Have you experienced any uptake in the business environment in Nigeria recently?
From our experience as a business, I will like to say it is a mixed bag of positives and the not so positives. We see definite signs of recovery in the economy from the recession, particularly in the construction industry which is a key segment we play in. This indicates that there are further investments and infrastructure projects going on in the country. If Nigeria was to follow normal economic indicators, we should see significantly higher growth, but we are not. This is not yet a reason for concern, but as this is a major driver for our business, we will maintain a close watch, especially considering the forthcoming elections. We still expect our businesses to progress steadily in the coming months. However, we must watch out for a certain number of indicators. However, there are still challenges in many consumer-related markets. It is fair, but not as good as it was a year ago, a lot of which can be attributed to the overall economic situation at the consumer level. From our perspective, despite the progress made, there are huge gaps in the development of infrastructure, education, and healthcare, which are all necessary for the ultimate uplifting of the country. The oil and gas sector, upstream agriculture and construction segments are all doing relatively well, but it would not take much to disrupt the system if the oil and gas sector were to experience a major shock.
What has led to the current state of the consumer market?
The consumer market is heavily dependent on disposable income or the money that people have in their pockets and how it is spent. It does not take much for a market such as ours to slow down once the economy comes under pressure. There is pressure on disposable income due to high unemployment rates, coupled with double digit inflation. Nigeria is one of the few countries in Africa where GDP growth does not necessarily translate into development. That is a major constraint because development will mean more schools, better healthcare, and improved infrastructure, pulling the entire economy forward in the long run. We see this as a core risk to miss the opportunity as a country to create value at a local level.
Have those projects that were paused because of the economy resumed?
Due to the recession, there was a dearth of infrastructural development in 2017, but there have since been significant investments in that segment by the government in 2018, as we see many projects such as railways, roads, and bridges currently underway.
How has the ease of doing business in Nigeria improved?
The process of registering a business for a new entrant has been simplified considerably. The situation has undoubtedly improved, but Nigeria remains one of the most complex places to run a business in the world. Looking at it from an investment standpoint, Nigeria is competing against countries like Ethiopia, Tanzania, Kenya, Ghana, or the Ivory Coast, and Nigeria needs to continue to put in efforts to facilitate managing businesses. We have promising projects in our business development pipeline, but it is still difficult do business in Nigeria, major reference for now being the situation at the ports, which are extremely congested and the poor state of the roads leading there. All these affect our ability to create more value in Nigeria. From a wider perspective, this does not help us in convincing our internal investors to do more business in Nigeria, and I am certain this is the same for many multinationals.
Do you import any raw materials?
We only import the raw materials which cannot be sourced locally for the manufacture of our construction chemicals. Challenge is, due to the sophisticated level of the technology required to produce these inputs and the absence of minimum critical mass for higher technology driven manufacturing, we are yet to get local substitutes for them. As we have been doing, we will keep working on developing locally available substitutes, as we know that is the best way to create the value here in Nigeria. With the Lekki projects coming up within the next few years, we expect an upsurge in the availability of more inputs for our manufacturing plant.
In 2017, you had plans to increase the number of BASF global businesses entering Nigeria. How has that progressed?
We have doubled what we had in 2017. So far in 2018, we have had six more, two of which were completely unexpected for us, which is a clear indication that some of our internal investors still see the many opportunities available here. Sustainability is fast becoming a major topic for us in Nigeria, and this is a topic that is becoming prominent in our discussions in our business across Africa. Asides education, the topics of food security and waste are critical, to the point where, for us, as a Nigerian company, we try to look at the challenges as possibilities. We have opportunities for circular economy projects and new business models. We will not necessarily do this all by ourselves; but we see ourselves as enablers for several small and large businesses, particularly social entrepreneurs. Some of these social entrepreneurs we have begun engagements with, and as we fine tune our plans, we will share accordingly and bring in more of these stakeholders on board this journey with us.
What is your outlook for 2019?
We do not anticipate that the election will disrupt the business environment significantly. Nigeria is more sensitive to a security clash or uncertainties in the oil and gas sectors, which would impact businesses almost immediately. As for BASF, we are out for success and do not expect anything less. We measure success in terms of total value to society; this means not only economic success, but also our contribution socially and environmentally to our society. We are committed to the country, and that will not change.