The Quality Threshold
What factors set El-Alan apart from its competitors?
We have a passion for what we do and exceed the brief on the strength of our multidisciplinary abilities. When given a design, we re-engineer it from the ground up and return to the client to propose improvements both in terms of design and functionality. We are also highly selective in terms of our projects. We want to differentiate ourselves by working in the highest quality markets. Therefore, when clients approach us they should not focus on price, as one doesn't when considering a performance car. Strategically, this is where we are trying to slot ourselves in the market. We are also agents for high-end brand items. We are effectively a one-stop shop, in that we design, build, and manage properties, which is what differentiates us. This enables our construction business to then supply better products. I am well aware of the challenges that can arise in terms of maintenance, and we are often invited as facilities managers at the design stage to provide input on how designs can be amended for better maintenance and to provide a longer lifespan for the client's asset. Maintenance is the key, and the guts of the building.
Why is the demand for prime-grade locations growing, and what does it mean for your development pipeline?
Demand for quality has evolved. Previously Nigerians were less qualityconscious, but today a new taste has grown for the best, especially as choice has now widened. The first acquisition of a well-to-do Nigerian used to be a flat in London. That has changed, and today many Nigerians are returning home to invest in a good property. As a result, we are particularly busy, expanding and recruiting. We have been growing at a rate of nearly 30% a year over the past five or six years. We are engaged in around 10 projects currently, having handed on certain projects from a total of 23. We also undertake considerable industrial work, where we stand to become the leading contractor. Aside from the superlative standards we adhere to, we are also approached by diverse industries that look to our varied experience, whereby we become their in-house contractors in Nigeria.
Have you also entered into partnerships with foreign companies?
Yes, and these are the kinds of agencies we are talking about. We are looking for additional investment, in particular in terms of development. I think the time is right for real estate and real estate agencies. For us it would be key because in terms of complementing our core activities. We need to become an international name to be able to leverage our skills across the construction value chain.
What is your assessment of construction sector viability for foreign investment?
I think Nigeria ranks among the best investment destinations in the world. It has reached a threshold that makes it the next India, China, or Brazil in terms of the size of its middle class, earnings, and development. There is a current housing shortage, and between now and 2020 Nigeria will need 20 million homes. There are challenges of course. The first involves technical skills, which we are trying to address through our schools, which are inadequate with classes of around 50 students. Funds are available, and need to be tapped as people are eager to learn.
Does government regulation of the sector present a challenge?
The lack of regulation and overregulation are both challenges at the same time. It is challenging because the law curbs the number of foreigners a company can employ, as well as there being significant bureaucracy to contend with, and it seems that the government needs to be better in touch with the needs of the business community. My concern is not necessarily to employ a foreign employee with a degree, but rather, a technically competent person such as a mason or bricklayer, capable, moreover, of transferring their skills to local technicians. Meanwhile, the lack of adequate regulations does not affect our business as we always operate by the book, although many companies build sub-standard and even dangerous buildings with impunity. As a result, clients are determined to select contractors with a solid reputation. The poor quality work I have mentioned is not a failing on the part of reputable contractors, but of the system itself.
How do you deal with the high costs of doing business in Nigeria?
The cost is high because materials are expensive, while that of labor is misleadingly low because although the local labor market is cheap you need to build a significant workforce to guarantee the quality required. That becomes particularly expensive, as the average cost of employing an expatriate ranges from $100,000 to $500,000 a year.
What broad trends have you identified in your sector for the coming years?
Many multinationals will be looking to Nigeria, as it now registers strongly on the global radar. Today, when thinking of investment in Africa, Nigeria springs to mind first as the largest market. It has developed a prominent manufacturing base. The potential is huge, as a result of which construction follows. What makes Nigeria such a strong address for investment is its well-educated population of 170 million, more than 50% of which is aged less than 18.