Employing Over 15,000 Nigerians

Could you tell us why Tolaram group decided to operate in Nigeria and what businesses Tolaram has in the country?

It is exciting to operate in an environment which brings constant challenge. There are number of reasons why we do what we do. It was the unique opportunity to build businesses that have the potential to deliver substantial value for all stakeholders. The flamboyant entrepreneurial spirit of Nigerians and ever-expanding work force makes it more attractive for businesses. In late 1990s Tolaram group decided to venture into CPG (Consumer Packaged Goods) segment with Indomie noodles. After the success of Indomie noodles we have launched many other brands like Hypo bleach, Power Vegetable Oil, Power Pasta, Minimie Chinchin, and attracted lot of foreign investment in the country with the companies like Arla foods of Denmark, Kellogg company and Colgate Palmolive of USA. Nigeria has more than half of west Africa GDP and its population accounts for 20% of African population. This makes Nigeria one of most attractive markets in Africa. Today, Tolaram Group also operates in infrastructure, where we have the Lekki Deep Sea Port project and the Lagos Free Trade Zone project.

What are the major trends you foresee in the consumer markets in West Africa and Africa as a whole?

Urbanization is a trend that will continue in African market. African consumer will tend to move from a low-cost trend to an aspirational one. Ever expanding population of Africa is mostly young and it will continue to grow both in size and income. The long-term prospects for sustained economic growth and consumption are positive, which will lead to more information on available choices. Unfortunately, an increasing number of people in the region are suffering from the malnutrition and health problems arising from under-nutrition, such as deficiencies in vitamins and minerals. That is why consumers are increasingly looking for convenient yet affordable, nutritious foods that are manufactured in hygienic conditions. People are becoming more aware of nutritional aspects as well as health risks. This will result in higher standards in the fast-moving consumer goods segment; players that incorporate nutritional improvements into their products will be in a better position and will complement efforts that are being made by governments to improve standards of living. Another aspect increasing the options available to the final consumer will be increased intra-regional trade that is being driven by ECOWAS & ACFTA.

What are some of the main infrastructure challenges that consumer-packaged goods (CPG) companies face in Nigeria?

Power generation is a huge burden on manufacturing companies. The absence of reliable grid power is a major constraint on the cost competitiveness of Nigerian products in both the domestic and export markets. To develop Nigeria through industrialization and export-led growth, it is important that we create an attractive investment environment that encourages investors to invest in power generation sector. Most factories are located in Lagos & Ogun states and dispatching goods around the country has become a major challenge, given the long distance to be covered. It takes four days on average to drive a truck from Lagos to Maiduguri. As the economy has grown and consumption has risen, the ports system has become a major bottleneck and hindered expansion. We have also witnessed infrastructure challenges with regards to the diminishing availability of trucks. Logistics would stand to benefit significantly from upgrades such as a more efficient railway system.

What are your expectations in Nigeria for the years to come within the sectors you are currently operating in?

Nigeria’s major GDP contribution comes through agriculture followed by oil and gas. In manufacturing sector Nigeria is still lagging behind and depends on lot of imports. We have invested heavily in the country in setting up manufacturing plants. Government is always very supportive with the policies to encourage manufacturing set ups. Recently we have invested more than 40 billion naira setting up Kellogg factory in Lekki. We are very confident with such investments and huge consumer base our businesses will thrive in Nigeria. We have been operating in the country for more than 30 years and we have ever-lasting commitment to serving our consumers.

Would you give us an insight into the group’s backward integration strategy within Nigeria?

More than 90 million Nigerians live below poverty line and to serve bottom of the pyramid we needed to have cost leadership strategy. To do full backward integration of supply chain we did lot of investments which created lot of jobs and impacted communities positively. Such kind of investments need to have very long-term view which denotes our believe in the country and commitment to serve Nigerian consumers. Today we operate more than 20 manufacturing plants in the country and employ more than 15,000 Nigerians.

What role did Tolaram Group play in the development of the Lagos Free Trade Zone, and what other projects do you have in the pipeline?

The Lagos Free Trade Zone is fully owned by Tolaram Group. Many industries/manufacturing plants are already operating in the zone. We are still in the process of developing 800ha of land in Lagos Free Trade Zone. The first phase is the industrial park, where we will be providing all the infrastructure and utilities for industries to operate. The second phase will be developing residential areas. Our Lekki Deep Sea Port project is a JV with China Harbour Engineering Company Limited (CHEC) and next to Lagos Free Trade Zone. Anyone operating in Lagos free trade zone will have direct access to the port. This offers a lot of logistical advantages, which is why many companies are interested in establishing their manufacturing facilities in the zone.

Tolaram is said to have a very strong culture. Many of your managers have spent their entire careers with the Group. How do you keep your people open to progress and change?

It’s true that we have a strong culture which is guided by our values. Diversity and inclusion are important parts of it. Look at how we handle partnerships and acquisitions, for instance. We have entered into a partnership with Asian, European & American companies and we are open to learn from them. For one thing, we send up-and-coming managers of different nationalities to these countries. But mostly we need local talent — people with a deep-seated understanding of the mentality of each place, with a feeling for the man on the street and his consumer habits and preferences. A graduate from a foreign business school won’t necessarily help us here. It goes without saying that their preferences and means are vastly different from those of consumers in industrialized nations. Every one of our employees understands what it means to their daily work and our culture is the glue that hold us all together.

What role is Tolaram Group going to play in Nigerian economy in 2020?

Nigeria is a country which imports a lot and have high unemployment rate. Agriculture is the one field where with less investment you can create more jobs. We have decided to go into Palm Oil plantation and cassava plantation in Nigeria. We have got 18,000 Hectare land in Edo state for Palm Oil Plantation. It will create thousands of jobs and save the forex to the country by reducing the import bill. The Nigerian government has set up incentives to help modernize and mechanize the agricultural industry. At the same time, our Lekki Deep Sea Port project is in progress. As we all know businesses have stagnated in Nigeria because of congestion at the largest port in Apapa. The eroded infrastructure and slow-moving nature of the port’s operations have resulted in perpetual congestion, but the inefficiency is costing the economy significantly as container traffic to the port has dipped more than 30% in the past few years. Our Lekki deep seaport will make significant impact on Nigerian economy, once it’s operational in next 24 months.