Building sustainable institutions

It was one of those rare gratifying mornings in Lagos, Nigeria on Thursday June 11, 2015 as I sat in the hall at the Eko Hotels Convention Centre observing celebrations of Custodian and Allied Insurance Plc’s twentieth anniversary. Genuine Nigerian stories of venturing with purpose, integrity and strategy are not abundant and those who have done so successfully are fewer still, so I have watched Custodian and Allied with admiration as its founders and managers have built it into a leading brand in the Nigerian insurance sector.

It was interesting listening to the company’s CEO, Wole Oshin tell the story of how as an undergraduate studying Actuarial Science at the University of Lagos he first broached the idea of setting up an insurance company with a classmate, then Mimi Pearce (now Ade-Odiachi) at the time which they christened “Perils and Technical”! After several years of learning the ropes in the industry, he still had not dispensed with the dream and he, along with a few shareholders, founded Accident and General Insurance Company Limited later renamed Custodian and Allied Insurance twenty years ago. There are many profound elements of Oshin’s account – the four-year delay in the licensing of the start-up due to a government embargo on new insurance licences after he had paid all the required fees and duties; the fact that the embargo was announced on a Monday after he had completed all the payments the previous Friday; the investors’ decision to get an older and more matured chairman who could provide guidance for the firm and its relatively younger shareholders (leading to Michael Ade-Ojo of Elizade Motors accepting to be the chairman); the fact that Oshin went back to invite Mimi Ade-Odiachi, his university confidant, and another friend, Kofi Sagoe, to join the incipient enterprise. It is probable that perhaps entrepreneurship may be fostered by association because Ade-Odiachi had also founded her own innovative business by the time, as a florist, while it is public knowledge that Sagoe has also been involved in various automobile ventures. For me however, the most poignant revelation was the counsel of Eugene Okwor, then Commissioner for Insurance, to the young Oshin as he handed over his licence after the four-year delay – “Wole you know what I have gone through to issue this licence; please do not disappoint me.” Chief Okwor who sat in the hall must have felt a depth of joy as he acknowledged the applause of the appreciative audience, seeing as his faith in Oshin had not been misplaced!

It was also remarkable as Chief Ade-Ojo reminded the audience that his own firm, Elizade Motors, had also been founded while he was a student at the University of Nigeria, Nsukka, regretting that there were not enough younger people in the audience to take in that lesson in early entrepreneurship. How do we get the message to our teenagers, undergraduates and other young persons that the best time to venture is when you are young, full of ideas, passion, energy and initiative and yet to acquire the responsibilities of a family?

Custodian and Allied has grown organically and through acquisitions to become one of the leaders in its sector. In 2006, it orchestrated its first merger with Signal Insurance led then by Toye Odunsi who is now the deputy managing director in Custodian; then it merged with Fire Equity and General Insurance in 2007; finally in 2012 it merged with the Crusader Insurance Group becoming as a consequence a broad financial services group with footprints in life and general insurance, pension fund management, trusteeship and property and investments. It has excellent testimonials from industry peers and customer and the CEO, Oshin, is a past president of the Nigerian Insurance Association. He is also a current president of the Lagos Business School Alumni Association.

And then fittingly, there was the keynote talk by John Momoh of Channels Television and panel discussion on “Building Sustainable Institutions” moderated by Ibukun Awosika of Chair Centre and including Leke Alder of Alder Consulting, Enase Okonedo of Lagos Business School and Cornielle Kerakazi, CEO of African Re-Insurance Corporation. Momoh defined sustainability as “meeting the needs of the present without compromising the future” and emphasized investing in capacity and continued growth rather than just short-term profits. Awosika, regretting the limited longevity of Nigerian businesses, noted that “we are not creating jobs, we are replacing jobs!” while Okonedo quoted the shocking but probably factual statistic that 95 percent of Nigerian businesses do not make it to the third generation and suggested a correlation between corporate sustainability and having objectives beyond just profits! Alder also explained sustainability in relation to defining a purpose for the business beyond making money while Karakazi attributed corporate sustainability to an “intangible, indecipherable element of culture and patterns and frameworks of decision-making”.

Given that represented on the platform were five relatively sustainable Nigerian and African institutions, perhaps the best value may have been provided by speakers offering reflections on how and why their own organisations had endured over the past two or more decades. Nevertheless the shared insight on the value of a motive beyond profits, in addition to, not in substitution for the profit motive, is one all Nigerian businesses can learn from.

There was entertainment too, a beautiful African dance drama to illustrate the benefits of insurance – some of the characters hitherto trusting Sango for fire insurance; Oya for marine risks; presumably Ogun for motor accident coverage; and Olodumare for life insurance, to their regret! Wole Oshin noted that insurance accounts for 0.6 percent of Nigeria’s GDP versus 15 percent in South Africa! Let us hope Custodian, its peers and other stakeholders are successful over the next decade in boosting insurance penetration in Nigeria to at least 5 percent of GDP.

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