Interview with Adham El-Khalil, CEO of Eurofind Participation

What is your current perception of the economic situation in Côte d'Ivoire?

Côte d'Ivoire spent many years in a political and security crisis, between 1999 and 2011. Even in the years prior to this, Côte d'Ivoire was not experiencing a very good political situation either. When this crisis finished in 2011, Côte d'Ivoire obviously found itself in a difficult situation politically, socially and economically. We have to bear in mind that during all these years of crisis, all infrastructure projects were stopped and many schools were practically destroyed not necessarily physically but in terms of quality of education, follow up or attention. This was a real issue because education is a very important aspect for the future development of Côte d'Ivoire.

Thus, the problems left behind after the crisis were huge and our task was tremendous. On the other hand, Côte d'Ivoire has so much potential; both economic and human, that we can build on to move forward. Considering the economic potential of this country, I am confident that if the political powers ensure their role as good governors, we can achieve great things in the future. Côte d'Ivoire plays a predominant role in the WAEMU region and it also has a very important geographical position with two ports that serve our country and the landlocked countries in the north. We also have great natural resources, both agricultural and mineral, which will help Côte d'Ivoire move forward; once again on the condition that good governance is assured.

Your group stayed in Côte d'Ivoire despite the difficulties that you just mentioned. This has allowed you to show your confidence in the country. Can you tell us a bit about the group itself?

The group was created in 1972, nearly 42 years ago by Mr Moustapha Khalil, the late President of the group. He was born in Daloa, in the central west of the country in 1939, so he is Ivorian by heart and soul. He started the group in the industrial sector in 1972, mainly in the PVC sector. He was a visionary and he realised that he would have to be different from other Lebanese businessmen and attack an industrial sector where the Lebanese were not present at the time. The Lebanese were trading and were merchants in this area and so he decided to go into industry and not trade. He was very ambitious, he had a vision and he started his industrial activities in the PVC sector with a partnership with Rhone Poulenc, a French company. He started producing PVC tubes, compounds, granules and other additives for the PVC industry. This activity was followed up technically by Rhone Poulenc at the time. In 1978 he started a business in the steel sector with the production of steel tubes, d-bars and other products. He developed this sector with the help of another French company, Vallourec. He also started a water bottling company with the Awa brand. This company was later on acquired by the BGI Castel group.

After the development of the PVC and steel sector, the group started an investment in 1994 in the rubber sector. We acquired the rubber plantation in Bettie, in the east of the country, which has an area of 5000 hectares and includes a transformation plant. This business was sold to SAPH later on, after many years of operation. Then in 1996, we started a business in dairy products. We acquired the assets of a yogurt plant and we reintroduced the Yoplait brand. Then we added Candia milk to our activities in this sector. We later added another product which is seasoning tablets under our own brand Maxigout. Today we are leaders in the local market for dairy products and we are second after the Maggi brand in Côte d'Ivoire for seasoning tablets. We also have an ambition to become a leader in this sector in the West African region.

Later on, we invested in the production of steel by building a steel mill in the industrial zone of Yopougon. Our main raw material is scrap and we invested in furnaces and other equipment. We are producing very high quality d-bars for the local market and the West African region today, with a capacity of nearly 90,000 tonnes of liquid steel a year.

We then invested in a brewery; the second brewery after Solibra in Côte d'Ivoire. It has a capacity of 300,000 hl per year. It is a state of the art, automated brewery with a water treatment plant. We are currently producing two brands: one mainstream brand which is ‘Number One’ and a premium brand which is ‘Gold 5.5’.

Today we can say that our group is focusing on three main sectors: the steel sector which has been our core business for many years, the chemical sector and the food and beverage sector. We are also in the process of acquiring an established juice brand in the local market for which we have high hopes not only in Côte d'Ivoire but also in West Africa.

We are present in Nigeria in the production of industrial gases, we are in Benin, Togo and Mali in the steel industry and also in Mali in food products, mainly dairy products, and we are present in Senegal in the distribution of chemical products.

It is a very interesting group. Do you find synergy between sectors? What is your strategy?

There is no synergy between these different sectors as they are completely separate. The reason that drove us to go into different industrial sectors was not necessarily opportunistic; the main reason was to diversify our activities and our risk. As you know, we do business in Africa, some activities can face some hurdles sometimes and so this is why we decided to diversify. In doing so, we are sheltered from possible problems in the future.

As part of your strategy, are you looking for partners or investors?

We should bear in mind that our group started its activities with strong collaboration and technical association with well renowned, mostly French groups. These were mostly technical partners. We are a family owned group, and we have always operated as such. I think that times are changing and that there is a possibility in the future for collaborating with potential international partners that might be interested in the African economy in general, and especially in West Africa.

Thus, there are no current plans for collaboration?

There is nothing going on for the time being. However, if an interesting opportunity arises we could seriously look into it.

Can you tell us a bit about your new success, the brewery Brasseries Ivoiriennes?

To summarise what was happening in this market, you should know that there was a monopoly established in Côte d'Ivoire and the West African region for the past 30 or 40 years with the presence of the Castel group. We thought that there was an opportunity to enter this market because of the presence of this monopoly. I would not say that breaking a monopoly is an easy task, in fact it is a very hard task, especially facing such a well-established group and brand. However we saw an opportunity here; people thought we were crazy! We had the idea many years ago but we were stopped from realising it because of the ongoing crisis in Côte d'Ivoire. Although we knew that if we waited for too long we would never do it so we launched this project in 2010, during the crisis. We did have to stop construction and development for a few months due to the event in 2011 but we resumed the project in May/June 2011 and we launched our first brand in May 2013. Our mainstream product was well received by the population, the quality was excellent, the brand was well presented, and the bottles were more modern and fun than what was already in the market. The cost of this project was around 21 billion CFA francs. Today we employ approximately 200 people in this brewery. We have launched two brands so far. We are positioned as an alternative to a beer that has been present for 40 years in the market. We have two advantages: a very good quality beer and a strong presence in highly populated parts of Abidjan and we hope to do the same soon in the interior of the country. Today we have begun the creation of a distribution channel. It is a difficult job to do but we are working on it. There is a lot of work ahead of us. We are facing big competition from the other competitor but we are confident that we will achieve our goals in the near future.

What are the main challenges when it comes to your group growing in the steel sector, which I understand is one of the main sources of revenue for the group?

We should note that the steel sector in the West African region is in crisis. Steel prices are extremely low nowadays. There is a surplus of production in China and elsewhere and competition in the region is rife. Our advantage is that we have a very strong commercial presence in Côte d'Ivoire and in the surrounding countries. Another advantage we have is the diversification of our products; today we have two main industries in this sector: Sotaci, which is a steel transformation plant and Acieries des Côtes d’Ivoires, which is a steel production plant and is very complementary to Sotaci today. Sotaci produces a whole range of products for the industrial, agricultural and construction sectors. It has nearly 50 references of products and a very strong presence and aggressive approach to this market. Investing in a steel mill was very important for our group because we wanted to stop importing some products from abroad and to produce them here where the raw material, scrap, was available. Previously the country was exporting scrap to India where it was transformed. We wanted to add value to this product locally. Furthermore electrical power is available, it is not cheap but it is available and of good quality. We are the first client of the electrical grid today in Côte d'Ivoire. The market was also present through Sotaci’s commercial channels and so we definitely wanted to invest in a steel mill. Despite the fact that the steel sector in the region is not doing very well, we have strong growth in our steel sector because of our aggressive approach and our diversity of products.

FAIR USE POLICY
This material (including media content) may not be published, broadcasted, rewritten, or redistributed. However, linking directly to the page (including the source, i.e. Marcopolis.net) is permitted and encouraged.