Interview with Haresh Aswani, Managing Director (Nigeria) of Tolaram Group
What is it like to do business in Nigeria in 2016?
It was a tough beginning with a lot of uncertainty. For our businesses and industries that have been here for 40 years this is probably one of the most difficult periods in terms of understanding in which direction the country is going. I think until the policies are clearly defined it will still be a challenge, primarily because of the policies in terms of what the government wants to achieve and the foreign exchange mechanism they want to put in place.
How is it affecting you?
Quite badly, as businesses need clarity on policies and it must be long term. This has resulted in us losing a year on new investments.
What about the sectors that you operate in?
We are primarily in the food/logistics and infrastructure. The food sector is badly affected because some raw materials are still imported so with the limitations of availability of foreign exchange and the fluctuation in currency it has hit the bottom line badly.
I think the key strategy for the Tolaram Group has been long-term businesses.
Tell us about the Tolaram Group. How long have you been in the country?
Tolaram Group has had a very exciting journey in Nigeria. A good journey. Tolaram Group has been here for 40 years. We started our first operations in 1976. We evolved from a multidiscipline company to a more focused company. We primarily started out as an electronics and textile company. We now have four pillars in our business. The food & fast moving consumer goods sector, infrastructure sector, power sector and the IT sector.
Can you give us a summary of your strategies for each of those sectors?
I think the key strategy for the Tolaram Group has been long-term businesses. We look at every business and ask ourselves if it is a long-term business. Is it a sustainable profitable business? If it is then we will focus on it. Some of these businesses take a long time to mature or become profitable but if there is light at the end of the tunnel we will focus and work on it.
Are there currently any investments that you are looking at closely?
We are continuously growing our businesses. In the fast moving consumer goods we are expanding our food business. We have just signed a joint venture with Kellogg and we intend to do the Africa Walk with them by developing the snack food and cereal business within Africa starting with Nigeria and Ghana. Hopefully we kick off in South Africa and Egypt very soon. We also have a joint venture with Arla in the milk business. We market the product under Dano brand. In the infrastructure sector we are key promoters of Lekki Port, which is a collaboration of our Group, Lagos state and the federal government through Nigerian Ports Authority (NPA). We are also developing the Lagos Free Trade Zone, which is an 800-hectare industrial development next to the port. In the power sector we currently have a licence to do an IPP and we are finalizing the gas supply and the legal commitments from the government. When that is done we will go ahead and create an IPP here of approximately 700 mega-watts. We are also executing World Bank projects as far as the power project is concerned. In the IT sector we have the largest search engine in Nigeria called VConnect. We intend to expand it and we are looking at the eCommerce sector as well and it is still a growing business for us. In all our sectors we see a lot of potential for growth and we intend to grow the businesses.
What would be your advice or message to potential investors coming to Nigeria?
If you are coming into the country as an investor you must look at Nigeria as a long-term country. Do not look at Nigeria as a short-term country. You must have a focused commitment. You must have a strong stomach to do business in Nigeria and most importantly you have to be patient. It’s not a country the makes decisions very fast. We are still settling down and the government is still settling down but I think that in time it will find its footing. The great thing is that Nigeria has embraced democracy and it is a big step for the country. Nigeria is still like a growing child and it still needs time to mature.
We are very optimistic about Nigeria in all our sectors. For example in our food sector we are now doing a backward integration program. This program is there to make sure that as much as possible we use raw materials and materials made in Nigeria. Right now we have achieved 70% in that category. The next step will be to go into the plantation sector because some of the raw materials we require on a long-term basis. As a group we are now embarking on a project that will look at sustaining the availability of the raw materials in the country. On the infrastructure side we have a long-term vision for this country in terms of the need for infrastructure and Nigeria is a country where, if you build infrastructure it will be used. In the development of our port, the key factors are growth in terms of GDP, importation needs of the country and trans-shipment hub for the region. Secondly if you look at the per capita container usage per person per year Nigeria has one of the lowest in the world. The potential to grow the power sector is still very viable here. We need sixty to eighty thousand mega-watts very quickly to meet the immediate needs of the country. We have to embark on a long-term program to create the power needs of the country. In all these sectors there is huge potential for growth. If you are willing to stay long term to develop all this, then Nigeria is the country for you.
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