Singaporean group Tolaram has operated in Nigeria for the past 38 years, greatly diversifying its operations to now embrace a gamut of sectors, from manufacturing foodstuffs to being involved in power distribution. African Business spoke to Harish Aswani, the company's managing director in Nigeria, about the Group’s approach to business on the continent.
African Business: Where do you now operate in Africa?
Since coming to Nigeria nearly 40 years ago, Tolaram is now in a number of countries, in Ghana, Congo, Cote d’Ivoire and Tanzania and we had an office in Ethiopia. We use them as launch pads to look at the markets, how we can do business there, to gauge the political climate, the economic climate.
We send someone there to stay perhaps for a year and then return to Singapore and tell us what they have learned about the country. But Nigeria is perhaps 80% of our business. We built the Lekki Port there, the first port in Nigeria to be privately built.
It is the country’s largest port, and offers the biggest potential container footprint and accessibility facilities for larger shipping vessels, compared to any port in the region. The project is worth $1.5bn and is estimated to generate over 150,000 jobs in Nigeria.
In addition, we have diversified into road transport logistics, fast moving consumer goods such as the manufacture of noodles, infrastructure, power distribution and ICT. We have a team that manages each sector.
Do you see policy consistency when governments change, such as happened in Nigeria?
I think business carries on. As long as you have been doing clean business, no one comes to disturb you. Understanding the dynamics of the country you are working in is vital. We started off in textiles, but have diversified greatly. Foodstuffs is a case in point. We introduced noodles to the Nigerian market and they were practically unknown. But they have been very successful, and we now have two mills producing the flour and we have moved into palm oil, we have our own seeds.
Some infrastructure projects take decades to develop. Can these really generate the revenues that are required?
Well, let’s take the case of Lekki Port and the Special Economic Zones. The business model is based on a landlord concept where you build the infrastructure and then put the operations out to tender. We did that and had 19 companies bidding. One won the tender. The model we had was a good one, a win-win for everyone. It was a very robust model economically, and we had financial and engineering consultants advising us.
I am interested in the way you moved from textiles to FMCG generally, to massive infrastructure projects. Was it because you experienced the constraints of poor infrastructure and identified the opportunity?
Yes, that was a great part of it. And you know president Obasanjo was very keen that we should develop the port. He loves Singapore. He gave us the approval and said ‘build it’.
Some parts of Nigeria have been trying to replicate the Singapore model. Realistically, is that viable?
What you should do is look at the policies that Singapore adopted. Look at the free port that was built 50 years ago. If you build the infrastructure, people will use it. Consider Nigeria’s container throughput. It is just 1m units a year for a population of 160 million. That’s one of the lowest per capita container throughputs in the world. Think of the potential!
This article was first published in African Business magazine, June 2015 issue. Copyright IC Publications 2015. Published under permission by IC Publications www.africanbusinessmagazine.com