SAO’s Ayo Sotinrin; THISDAY Newspaper Interview

May 6, 2022

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 of This Day Nigerian Newspaper speaks on how his organization has been working with the current administration in Ondo State, while also revealing that based on the economic reformation, infrastructure development plan and accelerated mode of economic growth in the state he envisages an Ondo that will rapidly develop in all dimensions.

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. One is SAO Capital. It functions as an investment bank. We provide financial advisory, capital market advisory and most importantly developmental advisory to state governments in Africa

SAO Capital as a social impact investment firm’s mantra is “impact comes first” in everything we do, that is why we are not in the capital markets as stockbrokers, we only approach the capital market to raise debt for developmental projects. When we raise capital, it is for socially impactful projects.

I am an ardent environmentalist and policy expert. However, I have extensive experience in the financial sector and also working with the government, or you can call me a social 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 from Warwick University.

I have an MBA from Saïd Business School, Oxford University and I’ve been working for the government for a while now. I worked for the Environment Agency in the UK where I was part of the team that looked after the environmental affairs of the UK for many years. I also worked for two investment banks in the UK, Royal Bank of Scotland and Deutsche Bank UK.

I moved back to Nigeria nine years ago when I was appointed Special Adviser on Environment to the Honorable Minister of State, FCT and one of the notable achievements then was the creation of the Satellite Town Development Agency (STDA), through executive order of the Nigerian President.

The second thing we achieved which was quite notable is the ongoing 450 million dollar Abuja urban integrated project, 350 million dollars set aside for the urban renewal programme and infrastructure upgrade in the six area councils of the FCT. And also to cut the menace of congestion in the FCT, we developed a 100 million dollar bus rapid transit scheme which is the BRT scheme currently been planned.

After then, I also worked with many development organizations in Nigeria. I worked as a World Bank consultant as a Environmental Safeguard Specialist developing large infrastructure concessions as PPPs, I also worked as a DFID consultant for as a Senior Power and Urban Development Specialist supporting all government infrastructure agencies.

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 organization into?

SAO group It is a social impact investment and advisory firm. SAO Group started in the UK thirteen years ago as SAO Technologies. We provided technology services to the banking industry and it morphed into SAO capital that started in Nigeria.

Under our advisory services, we assist governments by helping them plan and develop better with their limited resources. We also do a lot of infrastructure development and financial advisory. Our advisory business cross pollinates with the investment business as we do principal investment on some of the projects we work on within the advisory business. One of the largest infrastructure projects we are providing advisory services on is the planned 1100 megawatt kingline power which obviously is phasing into two – 550 megawatts, in each phase, the project so far has raised 650million dollars.

Part of SAO group portfolio companies is SAO Agro, focused on principal investments in large scale agriculture projects, however working with smallholder farmers to increase their social-economic status.

SAO Energy is focused on renewable energy projects (clean energy) particularly solar and hydro power. We develop power projects that are typically clean power including gas as well. We are currently raising capital in partnership with the Government of Ondo State to provide 24/7 Solar Power and clean water systems for all health facilities and also communities closest to the PHCs by turning the system into a Minigrid. Our Goal is to take all the 584 Primary healthcare Centers in Ondo State Off the Grid under our “Power and Water for All initiative”.

You have been partnering with 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 that is because we started work immediately the governor won his election, he had meetings with 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 advisor 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 starting with a baseline study for what’s on ground when his Excellency took over office. Based on our research we noticed massive gaps in infrastructure, probably due to paucity of funds. Our focus became creating a parallel funding source outside the budget of the state government leveraging on our project development expertise and our relationship with the international community and development financial institutions.

So, after doing a diagnostic study we came up with a wish list of projects and we did a prioritization of those projects to select what we believe can be phased short and long term. After which, we prioritized 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 strategy is to develop impactful revenue generating projects that will increase the IGR of 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 and markets. We also identified major roads where you have huge traffic of people going in and out of the capital and also some very strategic locations within the state.

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 will be a 70 to 30 percent ratio.

So, we prioritized these projects based on economic benefits to the residents of the state. Currently, we are focused on about 500km of rural roads strategically located and I’m proud to say that we have secured about 60 million dollars to rehabilitate those roads.

These are projects we believe will not only add to the social economic status of citizens but will also be done diligently at all cost and delivered at time because the funders are very meticulous.

Also, we realized 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 million dollars for erosion control for the sea incursion.

Ayetoro communities yearly suffer from the ocean washing away their homes and livelihood, a quarter of the communities close to the seaside in recent years have been washed away. So, we actually will target such projects, however 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; our approach is usually adopting a blended financing model, where we make use of different financial instruments including grants from donor partners, concessional loans that we believe are the cheapest source of capital out there, they don’t really put a strain or heavy burden on the state because the money is being loaned as a sovereign loan through the federal government of Nigeria to the state.

That is, an interest rate that ranges from 0.5 to 2 per cent plus Libor or Euribor if it’s denominated in dollars or in Euro.

Also, what we are trying to do is economic development projects that will have a lot of benefits to the state for many years to come. We provide what I call development advisory service which encompasses raising the capital and handholding the state during the implementation stages to ensure sustainability.

Based on your expertise and works done so far, how can you describe where Ondo State was and where it is now?

We did a baseline study when we started and we know exactly what we are doing now. In terms of revenue to the state government, I think the revenue generation was about 600 million and currently, the state is pushing in excess of 2 billion naira every month. Currently revenues have increased from N8.4 billion yearly that the current administration met on ground to about 26 to 30 billion a year, which is a massive leap in increase. Once the impact of our projects starts to reflect we believe Ondo state IGR will quadruple yearly.

Secondly, how you know if a state is attracting a lot of investment is the number of attractions in hotel accommodation. Many hotels are springing up in Ondo state which is number one. Prior to the Akeredolu’s administration we barely had seven hotels in the capital of Ondo state, now we have more than ten hotels that are brand new that have sprung up.

We barely had a functional airline service from Abuja to the state. Overland was probably doing two or three flights a week to the state. As we speak, the state has been able to convince two airlines based on visible increased numbers of passengers looking to fly to ondo for business. Presently Airpeace flies every day from Lagos to Akure, Overland also flies from Abuja to Akure every day and it’s always full and packed.

What do you envisage for Ondo in the next four years, if it continues with this economic plan?

For continuity, even though we’ve worked with this government and have achieved a lot in three and a half years. We have been able to raise almost half a billion dollars for different developmental projects in the state; projects funded by the biggest financial institutions in the world. If we have been able to raise about 420 million dollars for different projects that span across different sectors, I want to believe that we can do way more for another four years.

I believe we will be able to raise over a 1 billion dollars in extra investment or capital brought to the state. So, I would say, we envisage an Ondo state that will rapidly develop. What people have not been able to achieve in the state in the last forty years, I believe we can do it in another four years.

I’m talking about massive livestock projects within the agricultural space; massive oil palm plantations springing up in Ondo state; beef projects from pigs and so many projects that will change the landscape and economic situation of the state in total.

I believe we can leapfrog ahead from 24 to 30 billion naira with a target of about 100 billion naira yearly in IGR in another four years. I just want to say we have experienced what government should be, what public-private partnership should be and working with a tenacious government should be like.

Ondo state is actually one to emulate by other governments who want to develop their states better. We’re not saying we know it all, we are just saying with the right government, there’s so much we can achieve.