based on available statistics, which are actually very public and easy to access, Agbese is wrong to think that a business will most likely fail simply because it is state-owned. In fact, for two straight years, the most profitable company in the world has been a government-owned company, known as the Saudi Aramco.
This oil and gas giant, which is owned by the government of Saudi Arabia, in March this year, announced a profit of $121 billion for the 2023 business year, topping every other company in the world. And for the year 2022, the profit was even higher, as Aramco reported a record $161 billion or £134 billion in profit, the largest annual profit ever recorded by an oil and gas company.
Another example is that of Ethiopian Airlines, which is also government-owned, but is the largest airline in the whole of Africa. Yet, it is not just Africa’s largest but also the most profitable airline, earning more than all its rivals on the continent combined. Between 2021 and 2022, the company posted a whopping net profit of $937 million.
Therefore, it is logical to conclude here that companies don’t just fail because they are owned by government. It is also not true that companies must succeed simply because they are privately-held. Even in Benue State, there are examples of private companies that were known to have great potential but eventually failed. A prominent example is that of the defunct Yuteco Foods, also a private beverage-producing company, which was located somewhere in Gboko but unfortunately folded up in just a few years after it commenced production.
This means that good management by serious-minded and perfectly qualified people is the reason why a company will succeed, be it private or public. And for the Benue State government, taking time to understudy the various business models, or processes and procedures that are leveraged by the aforementioned highflying state-owned companies in Saudi Arabia and Ethiopia may help them to also succeed with their newly-proposed beverage production venture and possibly post higher profits than their privately-held competitors in the market.
Against this backdrop, to me, what Agbese wrote and posted is wrong, especially when directed at a government that is headed by serious minded people, who may be experienced and well informed about public governance and are also ready to do the right investments based on local comparative advantages that are available to them. In addition, Agbese may either have been very ignorant or may have chosen to be very economical with the truth concerning the possibility or reality of government success in business.
Let it therefore be known to Agbese that even right here in Nigeria, government is still doing business and doing it well. It only depends on the model of business and how effective it has been known to be, and also getting the right people with the right competences to do the job.
For instance, there are various models of public-private-partnership, including many forms of joint venture (JV) arrangements. And what most people fail to know in Nigeria is that the oil money that all states of the federation wait to collect from the federal government and spend every month comes from the various JVs between Nigeria and international oil companies, or IOCs. This is certainly a way of government investment, though in partnership with the private sector.
This also means that if appropriate business models are adopted, it is possible that all vices, including those that hamper smooth business growth, such as nepotism, could be managed and contained by any serious government with serious, competent and sincere people at the helm of affairs in any nation.
Therefore, government can actually do business and also hugely succeed in business. It only depends on the person or people in charge of that government, as well as the model of business and modus operandi. That is why the Alia-led Benue State government, without borrowing or touching federal allocation for about a year, can find enough money to pay and not owe salaries and arrears of salaries, while at the same time continue to pay monthly pensions and pension arrears to retirees. It can also build roads, renovate Benue State University Teaching Hospital, Remodel the Benue Links Park in Makurdi, acquire a permanent motor park for Benue Links in Abuja instead of the one rented for decades, begin construction of overhead bridges or flyovers in some towns in the state, renovate the Benue State Secretariat and also fix street lights, among many other projects.
All these can be done only when a government has the capacity for good management of people, resources and assets. It is therefore totally wrong for Agbese, or any other person for that matter, to harbor the misplaced assumption that if some past governors in Benue State purposely chose to fail, then another governor who wants to succeed in all areas for the benefit of the masses should shy away from building business assets just for the fear of other people’s failure in the past. To me, Agbese’s advice will certainly pass for the worst business advice of the century.
Instead, it would rather be more instructive for the present forward-looking government in Benue State, which believes in ownership and good management of business assets, to copy the best examples from other states or nations, such as the case of Aramco in Saudi Arabia or Ethiopian Airlines in Ethiopia and replicate same in the state.
Again, while Agbese described BIPC’s reason for the establishment of another brewery in Benue State “as strictly based on the need to harness the huge market potential that exists in the state and to trap the over N850 million that is lost to other companies that sell the same range of products in the state,” he further stated that “despite the huge market potential alluded to by the BIPC MD, Benue Breweries Limited, the producer of More Larger Beer, had to close shop until it was acquired by another firm.”
On this first ever brewery in Benue State, which was later sold, the current owner seemingly acquired it just to wait a little and then cannibalize it, tearing it down and moving machine parts to its other breweries elsewhere in the country. The purpose was probably to kill competition from any rival brewery in any nearby state in order to retain monopoly and claim all the profits. And this meant that the dismantled brewery took with it many jobs and big business opportunities away from the state.
But this was also purely a case of governance failure on the side of those then in power. They chose, either due to their own wisdom, or lack of it, to negotiate badly on the ownership transfer of the company by not putting enough caveats to compel the new ownership to run the factory in the best or even better interest of the state or risk losing it back to the Benue State government.
Why I don’t have all the details regarding how this particular transaction was negotiated, what I definitely have no doubts about is the fact that the way this beer factory was significantly dismembered and shipped down to the eastern part of Nigeria suggests that the Benue State government did not negotiate well or involve enough experts, such as transaction advisers, to lead the process and get the very best terms during the ownership transfer process.
However, the wrong decisions of past governors or governments should not solely form the basis for anyone to discredit meaningful investment attempts by the current government in Benue. If a new governor or a new government chooses to do better in asset and business management, this cannot be regarded as a wrong thing. Also, condemning them in blanket terms may not be right, especially without knowing the model of business they are going to adopt or how successful such a model may have proven to be elsewhere in the world.
And even if Agbese thinks that the two examples of government success in business that were earlier given about Ethiopia and Saudi Arabia are from other countries, where he probably believes that people are born with more than one head, there is still a local example here in the country to follow regarding government success in business. In this case, Agbese must be reminded about the success of the various JVs between IOCs and the Federal Government of Nigeria. This is also part of government business.
It is therefore too preemptive to completely carpet the Benue State government’s investment position, which is here under review, without having the full details of what business model it may have on the drawing board.
