Ayo Sotinrin: We Envisage an Ondo that’ll Develop Rapidly
The Chief Executive Officer of SAO Capital, Ayo Sotinrin in this interview with MARY NNAH speaks on how his organisation has been working with the current administration in Ondo State, while also revealing that based on the economic reformation and infras
Tell us a bit about you and your role at SAO Group
I’m the Group CEO of SAO Group. SAO group has a few portfolio companies under it. One is SAO Capital. It works like an investment bank. We provide financial advisory, capital market advisory and most importantly developmental advisory to state governments in Africa.
SAO Capital as a socially impacted investment program company, social and impact comes first in everything we do, that is why we are not in the capital markets as stock workers we only do meaningful projects even in the capital market. When we raise capital, it is for social impactful projects.
I am a fervent environmentalist. However, I have experience in the financial sector and also working with the government or you can call me an entrepreneur above all things. I got four degrees in total and counting. I have a degree in Environmental Conservation, which is my background from the University of Oxford. I also have an MSc in Engineering and Business Management.
I have an NBA from Saïd Business School and I’ve been working for the government for a while. I used to work for the Environment Agency in the UK where I was part of the team that looked after the environmental affairs of the UK. I also worked for Tom Investment Bank in the UK.
I moved back to Nigeria nine years ago when I was appointed Special Adviser on Environment to the Honourable Minister of State and FCT and one of the notable achievements then was the creation of a satellite and development agency, through executive order of President Jonathan.
The second thing we achieved which was quite notable was the 450 million dollar Abuja urban integrated project and 350 million dollars was set aside for the urban renewal programme and infrastructure upgrade in the six area council of the six local governments of the FCT. And also to cut the menace of congestion in the FCT, we created a 100 million dollar bus rapid transit scheme which is the BRT scheme.
After then, I also worked with many development organisations in Nigeria. I worked for the World Bank as a Senior Environmental specialist. I worked for the World Bank as a Senior Environmental specialist. I worked for DFID as a Senior Urban Development Consultant.
I worked for many development organisations across the board. Currently, I work with many state governments, providing investment and development advisory services for them and also financial advisory. I have been working with the Ondo State government for a while and also working with the Kwara State government doing the same thing as well.
Let’s talk about SAO Group. What is the organisation into?
SAO group actually started in the UK thirteen years ago as SAO Technology. We used to provide technology services to the banking industry and it metamorphosed into SAO capital that started in Nigeria. It is a social capital investment advisory firm. Under advisory, we do a lot of advisory for governments by helping them plan and develop better. We also do a lot of infrastructural advisory and create a financial capital advisory where we do a lot of services as well.
We are one of the leading development advisory firms within the Africa sphere, not
just Nigeria. Part of SAO portfolio companies is also SAO agro. We do stuff in agro space. We are into investment in agrospace across the continents.
We also do a lot of renewable energy projects (clean energy). We do a lot of solar projects. We are in the hydro space and we do anything that is typical clean power and gas as well.
On the advisory arm on the infrastructure side, we do advisory on all things I’ve listed that we also do investment in. So, we crosspollinate between both. One of our biggest projects is being advisory to 1100 megawatt king line power which obviously is phasing into two - 5.550 megawatts, capital raised so far is 650million dollars for that particular project.
You have been partnering the Ondo State government for a while now. Can you tell us how that came to being?
It’s been about four years, even though the government had not spent four years in office. The reason why I said its four years is because immediately the governor won his election, he called a few of us and we told him what we believed is the best way to achieve his goal for the state and after competitive bid, we were selected to be the sole investment financial adviser to the Ondo State government and we’ve not done badly so far.
What was the situation of the state before you began working with the state government based on your findings?
When we started, we looked at how we would develop the state and we had to start with baseline study for what’s on ground when his Excellency took over office. We looked around; we saw in the infrastructure space, there were a lot of gaps. Ondo State has a lot of infrastructure but it wasn’t developed and it wasn’t the fault of the last administration that didn’t develop it.
The reason it probably didn’t develop is because there was paucity of funds and for us, we focused on creating a parallel funding source through the budget of the state government because of our relationship and our extensive experience working with the international community and development financial institutions.
So, after doing a diagnostic study to get the baseline of what is already on ground in terms of infrastructural development in terms of social amenities within the state, we came up with a wish list of projects and we did a prioritisation of those projects to select what we believe can be done short terms and also that we can do long term as well.
After which, we prioritised them and we took on the projects with the most impact which is based on the needs of the people and those were the ones that we focused on and we went out to develop further and raised capital for.
What has SAO been able to achieve in Ondo State so far?
Initially, we thought of having two parallel strategies to governance. One approach is to raise the capital for developmental projects or social projects that are not complete income generating. The second thing is to have an economic development type project that will bring income to the state.
So, for the first one, we identified the roads that were very key to economic development. I’m talking about rural roads that lead to farms, markets. We also identified major roads where you have huge traffic for people going in and out of the capital and also some very strategic locations within the state and also other social amenities that we thought the people needed and we’ve not done badly on that so far.
On the second one which is an economic impact project that can actually bring revenue into the state, we also did a project study. On road projects, so many roads in Ondo state that actually need rehabilitation or total new construction and we focused on what would have the most impact and the one that has most impact is rural roads.
In the city, you have better roads than rural roads. However, the people in the city are mostly civil servants that work for the government and get paid by the government. The percentage of the people living in the urban area as compared to the rural dwellers, there’s a margin disparity like 70 per cent to 30 per cent ratio.
So, we chose these projects not based on the fact we want them to see these beautiful tarred roads. In the capital, we chose them based on economic benefits to the residents of the state. So, we focused on rural roads and we did a prioritisation of 500km worth of roads out of a thousand kilometres that was sort of surveyed and this was done over three to four months period and I’m proud to say that we’ve raised about 60 million dollars to do those roads.
These are projects we believe will not only add to the social economic state of citizens but will also be a project that will be done diligently at all cost and delivered at time because the funders are very meticulous.
Also, we realised that there’s a lot of erosion in Ondo state. One is the sea incursion in Ayetoro and we also have a lot of massive gully sites across the state. So, what we’ve done is to also go out there with all the documentation we’ve prepared to raise another 60 million dollars for erosion control for the sea incursion.
So, when the water tide rises at Ayetoro, it washes up to a quarter of the community in recent years and this year, we also experienced that where people that lived 30 meters from the sea had their houses washed away. So, we actually have many projects and this is the first of its kind in Ondo state.
How have you been able to raise funds for these projects and what are the financial implications to the state?
You can’t develop a state without developing infrastructure and you can’t develop infrastructure without borrowing money. It’s not the act of borrowing money that is wrong, it’s the type of money that you borrow which actually can be right or wrong.
What we’ve managed to do is to look at the profile of the state and look at a sort of financial instrument that we think is best for the state.
When I say we raise money, raising money does not necessarily mean we raised money that attract interest rate alone; we applied what we call a blended financing method, where we make use of different financial capital where we talk about grant money from development financial institutions, if you can justify what you want to use the money for. A lot of philanthropic types of money as well.
We’ve done a lot of fund raising as well which no one is expecting anything back and also the most important one which is the development financial institutions we’re talking about, we’ve raised money from them because we believe that they are the cheapest source of capital and they don’t really put a strain or heavy burden on the state because the money is being loaned as a sovereign loan to the federal government of Nigeria for the state.
This sort of money is raised on the sovereignty of Nigeria as a country and they are the cheapest type of money anywhere in the world. They are called concessional loans. That is, an interest rate that ranges from 0.5 to 2 per cent plus if it’s denominated in dollars or in Euro.
Also, what we are trying to do is the economic development project that will have a lot of benefits to the state. In other words, directly or indirectly, they would have been paid even before the moratorium period, if judiciously used which is why we don’t provide just financial advisory services to the government, we provide what I call development advisory service which encompasses all these things.