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Red Star Has Retooled to Serve Outsourcing Sector, Banks- Obabori

peter oluka
Mr. Sola Obabori, group managing director of Red Star Express Plc
Mr. Sola Obabori, group managing director of Red Star Express Plc

The resent assigning of specific tasks to four divisions of Red Star Express Plc was in its preparedness to harness potentials in the outsourcing space of the economy, without compromising on the mandate as the credible indigenous company with penchant for pick-up and delivery of express documents and parcels, domestic and international, said Mr. Peter Olusola Obabori, the group managing director/chief executive officer.
In this interview Nigeria CommunicationsWeek, after his recent appointment as GMD, Obabori, said that the Group had since 2008 commenced the compartmentalization of its divisions, today, identified as Red Star Fright (RSF); Red Star Express (RSE); Red Star Support Services (RSSS) and Red Star Logistics (RSL).
Obabori, an astute management professional with long and outstanding Sales and Marketing career with an accounting and finance background, was previously the General Manager/Chief Operating Officer of Red Star Logistics Limited.

He joined the services of the organization in 1999. At various times, he served as the group's Assistant General Manager in charge of Strategy and Business Development for over five years and later as Deputy General Manager Sales with the responsibility for the national sales management.  Sola has a Bachelor of Science (B.Sc. Hons) degree in Accounting, a Master of Business Administration (MBA) and a Master of Philosophy (M.Phil) in Business Administration from Obafemi  Awolowo University, Ile-Ife, Nigeria.

He is an alumnus of several advanced management and leadership programmes from world class institutions including -The School of Business Leadership of the University of South Africa, McGill Executive Institute, Canada; Lagos Business School, Nigeria; Harvard Business School, USA; Haas Business School of the University of California, Berkeley, USA; The University of Westminster, United Kingdom and FedEx Purple Academy, Belgium where he excelled as the Purple Star Award Winner in 2006, among others.

Red Star Express Plc’s Journey in Past 24 Years
“It has been a long journey. Twenty-four (24) years is also a length of time in the history of the company; we have seen it together. I have been here for seventeen (17) years; which means out of the twenty-four years I have seen ups and downs.
 It is such a journey that has been rewarding to a very large extent, considering the amount of issues Nigeria has dealt with over the same period.
As I said during the anniversary: the owners/founders of this great company have done a great job, because, naturally, the mortality rate for companies is typically five years.
“I can mention many companies that came up during the same time Red Star Express was established, they struggle to stay alive for five years and there after they fizzled away; not because the owners didn’t have good intentions.
But, when you confront some issues that are bigger than you at some points, an economic circle that is tougher than you can contend with, sometimes, the best option is to give up and walk away from the fight.
So, staying around for this long means that we have to fight with many things and have been able to survive.

Emergence as Group Managing Director and Plans for the Company
“To me, it is a mixed basket of joy, but comes with serious responsibilities. You can be joyful of clinching a new job, but you must be conscious of delivering on the expectations.
There are big tasks on my hands; that is why the euphoria of been appointed the GMD has fizzled away as far as I am concerned.
I am settled to do the work before me. In terms of plans for the future: I have met a very good company on ground that has done very well in the environment.
Red Star has gone through many phases and it is listed company on the Nigerian Stock Exchange (NSE) which puts us in the public domain.
“Therefore, we must not let down those who have put their investments here. That is why my number one role is to secure what is on ground and build on the foundations that have been laid in the last twenty-four years. So, we are looking at business expansions in various areas.
We are looking at various innovations and technologies to drive our businesses and we are doing serious investments in the company for future stability. One of the things we have found in companies like this is that for your future growth you must consider the strategic investment areas. That is way we are building a future for those that will later take over.

Plans for (Indigenous) Business Acquisitions
“There are possibilities to that effect. As a businessman you keep your ears and eyes wide open to opportunities. So, Red Star Express will respond with regards to opportunities.
At the global level it is happening in our industry; companies have to ‘swallow’ other companies. Such acquisitions have happened a lot in the banking sector in the last ten to fifteen years.
Some of them are done voluntarily, while others are through enforcement or policy direction. When government says you must have certain level of capitalization, people may have to respond by ‘swallowing’ smaller companies. In our industry it is usually voluntary. We are open to business opportunities and will keep monitoring situations in the industry.

Businesses & Challenging Economic Situation, Competition in Industry
“Looking at present economic challenge, Red Star was founded in 1992; a very turbulent economic period also in Nigeria. In 1998 there was global economic meltdown, which was also a season we weathered together.
This is eight years after that cycle that saw the collapse of many banks. Therefore, permanent rejuvenation and focus are core areas that companies must emphasis.
Because if you dabble into various businesses to stay alive; even diversification can kill your business. I have studied many companies and when you are a master of one trade, you also get yourself into trouble. For us in Red Star, one of the keys that have taken us thus far is focus
“Red Star is a much focused company I met and I have inherited as the CEO to run the affairs. Since 2008 we have had a bit of compartmentalization of our business leading to- Red Star Fright (RSF); Red Star Express (RSE); Red Star Support Services (RSSS) and Red Star Logistics (RSL). So, we have four companies inside Red Star Group.

Why Red Star Group Was ‘Unbundled’
“The purpose of the compartmentalization is to ensure that the entities can focus on the area of growth that we consider core for the business segment. For example, freight is a mega area of expansion.
Sea freight market is huge, even though in Nigeria we are going through economic recession. In other words, the volumes of goods have gone down substantially. The Customs Service even confirmed that the volume of exports has depreciated by a very wide margin.
Also from the air port side, as an import dependent economy, the volume has reduced, which means for us to go up we have to deepen what is on ground. For instance, the RSSS is engaged in outsourcing services for the banking sector. I see companies outsourcing some of their services to enable them focus on core competencies.
“We have offices nationwide; so, there is a structure already in place to help companies manage services they can’t handle, and definitely, it is cheaper for them.
If you run a chemist company, must you run a dispatch session to be able to distribute your goods from company-to-company and homes? It makes a lot of economic sense for you to ‘offload’ that aspect of the business, because by the time you start buying trucks and other machinery, recruit staff, of course you are going to pull your self down.
“We have seen that happen to many companies who ended up burning their fingers. So, looking at these opportunities we created those divisions in our business to address the needs in our current economy. And we are responding well to the challenges.
In fact, if you want to do well in Nigeria look at the banks; they are deploying technology to equip their businesses and drive down costs. If you do same with your business the results will show you made the right decision.

Assessment of Nigeria’s Postal Industry
“The industry is a reflection of total state of the economy. If the economy does very well, it will also benefit from it. If the power sector runs very well, what will happen? Production will improve substantially.
To us, there will be more goods to deliver from one location to another. The industry is not operating in isolation of the rest of the economy; we are part of it. We oil the machine of distribution from the point of production to the level of consumption.
That is our job; intermediaries from the time the raw materials are sourced to the end production. As the middlemen, whatever happens at the two ends, we will take a share of it. Whether they do well or not, the impacts rest with us
“To a large extent, the industry needs re-organisation, but it does not imply we are no contributing to the economy.
I cannot boast that we have done better; we are reflecting the state of the economy in a larger scale. If you consider the investments in the industry, the workforce, taxes payable to the government-P.A.Y.E, corporate taxes; and structures put in place we have contributed to scaling-up of the economy.
We need to put up the figures together to understand what the industry is contributing to the economy in general. There people who are licensed today to just do delivery. They operate without belonging to any Association, because today if you can acquire a truck or two you have started…

…But That Raises the Issue of Quacks
No! They have licenses to operate but chose not to belong to any association, because they don’t want the challenges of unionization.
We were in a meeting few days again, and some of them are not willing to participate, because there are pressures they may not be able to face. Companies have gone down as a result of unionism…

Migration of Postal from Communications Ministry to Transportation
“Well, I don’t want to make categorical statement on this matter, but I know we do more of transportation than communications. In past it used to be post and telecoms (P&T). That classification has always been there; I am not in the position to change it. But, what do we do for a living- we move shipments from one location to another.
If you interpret that properly, the society should decide where we ought to belong. We move goods via trucks, bikes, and aircrafts.
If you look at that broad description of services we render, then where should we belong? At some point, our members belonged to the maritime unions, but after many years of squabbles they have migrated to post and telecoms union.

Red Star’s Expansion Plans
We have about 170 offices and agencies across the country. In terms of growth projection, the four pillars that I mentioned earlier, we are trying to deepen what each of them is doing currently.
Through RSSS we are providing shuttle services for banks and other organizations. We are trying to deepen such operations without having to mingle into what is not our operational area. People want faster service; technology helps to offer faster services and cut costs.

Red Star’s Five Year Plan
We may not draw a plan for you because this is public quoted company. Anything I say now can affect our operations at the stock market. It is easy to be killed when you have opened your arsenal. But one thing I can guarantee you is that Red Star is a forward-looking company.
We will not leave this company the way we met it. Our plan is to add as much Naira as we can, rave up the value of the company; a pact we have signed with the owners of the Company. Our reports are released quarterly; we will continue to work hard for the benefit of the shareholders.

Non-Passage of Postal Commission Bill                
We are losing a lot (as a country) for non-passage of the all-important Bill. We do visit other countries and you would see a clear separation of roles between regulator and operator, enabling clear-cut policy direction as against the arrangement today where NIPOST is playing both rules. In the telecoms sector there is a clear direction on how things should be done.
Independence and control are part of critical areas that should be considered while passing the bill. I believe the industry will be given opportunity to make considerations to the Bill before passage. Ghana, Niger and other West African countries boast of a postal Commission.

Licensing & Renewal Fees Charged by NIPOST
Well, when the current fees were put forward, we had to fall in line. If you want to do survive you have to join hands with the government to sanitise the industry. Many (courier) companies had gone under, not just necessarily due to the licensing and renewal fees, but there are too many issues in this business ecosystem.