By Abubakar Yunusa
Femi Okenla, the owner of Ibis Hotels franchises in Lagos, said rising energy costs, foreign exchange (FX) volatility, and structural challenges in Nigeria’s business environment are slowing investment expansion.
Speaking on The Builders, a podcast hosted by Kemi Adeosun, Okenla said he had initially planned to build 10 hotels within a decade but has completed only two after more than 10 years due to operational constraints.
“We signed an agreement to build about 10 hotels in 10 years. But in 10 years, we’re only opening our second hotel,” he said.
The investor said energy costs alone have significantly eroded profitability in the hospitality sector.
“If I tell you what we pay monthly on energy costs, it is suicidal,” he said.
“We are paying as much as $35,000 a month on energy. That’s a fixed cost whether you like it or not.”
Okenla said electricity tariffs increased sharply after the introduction of the Band A billing structure, pushing monthly power costs for one hotel from about N11 million to roughly N49 million.
“Without any move, it jumped from N11 million to N49 million. This is government action,” the businessman said.
Okenla also disclosed that FX volatility disrupted expansion plans after funds set aside for development lost value following currency depreciation.
He said the company had maintained about N1.5 billion in a bank account intended to finance imports for a new hotel project.
“We kept money that was meant to give us $3 million,” he said.
“The first time we went to the market, that $3 million became $1 million.”
He described the loss as a major setback that forced the company to restructure its financing strategy.
“I’ve never seen anything like that,” Okenla said.
The hotel owner also criticised delays in bank financing decisions that are slowing the execution of private sector projects in Nigeria.
He said one financial institution took months to reverse an earlier commitment to fund a hotel development project, forcing the company to adjust its expansion timeline.
“They agreed in principle to fund the project,” he said.
“But it took them eight months to come back and say they could not do it.”
Okenla said such delays create uncertainty for developers who rely on timely access to financing to manage construction schedules and supplier commitments.
“When you are building, time is money. If funding decisions are delayed, the cost of the project keeps increasing,” he said.
The investor said the unpredictability of financing timelines has made it necessary for businesses to adopt more cautious expansion strategies and maintain additional liquidity buffers.
To manage the rising electricity expenses, Okenla said the company has invested heavily in solar infrastructure for its hotels.
“We just invested heavily in solar systems, which will be commissioned next month,” he said.
“It will shave at least 40 percent off our energy costs.”
He said the investment is expected to pay for itself within two years.
“Solar is the way to go,” he added.
Okenla also said systemic inefficiencies, including fraud risks, weak enforcement, and operational bottlenecks, continue to discourage expansion by private investors.
He said one of his hotels discovered supplier fraud involving inflated invoices for imported goods.
“We realised there was a lot of fraud activities going on with the supply chain,” the entrepreneur said.
The investor advised businesses to build strong internal systems to survive in Nigeria’s operating environment.
“You cannot run your business without structure,” he said.
On diasporans investing in Nigeria, the businessman said the struggles are mostly around structure.
“You cannot run your business without putting a very strong system in place. Most diaspora… they don’t put the structures in place. That is a major pitfall. Things are just run so loosely,” Okenla said.
“If a diaspora is coming to invest, you must plan to have a structure. It cannot be a l oose thing.”
Okenla said the system needs to be structured in a way that “even if yo u want to fight certain things, you will not be able to see it to the end”.
“You have to be committed… you put in a very strong system in place. Most people in the diaspora rely on family, and that is also a lack of structure,” he added.
Okemla said improving institutional systems and reducing operational bottlenecks would help restore investor confidence and support private sector growth.
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