We’re positioning
ABC to compete with air transportation – Nneji
By MOSES AKAIGWE
Monday, April 7, 2008
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•Nneji
Photo: Sun News Publishing |
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The youthful founder/chief executive officer of Associated
Bus Company Plc (operator of ABC Transport), Mr. Frank Nneji,
OON, seems to have been born with a knack for defying barriers
to make a difference wherever he finds himself.
This is evident in long distance (inter-city) transportation
which he ventured into in 1993 to face the challenges pioneers
and second generation luxury bus operators such as Ekene Dili
Chukwu, Ifesinachi, The Young Shall Grow, E. Ekesons, among
others, had been grappling with for years.
Fifteen years after, the services provided by ABC Transport
have become benchmark for the industry. So huge and visible
is the impact of the operator’s innovation on luxury
bus business that the successes of the parent company, Rapido
Ventures, which yielded the seed money for the passenger transport
business, pales in comparison.
A 1982 Biological Sciences graduate of the University of Nigeria,
Nsukka, who hails from Ezuhu Nguru, in Mbaise, Imo State,
Nneji gave an early foretaste of what to expect of his life
trajectory when he successfully ran for the position of Transport
Officer in the UNN students union election, and never failed
to take an opportunity to make some pocket money by conveying
fellow students to venues of sporting events for a fee in
his personal jalopy.
He passed through the Lagos Business School (LBS) and Whaton
Business School, Philadelphia, USA. He was the President,
Owerri Chamber of Commerce, Industry, Mines and Agriculture
(OCCIMA) from 2000 to 2003, and represented the transport
sector in the maiden board of the Federal Roads Maintenance
Agency (FERMA).
Aside the national honour of the Officer of the Order of the
Niger (OON), the ABC founder has earned many accolades for
his achievements on the business terrain, including the 2001
Rate Model Entrepreneur from the Imo State Government and
honorary Fellow of the Chartered Institute of Logistics and
Transport, UK.
Regardless of the fact that ABC is a clear front-runner in
luxury bus operation in West African sub-region, Nneji is
constantly re-energizing and expanding the company to provide
other aspects of transportation services. This explains why
in the past two years alone, the company has diversified into
managing the Cross River State sponsored city transit in Calabar,
establishing ABC Hauls which services Obajana Cement Factory
in Kogi is making use of; floating ABC Cargo Express, a full-fledged
NIPOST-licensed parcel/cargo outfit with about 100 trucks.
Two years ago, ABC became the first, and so far the only,
transport company to go public.
But the achievements on the Lagos-Cotonou-Lome-Accra route
stand clearly and remarkably out: Four years ago when ABC
pioneered formal and regularly scheduled coach transportation
on the West Coast, the frequency was one departure every other
day. Today, no fewer than three coaches leave Lagos daily
for Ghana (same number for Accra to Lagos), even as plans
are being wrapped up to extend the operation beyond the present
final destination; that is, from Lagos to Cote d’Ivoire.
So, at the speed he is going, where does Nneji see ABC in
the next 10 years? What are his secrets and management style?
What are the challenges yet to be surmounted? What is it like
operating in the Nigerian business environment? These are
some of the questions he fielded in a recent encounter with
Daily Sun. Excerpts:
Birth of ABC
No business comes as a result of an accident. Businesses that
come as a result of accidents are the ones that you stumble
on, they are on and off. I go to visit a friend and I see
an opportunity to buy something, sell it and make my money.
There is no business, no corporate organization that is planned
and powered by people that will come out as an accident. Initial
circumstances of the whole transport industry in Nigeria may
have warranted the need to make things better, but that is
not sufficient to call it an accident. It was actually a design
to improve on the way Nigerians travel, especially the middle
class. So, that was what led to the birth of ABC Transport.
Achievements
We have realized the goals we set to achieve when we set up
ABC. Apart from what we are doing at ABC, you also look at
our influence in other road transport sector. We have influenced
what other people do. If you look at the history of luxury
buses or inter-city buses, you will find two landmarks –
before the birth of ABC and after the birth of ABC. When ABC
came, the way people did things changed. So, what I am saying
is, apart from the achievements we have recorded in our company,
we have also influenced the way people do other things. And,
of course, the passenger is the beneficiary of all innovations.
Challenges of the past 15 years.
Well, you are right; this is actually 15 years of ABC because
we rolled out in February 1993. This is 2008, looking back,
you find out that essentially, we have been able to implement
most of our projections, but the challenges have been purely
environmental, of course, you know things have changed a lot
since 1993. At sometime, we had improvement on roads, at other
times, the roads are dilapidated. That is an environment challenge.
We have the challenge of security. All over the world, people
travel round the clock; people travel day, people travel night,
but in Nigeria you find out that because of security concerns,
at times when you move your bus up to 8:00p.m, you have to
find somewhere and park. These are environmental concerns
that are above the solutions the industry players can provide.
These are some of the challenges. There are quite others,
like the challenges of manpower, challenges of inconsistent
policies by government. But, it does not apply to transportation
alone. It applies to many other businesses.
Post-IPO ABC
In terms of what motivated the decision to go public, we looked
back and we were convinced we had built a company every Nigerian
would be proud of and want to participate in, we had built
a company where our staff had worked very hard … and
we felt that the best thing to do is not to let the company
die, to be able to immortalize this company, to be able to
sell it to the public and get people to participate in the
running of the company, in the funding of the company.
That is why we went public. But, of course, ab initio, when
we started ABC as a private company, it was a very well run
company in terms of corporate governance, in terms of policies,
in terms of human resource development, and we felt that if
we had built such a company, why don’t you give the
benefit of throwing it to the public and allowing the public
to participate in the running of the company. So, we did it
principally to ensure that the company outlives us, to ensure
that since we are serving the public, the public will have
the opportunity to own part of the company.
And talking about the post IPO-ABC, I think post-IPO-ABC has
been a lot better, because our stakeholders are more relaxed.
They know that this is a company they can invest in, they
continue to invest in, people have a choice. And, it also
reduces a lot of pressure on funding. Before, funding used
to come solely from the banks, but now when we went to the
capital market, we are able to trade in some of our exposures
for equity. So, financing has become a lot easier, and, of
course, the company has gained more recognition.
A lot more attention is given to your company. That is, you
have more attention given to your company; that if you have
a full load of a bus now, you find out that half of the bus
or 20 percent of the bus will be people who are your share
holders. So, they participate in contributing to the well
being of the company, in taking care of what happens in the
company, and the rest of them. Everybody shows a lot more
interest as opposed to what it used to be before. So, the
post-IPO-ABC is certainly much better than it was before when
it was a private company
The company after Frank Nneji
The ABC of today is owned by 9,000 Nigerians and a major foreign
investor; and of course, when foreign investors come, they
come in with global standard practices and ensure that corporate
governance is at its best. Certainly, ABC is a company that
has been immortalized; this is a company that will not stop
existing because Frank Nneji is no longer there. Frank Nneji
is just the founder. The company does not belong to Frank
Nneji anymore.
Management style
The management style we adopt here is people-based. ABC is
about people, we keep saying it is not all about buses. And
where people get it wrong is that they focus a lot on rolling
stock, a lot on assets, a lot on buses. ABC is not about buses;
it is about people. So, our management style is to invest
in our human resources, invest in people, and these are the
people who run the business, these are the people who run
the buses to make sure that people get services. So, that
is our style.
Critics
I don’t think the critics are right (that the high standards
of ABC services in its early days are falling today, especially
in terms of buses breaking down). We have to put everything
in context, ABC of 10 years ago when we had 10 buses or 15
buses, cannot be compared with ABC today when we have more
than 100 buses, and running maybe another fleet of 100 trucks.
If you take it by ratio, you will find out that our break-down
rate has not increased more than what it used to be before.
I mean those days, from Lagos to Port Harcourt, you will probably
see, maybe five ABC buses. Today, you will see like 30, like
40 all over the place, and then when we have more than 100
buses, and running maybe another fleet of 100 trucks, and
then when you see a bus breakdown, you think they are too
many. First of all, as long as you are moving on the road,
especially on the kind of road we have, you cannot avoid bus
failure.
And what we have done additionally is make arrangement to
have remedies the moment there is a bus failure. We have rescue
points in Okene, in Benin, in Ibadan, in Onisha, where we
can ensure two hours rescue to ameliorate the sufferings of
people who have boarded our buses. So, the ABC of today is
much better than the ABC of 10 years ago. First of all, we
have upgraded all our buses to coaches. All our buses are
fully fitted with toilets, 95 percent of them fitted with
air-conditioning systems. Those days, we used to have buses
without toilets, etc. it is standardized now. All our buses
now have fabric seats, they have refrigerators, they have
more leg space. So, ABC is getting better everyday.
But, the environment may not be moving at the same pace, which
is a big challenge. And I will give you example. People evaluate
the quality of our bus service by the turnaround time or journey
time. There is nothing we can do about journey time. You enter
a bus now and you are going to Owerri or Aba. You get to Ore
and have to spend three hours (due to bad road and traffic
build-up). There is nothing ABC Transport can do about it.
If the roads are very good, then match it with the input we
have made at ABC, you will find out that the travelling experience
will be marvellous for everybody. So, what I am saying is
that if the environmental improvement can move as fast as
ABC is moving, we will give our passengers world class service.
Active life-span of luxury coaches
Active life-span of a luxury bus is four years, unfortunately.
The depreciation is five years. Active is four. In the fifth
year, the productivity of the vehicle slows down. I said unfortunately
because these are buses that are built to last for 10years.
The fact is if you go to Brazil or Europe and see a 10-year
old bus, you will think it is a one-year old bus. In Nigeria,
when you see a two-year old bus, you will think it is a 10
year old bus, unfortunately. So, average life span is four
to five years.
Low accident record.
Like I said earlier, ABC is about people - an investment in
people, not just an investment in buses, and we have taken
time to invest in very good drivers, very careful drivers
who are trained on how to drive defensively. You can’t
succeed in Nigeria; you can’t operate with low fatality
rate in Nigeria without imbibing the tenets of defensive driving.
Defensive driving means that you have to drive your bus, you
have to drive the other person’s bus. Part of the defensive
driving is that you have to limit your speed. You have to
move at the appropriate speed.
When we say appropriate speed you are looking at what speed
do you move given the condition of the road. The speed limit
on the road could be 100 kilometres per hour, but you look
at the road, and you cannot do more than 50. So, the ability
to be defensive by driving carefully, limiting your speed,
is what helps you to limit your accidents. Our people are
very careful. we make sure that before we employ a driver,
we do a lot of investigations, we look at the alcohol history
of the driver, we look at the drug history of the driver and
we make sure that we keep on monitoring this, because when
you talk about accident, you find out that more than 80 percent
of the causes is human - what the man does right or wrong
leads to accident. So, our investment in our drivers, our
investment in technology for tracking our buses and limiting
speed, and catching drivers who exceed our speed limit, are
some of the secrets we have for low level of fatality, low
level of accident record we have in ABC.
Nigeria-Ghana route.
No, we never feel threatened (by the presence of many other
transporters who followed ABC’s footsteps on the Lagos-Accra
route). We never feel threatened in business, because that
was to be expected. When we did a study of the West African
route, what we did was to unlock the potentialities on the
route, to look at the difficulties experienced by travellers
on the road and find a way of ameliorating them. And then,
of course, when people travel on that route they feel that
the fare is high, the gains are high, and then you see people
jumping.
Usually, this is what you get in transportation all over the
world, especially in Nigeria where entry level is low. When
I say the entry level is low, I mean that for many people
what they do is that the moment they buy a bus and employ
a driver; they call themselves transport companies because
of the low level of regulation. That is happening in the West
Coast, but people who know us, people who know ABC quality,
still insist on ABC.
When we started operation (on the West Coast route,), we were
doing one bus on alternate days. Today, at times we run three
or more, and, of course, when you see the elitist traveller
going on the West Coast, he relies on ABC. So, we are not
perturbed by the crowding at the corridor. Water will always
find its level.
ABC 10 years hence
First of all, you know we are now publicly-quoted. We are
looking at a world standard company. If the promise of improved
infrastructure which government is making is anything to go
by, we are hoping that ABC will be in a position to compete
with air transportation for the middle class in terms of comfort,
in terms of shorter journey time, and generally in terms of
satisfaction of passengers. We will continue to grow, we will
continue to get better, and for our investors, ABC is getting
better, ABC is getting more profitable, our finance cost is
lower, our operating cost is getting lower every year, and
we are also diversifying in ABC.
We now have a full courier licence. We are doing what we call
less than truck loads – cargo transportation across
the country. We have been licensed by NIPOST to operate at
the bulk-end, the heavy-end of the courier industry, not just
letters. We service many industries, we service many manufacturing
companies, and we will continue to grow in this area. Apart
from road transportation, the courier operation of ABC is
also growing very fast, and last year, it accounted for almost
25 percent of our revenue. And this year, we are looking at
a situation where it will account for almost 60 percent. That
means, it is growing faster than the passenger transportation
in our sector. We are developing warehouses across the country
to be able to serve our customers better. So, in the next
10 years, we are seeing a huge company that is fully run,
not just in passenger transportation, but in general.
Aviation
Aviation is completely a different industry from road transportation.
That is a talk for another day. It is completely a different
business. But, we are thinking of growing what we have - road
transportation.
Of-shore investment
The first time Capital Alliance invested in our company, the
equity came from Cayman Island, but we have gone public now,
and people have diversified and probably diluted their investment.
However, during our last offer, South African investors invested
heavily in ABC, and, of course, they are bringing their financial
management expertise to bear on what we do .
Competition among luxury bus transporters
I would not use the word ‘healthy’ or ‘unhealthy’,
but what I will say is that the standards are not the same.
And, of course, you know ABC; we are not competing on price.
We are the premium bus operator in Nigeria. We are the only
purely coach service operating in Nigeria, and we have our
prices, we have our passengers. People who want to come to
ABC will come to ABC; people who want to go for cheap prices
will go for cheap prices. That is the thing. So, I would say
that the competition is there. At ABC we operate at our time,
we don’t load in the open motor parks, I think like
some other industries, you see a lot of bickering, you see
a lot of undercutting, but it is for the consumer to choose.
Are you getting the worth of what you are paying for? These
are the issues.
Association of luxury bus owners
I share in that view - that the Association of Luxury Bus
Owners of Nigeria (ALBON) should be more vibrant and active.
The association should be more active than it is today, because
this is an association that made a huge investment in transportation.
Yeah, I am the secretary, but if you are the secretary, you
are not a member. If you call for a meeting and there is apathy,
what would you do as secretary? I think there is quite a lot
of apathy in the association. We have a very capable president,
Chief Chidi Anyaegbu. If he finds a lot more time, I think
we can do much better.
What it takes to be in luxury bus business
If you are thinking of going into luxury bus transportation,
you have to look beyond buses. People are attracted by buses;
the ability to buy a bus, the ability to hire a driver, and
then they jump into the business. People should look beyond
that. People should look at the manpower; people should look
at the infrastructure you need to build. We may not have the
largest fleet (at ABC) in the country, but we have the largest
infrastructure.
We are the only company that has its own terminal in more
than seven cities of the federation. We have standard workshops,
and, of course, we have drivers’ training school. We
have different other facilities. We have safety patrol. People
should go beyond looking at just the buses. It entails quite
a lot, like appropriate manpower, appropriate workshops, infrastructure
or terminals, infrastructure for buses, and the rest of them.
And then people can build new roads, shorter roads, and collect
tolls on them. So, we support concession, we support billing
of the roads, but before that talk matures, government should
fix the roads.
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