Interview : Jean-Marc Ricca
What are some of the biggest obstacles faced by manufacturers in Nigeria?
JEAN-MARC RICCA: Localisation is the key issue for the manufacturing industry, especially when it comes to operating within local capabilities. This includes the need for locally available smart supply chain solutions, technical expertise, business developers, financial capabilities and raw materials. The lack of maturity in the chemicals value chain, for instance, and the need to import raw materials for chemicals manufacturing is a major challenge when it comes to localisation.
A second challenge is that of country risk perception. Since some external markets are very attractive, the case for business in Nigeria has to be compelling; however, the country is still being seen as an area of risk from a business standpoint.
In spite of this, we expect such challenges to ease with time. The stream of new refineries coming on-line, starting with the Dangote Refinery in 2019, should add backward integration and locally available raw materials to the chemicals value chain. Furthermore, state reforms to ease the way of doing business have started to change the perceived risk of Nigeria.
How has the business environment changed following regulatory reforms?
RICCA: We have noticed a sharp improvement in the business environment following the introduction of the Investors’ and Exporters’ Foreign Exchange Window by the Central Bank of Nigeria in April 2017 to address the foreign exchange scarcity. The window widened the market and allowed most importers to meet their foreign exchange obligations, which has been a considerable relief for the industry.
However, we are still facing regulatory complexity or over-regulation in the market. The introduction of the Product Authentication Mark by the Standards Organisation of Nigeria (SON) in the first quarter of 2018 is one such example. While SON’s efforts to tackle fake, cloned and counterfeit consumer and manufactured goods are commendable, this specific scheme adds an extra layer of complexity for manufacturers. Overall, innovative approaches need to be developed to enable businesses without compromising on guidelines and increasing the level of regulatory complexity.
What measures need to be taken to improve the local supply and value chain?
RICCA: The quality of local suppliers and service providers is a key strength. All local suppliers and service providers match the requirements of a typical international company. However, the business environment makes it challenging to deliver quality services, with impediments such as a lack of infrastructure, high logistics costs and power shortages.
In addition, it is challenging to find specific skill sets and competences. Market peculiarities, such as the dominance of Chinese construction players, call for Chinese-speaking account managers. In response to a constantly changing industry, companies need to be involved in upstream activities, like vocational training and internships, to support an overall upgrade of industry workforce standards.
To help bridge the gap in education, we have launched a management trainee scheme with the goal of equipping graduates with employable skills. Furthermore, we are considering the use of local applied research. This is likely to materialise in the fourth quarter of 2018.
How will demand for construction chemicals transform over the coming years?
RICCA: The construction industry is recovering along with the economy, so we expect an increase in demand for construction chemicals. We are seeing more projects being brought to the construction stage, with manufacturing and warehousing facilities being built at a faster pace than forecast. As a result, this will stimulate further investment in our local capabilities.
Read More from OBG
