Olusola Lawson is the Investment Director for West Africa at the African Infrastructure Investment Managers (AIIM), a member of the Old Mutual Alternative Investments (OMAI), the most experienced infrastructure equity investment manager in Africa with over 17 years track record and US$1.9 billion in asset under management across the power, telecommunications and transport sectors on the continents and operations in East, West and South Africa. Lawson, who holds a B.Sc degree in Economics from University College, London, and has played a key role in originating investments in West Africa. He led AIIM funds’ investment into IHS Towers and Nigeria’s Azura-Edo IPP, as well as playing a key role in the investment into Cenpower Generation Company in Ghana. He was at the 6th Powering Africa Nigeria Summit, held at Transcorp Hilton Hotel, Abuja, where he speaks on Africa’s power investment and infrastructure. Excerpts:
What do you think are Nigeria’s current power infrastructural requirements and what do you think are the ways the projected 17,000 megawatt demand can be achieved?
In terms of what the requirements are, let me put it this way, an average Nigerian consumes three per cent of what an average South African consumes and Nigeria is about the same size of South Africa in terms of potentials. South Africa has 60 million people and Nigeria has 180 million people. South Africa has about 40,000 mws, Nigeria has 6,000 mws, that shows you that with the potentials we have, if we are able to generate 20,000 mws on grid, I believe we will meet the projected demand. 20,000 mws will be sufficient for Nigeria’s industrial and commercial and residential use.
What are the challenges you’ve faced in executing infrastructural development in Africa? Like funding, private partnership involvement.
Let’s start with the basic, in every economy, the biggest funder is the government, it is the government that build most of the roads, airports and provide basic services among others. We are private sector investors’ managers, and interestingly, in our 17 years of operation, we have successfully managed about $2 billion worth of investment. We are probably the longest running private investment managers on the continent. Over 17 years, we have been involved in so many deals, with so many lessons learnt, one of which is that in the project you deliver, there is need to consider the value for money, there is no point building expensive roads without bringing income, it can’t work, though it can look good on papers, but you need to deliver service and value for money.
Secondly, the services you deliver need to have right impact on the community and should be people-oriented, once you have those two elements, for private investors to invest, you need to have a stable legal, regulatory and sustainability plan. As an investor, I will not want the next government to come and cancel a project I have invested in, so you need to have a stable legal, regulatory framework, you need to have a macro-economic environment that attracts good returns on investment, because it is difficult to have good value for your investment in a fluctuating economy and the projects need to be economically attractive for investors like us, and to put our investors’ money to work, you need to target very attractive return, and another one is that the project needs to be economically assertive for investors like us.
So, for us to involve in any deal and put out investors’ money to work, you need to guarantee us good returns, these are some of the pointers that have been our projection in the last 20 years of infrastructural investments.
Do you partner with governments in soliciting for financial assistance or financial institutions in securing loan facilities for your projects?
Let me tell you the way we work in Nigeria, because we are actually a South African company. The first project we did in Nigeria was with the Lekki Concession Company (LCC), in Lagos. We are actually the largest shareholder in the project, and we partnered with local-private sector and the Lagos State government in helping to implement the project from conception to execution. Since then, we have invested in private companies like HIS Towers, we manage most of the major telecommunications towers in Nigeria, and that is largely a private sector deal. The other one is the Azura Power, we have 450 megawatt on grid power plant and we also partner with the Edo State government to be able to deliver outstanding projects.
What has been the Nigerian government collaboration, does the government partner with you, do you advise government on investment-related issues and when you give advise, do they implement them?
As I said earlier that we have been on ground for a long time, and we have executed many projects, also, many governments have come and gone. LCC was a ground-breaking achievement in our history. We received support from the Lagos State government, we also have Federal Government assistance, and we ensure that our projects worth investing in it, and in Azura Project, Edo State government was involved and generally, the framework for PPP in Nigeria has been wonderful, a PPP unit was established in Lagos State. We have bodies of specialists, who are experts in various fields to pursue these deals and as well as liaising with relevant government authorities.
What are the Nigeria’s renewable energy potentials and the key areas of interest for your organisation?
There are many areas of interest for our organisation. For example, sun does not shine in some parts of the country, in terms of radiation and sunshine, we have big potentials. With solar, we have an estimate of like 40 kilowatt. There is a big potential and how do we utilise that clearly? There are two ways, one is big project that will go with on-grid, but when you have a constraint, in terms of this project, the constraint is that if the sun doesn’t shine for 24 hours, if it does for about 12 hours, that means you can only generate power for 12 hours. That means that the power for that particular plant is going to be fluctuating. We have too much of that power on-grid, in fact we have more than 20 per cent of renewable power on the grid and it is likely, so you cannot have so many big solar power being generated from the grid. The other solution for solar is to have the renewable power to have home solar system where people can charge mobile phones, power lighting bulbs, television, and radio, among others. This solar system can help business thrive and the advantage with that kind of system is to integrate them with batteries and just like inverter systems that people use at homes, we don’t have grid power and you can use your inverter batteries. That on a much bigger scale is another big potential for solar power.
What are some of the projects that you have executed successfully in Nigeria?
The LCC that we invested in 2008, it was a successful project, the IHS Towers in 2012, we are still in it, Azura Power project is another one in 2012 and we are still in the deal. And we are looking at other transactions as well that we will announce soon.
How do you sustain those projects?
The most important thing that we do is to have management team that is capable of administering our plans, there is no substitute to having best people who have sound experience in managing companies, one of the biggest things we have done is to find a reliable team of experts that manage our affairs and investors’ money and this has been of a great help to our company. We are committed to develop Africa’s infrastructural projects.