There’s big money to be made in Africa for those who crack the codes to running business in the many, risky and often complex countries. Listen below to hear fascinating insights on making money in Nigeria, Mozambique and other countries where many South African corporate bosses fear to tread. The group is generating an ever-larger chunk of revenue outside South Africa’s borders and sees greater medium to long-term growth opportunities in countries like Ethiopia than in its domestic market, which is waning in influence as an economic powerhouse. Imperial Group CEO Mohammed Akoojee is in conversation with BizNews. – Jackie Cameron
Mohammed Akoojee on the sale of Imperial’s South American shipping business:
The background to it is really a function of a major strategic review we undertook, in terms of defining the strategy for Imperial for the next three to five years. Through that strategic review, we decided to focus our business on Africa and positioned our logistics and market access businesses as the gateway to Africa. Two thirds of our businesses on the continent. We’ve got a very strong distribution platform across Southern, East and West Africa in attractive industries.
The logistics sector is set for good growth over the next three to five years. The end-to-end solution is we can provide a multinational in getting their products into some of the most challenging markets in the world. In my mind, that has got a value proposition that’s attractive. That was largely why we did it. Our international business, outside the continent, lacks the scale to compete with big global logistics players. We had to pick markets where we can compete, win and where we have a competitive advantage. Through that process, we’ve decided to exit some of our non-core assets outside of the continent.
On Imperial’s market cap and unlocking further value:
A big part of that halving [of market cap] was the unbundling of our motor interest, Motus, which is separately listed. That represented two thirds of Imperial’s earnings when we did the unbundling. One needs to combine the market cap of Motus and Imperial Logistics to get the whole picture, in terms of our market cap. We believe through that transaction we did unlock value, by creating two focused businesses – one in logistics and one in the automotive sector.
On the market growth in African countries like Ethiopia, Morocco and Nigeria:
There’s definitely more growth in those markets. The demographics of those markets suggest good growth for a long time. If you just look at the healthcare sector – where we’re a big player across the continent as a logistics and market access business. Nigeria’s got over 200 million people and they spend a quarter of what we spend in South Africa on pharmaceuticals. That gives you a sense of the growth opportunity in those markets. Our theme of playing the consumer through our logistics and healthcare businesses stand us in good stead to take advantage of the growth.
We’ve got a business that we call Market Access. It provides route to market solutions, where we take stock ownership of the product and provide the logistics – as well as the sales and marketing activities – in getting consumer and healthcare products into Africa. Our brand is Imperial Market Access and over time, it has acquired many companies across the continent (as well as in South Africa) to build the capability and scale.
The big opportunity with Covid-19 is the vaccine distribution, which we, in South Africa, are tendering for. Certainly, consumables and medical supplies that are required for Covid-19, in terms of PPE, for example. We do have the capability of sourcing, procuring and distributing those products through our business that’s based in The Netherlands.
On business opportunities in Nigeria:
Nigeria is a key market for us. We’ve got a significant healthcare footprint in Nigeria, where we take product into the last mile through our business and distribution networks there to approximately 50,000 points of sale. We have got a regional transport warehousing setup that supports that, in terms of getting product into the last mile. And by far, we’re the market leader in terms of providing access to healthcare providers that are looking to get their product into Nigeria’s healthcare sector – both in the private and public sector.
To give you a sense of the scale of the business. About 75% of branded drugs go through our network. What I’m describing these products like GSK, Pfizer, AstraZeneca – not generics – but what they call innovator drugs. We have a very commanding position in the healthcare sector within Nigeria – from the transport, warehousing and the distribution capability into the last mile.
On doing business in Nigeria:
It’s challenging and I think it’s complex because of the reasons that some of our South African colleagues or companies have pulled out. Our business model, in my mind, talks to some of the challenges that one faces. The informal sector is by far the majority through which consumption happens. We take product into that sector, whereas some of the companies you mentioned (Shoprite) would be more formal retail – which I think would be difficult to compete with the current setup in Nigeria.
Secondly, I think you need good partners and you need good local management that understand the lay of the land. We certainly haven’t started up greenfield type operations in Nigeria. We bought a well-established business with good systems, good management and good local partners. I think those are the key ingredients that you need to be successful.
Read more:Â
- Shoprite exits Nigeria – What makes Africa such a challenging place for SA retailers?
- Shoprite to sell Nigerian division to Persianas Group
- Shoprite to focus on domestic market after withdrawing from rest of Africa
