Wednesday, July 05, 2006

Is TransCorp the Messiah?

The emergence of TransCorp as a Nigerian government-sponsored mega corporation was discussed in an earlier post last year. Since then, the business entity has been more-or-less on the back burner until a couple of days ago when it fired its pioneer Managing Director Mr Fola Adeola, and almost immediately, news reports carried the purchase of NITEL by TransCorp, a public telcom company for $750 million.

While its logical to argue that Nigeria needs a mega business entity in order to compete internationally, the manner in which TransCorp emerged makes one very uneasy. The constitution of its board members- all closely tied to President Obasanjo- doesn't help either.

As Segun Adeniyi of ThisDay Newspaper puts it in his article the TransCorp Question:
"We have no details of business plans or strategies beyond the moves to buy Federal Government assets on the cheap...Transcorp had no product it either produced or would sell yet the value of the N1 per share which the 'shareholders' in July 2005 allotted to themselves had by six months later in February this year, attracted a value of N6.00 each. And from the information at my disposal, the Initial Public Offer (IPO) that targeted N6 billion was over subscribed such that it was able to attract N17 billion. What this means is that without producing or selling anything, the money 'invested' by the shareholders (and you ask, into what?) had yielded 500 percent profit...I have it on good authority that by the next IPO which is only a few weeks away, the shares of this Aso Rock company will sell for N10 each!"
To complicate things further, the heavy involvement of the presidency in the affairs of TranCorp is anything but due process-compliant. Yet, 'due-process' is one concept brought to live and the consciousness of Nigerians by the Obasanjo's administration.

Given the role Mr President in the creation and management of this entity, one can only imagine what lies ahead of TransCorp post 2007, after the exit of its creator.