SIKI MGABADELI: We’re talking to Tonye Cole of the Sahara Group, they’re into energy, power generation and distribution, oil and gas, and he is based in Nigeria. Tonye, thank you so much for your time today.
TONYE COLE: Thank you very much, nice being here.
SIKI MGABADELI: It’s an absolute pleasure. What do you make of the deliberations here? We are meeting at the Mining Indaba at a time when everybody is lamenting low prices but you see an opportunity for the continent in the low commodity price.
TONYE COLE: I actually see a great opportunity and the way I see it is this, when you have low prices, it forces people to think. Both corporations and governments, policymakers and those who actually generate revenue, they start thinking differently. High commodity prices means that people actually behave carelessly, but low prices means that how do we stretch our resources to do the things that we need to do.
From a government’s side, the people will begin to hold them more accountable because they are seeing less of what they expect government to do, and the governments themselves know that they can’t do and meet the expectations of the people, which means they have start looking elsewhere. The only place they can look is to the private sector. Now for the private sector, they have been fighting for years to change policy that would help them do things better, but they can’t do that in a high commodity market because the governments are comfortable. They are making good money, so they really don’t care about the policies that would help. And this is where government policy and people align.
SIKI MGABADELI: Wouldn’t that require governments and a private sector in a country with a vision, one who would actually care about the development of a country and often we hear tales of governments who don’t quite allocate those resources, whether we are in a high commodity cycle or a low commodity cycle for the benefit of the people. We hear of a private sector who only cares about profit. So there’s a lot of assumptions that we will be making.
TONYE COLE: True, but when you have – nothing focuses you and sharpens your focus as when you don’t have enough money to do everything that you need to do and that there is a demand by the people, especially remember that a lot of African countries have become democratic which means that they must answer to somebody, right, and generally it’s the people.
Now in the high commodity price, what the people expect is free roads, free energy, free everything, just, the government must do it, and the government collects all sort of royalties, trying to claw back profits from companies who naturally want to make profit and so there is a mismatch. There is a mismatch of expectations by the people, mismatch of what the government thinks they ought to do and then mismatch from the private sector as to what they should get away with. And so it’s that mismatch that is a problem.
But when everybody is forced to sit down to say, look I cannot do business because the policies and regulations here cannot allow me to put in my resources and make money. The government is sitting there and are saying, you know what, and if I have policies that can’t cause my resources to be developed then I can’t answer to the people. And the people are saying, what the hell did I vote you for? Because you have to bring resources to me and this is where alignment must come in and so vision is actually forced upon the governments by the fact that they have to do something with low resources.
SIKI MGABADELI: Tonye Cole is CEO of Nigeria’s energy and oil group Sahara.