Three years ago, Primero Transport Services Limited was established and positioned to change the history of transportation in Nigeria. The company is a modern transportation outfit whose entry into the market was as forceful, as it was calculated. Just three years into the journey, a lot has already been accomplished. However, in an exclusive interview with Nairametrics, the company’s CEO, Mr. Fola Tinubu, revealed that there are still many more plans to be unveiled. Before we get into all that, let us first go back to how it all began.
The beginning of an era: Primero’s aim to revamp a megacity’s archaic road transport system
Just a few years ago, the sight of a blue BRT bus in Lagos would have been unusual. Back then, little effort was being made to change the system for the better, even as Lagosians bore the brunt of traffic issues. And then seemingly out of nowhere, the now well-known blue buses are all over Lagos, providing affordable and comfortable transport services to local commuters.
Primero was masterminded by Mr. Fola Tinubu, who founded the company and raised the investments needed to kick-start it. According to him, the vision for the company was born when, in early 2015, the Lagos State Government put out a Request for Proposals (RFP). Back then, the State Government was just completing the Ikorodu Road renovation project in conjunction with The World Bank. Therefore, proposals were sought from qualified and capable private investors who were interested in operating the Bus Rapid Transport scheme in the state.
From studying the RFP, Mr. Tinubu and his partners bought in to the government’s vision. Consequently, they submitted an expression of interest alongside a proposal. And at the end of the competitive bidding process that ensued, Primero emerged the winner.
Partnership with Sterling Bank Plc
One of the requirements set out by the Government was that whoever won the bid to run the blue BRT scheme must start out with a specified number of busses. In specific terms, the winner must have a total of 434 buses. Therefore, after Primero Transport Services Limited won the bidding process, it had to prepare for the Government’s inspection. And to do that, the company sought Sterling Bank’s help in order to obtain the credit facilities needed to purchase the buses. In his own words-
“We went to Sterling Bank, showed them what we were trying to do, and they supported us. Their support led to us being able to secure the buses from China. And the rest is history.”
Three years down the line, Primero is a force to reckon with
Today, any resident of Lagos who has ever commuted in a Primero bus can, indeed, attest to the fact that the company makes all the difference. The buses are neat, with air conditioning, comfortable sitting arrangements, in bus wi-fi, and very well-trained and meticulous drivers. And, most importantly, the service delivered by Primero is quite affordable.
In the course of preparing this report, Nairametrics visited (twice) the company’s main depot at Majidun in Ikorodu. The first visit was for a tour of the facility. It was around mid-day, the end of the early morning rush hour. We observed as the blue buses were being washed and prepared for the afternoon/evening rush hour. Here, all the ultra-modern equipment needed to maintain the buses was readily available.
We saw the automated washing machine which cleans the buses, and we were privy to see the mechanic workshop, alongside the auto mechanics, all of whom busied themselves fixing the possible defaults in the vehicles. There is even a filling station, which takes care of all the buses diesel needs.
We also toured the communications and control room, which is manned by young and vibrant Nigerians. Their jobs are to monitor the busses and address customers’ complaints (if any), in order to improve the overall quality of services rendered.
More than 400 buses currently in operation, and more to come
Needless to say, no transport company in Lagos has ever done it as well as Primero has. And this manifests in their numbers and expansion. Primero currently has fleet size of 434 buses, a number that is projected to rise to 800 by the end of 2019. According to the CEO, the company has submitted yet another proposal to the Lagos State Government, indicating interest to operate the Abule-Egba to Oshodi BRT lane which is currently under construction. If the bid is won, Primero will import an additional 350 buses.
Revenue is streaming in
In the meantime, the company is earning millions of naira on a monthly basis. Monthly income increased from an average of N50 million per month in 2015, to more than N600 million in 2017. The average income generated per month is currently estimated at N1 billion. These figures show an impressive growth trajectory. And there is still room to accomplish much more as the years go by.
But Fola Tinubu doesn’t take the credit for the recorded success
As the brainchild behind the company as well as the current CEO, one would expect Mr. Tinubu to take all the credit for Primero’s accomplishments. But he does not. Instead, in the course of our discussion, he kept referring to, “his incredible team members”, which is comprised of about 1,500 employees. According to Mr. Tinubu, they have contributed immensely to the company’s success. Without them, the project would be a failure, he added.
Yet, the truth remains that the man is the poster child of the company. After all, he is the Chief Executive Officer. And that is why we asked to know more about him.
Focus on the man behind the success story
Mr Tinubu was born and raised in Lagos, Nigeria in the mid-1960s. He recalled growing up as a teenager in the 1970s, when Nigeria’s economic prospect was vibrant due to the then recent discovery of crude oil in the country.
After early studies in Nigeria, he travelled to the United Kingdom where he obtained a BA in Economics and Politics from the University of East Anglia. He later graduated with an MBA from the University of Stirling.
Upon graduation, Mr. Fola worked for roughly eighteen years in the US mortgage industry; reaching top management positions. And now, he has brought home his excellent managerial and leadership experience, and channelled it into transforming the Lagos transportation system. Needless to say, he is doing an excellent job. When asked to talk about the best thing about being a CEO, Mr. Fola said the following –
“Everyone thinks being a CEO is glamorous. They don’t see the other side of it; that is the responsibilities that come with the role. With the position comes the responsibilities. It is like when you are young, you want to grow up quickly because you think you can have so much fun without being questioned. But you don’t realise that growing up comes with responsibilities.
“So, what’s the best thing about being CEO? I think for me it’s the ability to take tough decisions which sometimes can be the worst thing about the position. Also seeing your vision actualize, you can afford to dream about something and work hard until you actualize it.”
Back to primero, what are the company’s growth prospects?
Mr. Tinubu told us that Primero is currently focused on consolidating on the success that has been recorded in the past three years. According to him, the company’s dream is to have, at least, 2000 buses commuting one million Lagosians on a daily basis. By the end of 2020, the company is optimistic that this dream would be half-way accomplished. This is because as mentioned earlier, Primero is working to bring in an additional 350 new buses to operate the Abule-Egba to Oshodi BRT axis.
Therefore, on whether the company plans to expand beyond Lagos, it is a possibility that is largely dependent on its ability to first expand in Lagos. As the CEO emphasised, they are bullish on Lagos State. And it is not difficult to see why. After all, there are lots of opportunities inherent in the city of 24 million people, all of whom need comfortable and affordable means of transportation.
A potential joint venture partnership with Yutong to set up a bus assembling plant in Nigeria
In the meantime, Primero Transport Services Limited has been getting offers by people in Abuja and elsewhere, to operate similar BRT buses already existing in such places. Mr. Tinubu disclosed that there is an ongoing negotiation for Management Service Agreement with the Oyo State Government which would see the company managing the state’s Pacesetter’s bus company.
But overall, the focus remains on Lagos State. And as part of the growth plans for the State, the company is also working to offer specialised charter services-
“Charter Services – Primero Transport is currently working on a model that would provide specialised services both during the week and weekends. Due to the numerous enquiries for that service, the business has decided to invest in more buses so that the normal bus operations are not affected. As a result of a potential a Joint Venture Agreement with Yutong (the bus manufacturer), the new buses may not be imported, but rather assembled locally. A temporary plant in Epe would happen first and then a permanent plant would be built in the Badagry area of Lagos State. The assembled buses would cater for Primero Transport requirements, and be sold to other customers within Nigeria and West Africa.
“Primero is currently negotiating a Management Services Agreement with the Oyo State Government. Once signed, this transfers the management of over 150 buses from the government to Primero Transport Services Limited for an initial 12 months. The goal for Primero is to convert the Management Service into a full Franchise right, giving the business the opportunity to acquire more buses and operate them in Oyo state (as well as the interstate concessions that currently exists).”
Attention to investors: The Company plans to list on the Nigerian Stock Exchange soon
In view of the company’s expansion efforts, a potential listing on the Nigerian Stock Exchange could help to raise capital. And Mr. Tinubu seemed to agree. As a matter of fact, he laughed very excitedly when Nairametrics asked if such a plan is in the offing. And yes, there is such a plan, he said. According to him, they are in the process of raising a bond.
“Do we want to be quoted on the Nigerian Stock Market? Yes. We will be going to the Nigerian Stock Exchange probably by the end of next year. This is because the rule is that you need to have been in operation for four years before you can go to the market so that people will know your track-record and see what you’ve done and how you’ve done it. So, by the third quarter of 2019, we will be preparing to go to the market. And hopefully, by the first quarter of 2021, we will be quoted on the Nigerian Stock Exchange.”
Competition is not a problem for Primero
On competition, the CEO said there is room enough for all to play. As mentioned earlier, Lagos State has an estimated population of 24 million people. At least, half of these people move from one location to the other on a daily basis. And they also need affordable and comfortable means of transportation. Moreover, the Lagos State Government has a strategic plan to establish fourteen BRT corridors across the state. At the moment, there is only one that is currently operational. Thirteen more are still on the way. So, there is room for everyone to operate.
Primero Transport Services Limited is changing the transportation paradigm in Nigeria. What they are doing and the scale at which they are doing it, has never been done before in the country. Of course, it hasn’t been smooth sailing all along. There have been challenges, as Mr Tinubu admitted. But despite all, the company is poised to accomplish more feats in the coming years. And Nairametrics will be here to share the good news as they unfold.
Cloud services are your safest bet against data and intellectual breaches – Adejumo, Cloudflex founder
The rule of keeping data within the country of origin allows Cloudflex to collaborate rather than compete with international players.
The Twitter community went up in flames last year when the official accounts of notable personalities like Donald Trump, Elon Musk, Jeff Bezos, Bill Gates, and Barack Obama were hacked by individuals who managed to rip some followers of their cryptocurrency. Those accounts were suspended for some days pending investigations but what this did was to alert the world to the need for heightened cybersecurity in countries.
In Nigeria, particularly, where cybercrime has been on the increase in the last couple of years, cybersecurity is a touchy topic; especially since global laws expect that customer data should not be stored outside the company of origin and most of the cloud services companies are international. There is, however, a local cloud company providing cloud services for Nigerians in Nigeria.
Cloudflex was founded in 2016 and has focused on providing cloud support infrastructure and services for companies away from the company premises. Founder and CEO of Cloudflex, Remi Adejumo was a guest on Nairametrics Business Half Hour recently, where he explained that the company was created to provide tailored solutions for clients in the Nigerian space.
Having worked almost three decades in several institutions, the last of which was EcoBank Nigeria Plc where he was in charge of IT Infrastructure, Adejumo saw the opportunity to create a Nigerian-built cyber-security solution, “that is fully Nigerian and run by Nigerians.”
“This is not a service where one size fits all. We have our peculiarities as a market and we are designed to serve the Nigerian market. If you want to get a foreign cloud service, you could wait 6 to 8 weeks, but if you want to get one from Cloudflex, you could have it in 24 hours.” Adejumo explained.
When companies were making several adjustments to fully activate the remote-working policy at the peak of the coronavirus pandemic lockdown, the importance of cloud services became more obvious. Companies needed a round-the-clock server from where the staff could access data from their homes and still work seamlessly.
The rule of keeping data within the country of origin allows Cloudflex to collaborate rather than compete with international players like Microsoft Azure and Amazon’s AWS, and use one another’s platforms.
There are a lot of security concerns about cloud services which some people think is not safe enough, but cloud-service providers would still insist that they are the safest option.
“The cloud platform is far safer than your own private server because your private server is on your premises and everyone knows where it is. From experience, 70% of breaches are done by the staff of your own organisation, and having a third party manage your own platform, means that you and your staff don’t know where it is. There is a protocol in giving access from the service provider, so security is higher. The data breach is not just financial, it is also intellectual. You can secure a building as much as you want, but as long as there is a door, somebody can still go in. That is the limit to your physical server in your office premises,” Adejumo explained.
There are also advancements in predictive learning, analysis, and reactive security, that allows the cloud systems to detect and flag activities outside the patterns until it is confirmed and validated.
Like most other startups in the tech space, funding remains a challenge. Adejumo recounts that the company started off solely on his savings and proceeds from the sales of some assets. Nigerian investors appear to still be sceptical of the tech startups and the result of this is that a lot of investment in the tech space comes from outside the country.
Cloud services will play a major role in the future of cybersecurity and Cloudflex is poised to take a space in that scene. According to Adejumo, the company is in the process of securing funds for expansion, although crowdfunding is not one of the options being considered.
Interswitch: The story of one of Africa’s earliest unicorn companies
Interswitch has come a long way, pioneering the Nigerian digital payments system.
One can hardly switch from the years of carrying large volumes of cash around to the years of using a card for financial transactions in Nigeria, without mentioning Interswitch.
Like the name suggests, the company uses a ‘switching’ infrastructure to connect the different banks in Nigeria and provides the technology now used for ATM cards. From a time when the company had only 3 banks on its network, Interswitch has grown in the last 19 years and now has 11,000 ATMs across different banks on its network.
How the journey started
A young graduate working in Telnet, Mitchell Elegbe was worried by the several inconveniences Nigerians had to go through to carry out financial transactions. From making long and stressful journeys to the banks, waiting in long queues, missing transaction deadlines, and increased loss of cash to criminals, that was certainly not the easiest of times to be an adult. Some opted for bank drafts to avoid carrying cash to travel, and I remember accompanying my mother to the bank a couple of time to buy a bank draft to pay my school fees.
Many people had to join long queues at the banks on Friday evening to withdraw enough cash for the weekend, and this naturally meant that weekends became work hours for criminals. The most frustrating part of it was that the bank branches did not have any software connecting them, so customers had to continue withdrawing money from the exact branch they opened the account, even when they needed to make long business trips. Even the highway became a playfield for robbers.
The young Elegbe who had only worked two years after his National Youth Service Corps, came up with the Switch idea, but the plans did not materialise as many traditional players were not interested in buying the switch software.
Not deterred by this little glitch, Elegbe went ahead to establish Interswitch, an organisation which would use the Switch software to address the problem. This time, he got the support of Accenture, and also got buy-in from some banks to raise a part of the start-up capital. Getting a Chief Executive to head the company was the next hurdle to be crossed, as Elegbe recalls that most of the capable hands then available were expatriates “who expected to earn more than the company’s capital”.
In search of cheap labour, he had to take up the task even though he had very little experience thus resigning his job at Telnet. The shareholders and the sponsoring company (TELNET) had their concerns at first, but they gave Insterswitch a shot and under Elegbe’s leadership, the company pushed through the uncertain years to become what it is now. Eight years later after starting Interswitch, the company was valued to be worth N26 billion (over $170 million), giving massive returns to early private equity holders. The company’s network grew steadily from 7 banks to 13, and then an ATM consortium and Globacom, a mobile telecommunications provider, up till this point when it has almost all Nigerian banks and 11,000 ATMs on its network.
Though Elegbe had no shares at the outset, his impressive performance earned him and his team some equity in the company in the coming years.
“So you have somebody who invested N10 million in this business going away with N2.6 billion after eight years. That to me was real value,” Elegbe said. When you help solve big problems, Mitchell says, you’re bound to be well rewarded.
Mitchell Elegbe is now the Group MD & CEO, Akeem Lawal is Divisional CEO, Switching & Processing Group while Mike Ogbalu is CEO, Verve International.
In 2019, Visa bought a fifth of Interswitch at a valuation of $1billion, making Interswtich Africa’s first fintech unicorn.
Interswitch is the owner of Verve, an international debit card and Nigeria’s most used payment card which is said to account for over 70% of the 25 million cards in circulation in the country. The company also owns Quickteller, an online payments platform; Retailpay, a mobile business management platform; Interswitch S&P, the first Nigerian in-country interbank transaction switching and third party processing for all card brands; and Smartgov, an identity management and e-payment infrastructure for state governments. Interswitch now serves almost all the state government of Nigeria, and is present in several other African countries including Kenya and Uganda.
Just last month, the group announced the launch of Quickteller Business – a new comprehensive corporate solution focused on empowering businesses of all sizes, to facilitate payments and manage transactions from anywhere in the world– through one, simple integrated platform. The platform added to its launch offer, a three-month zero transaction fee incentive for SMEs that sign up immediately.
Buy-ins, acquisitions and buy-outs
Interswitch has had several achievements over the years, and some more distinct than others. Two-third of the company was sold to a consortium led by Helios Investment Partners in 2010, and barely a year after, Interswitch took a 60% stake in Bankom in Uganda.
In 2013 the payment processing company entered into an agreement with Discover Financial Services, and in September 2014, Interswitch acquired a majority shareholding in Paynet Group, an East-African payments provider.
In 2015 Interswitch launched a $10m investment fund for African start-ups in the payments sector, and has since then, strategically invested in other African startups in the payments services.
Interswitch has also acquired VANSO, a mobile-focused technology provider to banks. This new acquisition has VANSO’s mobile banking, SMS and security business lines being fully integrated into Interswitch’s digital commerce and technology operations in Nigeria, and across Africa.
The IPO that never was
It was in 2016 the Interswitch first hinted at an Initial Public Offering (IPO) on the London Stock Exchange and /or the Nigerian Stock Exchange as part of options to create possible exits for its backers, but that listing never happened due to “unfavourable economic situation”.
By July 2019, it was reported that Interswitch had resumed its IPO plans and enlisted JPMorgan Chase & Co and Standard Bank Group to work on the potential IPO that was expected to value the company between $1.3 billion to $1.5 billion. This listing was expected to come through by 2020, but it is believed that the COVID-19 pandemic and other economic issues which plagued 2020 may have altered the company’s plans.
A recent statement from the CEO says that Interswitch will continue with alliances in line with its growth plans, but an IPO might not be in immediate view. According to him an IPO may be considered when private equity investors want an exit out of the business.
In place of the earlier expected IPO, the company announced the listing of N23 million bond on the Nigerian Stock Exchange (NSE) in February 2020. The bond is to run at a fixed interest rate of 15% for a tenure of 7 years.
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