JETHQ OFGEN JOHN DEERE PAYG SOLAR: LOWERING COST OF ENERGY ACCESS FOR MILLIONS OF AFRICAN HOUSEHOLDS RADISSON GROUP: EXPANSION IN AFRICA MOTOR INDUSTRY IN SOUTH AFRICA COVID-19 ACCELERATES GROWTH OF FOOD & BEVERAGE E-COMMERCE MARKET
ANDREW CHIMPHONDAH CEO & MANAGING DIRECTOR SHELTER AFRIQUE WWW.CEOBUSINESSAFRICA.COM
YEAR 4 ISSUE 2. NO. 6
Afmass FOOD EXPO
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CONTENTS - DECEMBER 2021 | YEAR 4 ISSUE 2. NO. 5
4 6
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2
CEO BUSINESS AFRICA
DECEMBER 2021
EVENTS CALENDAR OPINION
65
CEO BUSINESS AFRICA GREEN
71
MOBILITY AND SUPPLY CHAIN AFRICA
8
EXECUTIVE INTERVIEW: TOMIE BALOGUN
26
COMPANY FEATURE: DANGOTE GROUP
PAYG Solar: Lowering cost of energy access for millions of African households
Motor Industry In South Africa
The young lady blazing investment trails in Nigeria
The industry with africa’s most valuable brands
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COMPANY FEATURE: OFGEN
40
COMPANY FEATURE: JETHQ
46
COMPANY FEATURE: JOHN DEERE
Brightening Africa’s future through solar power
Making aircraft transaction easy
Leading producer of agricultural and construction equipment in the african continent - Jaco Beyers
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54
TOP 10: TOP TEN SOLAR PROJECTS IN AFRICA
58
TOURISM: RADISSON GROUP
77
DIGITAL TECH AFRICA
Spreading its wingd across Africa despite COVID-19
COVID-19 accelerates growth of food & beverage ecommerce market
DECEMBER 2021
CEO BUSINESS AFRICA
3
EVENTS CALENDAR
AGRICULTURE & FORESTRY
AUTO & AUTOMOTIVE
ELECTRIC & ELECTRONICS
Autoexpo Ethiopia (Auto Show Africa) 02 - 04 Dec 2021 Addis Ababa, Ethopia www.expogr.com
The Africa Sugar Conference 07 - 09 Dec 2021 Kampala, Uganda www.informaconnect.com/africa-sugar East Africa International Trade Exhibition 27 - 29 Jan 2022 Dar es Salaam, Tanzania www.expogr.com/tanzania/general Grains Africa - International Trade Show on Grains & Technology 16 - 18 Feb 2022 Nairobi, Kenya www.mxmexhibitions.com/ grainsafricakenya Sipsa-Filaha & Agrofood 14 - 17 Mar 2022 Mohammadia, Algeria www.sipsa-filaha.com
Autoparts East Africa 10 - 12 Dec 2021 Nairobi, Kenya autoparts-eastafrica.com Autoexpo Tanzania 27 - 29 Jan 2022 Dar es Salaam, Tanzania www.expogr.com/tanzania/autoexpo Equip Auto Algeria 07 - 10 Mar 2022 Mohammadia, Algeria www.equipauto-algeria.net Automechanika Johannesburg 15 - 18 Mar 2022 Johannesburg, South Africa automechanika.za.messefrankfurt.com
EDUCATION & TRAINING
Power & Energy Africa - Ethiopia (PE Ethiopia) 02 - 04 Dec 2021 Addis Ababa, Ethiopia expogr.com/ethiopia Retail Sourcing Fair West Africa 14 - 16 Dec 2021 Lagos, Nigeria https://retailsourcingfair.com/ Electrex Africa 11 - 13 Mar 2022 Nairobi, Kenya 10times.com/east-africa-electricity SAITEX Africa 19 - 21 Jun 2022 Johannesburg, South Africa www.saitexafrica.com
ENVIRONMENTAL & WASTE
Agri Expo for Agriculture Supplies 31 Jan - 02 Feb 2022 El Sadat, Egypt www.agriexpo.online International Conference on Agricultural and Biological Science 12 - 13 Dec 2021 Cairo, Egypt www.10times.com/icabs-cairo Ethiopia International Trade Fair 17 - 20 Feb 2022 Addis Ababa, Ethiopia www.10times.com/ethiopia-trade-expo
TedxAccra 01 Jan 2022 Accra, Ghana www.ted.com Ghana International Model United Nations Conference 05 - 07 Jan 2022 Accra, Ghana thegimun.org Digital Retail Forum 26 Jan 2022 Kempton Park, South Africa 10times.com/drf International Schools & Education Fair Africa 26 - 27 Feb 2022 Nairobi, Kenya www.isefafrica.com The Network Forum Africa Meeting 15 - 16 Mar 2022 Johannesburg, South Africa www.thenetworkforum.net/home/events
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CEO BUSINESS AFRICA
DECEMBER 2021
International Conference On Environment And Natural Science 12 - 13 Jan 2022 Cairo, Egypt waset.org/natural-science-andenvironment-conference We Are Africa 17 - 20 May 2022 Cape Town, South Africa 10times.com/we-are-africa Envirotec & Energie Expo 01 - 03 Jun 2022 Tunis, Tunisia www.envirotecener-expo.com Leading trade fair for Waste Water & Water Treatment Technologies 18 - 20 Jun 2022 Cairo, Egypt www.watrexexpo.com/site
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MEDICAL & PHARMA International Conference On Nursing Ethics And Medical Ethics 28 Dec 2021 Bulawayo, Zimbabwe 10times.com/e1z1-h6g3-k7ph International Conference on Medical & Health Science 14 - 15 Jan 2022 Lagos, Nigeria 10times.com/icmhs-lagos ESMO Summit Africa 11 - 13 Feb 2022 Cape Town, South Africa 10times.com/expo-summit-africa Medexpo Tanzania 17 - 19 Feb 2022 Dar es Salaam, Tanzania www.expogr.com/tanzania/medexpo Morocco Medical Expo 12 - 15 May 2022 El Jadida, Morocco www.medicalexpo.ma
MINING, OIL & GAS
POWER & ENERGY
Africa's Big 7 19 - 21 Jun 2022 Johannesburg, South Africa www.africabig7.com
Power & Energy Africa - Ethiopia (PE Ethiopia) 02 - 04 Dec 2021 Addis Ababa expogr.com/ethiopia
TELECOMMUNICATION
Mozambique Mining, Oil & Gas and Energy Conference and Exhibition 29 - 30 Mar 2022 Maputo, Mozambique https://mozambiqueoilmining.com/ West Africa LPG Expo 08 - 09 Mar 2022 Accra, Ghana https://lpgexpo.com.sg/lpg-nigeria/ Nigeria International Energy Summit 27 Feb - 03 Mar 2022 Abuja, Nigeria https://nigeriaenergysummit.com/ Egypt Petroleum Show 14 - 16 Feb 2022 Cairo, Egypt https://www.egyps.com/
HOSPITALITY & TOURISM
Conference on the Sciences of Electronics, Technologies of Information and Telecommunication 19 - 21 Mar 2022 Hammamet, Tunisia https://10times.com/setit-hammamet International Trade Fair for Information and Communication Technologies Communication to MAGHREB 21 - 23 Mar 2022 Algiers, Algeria https://www.ictmaghreb.com/en/ Zimbabwe Conference of Information and Communication Technologies 20 - 21 Apr 2022 Harare, Zimbabwe http://www.zcict.org.zw/
Coal-City Conference 06 - 10 Dec 2021 Abuja, Nigeria 10times.com/e1z4-z9r0-ps1f Steel Alloys South Africa 03 - 04 Feb 2022 Sandton, South Africa 10times.com/steel-iron
East Africa Com 10 - 11 May 2022 Nairobi, Kenya https://10times.com/e10s-h8dx-4kk9
Mining Investment Cape Town 07 - 08 Feb 2022 Cape Town, South Africa 10times.com/mining-investment-capetown
Hostex 06 - 08 Mar 2022 Johannesburg, South Africa www.hostex.co.za/
Minexpo Tanzania 10 - 12 Feb 2022 Dar es Salaam, Tanzania 10times.com/minexpo-africa-tanzania
CAFEX 10 - 12 Mar 2022 Cairo, Egypt www.10times.com/cafex2015
West African Mining & Power Exhibition 01 - 03 Jun 2022 Accra, Ghana www.wampexwestafrica.com/
Kenyan Hospitality Event 23 - 25 Mar 2022 Nairobi, Kenya www.kenyanhospitalityevent.com
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Foodpack Tanzania 20 - 22 May 2022 Dar es Salaam, Tanzania www.10times.com/food-hotel-kitchen
DECEMBER 2021
CEO BUSINESS AFRICA
5
OPINION
Africa’s first continent-wide survey of climate change literacy finds education is key
Year 4 Issue 2. No.6 WWW.CEOBUSINESSAFRICA.COM
FOUNDER & PUBLISHER Francis Juma EDITORIAL Jackie Muinde I Elly Akoko | Paul Ongeto ADVERTISING & SUBSCRIPTION Jonah Sambai | Hellen Mucheru DESIGN & LAYOUT Clare Ngode PUBLISHED BY: FW Africa P.O. Box 1874-00621, Nairobi Kenya Tel: +254 20 8155022, +254725 343932 Email: info@fwafrica.net Company Website: www.fwafrica.net RELATED PUBLICATIONS
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CEO Business Africa is published 6 times a year by FW Africa. Reproduction of the whole or any part of the contents without written permission from the editor is prohibited. All information is published in good faith. While care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of any action taken on the basis of information published.
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CEO BUSINESS AFRICA
DECEMBER 2021
By Nicholas P. Simpson; Postdoctoral Research Fellow, African Climate and Development Initiative, University of Cape Town, University of Cape Town; Christopher Trisos; Senior Research Fellow, University of Cape Town; Matthias Krönke; PhD student in the Department of Political Studies, University of Cape Town Talbot M. Andrews;Assistant Professor, University of Connecticut
M
ost Africans have heard of climate change and agree that it should be stopped. But far fewer feel that ordinary people can do something to stop it and even fewer understand its human causes. A recent survey by Afrobarometer found that over two thirds of Africans perceived climate conditions for agricultural production had worsened over the past ten years. And among Africans who have heard of climate change, 71% say it needs to be stopped and 51% feel they can do something to help. Climate change literacy includes understanding the human causes of climate change and its potential impact on the world. Without it, people will be less able to adapt to climate change impacts, including projected adverse economic and environmental impacts and potential opportunities. Climate change literacy is important because it underpins more informed responses to climate change. Yet, until recently little was known about how climate change literacy rates differ among populations across Africa, what influences variation, and the factors that predict changes in climate change literacy rates. Our research answers these questions and estimates climate change literacy rates across Africa. Across 33 African countries, we found climate change literacy varies substantially between countries and at sub-national levels. Education level is the strongest predictor of climate change literacy. Our primary data source was
Afrobarometer. The pan-African research institution conducted a public opinion survey in Africa, from 2016 to 2018, using nationally representative samples. It included 44,623 respondents across 33 countries, representing 61% of Africa’s population. This survey measured climate change literacy, as well as perceptions of climate change and sociodemographic factors such as age, gender, education and wealth. We integrated these data with measurements of local climate trends (extreme heat, extreme rainfall, and severe drought) and climate-related disasters such as nationally significant floods. Combining these data sources allowed us to identify the effects of both social and environmental factors on climate change literacy. The result was the most holistic picture to date of the knowledge dimension of climate change literacy
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and its predictors across Africa. The average national climate change literacy rate in Africa is 37% – far lower than in Europe and North America, where rates are generally over 80%. Climate change literacy varies substantially across African countries, as well as within countries. The climate change literacy rate is 66% in Mauritius and 62% in Uganda, but only 25% in Mozambique and 23% in Tunisia. Of 394 sub-national regions surveyed, 8% (37 regions in 16 countries) have a climate change literacy rate lower than 20%, while only 2% (8 regions) score higher than 80%. Striking differences exist within countries, too. For example, rates in Nigeria range from 71% in Kwara to 5% in Kano, and within Botswana from 69% in Lobatse to only 6% in Kweneng West. The average range between the highest and lowest climate change literacy rates for sub-national units is 33%. By far the strongest predictor of climate change literacy is education. Compared to those with no formal schooling, those who completed a high school degree are 19% more likely to be climate change literate. Those who complete a university education are 36% more likely to be climate change literate. Additionally, wealthier and more mobile Africans, as well as those living in urban areas, are more climate change literate. Poverty undermines climate change literacy. We also found a difference according to gender. On average country-level climate change literacy rates are 12.8% lower for
women than men. When considering regional patterns of this gender gap, we found that 60% of countries sampled had a difference between men and women greater than 10%, and 11 of the 15 countries with the largest gender gap are in west Africa. This is a concern given that women are often more vulnerable to climate impacts than men. This gender gap is a global phenomenon. A study covering 54 countries (only one African country) found women aged 15 years old were on average 4.7% less likely to be climate change literate than men. We found that education is generally equally effective in increasing both men’s and women’s climate change literacy. The changing environment also affects climate change literacy. Historical trends in precipitation, and perceived drought experiences, are associated with increased climate change literacy. However, we did not find that changing temperatures or the occurrence of climate change related hazards like floods had an effect on climate change literacy. The results of our study can guide policy makers and civil society when intervening to increase climate change literacy. Africa is projected to undergo substantial shifts in urbanisation, education, gender equality, mobility and income in the near future. Rates of climate change literacy are therefore likely to evolve with these processes, as well as with changing climate hazards. Large inequalities exist in climate change literacy between regions. And rates are lower in rural areas and among women. People living in poverty are also more vulnerable to climate change impacts and more likely to perceive changes in droughts and flooding. Yet these groups often have the least adaptive capacity, highlighting the urgency of enabling adaptation responses for these groups, including increasing access to financial and knowledge resources. A focus on climate change literacy – especially through education – presents an important opportunity to put climate change on national and sub-national development agendas. Increased climate change literacy, together with indigenous and local knowledge practices, can lead to more informed climate change adaptation across Africa
Large inequalities exist in climate change literacy between regions. And rates are lower in rural areas and among women
Source: The Conversation WWW.CEOBUSINESSAFRICA.COM
DECEMBER 2021
CEO BUSINESS AFRICA
7
EXECUTIVE INTERVIEW: TOMIE BALOGUN
TOMIE BALOGUN: THE YOUNG LADY BLAZING INVESTMENT TRAILS IN NIGERIA. 8
CEO BUSINESS AFRICA
DECEMBER 2021
WWW.CEOBUSINESSAFRICA.COM
By Elly Akoko
T
omie Balogun is an Innovator and award-winning leader in the financial services industry in Africa with over 15 years’ worth of experience across management consulting, telecommunications, investment advisory and Fintech. She is the Founder of The Green Investment Club which has recently been gaining international recognition for its efforts in improving financial literacy in Nigeria. The CEO Business Africa magazine had an opportunity to chat with Balogun, who is also the CEO of the Vestract Company on how her club is influencing investment in Africa.
Tell us about yourself and your organization
My name is Tomie Balogun, a certified financial educator. I have worked in multiple industries as well for over a decade. I have been in the communication sector- consulting in value added technology and more recently fintech. My experience cuts across multiple sectors but one thing that has driven me is wanting my finances help me live the life that I want and that is what put me on the journey of financial education and eventually started a community-based investment club. It all started with my story. I wanted to go do my MBA program and then I realized that I had been working for 4 years and I had not been saving, so what happened to my money? I knew I had to get better on my personal finances. So right after my MBA, I started a savings club for my classmates and that led to the journey of investing after learning that it wasn’t enough to just have savings. We started learning but it was hard due to lack of documented works of people’s investment journeys like in the West where it is very easy to find stories of Warren Buffet and the likes. We decided to look for experts and reach out to people who had this knowledge in their heads. We got our fingers burned but learnt our lessons. I started to blog about it on my personal blog at that time and I realized that there were so many people like me who simply wanted to understand investing. Someone asked me to start a community based investment club and we will join and at that time, I only knew of one model which is the financial club, so we started it together with my friends. I wrote about 3 investment models and the Green Investment Club which I established 3 years ago was me implementing the community based model. It is a registered entity. We invest in financial literacy, educating people about how investment works and go the extra step of helping them implement WWW.CEOBUSINESSAFRICA.COM
whatever they learn.
You have talked about lack of documented stories. Why do you think people and companies shy away from telling their stories, especially in Africa?
In Africa and especially in Nigeria, people like to stay private because they feel like they will get unnecessary attention when they put their stories out there. You find that for the generations before us they feared that the government would put some regulations if they speak up because they grew up in the military regime where there was no much freedom of speech. For us, with all these social media platforms it is normal to talk, we share openly and maybe even overshare. We find people with over 20 years’ experience in let’s say investing in the stock market shying away from telling their stories like the case of my mentor just because they want to stay private. We need such people to come out boldly and speak up because you know we are at a better position having such people around who can educate us and guide us. We need to push them to tell their stories and if necessary write books. DECEMBER 2021
Education is definitely a big one. We need both the government and the private sector working together because it cannot be private sector led alone- that would make it expensive.
CEO BUSINESS AFRICA
9
EXECUTIVE INTERVIEW: TOMIE BALOGUN
TOMIE HOLDING HER PUBLISHED BOOK (INVESTMENT CLUBS)
Another lesson we learnt during the pandemic was to have an open mind because it is during that time that we were able to invest in companies well due to the discounts offered.
10 CEO BUSINESS AFRICA
What are some of your achievements 3 years down the line?
The truth is that when I started I did not have this big and clear vision of where I wanted to go. It was more of like just deciding to start. What am grateful about is evolving over time and recognizing the point where I had to evolve. We started the community on Facebook, when we grew to around 200 people. We decided to have a proper domain so we built an online portal with online courses and then we moved into building a platform. Right now we have 1,700 members and that to us is a big achievement. Seeing such a big number commit to financial literacy and them going an extra mile of investing is such a big joy to us. In 2019 we built an app that helps us track investments and am proud to say that so far, we have seen investments grow to over US$70 million. We have seen the impact of these investments not only to our members but also to the companies that we invest in. We have seen them grow significantly and absorb more people in terms of employment. From produce exporters to Europe, to consumer lending companies and logistics companies, we have helped grow DECEMBER 2021
local businesses. In short, our investments have affected the whole economy positively.
What are some of the challenges you have encountered along the journey and lessons learnt?
One thing that I have learnt is that humans will always be humans. When you are working with people you have to understand that sometimes we make decisions based on our emotions especially when it comes to money, there are these emotions that come about with money. The challenge has been understanding that beyond the financial principles we need to teach people the right mindset towards money and investing. Most of us have the wrong mindsets towards money because of our upbringing and what we see on the new that shape some to think that you have to engage in fraudulent activities to be rich, this is what we are trying to change. Another lesson we learnt during the pandemic was to have an open mind because it is during that time that we were able to invest in companies well due to the discounts offered. Another challenge that we see is people wanting to make money really fast, they are impatient. We try to show them that investing is a journey and WWW.CEOBUSINESSAFRICA.COM
you have to pace yourself, it takes time to build an investment portfolio. What are some of the sectors you see potential in for your type of investment club and for other investors in Nigeria? Some of the sectors that I think need more investment are; one - Agro-processing because we have raw materials and we need to capture more value along the value chain, two - logistics especially international logistics, three Fintechhere we have seen two companies come from Nigeria that is Pay stack and Flutterwave but this is only one aspect of fintech that is payment processing, that has been explored and this space is so huge, there is potential. Credit is very important for economic growth. Healthcare is another sector, the pandemic showed countries the gaps in their healthcare sector and now they know where to invest.
What are the opportunities around education sector in Nigeria?
Education is definitely a big one. We need both the government and the private sector working together because it cannot be private sector led alone- that would make it expensive. We need a more skill-based type education focused on providing solutions. We are in the fourth industrial revolution we need more people learning tech skills even at the basic level. What we want to see is more publicprivate partnerships in this particular sector.
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Learning that brings change.
Do you get inquiries from people outside nigeria interested in joining the club?
Our members are spread over 26 countries, mostly Nigerians in Nigeria and in diaspora aiming at investing in Nigeria. We also have people interested in implementing the model in their countries all over and am working with a few of them. They trust the information we provide.
Tell us about your future plans and impacts you are looking at
For us, the future is bold and audacious. We are looking towards becoming a premier investment mining company not just a club. We are looking towards becoming a company that has an investment club and platforms. We will be building digital platforms across border that offer global adviser services, wealth management services and because we understand how our generation thinks, we understand that we will have to be disruptive in terms of our use of technology so we will harness the use of block chain technology. We want to enable people to own and purchase assets in a secure way because that is a gap we see there. We are also looking at taking advantage of technology to scale up our work
DECEMBER 2021
Another challenge that we see is people wanting to make money really fast, they are impatient. We try to show them that investing is a journey and you have to pace yourself, it takes time to build an investment portfolio.
CEO BUSINESS AFRICA
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CONFIRMED SPEAKERS
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Managing Director & Senior Vice President, Olam Nigeria
JUSTIN ARCHER
COO East Africa & Group Head of Sustainability, Sucafina SA
ESSAM EL-MADDAH
BRETT THOMPSON
Co-Founder & CEO, Mzansi Meat
MERIJN GORIS
HR & General Secretary Director, Danone Egypt & North East Africa
CEO, Holland Dairy, Ethiopia
NICO ROOZEN
OLUGBEMINIYI (BEMI) IDOWU
Honorary President, Solidaridad Network WWW.CEOBUSINESSAFRICA.COM
ROZY RANA
Managing Director, Dormans Coffee
Managing Director, Talking Drum Communications
DECEMBER 2021
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INSPIRATIONAL AFRICAN CEO INSIGHTS & COMPANY PROFILES
Your business has a unique story. Work with us to showcase your organisation to our readers in Africa and across the World. CEO Business Africa magazine is read by some of the most important business owners, C-suite managers and other key decision makers from the private sector, Government, NGOs, embassies, consulates, development organisations and other sectors across the breadth of Africa and the World. Full of inspirational and impactful interviews with CEOs and other leaders, the magazine, available in print and digital formats, is the voice of business in Africa. We tell African business stories better than any other publication.
CEO Business Africa magazine tracks, reports and celebrates the huge strides that are made by organisations in the Continent - from well established multinationals, to young enterprises that are inching their way to greatness in the future - thereby catalysing the next wave of enterpreneurs and investors in the world’s remaining growth engine. Having your organisation featured in this magazine provides your organisation and brands with the best opportunity to stand out in the crowded marketplace and for your story and impact to reach key decision makers across the Continent and beyond. In case you would like to have your story told here, please contact our Editorial team on +254 725 34 39 32 or info@fwafrica.net to discuss how we can work together to deliver an impactful story for your organisation.
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Education & Training
DECEMBER 2021
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DECEMBER 2021
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ANDREW CHIMPHONDAH: LEADING SHELTER AFRIQUE IN CREATING AFFORDABLE HOUSING IN AFRICA Supporting the development of the housing and real estate sector in Africa.
DECEMBER 2021
CEO BUSINESS AFRICA
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COMPANY FEATURE: SHELTER AFRIQUE
By Elly Akoko
Africa has experienced the highest urban growth during the last two decades. According to the African Development Bank, Africa has seen urbanization growth of 3.5% per year and this rate of growth the bank projects the share of the African urban population to increase to 50% and 60% by 2030 and 2050 respectively. The unprecedented growth has however not been matched with adequate supply of affordable housing, leading to proliferation of slums in cities across the continent. Shelter Afrique is the pan-African finance institution that exclusively supports the development of housing and urban development in Africa is however looking to address the housing shortage in Africa. Through partnerships with 44 African Governments, the African Development Bank (AfDB) and the Africa Reinsurance Corporation (Africa-Re), Shelter Afrique offers a host of products and related services to support the efficient delivery of affordable housing and commercial real estate across the Continent. The 44 member states own “Class A” shares, 18 CEO BUSINESS AFRICA
DECEMBER 2021
while “Class B” shares are held by Development financial institutions: African Development Bank, the African Reinsurance Cooperation and Fonds de Solidarité Africain (FSA). The Company has also opened “Class C” shares category to accommodate other international institutions outside of Africa who wish to join the pan-Africa housing development financier.
LEADING SHELTER AFRIQUE INTO NEW HORIZONS
Shelter Afrique has over the past 4 years been seeking to redeem its long held positive reputation with its shareholders and other stakeholders, after going through a turbulent period. And the person who has had to redefine the future of the institution while making amends with its shareholders and other partners has been none other than Andrew Chimphondah, the Group Managing Director and Chief Executive Officer. Under his leadership, the financial institution has managed a significant turnaround, registered a profit in 2020 after WWW.CEOBUSINESSAFRICA.COM
owned by Old Mutual, Managing Executive for NHFC. The Zimbabwean national also worked at Director level at Absa and Standard Bank South Africa for over past 10 years and has hugely successful business turnarounds and fundraising initiatives in several housing finance corporations.
FILLING HOUSING GAP IN AFRICA
OUR CEO MR. FRANCIS JUMA (LEFT) INTERVIEWING MR. ANDREW CHIMPHONDAH, CEO SHELTER AFRIQUE (RIGHT)
years of recurrent losses, giving the shareholders the assurance that their capital is well protected and not eroded. In May 2020, Shelter Afrique signed a debt restructure agreement with lenders, where they were to pay their debts over 4 or 5 years – this debt was paid in full June 2021 – despite of the Covid-19 pandemic. “The company has effectively turned around. We got certification as a well governed company,” reveals the Group MD & CEO. Andrew, who is Chartered Accountant with the Institute of Chartered Accountants of South Africa (SAICA), and Institute of chartered Accountants of Zimbabwe (ICAZ), holds a master’s degree in International Finance with Durham University Business School in the UK and is currently pursuing his PhD with Da Vinci Institute in South Africa says he feels privileged to have been given the opportunity to head this pan-African institution. He joined Shelter Afrique in 2018 after having served as the Chief Executive Officer for Housing Investment Partners in South Africa, which is
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To help it achieve its goal, Shelter Afrique works with Islamic Development Bank, African Development Bank, France’s AFD, EIB, KfW and BOAD. Beyond working with the DFIs and country governments in Africa, it is also looking for other partners to provide capital such as China’s EXIMBANK and philanthropic organizations. “These partners give us competitively priced funding and to deliver on our goals, banks are important because strategically, we cannot be in those countries, so we work with partners like Equity Bank and other banks, where we give them a line of credit specifically for housing since they have better knowledge of developers and their clients,” the Group MD & CEO, Mr. Chimphondah informs us. “Shelter Afrique is unique as they can give loans of up to 10 years. You cannot get that from commercial banks or private institution. In some occasions, we give a grace period of 2 years because we understand that in housing, the project life cycle is long. From our point of view, we believe that housing in Africa is a crisis. We believe that it is a human right that everybody must have access to decent and affordable homes.” He adds that Shelter Afrique’s vision is that all Africans must have access to decent and affordable homes. “In Africa, in search of good opportunities for employment, a lot of people are moving from traditional rural areas to the urban areas. The rate of urbanization is very high, but the challenge is that the urban areas are not creating affordable or low-cost houses to be able to cater for that movement leading to a proliferation of slums or informal settlements,” he adds. Shelter Afrique believes that it’s been established to try to either eradicate the slums or upgrade them or to create a new stock of housing. According to the pan-African finance institution’s Center of Excellence, which deals with research, advisory, advocacy and capacity development, the shortage of housing in Africa is estimated to be 56 million units, meaning African cities and urban areas need an average US$25,000 dollars per house, or at least US$3 trillion to resolve. “We are going through year-by-year increase DECEMBER 2021
CEO BUSINESS AFRICA
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COMPANY FEATURE: SHELTER AFRIQUE
JAMES MACHARIA (RIGHT) HANDING OVER THE CHAIRMANSHIP OF SHELTER AFRIQUE TO CÉLESTINE KETCHA
We are going through yearby-year increase in demand for housing, but the supply of housing is not matching that, so the rate of the shortage is also increasing
in demand for housing, but the supply of housing is not matching that, so the rate of the shortage is also increasing. For instance, in Kenya, the shortages are about 2 million, in Zimbabwe 1.8 million, South Africa is 3 million. Countries that have the bigger shortages of housing are like DRC at about 3 million and South Sudan about 4 million. We are trying to compute the shortage in Nigeria. I have been with the Minister for Works and Housing Mr. Babatunde Sanda, and they do not want people to just quote the figure they want the figure to be defined on a proper base,” says the Group MD & CEO. “The fact of the matter is in each country in Africa, we do have a shortage and our job is to intervene and hopefully resolve that shortage because we believe that housing is a basic need, which gives people their dignity and beyond that, it is also a wealth creator, if managed appropriately,” adds Mr. Chimphondah.
PUTTING THE PLAN INTO ACTION
According to the Group MD & CEO, Shelter Afrique has an authorized share capital of US$1 billion. With a paid-up capital of US$150 million the institution can leverage its capital to raise up to US$600 million, which they can then plough into investing in large scale housing projects across Africa. He elucidates how private-public partnerships enable the institution to deliver on its core mandate of providing housing by leveraging 20 CEO BUSINESS AFRICA
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on its capacity. “We work with member states to provide land to support infrastructure then we fund the top structure of the housing developments. We do it through public-private partnerships because when the land is provided, then the cost of the house becomes lower for the end user,” he explains. “We also do it through the provision of lines of credit. On the supply side, we are creating these units of housing while on the demand side, we provide access to affordable housing finance through mortgages and incremental housing micro-loans. With mortgages, we invest in primary mortgage lenders that then invest in mortgages product so that our people can get affordable mortgages over 20 years that improve home ownership in Africa,” Mr. Chimphondah adds. One example of that approach is the Kenya Mortgage Refinance Company, where Shelter Afrique has taken a US$2 million equity stake. The firm was also instrumental in forming the Tanzania Mortgage Refinancing Company, taking an equity of 12% and it has also placed a 12% equity in another mortgaging finance company in Togo called CRRH. “We are part and parcel of the think tank that came up with the Nigerian Mortgage Refinance Company,” he adds. The Group MD & CEO emphasized that “if you look at Kenya with 2 million houses shortage but with only 27,000 active mortgages, that shows you that across the continent, mortgage WWW.CEOBUSINESSAFRICA.COM
penetration as a percentage of the GDP is low and that’s an opportunity. There are various reasons why it is so low and as Shelter Afrique, we provide lines of credit to banks to support housing through mortgages or incremental housing loans.” “We also give them lines of credit to give to developers who want to construct houses to encourage the development of home ownership and house creation and those efforts hopefully will reduce or mitigate the shortage into the future.” The Nairobi headquartered organization also has its West African headquarters Abuja, Nigeria in Abuja, and another branch office in Abidjan for Francophone West Africa.
CAPITAL RAISING CHALLENGES IMPROVE
Post 2017, Shelter Afrique went through what the Group MD & CEO calls disruptive events, which were self-created internally and that made the market lose a bit confidence in the institution. The Group MD & CEO reveals that the challenge has been to rebuild that reputation and assure prospective investors that apart from it being an African super institution, the firm also has good governance structures and can create viable returns to its shareholders. “Investors want to put their money to create development impacts to further benefit Africans and create a return, with the profits re-invested in the company. I have to say that once we were clear on what our story is, the purpose of the
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company, and that we provide a window into investing into 44 countries in Africa, we started having like-minded funders that have been more than prepared to create the development impact in Africa,” he says. “We have aligned with funders that have patient capital to invest into housing, because housing is different: you invest, construct over a period and only get your returns once the construction period is completed. The project life cycle is anything within 3-4 years, so you start to get your returns when people start living in the houses, may be in the next 5 years. You need patient capital that can support the project life cycle,” says the Group MD & CEO. Andrew adds that the other funding challenge the institution faces is that deploying US dollars in Africa is a problem because of weakening currencies, for example countries such as Nigeria. In such cases, Shelter Afrique plans to issue bonds in different countries in local currencies. For example, in Nigeria they have issued a bond worth N500 million and are planning the same concept for East Africa. He added that most African governments have been allocating funding towards the health sector to combat Covid-19 pandemic but still, in the past three years, Shelter Afrique has been able to raise in excess of US$90 million from governments in Africa. In 2021 alone, they surpassed their budget of US$70 million by more than 22%. “Cameroon paid in about US$4 million, Kenya paid in about US$9 million, Tanzania paid about
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Shelter Afrique has an authorized share capital of US$1 billion. With a paidup capital of US$150 million the institution can leverage its capital to raise up to US$600 million.
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COMPANY FEATURE: SHELTER AFRIQUE
IN NUMBERS
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NUMBER OF AFRICAN GOVERNMENTS THAT HAVE PARTNERED WITH SHELTER AFRIQUE
US$2.7 million and other governments like Mali have paid US$2 million, so we have raised US$22 million, and it shows you that governments see the need for Shelter Afrique, so they are putting in equity and that’s how we have raised US$150 million over the past two years. We plan to raise another US$300 million to leverage our debts as well, so there is a lot of confidence that this has been expressed by the African governments.” The Shelter Afrique boss is grateful to the African countries’ governments for the support as well as the DFIs that have been giving them funding. “When it comes to housing, it’s that kind of a product that you cannot just talk about: you just have to executive it. People just ask you how many housing units you have invested in. For example, in Kenya, the housing gap is about 500,000 units. Every country has its targets or budget for housing and am yet to meet a country that has met that budget completely. Namibia has done quite well but it’s a process - over time we must ensure that we are delivering more and more housing units so that less and less of our people are left with indecent housing,” he clarifies.
REGULATORY GAPS EXIST
The CEO pointed that while land title deeds act as security, some countries in Africa do not have a sophisticated and developed land title system, which hinders the development of housing in such countries. “In such countries, there is land, but they don’t have title deeds, so we try to encourage the governments to regularize whether through digitization or blockchain technology to resolve this challenge.” “Similarly, at times pension funds may have certain restrictions in terms of how much money or capital to deploy in real estate or in real estate investments. In these cases, we work with
governments to change those regulations and in most cases, when you tell a good story, you can get waivers to proceed,” says Mr. Chimphondah.
AFRICA’S SUCCESS STORIES
Mr. Chimphondah reveals that Namibia can be a good example for other countries in Africa to follow in their quest to provide affordable housing to their populations, saying that by the government of Namibia aids homeowners by subsidizing up to a third of the cost of buying a home, enabling many people to buy houses. It has also created low-cost affordable houses for the people. He adds that Morocco too has a good story to tell in terms of provision of social housing projects, as have Egypt. Shelter Afrique though its Centre of Excellence arranges tours to different countries, so that other countries can emulate the lessons learnt from other countries in Africa. One such tour is planned in Morocco starting in November of 2021 to support the development of housing in Africa.
TECHNOLOGY ADOPTION IN HOUSING
Shelter Afrique is seeking new technologies, away from the centuries old brick and mortar
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meet the requirements,” he says. “Nowadays, the lenders also want to see green compliance, which can be achieved with the adoption of new technologies,” giving an example of the US, where some of the houses are made of wood and are still highly priced and durable. “I guess it’s the mindset and I believe it’s changing so by the end of the day, as long as you can give affordable low houses which are durable, I believe that we will have more progress throughout the African continent,” he adds.
SUSTAINABILITY IN FOCUS
techniques, by encouraging alternative building techniques that will eventually lead to better, cost-effective housing in Africa. For instance, in Rwanda, they have been experimenting with aerated autoclaved concrete, while in Malawi, they are looking at 3D printing technology. “To achieve more housing in Africa, we must move to industrialization of housing, where you manufacture a house in a factory and then assemble on the site, like what we are working on in Cameroon and Zimbabwe. For us to deal with the shortage, we must do things differently. We have to work with the economies of scale, so that we can rapidly deal with the housing shortage crisis that exists in Africa.” “Technology is key, and its acceptance is very important in the continent. One such company that has come up with new building technique is a Kenyan company Hydroform, which uses interlocking bricks and won Shelter Afrique’s Innovation Award in 2021. One of the roles we have as Shelter Afrique is to educate primary mortgage lenders that developers can use different technologies to develop housing projects. Their policies are usually used to only taking securities on bricks and mortar but now they need to be a bit more flexible as long as the quality and the standards or the frameworks WWW.CEOBUSINESSAFRICA.COM
To ensure that housing development across the continent is sustainable, the Group MD & CEO says that Shelter Afrique has signed a strategic partnership project with the UN Habitat that complies with the new urban agenda of the African Union and United Nations. They have also subscribed to the Sustainable Development Goals, particularly SDG goal No. 11, to ensure that when it comes to building houses, they are doing it in a responsible manner in terms of reducing the carbon footprint and supporting the development of green houses and create smart cities. “In part of the designs and the urban planning of the project that comes to us, we also want to make sure that those designs cater for even social distancing and reduce the carbon footprint to comply with the creation of smarter integrated cities,” he explains. “A house should a place for people to play, pray and to live comfortably. It should also have easy access to churches, schools and recreational facilities. All these things are very critical, apart from the just having a shopping center, so that you have integrated development with everything that can cater for what people would want, but in a responsible manner.”
COMPANY Shelter Afrique
COUNTRY Africa
SECTORS Real Estate
AFFORDABILITY GOAL
To the pan-African body, at the end of the day, Africa should be building houses for the 40% of the income pyramid, or for individual that earns between US$10,000 and US$30,000 per year. “We are looking at that bracket of low-cost houses, which must be built through innovation but must also be of high quality for people to feel they are living in a decent but affordable home. We are driving that because the biggest challenge in the whole of Africa in the housing industry, is making sure that people have decent homes that are affordable.” “I have been to countries like Nigeria, Ivory Coast, where the houses are being built but they are expensive and people can’t afford - so they remain inhabited thus creating sort of ghost towns; we try to drive through partnerships to DECEMBER 2021
WEBSITE www. shelterafrique. org/en/
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COMPANY FEATURE: SHELTER AFRIQUE
deliver on the goal of having low-cost affordable house in the continent,” he adds.
One of the roles we have as Shelter Afrique is to educate primary mortgage lenders that developers can use different technologies to develop housing projects.
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FUTURE PRIORITIES
Shelter Afrique has put in place a 5-year strategy on its quest to develop affordable housing in Africa, which is split into individual countries. “We have 44 strategies for each country because some countries are needing housing banks while others have housing banks. Some countries like CAR, because of the wars, are needing incremental housing loan support to rebuild those houses that have been ravaged by wars and some countries need local financing. As Shelter Afrique, we have now embarked on an ambitious program of issuing local currency bonds so that countries can get access to local currencies.” To that end, in September 2021, the institution will issue, for the first time in the
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market, a US$500 million medium term note/ registered bond in Nigeria to allow people to get access to NR250 billion for housing. In the first quarter of 2022, they will also issue in Kenya an East Africa bond, which will allow all the East African countries to get access to Kenya Shillings, Tanzania Shillings, Rwandan Francs, Ugandan Shillings - all that in partnership with the Capital Markets Authority of Kenya. On the Francophone Africa side, towards the second or third quarter of 2022, it will issue a Francophone bond. Mr. Chimphondah believes Africa itself has capital, and with the partnership that they have with the World Bank that has given them technical assistance grant of about US$200,000, they want to effectively access those capital markets because there is money, but that money is not being deployed into housing. “There are capital insurance companies, pension funds and big institutions that can invest in the housing sector but it’s about coming up with the right products for them to be able to buy that paper at an affordable coupon rate for their investment and we direct that money into housing.” “We see a future where we are using the capital in Africa to be reinvested into real estate and then of course beyond that we want to create a fund whereby you will have an Africa Housing Fund, which will take care of funding banks that are supporting developers to build houses. The fund will not only be used for house creation but will also provide mortgage loans and support the retail intermediaries that provide housing microloans.” Mr. Chimphondah says that for every 100 applicants that apply for the mortgage loans, maybe 5 will get approved by the banks, arguing that the mortgage loans product is not appropriate for many in African and therefore there is a need to have another product such as the incremental house micro-loans, where the government takes the land, provides basic infrastructure and services and then people can build houses of their choice, incrementally. “All in all, what we are doing is creating an avenue for housing. I believe there is a lot to be done but the key thing is attracting capital investments into low-cost housing because the developers want development profits. As Shelter Afrique, we encourage developers and strategic partners to still get the same profits but through volumes and less profit per unit to create affordable homes in Africa. That way, we are benefitting people not only through housing but also through the creation of employment and the improvement of standards of living in the continent
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AFRICA’S HOUSING CRISIS
Access to adequate and affordable housing is a current and growing problem in all the countries in Africa. Housing problems are largely to do with affordability: housing is expensive, and incomes are too low. Faced with few other options, vast numbers of urban households in African cities live in inadequate housing in slums and informal settlements. Furthermore, in many cases, they pay an inordinate share of their income for such housing and are further impoverished as a result. The urgent task is to make the urban housing sector in both large and small African cities function more effectively to increase access to affordable housing, especially for low-income households. The provision of affordable land and housing at scale remains a challenge to most countries in Africa. While the continent is the most rural region in the world, it is urbanising fast. Every day, for the coming fifteen years, Africa’s cities will have to accommodate an average of extra 40,000 people. Urbanisation will continue to place immense strain on affordable urban land and housing provision in the coming decades. Africa is rapidly urbanizing and will lead the world’s urban growth in the coming decades. Africa is the leasturbanized continent, accommodating WWW.CEOBUSINESSAFRICA.COM
11.3 percent of the world’s urban population, and the Sub-Saharan region is the continent’s least-urbanized area. However, the region’s cities are expanding rapidly - by 2050, Africa’s urban population is projected to reach 1.2 billion, with an urbanization rate of 58 percent, according to UN Habitat. With this rate of growth, Africa will overtake Asia as the world’s most rapidly urbanizing region by 2025. Although the nature and pace of urbanization varies among countries, with over a quarter of the world’s fastest growing cities, Africa is undergoing a massive urban transition. Globally, cities are major drivers of economic growth, and the quality and location of housing has long-term consequences for inclusive growth. However, in Sub-Saharan Africa, urbanization is not accompanied by the level of per-capita economic growth or housing investment that is observed elsewhere in global trends. Incomes in Sub-Saharan Africa have not kept pace with urbanization, which, in many African countries, has not necessarily been accompanied by industrial growth and the structural transformation as has occurred in other regions. Housing stocks, along with investment and employment in related
construction and finance industries, constitute a major component of national economic wealth. The key challenge for African cities, however, has been the comparatively low growth in per-capita income, which limits the resources that households must consume or invest in housing. At the same time across the region, the formal channels through which quality housing is produced and financed face major constraints that limit access to a large share of urban households. Hence, the formal housing sector is only a small part of the economy because the construction and finance services have very little effective demand, evidenced by the lack of formal investment in housing across the region. Recent studies have found that in Africa, formal housing investment (in national current accounts data) lags urbanization by nine years. Furthermore, the capital investment in infrastructure needed to handle rapid urbanization typically happens (if at all) after housing has already been built, often in informal settlements. Source: UN HABITAT – Affordable Land and Housing Report
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DANGOTE GROUP: THE HOME OF AFRICA’S MOST VALUABLE BRANDS With 18 subsidiaries operating in ten African countries, Aliko Dngote’s group has emerged the Most Valuable Brand in Nigeria in 2020 for the third year consecutively and named the most admired African brand.
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COMPANY FEATURE: DANGOTE GROUP
By Jackie Muinde
Founded in 1981 as a trading enterprise by Aliko Dangote, The Dangote Group is the largest conglomerate in West Africa. With annual revenues in excess of US$4.1 billion, the Dangote Group is also one of the largest on the African continent. Aliko Dangote, the Group Chairman and CEO, is currently the richest person in Africa with an estimated net worth of US$11.1 billion. He started the Group with a US$3,000 loan from an uncle to venture into sugar and other consumer goods trading. Later, his enterprise would gradually expand into trading other commodities such as rice. In 1981, when import licenses were required to import bulk commodities, Dangote established two business enterprises, Dangote Nigeria Limited, and Blue Star Services and sought to acquire import licenses for various commodities including steel, baby food, and aluminium products. He then added the shipping and the importing of cement 28 CEO BUSINESS AFRICA
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to his group's portfolio, setting himself on new pedestal where he had to compete with Lafarge, a French multinational cement manufacturing company that produces the bulk of the cement used in the continent. Currently, the group has over 18 subsidiaries, operating in ten African countries. The major subsidiaries are Dangote Cement, Dangote Sugar, Dangote Fertilizer, Dangote Pasta, National Salt Company (NASCON) Dangote Classic Seasoning, Dangote Oil and Gas, Dansa Foods, Dangote Transportation, Dangote Agrosacks, Greenview Development, Savannah Sugar and MHF Properties.
DANGOTE CEMENT
Headquartered in Lagos, Dangote Cement engages in the manufacture, preparation, import, packaging, and distribution of cement and related products in Nigeria and has plants WWW.CEOBUSINESSAFRICA.COM
The largest company traded on the Nigerian Stock Exchange, Dangote Cement Plc was formerly known as Obajana Cement Plc and changed its name to Dangote Cement Plc in July 2010. Obajana Cement Plc was incorporated in 1992. It is listed on the Nigerian Stock Exchange in October 2010 and as of August 13, 2014, accounts for 20% of the total market capitalization of the Nigerian Stock Exchange. Aliko Dangote has invested US$6.5 billion into the company between 2007 and 2012. In October 2019, Dangote Cement plc has signed an agreement with General Electric to Modernize Seven GE LM6000PC Aeroderivative Gas Turbines and Install Its Asset Performance Management (APM) Digital Solution at Dangote Cement Plants in Obajana and Ibese, Nigeria in a move believed to help one of Africa’s largest cement company improve efficiency and reliability, both of which are essential to executing the plants’ business strategy. The Contract Includes Service Agreement Extension for Additional 50,000 Operating Hours for Each of the Seven GE LM6000PC Aeroderivative Gas Turbines. The APM Digital Solution supplied by GE is expected to help the company reduce unplanned downtime and enhance operational Performance while GE’s Total Plant Solutions Will Improve Power Supply Efficiency and Help Extend the Life of the Cement Plants. In March 2020, the company obtained the approval of its board of directors to access the capital market for a medium-term debt funding under its N300 billion (US$818.1 million) bond registration programme. The cement firm in a statement filed at the Nigeria Stock Exchange (NSE) said it intended to issue its maiden series
With a capacity of 650,000 barrels per day (BPD), the integrated refinery project under construction in the Lekki Free Zone near Lagos, Nigeria is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility upon completion in 2022.
DANGOTE CEMENT FACTORY
or import terminals in 9 other African countries. The Company operates through two segments: Nigeria and Pan Africa. The Company, through its subsidiaries, is engaged in exploration, coal production, cement grinding, power production and limestone mining operations, among others. Its Nigerian operations include its three manufacturing plants in Nigeria: Obajana Cement Plant in Kogi State, Gboko Cement Plant in Benue State and Ibese plant in Ogun State. Its Pan African operations include its factories or import facilities in Cameroon, Ethiopia, Ghana, Senegal, South Africa, Tanzania and Zambia. It is also focused on operating in Congo and Sierra Leone. In Nigeria, Dangote Cement Plc is the largest company by market capitalization while the company’s overall operations make it the largest cement producer in Sub Saharan Africa (SSA) with an installed capacity of 45.6 million tonnes per year across operations in 10 African countries. WWW.CEOBUSINESSAFRICA.COM
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COMPANY FEATURE: DANGOTE GROUP
affirmed the long-term and short-term national scale issuer ratings of AA+ (NG) and A1+(NG) respectively, assigned to Dangote Cement Plc, as well as with the outlook accorded as Stable. In addition, the cement firm’s N100 billion (US$262.12m) Series 1 Fixed Rate Bond has been assigned AA+. This rating signifies that Dangote Cement’s credit profile and liquidity is very strong, with low risk of default. The rating accorded to Dangote Cement is an investmentgrade rating, signifying that it is an attractive investment vehicle. Dangote Cement PLC. has a long-term credit rating of AAA by GCR and Aa2.ng by Moody’s due to its market-leading position, significant operational scale, and strong financial profile evidenced by the company’s robust operating and net profit margins relative to regional and global peers, adequate working capital, good cash flow, and low leverage.
DANGOTE FERTILIZER
In January this year, the cement producer, bagged AA+(NG) and A1+(NG) ratings from Global Credit Ratings (GCR)
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of bonds, tagged ‘Series 1 Bonds’, subject to obtaining regulatory approvals and favorable market conditions. And in June 2021 the company announced the successful issuance of 50 billion Series 1 Fixed Rate Senior Unsecured Bonds under its new N300 billion (US$729m) Multi-Instrument Issuance Programme. The bonds were issued on May 26, 2021, at coupon rates of 11.25%, 12.50% and 13.50% for the 3, 5 and 7-year tranches respectively. Despite market headwinds, the bond issuance was well received and recorded participation from a wide range of investors including domestic pension funds, asset managers, insurance companies and high net-worth investors. The proceeds of the bond issuance were to be deployed for the company’s expansion projects, short-term debt refinancing and working capital requirements. Aside from this first issuance of a traditional bond under the new Multi-Instruments Programme, Dangote Cement has registered a programme enabling it to consider different types of fixed income instruments to cater for different type of investors. In January this year, the cement producer, bagged AA+(NG) and A1+(NG) ratings from Global Credit Ratings (GCR). GCR in its notice,
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Built at a cost of US$2.5 Billion, the Dangote Fertilizer Plant is Africa’s largest Granulated Urea Fertilizer complex. The plant occupies 500 hectares of land in Lekki Free Trade Zone, Lagos Nigeria. Dangote Fertilizer complex was established to produce 3 million metric tonnes per annum of urea fertilizer in phase 1. Its output will be critical in satisfying the existing demand which is pegged at about is 1.5 million metric tonnes as well as cater to demand in other markets in the African continent. Dangote Fertilizer works
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with Farmer Associations, Corporate Farms, NPK Blenders, NGO/development partners and State Governments all over Nigeria, as well as governments across Africa and beyond who are looking for sustainable approach to improve soil and farm yields. “This plant in five-ten years will change Nigeria agriculture and economy, as the efforts by Dangote Industries will help to ward off the crisis encountered in local production which has impacted agriculture,” the Minister of the Federal Ministry of Agriculture and Rural Development (FMARD), Alhaji Sabo Nanono during a tour of the fully completed facility in 2020, said. “The new fertilizer plant will make fertilizer available to Nigerian farmers, now we can forget all those merchants of fertilizer that have been confusing this country for the last 40 years, as we have received an answer from somebody who bypasses them and makes fertilizer available to the farmers.” Dangote Group recently announced plans to begin the export of its first shipment of fertilizer from its new fertilizer plant at the Lekki Free Zone in Lagos, to the USA and Brazil. Initial shipment from one of the world’s biggest fertilizer plant, which has the capacity to produce 3 million tonnes of urea and ammonia per year, is expected to start in late June or early July. Aliko Dangote said that the new fertilizer plant will export its first shipment in late June or early July, WWW.CEOBUSINESSAFRICA.COM
to Louisiana, while the majority of exports from the plant are expected to go to Brazil, adding that it will also be able to supply all the major markets in sub-Saharan Africa. Aside from fertilizer production, the company is already working to support the farmers with training on application of the fertilizer and even establish laboratories across the country for proper soil examination.
DANGOTE SUGAR
Dangote Sugar Refinery Plc commenced business in March 2000 as the sugar division of Dangote Industries Limited. It is a world class 1.44MT/ PA facility located at Shed 20 NPA Apapa Wharf Complex, at Apapa Wharf Lagos. The facility was the first sugar refinery to built in Nigeria, with an initial refining capacity of 600,000MT of raw sugar per annum. In December 2007, DSR Plc successfully exported its first consignment of 1,500MT of sugar to Ghana. Dangote Sugar Refinery is QMS, (ISO 9001:2008), FSMS, (ISO 22000:2005), OHSMS, (ISO 18001:2007) and (FSSC 22000) certified. Over the years, the facility has undergone two major upgrades which turned it into one of the largest sugar refineries in the world with 1.44MTPA refining capacity, at the same location. The refinery is powered efficiently with gas and/ or Low-Pour Fuel Oil (LPFO) with 16MW of inhouse power generating capability. The Dangote DECEMBER 2021
DANGOTE REFINERY
IN NUMBERS
US$
11.1B NET WORTH OF ALIKO DANGOTE
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COMPANY FEATURE: DANGOTE GROUP
COMPANY Dangote Group
Sugar refinery, produces 45 ICUMSA Vitamin A Fortified refined granulated free flowing crystal white sugar, packaged and distributed in 50kg, 1kg, 500g, 250g and non-fortified granulated sugar in 50kg bags. The sugar sold under the brand name Dangote Sugar is loved and preferred over any other sugar brand in Nigeria by consumers. The facility and production processes are operated in line with regulatory and international standards, and can accommodate requests for special products and packaging from customers. The sugar brand is a leader with over 70% of the Nigerian sugar industry market share and are trusted by the various industries it serves. With high volume capacity warehouses at strategic locations across Nigeria, the company has been able to optimize supply chain opportunities by being close to its markets and guaranteeing a very fast and reliable delivery service.
DANGOTE OIL AND GAS
COUNTRY Nigeria
SECTORS Conglomerate
WEBSITE www.dangote.com
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Estimated to hold 37 billion barrels of proven oil reserves, Nigeria is the second biggest oil-rich country in Africa, after Libya. Nigeria is, however, dependent on imported refined fuel products due to lack of domestic refining capacity. The soon to be launched Dangote refinery will double Nigeria’s refining capacity and help meet the increasing domestic fuel demand, while generating foreign exchange through exports. With a capacity of 650,000 barrels per day (BPD), the integrated refinery project under construction in the Lekki Free Zone near Lagos, Nigeria is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility upon completion in 2022. The project as a whole is estimated to be cost about US$19 billion. The processing facilities at the refinery include a crude distillation unit (CDU) and associated facilities, a mild hydrocracking (MHC) unit, a residual fluid catalytic cracking (RFCC) unit, a naphtha hydrotreater, and a gasoline hydrodesulfurisation (HDS) unit as well as alkylation units. The refinery complex will also house sulphur recovery and hydrogen generation facilities and a polypropylene unit. Comprising two steam methane reformer (SMR) units, the hydrogen generation facility will generate 200,000Nm³/h of hydrogen and steam to produce sulphur-free fuels. Other processing units include the STRATCO® alkylation unit, the MECS® sulphuric acid regeneration (SAR) unit, the MECS® DynaWave® sulphur recovery unit, and the BELCO® EDV® fluid catalytic cracking unit. The infrastructure facilities include a pipeline system, access roads, tank storage facilities, DECEMBER 2021
and crude and product-handling facilities. The Pipeline Infrastructure at the Dangote Petroleum Refinery will be the largest anywhere in the world, with 1,100 kilometers to handle 3 Billion Standard Cubic Foot of gas per day. The Refinery alone has a 400MW Power Plant that is able to meet the total power requirement of Ibadan DisCo. A marine terminal, including a breakwater, jetty and harbour, has also been developed as part of the project. Other facilities developed to support the project include an administrative building, guardhouses, fire station, and pump stations. Furthermore, the refinery complex will house a fertiliser plant, which will utilise the refinery by-products as raw materials. According to the company, the Refinery will meet 100% of the Nigerian requirement of all refined products and also have a surplus of each of these products for export. Dangote Petroleum Refinery is a multi-billion-dollar project that will create a market for US$11 Billion per annum
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Valuable Brand 2020, followed by MTN which also doubled as the Most Valuable Multinational and Telecom Brand. The emergence of Dangote brand as the most valuable for the third time in Nigeria is coming a year after the company was named the most admired African brand, of African continent origin, by consumers in the Continent.
AFCFTA HERALDS NEW OPPORTUNITIES FOR DANGOTE
of Nigerian Crude. The integrated refinery and petrochemical project is also expected to generate 9,500 direct and 25,000 indirect jobs. As a way of supporting the project, Nigeria’s Federal Executive Council (FEC) approved the acquisition of 20% minority stake in the project by state-owned Nigerian National Petroleum Corporation (NNPC) for US$2.76 billion in August 2021.
NIGERIA’S MOST VALUABLE BRAND
Dangote Group as a whole was estimated to have a revenue in excess of US$4.1 billion by 2017 and boasts of a workforce of over employees 30,000 employees. With such staggering figures, its not surprising that Dangote Group emerged the Most Valuable Brand in Nigeria in 2020 for the third year consecutively according to the outcome of the 2020 edition of Annual Brand Evaluation, “TOP 50 BRANDS NIGERIA”. A brief summary of the 2020 report reveals that Dangote Group topped the list of the Most
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Dangote Industries Ltd had announced in the beginning of the year that its cement expansion plan and fertilizer investments will open new trade routes for the company and Nigeria under the African Continental Free Trade Area (AfCFTA) trade deal that kicked off at the beginning of this year. The African Continental Free Trade Area is an ambitious trade pact to form the world’s largest free trade area by connecting almost 1.3bn people across 54 African countries. The agreement aims to create a single market for goods and services in order to deepen the economic integration of Africa. The trade area could have a combined gross domestic product of around US$3.4 trillion which Dangote can tap into especially for its leading products from sugar, cement, and now refined petroleum products. Already, the cement company, despite an installed capacity of 29.3Mta in Nigeria, is targeting an expanded entity in-country and in Cameroon, while new plants will soon be ready for commissioning in Niger, Benin, Ghana, Cote d’Ivoire, and Togo. According to President/ Chief Executive, Dangote Industries Ltd, Aliko Dangote, Africa needs to deliberately improve its per capita consumption of cement in order to aid infrastructural development by stimulating further demand and forcing down the cost of the commodity. For Dangote Industries Ltd, moving goods like cement by road from Nigeria where they are manufactured to Ghana, where there is a big market, is “unviable”, hence the need for new plants that will open multiple trade routes. Dangote has set itself apart as a leader in manufacturing excellence in the continent. It has ventured into new territories, creating new business ventures that are impacting the lives of millions of Africans from Nigeria in the west to Ethiopia in the North and Zambia in the South. With future projects lined up not only for Nigeria but also for other parts in the continent, Dangote Group is certainly poised for even more success in future. Its success is enough proof that Africans are capable of building successful billion dollar companies with little to no help from outside players, we just need to be bold and ambitious like the Dangote Group DECEMBER 2021
The new fertilizer plant will make fertilizer available to Nigerian farmers, now we can forget all those merchants of fertilizer that have been confusing this country for the last 40 years
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JIBRIL OMAR: LEADING OFGEN TO A FUTURE OF SOLAR POWER Most solar companies in Kenya and in other parts of Africa tend to focus on community and domestic consumers and unlike them OFGEN, through research and development background, saw a business viability and went into; the commercial market because it is the most difficult to crack but offers the highest rewards.
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COMPANY FEATURE: OFGEN
By Elly Akoko
About half of sub-Saharan Africa’s population today does not have access to electricity and those who do, pay on average nearly twice as much as consumers elsewhere in the world, according to the International Monetary Fund (IMF). To bridge the gap, African governments have started to seriously consider investment in renewable energy which is not only cheap but environmentally friendly. Among the renewable energy sources, solar power has emerged as the option with the greatest potential solution to briding the energy gap in Africa. Installation costs for power generated by utility-scale solar PV projects in Africa have decreased as much as 61 per cent since 2012 to as low as US$1.30 per watt, according to the Intenational Renewable Agency (IRENA). This drop in prices has been particularly pushed by the increase in the number of solar suppliers in the continent and 36 CEO BUSINESS AFRICA
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technological advancements which are pushing production costs down. One such company that is pushing for and installing state-of-the-art solar power plants is Ofgen. Founded in 2014 and based in Kenya’s capital Nairobi, the company currently has 7 MWp and 9.8 MWh of battery energy under management and a further pipeline of 15 MWp at various stages of development across Eastern Africa, making it the market leader in the solar energy space. “Our business is purely harvesting the power of the sun and we have been in the market since 2012, with our core space being the commercial and industrial segment where we build, own, operate and sell electricity from solar,” says the firm’s Chief Executive Officer and Commercial Director, Jibril Omar during an interview with the CEO Business Africa team.
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7 megawatts of commercial industrial solar and close to 10 megawatt hours of storage, making us one of the most successful solar company in the commercial and industrial segment,” he says. Most solar companies in Kenya and in other parts of Africa tend to focus on community and domestic consumers, but Ofgen targeted the more difficult to crack commercial market because it offers the highest rewards. “There are different segments of consumers: the utility scale which is the 50 megawatts and normally fed to the national grid; commercial and industrial which is for industrial consumers and is mostly either grid tied or off grid and then there is for mini- grids for communities and pay-as-you-go systems like solar lanterns. Our focus is on the commercial and industrial segment which is much easier because close to 60% of the power demand supplied in the country goes to industrial customers,” he explains.
With big corporates like Swissport, Serena Hotels, Wiliamson Tea, Toyota Thusho Group, BAT Kenya, GlaxoSmithkline to count just a few as their clients, Ofgen has created a name and a trackrecord for itself
TRACHEROUS JOURNEY
WADING INTO UNTESTED WATERS
Just like any new company wading into untested waters, it took Ofgen some time before they could see the fruit of the business. At the time of its founding, Kenya’s energy policy had not been updating, making the business environment very hostile for the company. The enactment of the Kenya energy management act and renewable energy of policy became a life savior to the company, enabling it to operate and sell electricity or build an outright purchase to their clients for anything below a megawatt. Ofgen also had to fight for market share with far more established and well resourced multinationals. Mr Jibril is however satisfied with the progress that his company has made thus far. “we are basically in a market dominated by foreign owned companies but we have seen ourselves grow very well on the commercial and industrial space. To date, we have built close to WWW.CEOBUSINESSAFRICA.COM
With big corprates like Swissport, Serena Hotels, Wiliamson Tea, Fairmont Hotels & Resort, BAT Kenya, GlaxoSmithkline to count just a few as their clients, Ofgen has created a name and a trackrecord for itself. Its success today was however not handed to it on a silver platter. “The first few years were not the easiest. Everybody viewed solar not as a source for commercial and industrial use but for lighting, floodlights and water pumping and we had to educate so many of our customers. And even after taking them through the process, they would pick up the idea and our proposal and put it into the tendering process and you can imagine what that means,” he explains. Jibril, a marketer by profession, however reveals that what kept the company going is its unique business set up. “What has given us an edge over others is that we started from the energy research center at Strathmore University in Kenya, purely as an academic research work. Unlike many the other businesses which saw a business viability and went into it, ours was done purely from research and development background where we saw that this is the next phase of business, the future and so we invested into that,” says the CEO.
AN AFFORDABLE AND SUSTAINABLE SOURCE OF ENERGY
According to the CEO, 90% of their customers have indertaken solar energy investment decision based purely on cost reduction element. “Other customers would look at the element of sustainability, but for most its purely cost driven. The element of sustainability comes second.” Regardless of what drives a company DECEMBER 2021
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COMPANY FEATURE: OFGEN
7
IN NUMBERS
MWP
OF SOLAR PV AND 9.8MWH OF ENERGY STORAGE SOLUTION
to sustainability, for Ofgen its investment is mainly driven by three Ps: the planet, people and profits. Mr Jibri says that when venturing into a project, they work to ensure that it is sustainable, profitable to Ofgen and cost-daving to its clients. With its 3Ps model, Mr. Jibril emphasizes that companies can save a lot of money. Investing in solar energy is the cheapest in the renewables space beating fossil fuels, Jibril empasizes. “Solar can cut your cost by nearly upto 30% or even 40% of what you are currently paying whether you are relying on the grid or the diesel generator,” he says.
TRANSITIONING TO SOLAR POWER
COMPANY Ofgen
COUNTRY Kenya
SECTORS Renewable Energy
WEBSITE www.ofgen.africa
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Transitioning to solar can be challenging to businesses who don’t know where to start. Jibril reveals to us that it is not play-and-play set up. “First, you will invite us to your facility, do a site visit and look at the viability and check your roof space, demand load, seasonality in terms of the operations, structural integrity of your facility and then from there we go back to the office and then do a design and see what we can offset for you and also do a financial modelling showing what you are going to save every month,” expalins Jibril. Although affordable and sustainable, Solar can also be very limiting as the sun does not shine for 24 hours a day. To ensure a a consistent supply of energy even when the sun sets, Ofgen offers battery storage solutions for companies needing to fully maximise their solar potential. “Since the sun shines during daytime and if you need power in the evening, you need to have solar and the battery connected. The power from the panels will feed the load and also fill the batteries and then the batteries can be used in the evening,” clarifies jibril. Where grid energy is also unreliable, solar also comes in as a reliable backup energy instead of the emission emitting dieasel engines that most businesses have. “On the on-grid areas where the grid is very weak, we use the batteries to stabilise it instead of turning on the diesel generator even during intervals when the power is off, and that’s where the battery comes in. Batteries are used purely from the economies perspective as solar which is the cheapest, followed by the grid and then the battery storage, and lastly diesel generator. The generator is the most expensive so that is how a consumers pick their mix of energy,” says Jibril.
regulatory frameworks to enable greater adoption of renewable energy. Across the region, Mr. Jibril picks Kenya as having the best environment followed by Uganda and Rwanda. Ofgen CEO is for instance happy that new regulations in Kenya have further pushed the costs of solar inputs down, creating more incentives for more companies to join the green energy bandwagon. “The new Kenya Energy Act has given a huge boost to the solar and renewable energy industry at large by exempting taxes and duties in most of the components making it now very much affordable. The cost of equipment’s have really gone down particularly in the manufacturing countries such as the China, US, Germany, South Africa,” says Jibril.
IMPROVING REGULATORY ENVIRONMENT TO SPUR SOLAR GROWTH
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storage batteries. He however believes the best thing now is to invest in the PV and generate more power. “Trying to put up a solar manufacturing plant and you are fighting with a prices in China, is not really viable at all,“ Jibril cautions. “May be we can think of others like storage batteries.”
FUTURE PLANS AND INVESTMENT
As the regulatory environment improves, Jibril is confident that in ther near future, local manufacturing of some solar componments would be possible. The CEO reveals that there are other battery manufacturers looking Kenya as one of their major hubs because of the accessibility to the minerals in DRC for manufacturing of the
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So far, Ofgen has done well for itself. It has attracted big corporate clieants and in the in the last 4 years, expanded operations to Uganda, Rwanda, South Sudan and as far as Somalia and continues to grow within the East African markets. Its eyes are now trained on the more difficult to crack West and Southern African markets. It hopes to have a footing in these markets by the end of 2021 and is also looking to push more on storage as a business. Solar energy being a high capital expenditure exercise, Jibril says the company is keen to get all kind of partners from the manufacturing side of the products to the financing side elements. “One of the biggest challenge is finance, getting cheaper debt. Our competitors are getting debts from Europe at a very small interest rates so we can’t compete but if we have access to cheaper or affordable funding, we would love to do that. We would love to see the company grow move to the next level so any other potential partners are always welcome,” Jibril says
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Solar can cut your cost by nearly upto 30% or even 40% of what you are currently paying whether you are relying on the grid or the diesel generator
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REBECCA JOHNSON: LEADING JETHQ TO EASEN AIRCRAFT BUYING Building on its international sales growth of the past year, JetHQ has targeted expansions throughout Africa, with offices in Egypt and Dubai, the company promises bespoke services to clients in the North, West, South, and East of Africa WWW.CEOBUSINESSAFRICA.COM
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COMPANY FEATURE: JETHQ
JETHQ CONSULTING TEAM
By Elly Akoko
Established in Dubai, UAE, to assist customers in the emerging markets of the Middle East, Africa, and the Indian subcontinent, JetHQ has over the years expanded their footprint with strategic locations to assist customers in the Western Hemisphere, as well as emerging markets. Building on its international sales growth of the past year, JetHQ has targeted expansions throughout Africa, bringing its aircraft services outside its established office in Egypt. The aircraft transaction and brokerage company has focused on underserved markets on the continent, finding success in Côte d’Ivoire among other locations. JetHQ’s success in the region has been part of a year-long expansion drive. It created its Africa sales division early in 2020, headed by Rebecca Johnson, President of JetHQ EMEA (Europe, the Middle East and Africa) and brought aboard Dubai-based Kani Saritas to assist in the markets, specializing in north and west Africa and South Africa. Later that year, the company opened its Egypt office, led by Sherif Abouzeid to cover east Africa.
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A CUSTOMER-CENTRIC BUSINESS
CEO Magazine had a virtual meeting with Rebecca Johnson, a pilot by profession, who is the sales president for Jet HQ, an airplane brokerage firm that buys and sells used airplanes and provide consultancy, maintenance, and support for airplanes. “Our company started in Dubai where our founder used to live, but then we expanded it all over the world. We chose Dubai because it is a nice location that is open for all nationalities, easier to get in and out and also do trade. We just opened an office in Cairo to facilitate North and Eastern Africa states. As the business grows in Africa we might open offices in either South Africa or even in West Africa,” says Rebecca. “As a company we find that it is important to have people in Africa on the ground. We have had positive report from down there and that was a big milestone for us,” she adds. Some of the company’s recent successes is a transaction involving the Ivorian military. Rebecca says that her company is not shy of transacting business in Africa as difficult as it may seem to others.
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market research team, and I can say that this is the backbone of our company.”
TARGET CUSTOMERS
“We are not afraid of doing transactions that may be difficult, or one that may require time,” she adds. What makes JetHQ unique is that it is even willing to go into an area that other companies don’t have experience in or don’t want to go to. “We devised a mechanism that is going to work well for the customer,” Rebecca explains. “We are working on a couple of other transactions in Africa, and we are dividing them according to who best can handle the client, who speaks the language or who has the most contact.” Everything is tailored to suit the needs of the client, according to Rebecca. Even where the client is only confident transaction in Dubai, JetHQ is flexible to accommodate their needs. “We do what the client wants,” Rebecca emphasizes. While aircraft acquisitions have been JetHQ’s primary area of service in Africa, it is also assisting its customers in fleet management and aircraft sales. JetHQ leverages its market data analysis to locate global buyers, allowing customers to maximize their investment for aircraft that is no longer needed. “We are always looking to improve our services and we are in a great position to do so now that the pandemic is here and Covid-19 has accelerated our growth. We have a fantastic WWW.CEOBUSINESSAFRICA.COM
Aircraft business is not child’s play. As a comparison, possible prices start from US$3.5 million for a used Cessna Citation M2, US$7 million for a Learjet 75, US $62 million for a Gulfstream G650, and US$50 million for a Bombardier Global 6000. These are prices that are out of reach for many of the continent’s citizens. Even in the developed nations, jets are exclusive properties of high-net-worth individuals or corporations. So how JetHQ does picks its customers? “We have three types of customers. There are the governments which are always needing aircraft, we have companies who are always using their aircrafts for transportation and then we also have simply private individuals- people who have decided that they need an airplane for themselves,” explains Rebecca. Winning in the aircraft industry, given its limited clientele require a unique approach. Rebecca tells us that the difference is having professionals who are there, who know the culture and know the needs of client. “We can be on location that day to answer questions, assess aircraft for purchase or sale and meet face-to-face to make personal relationships and overcome any obstacles in the transactions. These clients have not previously received this level of service when it comes to aircraft transaction.” The President of JetHQ EMEA clarifies that before one opts to buy an airplane, the customer needs to ask three questions that will help them choose the right aircraft: What is your budget? How many people do you travel with? And where are you going? With those three questions answered, the company is now able narrow it down to the type of plane that they can offer you. “I usually tell people if you have a budget to start with, stick with it, we will find you something for that price. You don’t have to stretch your budget so much. It is really important to know how many people you are travelling with in order to know how many seats are needed and where you are going in order to know the amount of gas and the stop overs.” In terms of demand in the type of aircrafts, Ms. Johnsons reckons that they see a lot more demand for what they call the ‘midsize jets. “We have small jets for like 6 people and go for smaller ranges. Then we have long range jets that are meant to go anywhere in the world with maybe one stop. There are also the midsize jets, and this is where we see a lot of activities because you can cover a good amount of distance with it.” DECEMBER 2021
That includes having a pilot and technician in the country, working with our partners after the sale, training to get the most return from their investment. We’re able and willing to go places other companies just aren’t
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COMPANY FEATURE: JETHQ
IN NUMBERS
20,000 NUMBER OF BUSINESS AIRCRAFT WORLDWIDE
COMPANY JEHTQ
COUNTRY UAE
Dubai
SECTORS AVIATION
IDENTIFYING THE RIGHT PLANE FOR CUSTOMERS
Getting the right plane for customers, particularly in the used-market segment, can be as tedious as looking for a pin in a haystack. “We have so many people buying airplanes and it’s getting harder and harder to find a good airplane. You can always find a pair of junk, something that’s not well maintained but getting a good airplane is becoming harder nowadays,” narrates Rebecca. She reveals to us that the work of finding planes is undertake by members of the back office who make it their duty to find airplanes that have not been advertised and contact owners interested in selling. Once the planes have been identified, the buck is passed to the marketing team which now finds interested buyers. Ted Farid, Chairman of JetHQ, has brokered business aviation deals around the globe for 50 years and has been instrumental in developing connections with
government-affiliated buyers that blossom into full-service transactions. In its penetration in Africa, Dubai-based Kani Saritas assist in finding clients in north and west Africa and South Africa while Sherif Abouzeid, working from the Egypt office, works to meat client needs in east Africa. “JetHQ has the resources and connections to make transactions easy for our clients,” Johnson said. “That includes having a pilot and technician in the country, working with our partners after the sale, training to get the most return from their investment. We’re able and willing to go places other companies just aren’t.”
COVID-19 ACCELERATE AIRCRAFT PURCHASES
According to the airline brokerage firm, they have had a huge influx of buyers purchasing airplanes at the start of the pandemic and that a few things are driving that, one is the uncertainity of the airlines and the ability to travel.
WEBSITE www.jethq.com
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now with the pandemic we have seen many first time buyers,” she adds. Industry, Rebecca reveals that Covid-19 also triggered a fresh wave of interest from new market entrants. According to her the downturn in airline activity and the demise of many airlines, or route reductions, led to a major increase in interest in aircraft acquisitions, creating more opportunities for JetHQ and others in the field.
FUTURE OF PRIVATE AIR TRAVEL
“If I own my own airplane i can control where I want to go and I don’t have to rely on an airline schedule. Second is the sanitation, health and safety, in your own airplane you can control who is in it and it is easier to follow the set health guidelines,” explains Rebecca. “The other area is irrespective of the pandemic is people security. We find high net worth individuals feeling like it is not safe for them to use public air transport. We always see those type of individuals buying private jets and
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The private aviation market is broadening. More concept buyers – a term used to describe people who have never purchased an aircraft – are entering the market. Additionally, existing owners are wanting to upgrade their aircraft via trade. Right now, demand is high, but supply is low. Brokers are chasing aircraft deals and, if an owner hints at a coming trade, multiple buyers are making bids on the aircraft months in advance of sale. Worldwide, there are approximately 20,0000 business aircraft – not enough to meet the needs of new and existing buyers. The airplane brokerage company points out that they are now seeing a shortage of aircrafts available for sale. “That is good because it means our business is doing well but on the negative side it means that we can’t serve as many customers as we wish,” she clarifies. All in all, the president for JetHQ, Europe Middle East and Africa President is confident that they are a growing company and believes that they are in a very good position to hire people in target regions to enhance capacity to offer bespoke customer-service to customers
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While aircraft acquisitions have been JetHQ’s primary area of service in Africa, it is also assisting its customers in fleet management and aircraft sales.
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JACO BEYERS: GROWING JOHN DEER'S REPERTOIRE OF SOLUTIONS INTO AFRICA TO ELEVATE ECONOMIES Africa is getting to a new era of development and according to Jaco Beyers, John Deere has the mechanization that will leap Africa into the new future with new technology. They have the best dealer network and largest footprint that invest millions on infrastructure, tools to ensure that they can look at after their customers. WWW.CEOBUSINESSAFRICA.COM
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COMPANY FEATURE: JOHN DEERE
By Elly Akoko
According to Food and Agriculture Organization (FAO), while tractors are used to prepare land on over 60 percent of cultivated lands in Asia, the corresponding figure for Sub-Saharan Africa is around 5 percent. Moreover, the use of draught animals in sub-Saharan Africa is minimal outside of Ethiopia - due in considerable measure to the tsetse fly - so almost all the work is done manually. One result is that many African farmers deploy low-yielding techniques and may prefer slash-and-burn methods. Today, smaller and more affordable machinery, such as two-wheel tractors, available on hiring terms using digital technologies are proving popular around the continent, underscoring how the sharing of capital assets can be leveraged to achieve greater scale and access to modern tools. Agricultural mechanization in Africa can raise productivity and make rural employment more attractive, thus ensuring the continent’s
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future growth and poverty alleviation. Another report from German Development Institute, says that majority of the population in sub-Saharan Africa (SSA) lives in rural areas and is directly or indirectly dependent on agriculture. As land is usually tilled by smallholders manually with a hand hoe, or mattock, the worker’s output, and productivity (and with it, their income) is low, and the actual workload high. Similar conditions apply in downstream sectors, ranging from processing and transport to marketing. This frequently results in negative health implications for the workers, many of them women, and makes the agricultural sector less appealing. If they have achieved good levels of schooling or training, young people prefer to take up employment in the cities and choose to leave rural areas. In addition to the heavy workload, further consequences of manual cultivation include high harvest and post-harvest losses, lack
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JOHN DEERE'S DISPLAY OF THEIR TRACTORS
of competitiveness, low agricultural exports, and high imports. Agricultural mechanization can help to improve this situation. Jaco Beyers, the Managing Director, John Deere Africa, and the Middle East explained to CEO Business Africa how John Deere is transforming agricultural mechanization and productivity in the continent. “John Deer started as an agricultural company in 1837 with a plough and today, we are a global company, the leading producer of agricultural and construction equipment in the continent. We are the best agricultural company on the continent with the best dealer network in the continent, dealer network that invest millions on infrastructure, tools to ensure that we can look at after our customers,” he says. For a man who began working for John Deere 17 years ago, having started as a field territory manager working with local dealers in South Africa and expanding into additional WWW.CEOBUSINESSAFRICA.COM
management role in Sub-Saharan Africa besides doing strategic planning for Southeast Asia, China, India then moving to the U.S where he worked in future product marketing in North America before coming back as Sales Director for Africa, steering John Deere into other sectors is an immense pleasure. “In the last three months, we took over the construction and forestry division, so now we can look after the infrastructure, mining all the way to food security for Africa. I am really looking forward to that challenge and take all the wellknown agricultural brands just to the next level,” says Jaco. The past two years have been quite challenging to businesses globally due to Covid-19 pandemic and the Illinois headquartered heavy machinery manufacturer was no exception having faced massive challenges in its operations. “Covid-19 has been a massive challenge, fortunately for us, we got these “dealers of tomorrow”, strong dealers with the right infrastructures that were able to keep our customers going. The challenge was logistics to ensure we got the right parts to our customers. Come to think of it, when a farmer needs to plant, they need to plant that specific day otherwise they lose the planting window. That window is just so short, so we moved almost heaven and earth to ensure we get the parts there in time and when not, we made plans,” explains Jaco. Jaco goes ahead to clarify that they are not out of Covid-19 pandemic yet. “I think we are still going to be on it for quite some time, but we managed to put plans from point A to point Z to ensure continuity, to ensure we keep our customers going and remember it is also on the construction and agricultural sides. All these customers are quite critical. We also moved to another phase of digital phase in communicating to our customers. We launched a platform called tech-terrain which is also available in Kenya where we share all the technologies and is gaining some good traction.”
Agricultural mechanization in Africa can raise productivity and make rural employment more attractive, thus ensuring the continent’s future growth and poverty alleviation
FORESTRY AND CONSTRUCTION SOLUTIONS
John Deer Middle East and Africa recently added construction and forestry to their agriculture equipment division, so what are some of the solutions that they look to provide in those three segments? “On the agriculture side, we bring solutions from the small new era farmer all the way to the large agro-processor or put it differently, from the used piece of equipment may be 30 years old, all the way to a brand-new combine harvester. We have a brand promise to look after those DECEMBER 2021
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COMPANY FEATURE: JOHN DEERE
customers and bring in technologies to improve the productivity of a customer. When it comes to new era farmer, it can be something as a tractor, a ripper and a plant re-combination and believe it or not, that is technology that will help the farmer be more productive,” Jaco explains. Jaco adds that in Africa, a lot of farmers who have been planting for the last 30 years used a disc plough, meaning there is a hard pan of about 15cms and the water cannot penetrate deeper and by bringing a little planter and a ripper that can reap through it, a farmer can harvest the water and you can get proper root development. With the proper John Deer planter, they can get proper seeds spacing, fertilizer spacing. They call it John Deer smart farmer. “When we try and show these technologies to the new era farmer, we improve the yield from average of 1.7 tones to something like 7-7.5 tones. That is massive when it comes to food security and productivity for that farmer.” The same happens with large pieces of equipment where they have self-adjusting combines leveraging on artificial intelligence. On the construction side, John Deere has introduced equipment like smart grader. “Hats off to all those grader operators. I did not realize how challenging it is and what skill level you need to run that piece of equipment. With our smart grader, we make it easy for a less developed operator to run at the same efficiency. The most expensive operator is a grader operator, so we try to make it more efficient 50 CEO BUSINESS AFRICA
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for the people who are running that piece of equipment. The same applies when it comes to forestry. We have a vested interest to ensure we got great responsibility to protect our forests, be as productive when it comes to harvesting with this equipment and we have got world class technology when it comes to forestry,” says Jaco as he talks about their new range of smart graders. Africa is a continent where majority of farmers are still using the plough to work on their field yet there are brands like John Deere with more 100 years’ experience providing new technologies so how is John Deer brand adopting technologies that can be taken up by the kind of clients they have across the continent where in terms of agriculture, technology there is still a big gap? “How do we make the new technology affordable for the new era farmer? What John Deer is doing and we are quite proud of is what we have realized that not every farmer will be able to afford a tractor, ripper or a planter but what we have developed a new business model and one of them is tractor hiring model where we get a community to purchase together or a family purchase a tractor and some implements together and hire it to the community or neighbors and by doing that, very quickly you get that vested interest from the community,” explains Jaco. “You have the right technology, and you are creating a business worth additional employment because we have got two key issues in Africa; one is to create jobs and food security and with this
JOHN DEERE'S NEW ARTICULATED DUMP TRUCKS.
When it comes to new era farmer, it can be something as a tractor, a ripper and a plant re-combination and believe it or not, that is technology that will help the farmer be more productive.
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equipment hiring synthesis, we believe we have got the great solutions,” he explains. Similarly, of the other ways through which the Jhon Deere ensures that farmers across the continent have access to their latest technologies is by asking the governments not to give the tractors for free. “We have done a few studies and realized that 46% of the tractors that was given away by the government was going to a tractor graveyard within 36 months. That is an alarming number. What we have done in the last 15 years as John Deer is to work with the government to share what is fundamental. When a farmer is putting down a deposit, you get to buy in, then you have a vested interest to make it work. We have success stories across this continent from East to West Africa on this,” he explains. “These are some critical elements that we want to put on the table. Another element is that we got John Deer financial that works. We offer our dealer network on solutions for the farmers. We are looking from a small new era farmer all the way to large agro-processors trying to find the right solution for the customers.”
NEW STRATEGY AND PARTNERSHIPS
Recently, John Deere recruited new trade partners and put in place a strategy of getting new partners rejig their business, one on construction where they are now responsible for construction and the forestry and its strategic plan. John Deere has this large dealer organizations across the continent that have made huge investments in agriculture. “Agriculture is quite cyclical. You got drought and challenges in different parts of Africa at different years and by bringing in the construction side, we ensure we are not in the same trough at the same time, which means my dealers can invest more. If you look at what goes into a dealership, there is a mammoth number of investments when it comes to spare parts, training of technicians. We have more than 750 technicians at this point on this continent,” explains Jaco. “Then it comes to the sales organizations. Now we overlay the construction side, we can leverage a lot of the same infrastructure. Yes, we are going to run the business simpler because the customers on the construction side, you need to treat them completely quite different from the customers on the agricultural side, but for the company, overall, we feel this is the way forward and this is the way we going help drive further investment and development in Africa,” he goes on to say. Jaco Meyers says that Africa needs WWW.CEOBUSINESSAFRICA.COM
infrastructure, so they need to leverage their resources in Africa and then with the abundance in development of agriculture, they want to tap in and bring additional infrastructure. “Yes, we are the leading player in this continent but there is way more that John Deere can do to evolve in this continent. We have added North Africa and Middle East as well. We are used to dealing in Sub-Saharan Africa where every country is different. There is a lot of volatility but now we have specialists who knows how to handle it in Sub-Saharan Africa. We need to leverage our team to help grow our new dealers in North Africa and Middle East, really looking forward to taking this organization to the next level as we grow Africa.” With the adoption of technology picking up very fast in the continent, to farmers in Africa, seeing is believing, they want to see the technology on this continent, but the challenge is that Africa is vast. In tech-terrain digital platform, John Deere share Africa stories and success stories of technology on the continent. “For the viewers, go to techterrain.co.za and have a look at this success stories from emerging farmers to large operations and we are moving now to season two where we want to elaborate and expand. Two, we talk about our operations center which is a cloud-based platform. We help farmers record and store all the data from yield mapping; yield year over year overlay, seed placement because these days you can write your
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IN NUMBERS
1837 THE YEAR JOHN DEERE STARTED
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COMPANY FEATURE: JOHN DEERE
JOHN DEERE'S COMPACT TRACTORS
John Deer started as an agricultural company in 1837 with a plough and today, we are a global company, the leading producer of agricultural and construction equipment in the continent.
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seed population based on soil types. You overlay that, your fertilizer application and because it is in a cloud-based platform, you can share it with your agronomist, you can share it with your seed’s supplier, fertilizer suppliers. We work with a lot of third parties and that is another element when it comes to digitalization,” says Jaco. To further ensure effective customer support, John Deere has come up with “Connected Support”. “You know the size of countries like Kenya, Angola, the size of the continent, how do you look after those pieces’ equipment. When it comes to the support, we got something called connected support where the tractor or the combine or the sprayer itself will let the farmer or the dealer know when there is something that might go wrong. There might be some issue on the bearing, and it will tell you to stop and let the dealer know and bring the different parts. We call it preventative maintenance linked to the connected dealer support, so those relatively new for the continent. In South Africa, we have been running it for now years now and its some great technology we can leverage and because we all want to be equal at John Deere, the same technology will still apply for the construction side. We are looking forward to bringing those technologies to the construction industry as well,” explains the VP.
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PROSPECTS, CHALLENGES, AND OPPORTUNITIES
Jaco Meyers says John Deere is quite bullish on the success of agriculture, mining, construction on this continent adding that there is no more arable land available, and one cannot make arable land. “Time for Africa to develop is now and that is why we are investing in these technologies; we are bringing in large organizations to run our dealership to help train and work with our farmers. We have contractors, construction, and mining operations because with the setting up all these resources, we can leverage, and we have technologies that we can do it more efficiently and operate as same level as the farmers and operators to the rest of the world,” Jaco says emphatically. “We also got the infrastructure, so we are quite bullish, and feel we are going to expand, ramping up support to our dealers and customers to the best of our ability. We have dealers willing to invest, we have got the technology, portfolio to support mining operations, construction, and farmers from the new era farmers all the way to the large corporate organizations across the continent. I do want to point out that there may be a few challenges out there that may help improve food security and improve technology
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adoption. Bureaucracy and red tape when it comes to establishing signals is one,” says Jaco. For example, GPS, some of their tractors can run autonomously for most of the operations but they need specific signals and as John Deer, they pride themselves in doing things ethically so sometimes it takes a lot of time to get correct approval from the government. If there is away for them to understand the urgency, then that will basically help. “The other one is high taxes and import duties. When you think of what you can do to support farmers, we have new technologies but then you look at the amount of taxes loaded on these new technologies, there is a way a government can help reduce and it can make improvement on the productivity of agricultural even on the construction side,” he adds. With the American agricultural machinery, heavy equipment, forestry machinery, diesel engines, drivetrains used in heavy equipment, and lawn care equipment manufacturer expanding its footprint across the region, do they plan to establish a manufacturing plant and service centers? “We run across the entire African continent plus the near Middle East. We have a strong dealer network. Even though we do not have a
100% manufacturing plant, we do have some local assembly that happens when our dealers apply. Across the entire continent, we do some local small, smaller tractors,” explains Jaco. According to the father of two kids who is trying to balance family and work life and driving the John Deere Middle East and Africa ship, they have a new purpose statement that says, “we run so life can leap forward.” To him, the statement touches almost emotionally because they supply equipment, but their equipment is helping the farmer farm more productively, helping building infrastructure so we can get kids to schools. “If you look at Africa, it is such a vast opportunity, but we need to start somewhere, and the future is now. We are getting into new era of development and there will always be issues but with the right partners, Africa is the new frontier and John Deere has been here from the start. We have mechanization and we are going to leap Africa into the future bringing new technology, moving all of us to that next level. We have the best dealer network, the largest footprint. If you have any question, please reach us on Facebook or on our websites, talk to our dealers. We would like to engage and help grow the business,” he concludes
COMPANY John Deere
COUNTRY
UAESouth Africa
SECTORS Agriculture
WEBSITE www.deere.com
JOHN DEERE'S SPECIALTY TRACTORS
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TOP TEN SOLAR PROJECTS IN AFRICA
54 CEO BUSINESS AFRICA
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WWW.CEOBUSINESSAFRICA.COM
By Jackie Muinde
1. 510MW NOOR SOLAR COMPLEX – MOROCCO
The Noor Solar Complex is a 500MW solar park located in the municipality of Ouarzazate in the Agadir district of Morocco. It is the biggest concentrated solar power plant project in the world. The location of the project offers 2,635kWh/m² of sunlight a year, which is considered to be one of the highest in the world.
2. 100MW KAXU SOLAR ONE – SOUTH AFRICA
Located in the Northern Cape, South Africa, the De Aar solar project was developed by Solar Capital. The project encompasses two phases (De Aar 1 and De Aar 3) with a combined installed capacity of 175MW. The De Aar solar project supplies green electricity to power up to 100,000 South African homes, making it the largest solar farm in the country.
3. 165.5MW BENBAN SOLAR PROJECT – EGYPT
The 165.5MW Benban photovoltaic (PV) solar park is located in the Aswan Province in Benban, Egypt. The solar park is made up of three solar power plants with an individual installed capacity of 67.5MW, 70MW and 28MW, respectively. The 165.5MW project was constructed by CHINT Solar by August 2018. ACWA Power is the developer, financier and operator of the solar park, which involved an investment of US$190 million.
4. 100MW KAXU SOLAR ONE – SOUTH AFRICA
KaXu Solar One is a 100MW solar power plant near Pofadder in the Northern Cape Province of South Africa. Commissioned in March 2015, the public-private partnership (PPP) project supplies sustainable energy to South Africa’s power utility Eskom, under a 20-year power purchase agreement.
5. 100MW XINA SOLAR ONE – SOUTH AFRICA
Xina Solar One is located in Pofadder, South Africa and a 100MW concentrated solar power (CSP) plant built by Abengoa with a US$880 million investment. The plant commenced its commercial operations in September 2017.
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TOP 10 SOLAR PROJECTS IN AFRICA
6. 100MW ILANGA-1 CSP PLANT – SOUTH AFRICA
Located in Karoshoek in the Northern Cape province of South Africa, the plant is owned by Karoshoek Solar One (RF) Proprietary. SENER and its partners Emvelo and Cobra completed the commissioning and testing of the 100MW Ilanga-1 CSP plant in November 2018.
7. 100MW KATHU SOLAR PARK – SOUTH AFRICA
The Kathu Solar Park (KSP) is a 100MW CSP project in Kathu in the province of Northern Cape, South Africa. The solar park started commercial operations in January 2019.The KSP project is owned by Engie, SIOC Community Development Trust, the Public Investment Corporation, the Lereko Metier REIPPP Fund Trust, Investec Bank and the Kathu LCT Trust.
8. 96MW JASPER SOLAR POWER PROJECT – SOUTH AFRICA
With a 96MW-DC installed capacity, Jasper is one of the most significant solar energy projects in Continental Africa. The solar plant is located in Postmasburg in the Northern Cape Province in South Africa. The solar power project was developed by SolarReserve and its consortium partners Kensani and Intikon Energy.
9. 86MW MULILO-SONNEDIX-PRIESKA PV PROJECT – SOUTH AFRICA
The 86MW Mulilo-Sonnedix-Prieska solar photovoltaic (PV) project is located across 125ha of land area in the Northern Cape Province, South Africa. This project was developed by Mulilo Renewable Project Developments (Pty) in partnership with Mulilo Renewable Energy and Ixowave Women in Power, for Mulilo Sonnedix Prieska PV (Pty).
10. 75MW KALKBULT SOLAR PLANT – SOUTH AFRICA
The 75MW Kalkbult solar PV plant is situated near Petrusville in the Northern Cape Province, South Africa. Developed by Scatec Solar, the plant was officially inaugurated in November 2013. Construction of the Kalkbult solar plant began in November 2012 and the facility was grid-connected in September 2013.
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What about if this was your advert?
ADVERTISING WORKS!
Talk to us and discover how we can enable your brand to stand out in Africa's food and agro industry
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DECEMBER 2021
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TOURISM: RADISSON GROUP
RADISSON GROUP SPREADS ITS WINGS ACROSS AFRICA DESPITE COVID-19 GLOOM 58 CEO BUSINESS AFRICA
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Part of Radisson Group’s strategy is to rapidly expand its footprint in Africa and the company has a new objective of operating over 130 hotels and 23,000 rooms in 23 of the continent’s 60 larger cities by 2022. WWW.CEOBUSINESSAFRICA.COM
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TOURISM: RADISSON GROUP
By Jackie Muinde
The Radisson Hotel Group is an American multinational hospitality company and one of the world’s largest hotel groups with eight distinctive hotel brands. The Hotel Group portfolio includes Radisson Collection, Radisson Blu, Radisson, Radisson RED, Park Plaza, Park Inn by Radisson, Country Inn & Suites by Radisson, Radisson Individual and Prizeotel. It currently has more than 1,400 hotels in operation and under development around the world. The African Sub-division of the group has more than 90 hotels that combined play host to more than 18,000 rooms restaurants and shops. Part of its strategy is to rapidly expand its footprint in Africa and the company has a new objective of operating over 130 hotels and 23,000 rooms in 23 of the continent’s 60 larger cities by 2022. As of 2019, the Group’s African portfolio was comprised of almost 100 hotels and over 17,000 rooms which were either in operation or under construction. To start of its ambitious expansion strategy in the continent, the American multi-national hospitality company, signed of 11 new hotels in Africa within the first nine months of 2019. The onset of the Covid-19 pandemic in 2020 60 CEO BUSINESS AFRICA
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and its threat on the hospitality did little to slow down the progress of the company’s expansion in the continent. In that year alone The Radisson Group announced the addition of six new hotels. The group was also able to increase its African portfolio with nine hotel signings, resulting in an addition of more than 1,600 rooms, a move that further reinforced its presence in key markets such as Egypt, South Africa, and Nigeria, as well as Ghana and Reunion Island. In this review, we highlight some of the hotel’s major signings in various cities in Africa.
RADISSON BLU, YAOUNDÉ CAMEROON
We start our review with the luxurious futuristic hotel complex of 25 storeys, and 7-storey Yachtshaped annexe that will be the Radisson Blu, Yaoundé. Announced in2019, the new hotel in the country’s capital and second largest city, Yaoundé will be the second hotel after the one that was already under construction, the Radisson Blue Hotel Doula that was expected to commence before the end of the first quarter of 2021. In the partnership agreement, the government of Cameroon agreed to lease the WWW.CEOBUSINESSAFRICA.COM
hotel a 2-hectar piece of land for a period of 30 years. The annexe will host a 5-star hotel with at least 300 rooms, swimming pools, and various sports and entertainment equipment. The US$132.34 million investment is also expected to host International-standard restaurants and shops.
RADISSON HOTEL & CONVENTION CENTRE, JOHANNESBURG – SOUTH AFRICA
After almost a year, in September 2020, Radisson Hotel Group opened Radisson Hotel & Convention Centre, Johannesburg, O.R. Tambo, its twelfth hotel in South Africa. Located in an exclusive private location in Bredell tucked away from city life, Radisson Hotel & Convention Centre, Johannesburg, O.R. Tambo is a short 10-minute drive away from O.R. Tambo International Airport and is conveniently situated close to a range of activities and attractions including the nearby shopping malls, local coffee shops and restaurants and Kempton Park Golf Course, designed by Grimsdell & Kerr. This upscale, full-service hotel features 248 contemporary, spacious, and stylish hotel rooms with all the home comforts. The Radisson Hotel & Convention Centre, Johannesburg, O.R. Tambo is the ideal venue for business conferences, private functions, and weddings. During the hotel’s commissioning, the group announced its future plans to introduce the Radisson RED brand in Johannesburg based on the success of the Radisson RED hotel in Cape Town. Raddison first entered the South African market in 2000 and has since grown its portfolio to 16 hotels, ranging from midscale to upscale properties across four brands. The brands comprise Park Inn by Radisson, Radisson, Radisson Blu and the lifestyle concept brand Radisson RED
restaurant and rooftop pool terrace with eight different meeting & event venues.
RADISSON COLLECTION HOTEL BAMAKO - MALI
Towards the close of 2020, the Radisson debuted a new brand in Africa with the launch of Radisson Collection Hotel Bamako, Mali. Located in the capital and largest city of Mali, the Radisson Collection Hotel, Bamako is 20 minutes from Bamako’s Modibo Keita International Airport and in close proximity to the city’s embassies, corporate headquarters, and government precinct. The hotel consists of 200 elegant and spacious rooms, including 32 suites and three accessible rooms, offering panoramic views over the Niger River and the lush green hillside dotted with mango tree plantations, as well as the pool and city skyline. Complementing the hotel’s five-star luxury experience is a selection of four diverse restaurants and bars. The renowned City Grill offers a multi-cuisine menu allowing guests to indulge in both European and West African flavors through interactive stations.
The company has a new objective of operating over 130 hotels and 23,000 rooms in 23 of the continent’s 60 larger cities by 2022.
RADISSON BLU HOTEL ABUJA CITY CENTRE - NIGERIA
The Radisson Blu Hotel Abuja City Centre, scheduled to open in 2024, is the Group’s first hotel in the city, complementing the existing
PARK INN BY RADISSON, DURBAN INTL. AIRPORT, DUBE – SOUTH AFRICA
The new-build hotel introduces the upper midscale Park Inn by Radisson brand to Durban and strengthens Radisson Hotel Group’s current portfolio of 16 hotels (3,007 rooms) in operation and under development in the country. It will also complement the national business circuit with a Park Inn by Radisson in each of the three major cities of South Africa (Cape Town, Durban and Johannesburg). It is the first hotel within Dube Trade Port Special Economic Zone, which forms the heart of the first purpose-planned aerotropolis in Africa, around King Shaka International Airport. The 168-room hotel scheduled to open in 2022, will have a lobby bar, rooftop all-day dining WWW.CEOBUSINESSAFRICA.COM
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TOURISM: RADISSON GROUP
conveniently located near shopping malls, restaurants, as well as the University of Ghana, situated north of the district. Upon completion, the property will comprise modern studios as well as spacious and elegant one- and two-bedroom suites. Creating a true destination for its guests, the property will offer culinary options in the restaurant as well as in the hotel bar. The property will also feature a spa, gym, pool, convenience store, and business centre, providing the perfect base for both business and leisure.
RADISSON BLU RESORT MOSI-OATUNYA, LIVINGSTONE, ZAMBIA
nine hotels in operation and under development in Nigeria.Located in the heart of the central business district of Nigeria’s Federal Capital, the 258-room hotel will boast five different food and beverage outlets from a specialty restaurant and all-day-dining restaurant to a Lobby Bar & Café, a pool terrace and a business class lounge. The leisure facilities will include a 555sqm wellness spa, a gym and a swimming pool to support guest’s wellness.
A month after the partnership in Accra, the Group announced its first resort and third hotel in Zambia, with the signing of Radisson Blu Resort Mosi-oa-Tunya, Livingstone, Zambia. Set to open in 2022, the new unit is nestled on the banks of one of Africa’s longest rivers, the Zambezi, in Mosi-oa-Tunya National Park. Its strategic location gives visitors easy access the historic city of Livingstone and the majestic
EARL HEIGHT SUITE HOTEL, ACCRA GHANA
Radisson Hotel Group has made Africa the centre of its growth strategy and it announced in February 2021 that it aims to reach around 150 hotels in operation and under development by 2025.
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In March 2021, Radisson Hotel Group signed a partnership agreement with Earlbeam Group of Companies to construct the Earl Height Suite Hotel, a member of Radisson Individuals, in Accra. Construction of the 58-serviced apartments located at Dzorwulu is ongoing and would be completed by the end of the year. It will be the first Radisson Individuals property in Africa. Due to open by the end of 2021, this new addition places the Group firmly on track to achieving its objective of reaching 150 hotels in operation and under development by 2025. The Chief Financial Officer (CFO) for Earlbeam Group of Companies, Godwin Danso Darkwah explained that the reason for this partnership was for the company to stay resilient in the hospitality industry amidst the coronavirus pandemic. Located in Dzorwulu, the property is currently undergoing a full renovation and is on schedule to open within this year. Just 5km from Kotoka International Airport (KIA), the main access point by air for domestic and international visitors, the serviced apartment property is
DECEMBER 2021
Victoria Falls, one of the seven natural wonders of the world and a UNESCO world heritage site. Convenience is amplified with Harry Mwanga Nkumbula International Airport located just 15 minutes away. For an immersive experience of the destination, situated right next door, is Safari Par Excellence, offering unique on and off the river adventure activities, from Victoria Falls bridge activities, water-rafting, canoeing and game drives to helicopter rides, river cruises and elephant encounters. The hotel will be constructed and operated with the greatest respect to its environment and aims to obtain the EDGE green building certification as well sign the UNESCO Sustainable Tourism Pledge. The construction of the new hotel, which is currently underway, and WWW.CEOBUSINESSAFRICA.COM
the design fully integrate local materials, focuses on employing and upskilling local craftspeople. It will consist of a contemporary 174-room main hotel and 26 luxurious villas. Guests can indulge in their favourite cuisine at the all-day dining restaurant and sit back with their favourite drink at the coffee bar.
RADISSON HOTEL DJIBOUTI
In June this year, the Radisson Hotel Group announced the signing of Radisson Hotel Djibouti, marking the Group’s entry into the country and bringing its East African portfolio to 18 hotels and over 2,700 rooms in operation and under development. The new-build 144-room hotel, scheduled to open in 2024, will comprise not only of modern standard rooms and suites, but will also have accessible rooms, designed for wheelchair access. Dining options will include light snacks at the lobby café, international and local cuisine at the all-day dining restaurant, and refreshing drinks at the poolside juice bar. Just 15 minutes away from Djibouti International Airport, Radisson Hotel Djibouti will be located in the heart of the city, surrounded by key infrastructures such as the Djibouti Port, Djibouti Free Zone, international headquarters, shopping malls and the seaside, providing the ideal base for business and leisure. Djibouti’s strength lies in its strategic location at the southern entrance to the Red Sea, forming a bridge between Africa and the Middle East and is a key market in East Africa due to its port which is considered one of the most important in the world given its location at the intersection of major international shipping lanes connecting Asia, Africa, and Europe.
RADISSON HOTEL ADDIS ABABA
Radisson Hotel Group’s fifth hotel in Ethiopia, scheduled to open in 2021, has 114 guestrooms. The facility is located within Ethiopia's capital city—adjacent to the United Nations Compound and 6 kilometers from Bole International Airport. The hotel is also a short distance from the city's main points of interest, such as the Imperial Palace, Meskel Square and Holy Trinity Cathedral. The hotel offers a total of 212 elegantly designed rooms and suites with premium amenities such as individual climate control and free high-speed wireless Internet. Patrons will have a chance to explore the Savor French bistro fare from its on-site restaurant, Verres en Vers, or try a refreshing cocktail at the hotel's Signature Bar. The Signature Bar & Terrace is the perfect place to relax, socialize or work quietly at any WWW.CEOBUSINESSAFRICA.COM
time of the day while enjoying sophisticated drinks or revitalizing snacks. Their 12 conference rooms have a capacity of 12 to 400 guests making them ideal for group gatherings.
RADISSON HOTEL CASABLANCA GAUTHIER LA CITADELLE, MOROCCO
In what would be seen as a marathon, in June this year, Radisson announced the debut of its second brand and third hotel in Morocco with the signing of Radisson Hotel Casablanca Gauthier La Citadelle in partnership with Al Hoceinia Hospitality. The new facilities will join Radisson Blu Hotel, Marrakech Carre Eden and Radisson Blu Hotel, Casablanca City Center which are already operational. With construction already underway, the hotel is scheduled to open in 2023 and will consist of 133 guestrooms and suites. Located in the heart of Casablanca’s vibrant and exclusive Gauthier district, Radisson Hotel Casablanca Gauthier La Citadelle will give visitors easy access to the glistening La Corniche, the charming Old Medina, and Hassan II Mosque, the second largest mosque in the world. The hotel will offer a unique view over the Arab League Park and will also form part of La Citadelle, a new, premium mixed-use development which will comprise of residences, offices and retail outlets.
IN NUMBERS
1,400 HOTELS IN OPERATION AROUND THE WORLD
PARTNERSHIP WITH MADAËF
In July, the Radisson Hotel Group in partnership with Madaëf announced the signing of seven Moroccan hotels some which are located in country’s renowned tourist sites namely; Al Hoceima, Saïdia and Taghazout. In Al Hoceima, Radisson Blu is building 432-room beach resort surrounded by the local reserve’s natural beauty. The new facility will offer guests the ideal coastal-leisure experience with direct beach
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The onset of the Covid-19 pandemic in 2020 and its threat on the hospitality did little to slow down the progress of the company’s expansion in the continent.
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access and an abundance of water sport activities and is set to open its doors soon. Still in Al Hoceima Radisson will open the Radisson Blu Residences, a newly built 142-unit property also comprising of contemporary one, two, and threebedroom apartments. Residents will also have access to the properties’ three swimming pools and will be able to enjoy the extensive facilities at the adjacent Radisson Blu Resort, Al Hoceima. In Saidia, the Hotel Group will soon open the Radisson Blu Resort, a 397-room resort that is centrally located adjacent to the marina, offering guests memorable stays with direct beach access and an expansive range of facilities. Still in Saidia, The Radisson Blu Resort, Saïdia Garden is also scheduled for opening in Q2 2022. the 150-room converted resort will welcome guests with its modern standard rooms and luxurious suites. Guests will not only have access to the fitness center, all-day-dining restaurant, and bar but will also be able to enjoy the facilities at the adjacent Radisson Blu Resort, Saidia Beach. Another establishment, The Radisson Blu Residences, Saïdia with 192-units comprising standard and standard suite apartments is also to open in Q2 2022. The facility will feature an all-day-dining restaurant, two specialty restaurants as well as lounge, snack and wet bars. Guests can enjoy the property’s on-site wellness facilities, as well as those of the adjacent Radisson Blu Resort, Saidia Beach. Radisson Blu Resort at the Taghazout Bay Surf Village is the fourth hotel in the portfolio opening soon. The facility will consist of various accommodation types perfect for family getaways. It will also have a wide array of facilities and dining options, for an ideal and memorable resort stay. The Radisson Residences Taghazout Bay are also on track to open in Q1 2023. The new build 208-unit property will comprise of twoand three-bedroom apartments and also provide guests with access to its outdoor swimming pool. The new portfolio consisting of resorts and
DECEMBER 2021
RADISSON BRANDS IN AFRICA Brands
Numbers
Radisson Collection
1
Radisson Blu
35
Radisson
2
Park Inn by Radisson
8
Radisson Individual
1
Radisson RED
2
residences will add over 1600 rooms bringing the Group’s Moroccan portfolio to 10 hotels, fast-tracking its strategy to reach 15 hotels in operation and under development in the country by 2025. In line with Madaëf ’s commitment to sustainable tourism, the hotels will be operated in respect of their close proximity to the natural wonders and aim to implement Radisson Hotel Group’s leading Responsible Business program.
A PLAN TO WIN IN AFRICA
Radisson Hotel Group has made Africa the centre of its growth strategy and it announced in February 2021 that it aims to reach around 150 hotels in operation and under development by 2025. For the hotel group, 2021 represented a year of continued acceleration, with a focus on their identified key markets, specifically Morocco, Egypt, Nigeria and South Africa. “We have reinforced our team and resources in order to not only increase the momentum of our growth ambitions, but also to better respond to the needs of the investment community in each market with the right skillset and relevant solutions,” said Ramsay Rankoussi, VP, development, Africa & Turkey, Radisson Hotel Group. By close of the year, Rankoussi expects the Hotel to add a dozen new African hotel signings and around 2,000 rooms, 50% of which will be in these core focus countries with the remainder reinforcing the company’s presence in cluster markets or entering into new territories. Despite the economic downturn brought by the Covid-19 pandemic, the bold and strategic investments by the Radisson Hotel Group show a company that is confident about Africa’s tourism and hospitality industry. The mission according to Rankoussi for Radisson Hotel Group to command the “leading position as the hotel company with the largest active presence in the most countries across Africa” WWW.CEOBUSINESSAFRICA.COM
GREEN
PAYG Solar: Lowering Cost of Energy Access For Millions of African Households By Jackie Muinde
Pay-as-you-go (PAYG) business model of energy access has been a roaring success in Africa. The model provides household-scale solar energy with a payment scheme tailored to the budgets of bottom-of-the-pyramid customers. By allowing poor households to pay for solar products in small increments, PAYG solar offers households not currently served by a reliable grid with a cleaner, safer alternative to kerosene for lighting. In the PAYG model, solar the companies lease solar home systems to customers. A basic system has a battery, solar panel, a charge controller, WWW.CEOBUSINESSAFRICA.COM
LED bulbs and a mobile charger. Customers commit to an upfront amount for the system which acts as security and then are able to pay for the energy they consume on daily, weekly or monthly basis with daily rates averaging between US$0.30 and US$2.00 depending on usage. Should a customer feel the need to increase their energy needs more solar panels are added to the system. Payment is done through mobile money platforms like MPESA or through scratch cards. The model has expanded to small businesses like bars and salons allowing them to operate DECEMBER 2021
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CEO BUSINESS AFRICA GREEN: PAYG SOLAR
In Africa, where energy penetration is the lowest in the world, PAYG solar shows the greatest potential to lifting millions from darkness to clean energy
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on extended hours, save on electricity costs and expand their businesses. The renewable energy companies also allow for flexible payment terms to entice customers and reduce the risk of defaults in payment. In Kenya there are approximately six solar firms providing PAYG payment plans for SHSs customers namely M-KOPA, SunTransfer Kenya, Azuri technologies, Fenix International, Mobisol, Lumeter and BBOXX, based on realtime monitoring with the aid of machine-tomachine technologies and innovative PAYG payment plans. In Nigeria, there is Lighting Global Quality Verified solar lighting products, in Uganda Innovex and South Africa has Bboxx which rents out offgrid PV systems and TVs to rural villagers across Africa.
PARTNERING WITH TELECOMS TO EXPAND REACH
In the last couple of years investors have been attracted to this new disruptive force. In November 2019, Greenlight Planet, the market leader in the rapidly expanding pay-as-you-go (PAYG) solar industry successfully partnered with major telecom operators in Africa aiming to have a far-reaching impact on more than 600 million unelectrified consumers across the
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African continent. The company collaborated with more than fifteen telecom operators, banks and payment gateways to make Sun King products more affordable and accessible for rural individuals, increasing long-term value for a common consumer base. Full-fledged sales and distribution partnerships have been launched with three leading telecom operators, Vodacom (Tanzania), Orange (Burkina Faso) and Telma (Madagascar). This is to enable sales of solarpowered energy solutions through each operator’s subscriber base and mobile money channels. In addition, Greenlight Planet has integrated its innovative PAYG technology platform with leading mobile money providers across subSaharan Africa, enabling consumers to make continuous instalment payments in a secure and simple way.
INVESTMENTS IN PAYG SOLAR SURGE
In October 2020, Greenlight planet secured US$90 million in new funding to expand its PayAs-You-Go (PAYG) solar consumer financing business and consolidate its debt portfolio. The debt and equity investments were provided by European development finance institutions CDC Group, FMO, and Norfund, along with
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impact investors ResponsAbility, SIMA Funds, Symbiotics, Global Partnerships, and private equity firm ARCH Emerging Markets Partners’ Africa Renewable Power Fund. Of the total US$90 million in committed funding, US$69 million has been disbursed to the company, with the balance to be drawn down as the company delivers additional solar-powered home energy systems, with end-consumer financing, to homes in Africa. d.light Design Inc., a pioneering manufacturer and provider of solar power products, was founded in 2006 at Stanford and it distributes solar energy to households and small businesses in 70 countries, impacting the lives of nearly 100 million people. The product is targeted at off-grid customers in rural areas, with a price ranging from US$9.12 to US$18.25. The company also markets a series of solar LED lights which are designed as an affordable alternative to kerosene lanterns. In February of 2021, it raised US$11.9 million to power its expansion in Kenya as it eyes a bigger share of the solar energy market. The Delhi based d.light raised the funds from Norfund, the Norwegian Investment Fund for Developing Countries, through its capital raising vehicle Brighter Life Kenya 1 Limited (BLK1). In November 2019, d.light it announced that Shell’s New Energies business had acquired a minority stake in the company, underscoring the sector’s increasing commercial viability. This transaction was subject to customary conditions precedent including regulatory approvals. The figure was determined by the World Bank’s PayGo PERFORM initiative, which oversees financial reporting and operational benchmarking of PayGo companies. d.light and Solar Frontier Capital Limited (SFC), a wholly owned susidiay of African Frontier Capital (AFC) jointly announced the establishment of a KSh 6.9 billion (US$65 million) financing vehicle, Brighter Life Kenya
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1 Limited (BLK1) in June 2020. The BLK1 is an off-balance sheet financing vehicle, newly incorporated in Jersey, which will be dedicated to acquiring pay-as-you-go (PAYGO) Solar Home System (SHS) accounts receivables from d.light’s Kenyan subsidiary, d.light Limited to provide the company with flexible, working capital to finance its continued growth. The two-year commitment is intended as the first in a series of vehicles designed to provide d.light with continuing access to sustainable and affordable local currency receivable financing. Part of BLK1 is being financed by a US$20 million senior debt commitment from U. S. International Development Finance Corporation (DFC). SFC acts as the subordinated lender and the master servicer under the transaction and more generally, as the sponsor of the structure. Kampala-based startup Innovex which provides remote monitoring for PAYG solar companies, closed a seed funding round in January 2021 from the Gaia Impact Fund, a French fund dedicated to energy access entrepreneurs, to help it scale its technology across Africa. The company owns “Remot”, a cloud-based Internet of Things (IoT) solution that transforms the distribution of off-grid solar energy systems and equipment using digital tools by enabling solar companies, electricity producing companies (EPC) and distributors to remotely monitor and manage their energy systems. Remot also facilitates better after-sales support and PAYG actuation for larger size solar systems, reducing downtime of solar systems and improved accessibility of solar systems and solar equipment. Innovex will use the funding to scale Remot to 100 solar distributors across
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IN NUMBERS
500,000 THE NUMBER OF PEOPLE USING BBOXX COMPANY
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under chairman Mugo Kibati, in an agreement with Solinc East Africa. In February 2018, M-Kopa received US$10 million in funding from FinDev Canada in a new funding round led by CDC and including existing shareholders LGT Venture Philanthropy and Generation Investment Management. In July 2021, M-Kopa announced its expansion to Nigeria.
NEW FUNDING EXTENDS BBOXX REACH IN AFRICA
Africa, thus enabling solar energy access to three million people by 2023. “ Gaia has so far invested in 11 innovative companies across Africa and Southeast Asia and is actively pursuing its investment strategy with strong social and environmental impact.
M-KOPA EXTENDS SOLAR TO AFRICA’S UNDERBANKED In Kenya there are approximately six solar firms providing PAYG payment plans for SHSs customers namely M-KOPA, SunTransfer Kenya, Azuri technologies, Fenix International, Mobisol, Lumeter and BBOXX
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Founded in 2010 by banker and micro-finance expert Chad Larson, in 2010 founded the startup in Nairobi, M-Kopa provides underbanked customers in Africa to essential products including solar lighting, televisions, fridges, smartphones & financial services. M-Kopa was launched commercially in 2012 and is headquartered in Nairobi and has operations in Kenya, Nigeria and Uganda. The initial goal was to sell 1,000 units a week within three years. That milestone was reached within 12 months and now the 1,200-strong sales team, who work on commission and incentives, are selling up to 4,000 units a week. It raised money in 2011, with incubation by Signal Point Partners. Backing investors have included Richard Branson, Generation Investment Management, Blue Haven Initiative and LGT Venture Philanthropy, an investment vehicle of the Princely Family of Liechtenstein. By 2015, M-Kopa had powered 150,000 households in Kenya, Uganda, and Tanzania, with around 10,000 mobile payments made by users on its cloud platform, M-Kopanet, made on a daily basis. It had over US$40 million of revenue by 2015.That year it estimated that 80 percent of its customers lived on less than US$2 a day. In January 2018, the company had wired at least 500,000 homes, and sold about 90,000 solar rechargeable televisions. In 2018, it was reported that M-Kopa was going to acquire an additional 500,000 photovoltaic solar panels,
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London-based off-grid solar company Bboxx has operations in Africa and Asia. It installs a solar panel that can power up to five lights, a television, a radio, a torch or a 12 V battery. The company has a presence in 12 countries, including Democratic Republic of the Congo, Kenya, Pakistan, Rwanda and Togo. In August 2020, the African Infrastructure Investment Managers (AIIM) announced plans to invest more money into the clean-energy utility platform to fund the company’s growth. In November that year, Bboxx secured a US$4 million loan from the Facility for Energy Inclusion Off-Grid Energy Access Fund (FEI OGEF), a debt fund managed by Lion’s Head Global Partners (LHGP) to accelerate energy access in the Democratic Republic of Congo (DRC). Bboxx had announced a memorandum of understanding (MoU) with the DRC government earlier that year, with the aim of bringing clean energy to 10 million citizens, equivalent to 10% of the population. During that same time Bboxx partnered with the US Agency for International Development (USAID) to expand clean cooking access in the DRC. Over the next three years, the funding will enable Bboxx to provide 15,000 households and small businesses in Goma with clean and affordable cooking alternatives. Through their new partnership, USAID and Bboxx ultimately aim to reduce deforestation and greenhouse gas emissions by reducing the consumption of charcoal used for cooking. In February of 2021, Global commodities trading company Trafigura purchased a minority stake in Bboxx. The size of the stake and the value of the deal have not been disclosed. Trafigura’s minority equity investment came as Bboxx embarks on the next phase of its growth and accelerates its clean cooking commitments – In March French multinational electric utility company Electricité de France (EDF) bought a 23% stake in Bboxx Kenya. The investment will bring electricity to 2 million Kenyans living in rural areas by 2025. Kenya is Bboxx’s largest market in Africa where an 500,000 people are using the company’s solutions to access electricity. The new transaction builds on the WWW.CEOBUSINESSAFRICA.COM
existing partnership between EDF and Bboxx with the two companies already working together in Togo on rural household electrification. Bboxx and EDF have in the recent past extended this collaboration to the supply of solar-powered irrigation systems with the help of the Kenyan company SunCulture. Bboxx has also received US$500,000 in financing from The United Nations Capital Development Fund (UNCDF) to deploy its clean cooking solution in several provinces of the Democratic Republic of Congo (DRC). The funding is intended for the development of Bboxx’s second core business in the DRC, namely the distribution of environmentally friendly cookers. The company wants to implement its partnership with UNCDF in the DRC provinces of Goma, Bukavu and Lubumbashi, where the rate of access to clean cooking is quite low.
ENGIE GETS EIB FUNDING TO EXPAND IN AFRICA
ENGIE’s subsidiary, Fenix International, provides access to energy via PAYG solar home systems to more than 500 000 customers in Uganda, Zambia, Nigeria, Benin, Cote d’Ivoire and Mozambique. Additionally, with ENGIE PowerCorner, ENGIE supplies electricity to rural populations in villages across Tanzania and Zambia through smart mini-grids powered by solar energy and battery storage. All of these services are enabled by digital financial solutions such as mobile money and PAYG technologies. In July 2020, ENGIE partnered with the European Investment Bank (EIB), one of the world’s largest financiers of renewable energy to provide reliable and cheap electricity to small holders and entrepreneurs in remote villages across Uganda for the first time under a new off-
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grid solar scheme. EIB has agreed to provide a US$12.5 million loan to support the deployment of 240,000 high-quality solar home systems in Uganda. The new European Investment Bank financing will also allow repayment of equipment purchased in US dollars in Ugandan shillings. Previously currency fluctuations hindered provision of affordable clean energy solutions to Ugandans without access to foreign currency.
PAYG A KEY DRIVER OF ENERGY ACCESS ACROSS AFRICA
During the last decade, a greater share of the global population gained access to electricity than ever before, but the number of people without electricity in Sub-Saharan Africa actually increased, according to a World Bank report. The report further indicates unless efforts are scaled up significantly in countries with the largest deficits the world will still fall short of ensuring universal access to affordable, reliable, sustainable, and modern energy by 2030. In Africa, where energy penetration is the lowest in the world, PAYG solar shows the greatest potential to lifting millions from darkness to clean energy. Widespread use of mobile payment technologies, rich solar resources and declining solar PV and battery costs, coupled with increased awareness of these technologies, have been key drivers in the implementation of this business model. Also, increasing numbers of companies offer PAYG systems, and high competition in this field pushes prices for consumers even lower. Furthermore, the millions of dollars being injected into the sector by investors, promise to sustain the sectors viability and expanding its reach to millions of Africa’s rural population which is yet to enjoy the benefits of electricity
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The millions of dollars being injected into the sector by investors, promise to sustain the sectors viability and expanding its reach to millions of Africa’s rural population which is yet to enjoy the benefits of electricity
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GROW YOUR BUSINESS FASTER, MORE SUSTAINABLY READ AFRICA’S LEADING BUSINESS & ENTREPRENEURSHIP MAGAZINE
JETHQ OFGEN JOHN DEERE
JETHQ OFGEN JOHN DEERE
PAYG SOLAR: LOWERING COST OF ENERGY ACCESS FOR MILLIONS OF AFRICAN HOUSEHOLDS
PAYG SOLAR: LOWERING COST OF ENERGY ACCESS FOR MILLIONS OF AFRICAN HOUSEHOLDS
RADISSON GROUP: EXPANSION IN AFRICA
RADISSON GROUP: EXPANSION IN AFRICA
MOTOR INDUSTRY IN SOUTH AFRICA
MOTOR INDUSTRY IN SOUTH AFRICA
COVID-19 ACCELERATES GROWTH OF FOOD & BEVERAGE E-COMMERCE MARKET
COVID-19 ACCELERATES GROWTH OF FOOD & BEVERAGE E-COMMERCE MARKET
ANDREW CHIMPHONDAH
ANDREW CHIMPHONDAH
CEO & MANAGING DIRECTOR SHELTER AFRIQUE
CEO & MANAGING DIRECTOR SHELTER AFRIQUE WWW.CEOBUSINESSAFRICA.COM
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YEAR 4 ISSUE 2. NO. 6
YEAR 4 ISSUE 2. NO. 6
AVAILABLE IN PRINT & FOR FREE ONLINE AT WWW.CEOBUSINESSAFRICA.COM 70 CEO BUSINESS AFRICA
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International motor firms invest in South Africa for local, regional and global markets The fact that South Africa is still in recession and all these automakers are making very serious investments in South Africa confirms a new investment climate from the auto industry this year By Elly Akoko
Manufacturing is often seen as a gateway to inclusive growth and with the potential to create jobs, deepen and broaden local value chains, advance technology and cultivate local skills. As such, numerous countries in Africa have solidified manufacturing as the cornerstone of their
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industrial policies. The automotive industry has set itself apart as a key driver of industrialization and manufacturing and many developing economy governments have given incentives to their domestic automotive manufacturing. For some countries, such as South Africa, the
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MOBILITY & SUPPLY CHAIN AFRICA: MOTOR INDUSTRY IN SA
In 2004, South Africa was responsible for the manufacture of 84% of all vehicles produced in Africa, 7 million of which are on the South African roads
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automotive industry has become a key economic growth driver. The industry boasts to be the largest in the African continent producing units that are not only used in South Africa but also exports to other countries in the continent and Europe. Our review in this issue focuses on how the industry has impacted the country’s economy, its experience during the pandemic, and what the future holds for the sector which is one of South Africa’s most important socio-economic growth drive.
A CENTURY-OLD INDUSTRY
Automotives first came to South Africa in 1896 when a Benz Velo was imported and was demonstrated on January 4 of 1897 in Pretoria in front of President Paul Kruger. Manufacturing however started decades later, in 1923 to be specific, after a visit by Henry Ford in 1922 led to the first assembly plant being set up in Port Ford. General Motors joined soon afterwards producing Ceves Buicks Oldsmobiles and Pontiac's and in the mid-1960s, Ford and GM still controlled over 60% of the local car marked with Ford's and Chevrolets dominating until the mid-1950s when the German and British small cars began to make inroads into the country. In the early 1960s, the Volkswagen (VW) launched in South Africa by managers from Ford PE who went on to develop VW- USA for the German company. By the late 1960s Toyota,
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Datsun and Mercedes were all developing factories in South Africa, and British makers were being pushed out. In the late seventies, Sigma Motors had planned to merge with British Leyland, known as Leykor locally - when this merger failed, Leyland had to scramble to create an all-new dealer network in only a month. Leyland's South African presence never recovered. Two of the great things about the automobile industry in the 1960s was that the Apartheid government asked Ford and GM to advise on policy to develop the local automobile component manufacturing industry. Ford and GM engineers asked to include black people in development to address chronic poverty but this was refused. However, Ford, GM and VW, the three largest manufacturers at the time with over 75% market share, accelerated local component development so rapidly that by 1968 they had destroyed Job Reservation policy in the auto industry allowing black people to work in factories previously reserved for whites. After the fuel crisis of the ‘70s, the large American cars which had been very popular dropped in sales drastically. By the end of the 1970s, the Mazda 323 and the Volkswagen Golf were the biggest sellers and Americandesigned cars were no longer regularly available. For a while, the demand for big saloons had been met by assembling the somewhat more compact Australian Fords and Holdens, but these
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were discontinued in favour of more compact European designs. 1976 showed the worst sales numbers since 1972. Chrysler SA went belly up soon thereafter, merging with Illings (Mazda) to form Sigma. Chrysler had been very successful in the late sixties, with the Valiant range being the most sold passenger car in 1966, 1967, and 1968, but began a serious slide after that. The acquisition of Mitsubishi gave Chrysler a stay of execution but the severe economic climate of the latter half of the 1970s proved too much. The many industry upheavals of the 20th century only led to sector reorganization where new and agile players pushed out players who were unable to adopt to the changing economic environment. Overall, the sector was experiencing robust growth. By 2003, the industry catered to 303,000 employees in South Africa in 2003, and in 2004 the country exported fully assembled motor vehicles to 53 countries including many developed countries such as Japan, the United States, the United Kingdom, Australia and Germany. South Africa had grown in profile during these years with many of the manufacturers now making the country their main production base. In 2004, South Africa was responsible for the manufacture of 84% of all vehicles produced in Africa, 7 million of which are on the South African roads. Also in 2004, the industry made a 6.7% contribution to the GDP of South Africa and 29% of all South African manufacturers made up the country's automotive industry. 2004 also saw 110,000 vehicles exported from South Africa of which 100,000 were passenger vehicles. In 2007 and the next years, the automotive industry grew again, producing over 500,000 vehicles annually reaching peak of 616,000 in 2015. While amounting to a small fraction and 22nd place of the global vehicle production of near 100 million, this made great contributions locally, being supremely first in Africa and making up 7.5% of the country’s GDP and about 10% of South Africa's manufacturing exports. In 2010 the National Association of Automobile Manufacturers of South Africa (NAAMSA) reported that new vehicle sales exceeded their initial expectations of 7%, with large local growth allowing it to reach 24%, providing a big boost after the 2008/09 recession. This was evident in 2010 with 271,000 vehicles being exported, more than double what was seen in previous years.
key economic driver for the country. For decades, the automotive industry has been fundamental to South Africa’s economy. It contributed 6.8% (4.3% manufacturing and 2.5% retail) to GDP in 2018. Moreover, in 2018 the industry employed around 110,000 people (across vehicle and component manufacturing) producing over half a million vehicles according to Deloitte. In addition, the segment is a key foreign exchange earner as its products are exports to several other parts of the world, especially Europe. Automotive exports are valued at nearly R180 billion (US$12.5 billion) and comprised 14.3% of South African exports. Export sales recorded a second consecutive month of solid growth in January 2021 and at 22,771 units reflected an increase of 6,468 units, or 39,7%, compared to the 16,303 vehicles exported in January 2020. However, during the year 2019, it witnessed a slight downfall in sales figures. During the year 2019, 355,378 units were sold as compared to 365,242 units in the year 2018, which is a fall of around 2.7%. Similarly, the commercial vehicle segment in the country witnessed a downfall of around 3.07% and registered sales of 181,233 units of commercial vehicle sales in the year 2019. In 2020, according to the National Association of Automobile Manufacturers of South Africa, vehicle sales in the country declined by 29.1%, which is because of the pandemic COVID-19. New vehicle sales are expected to continue declining as constrained household finances (even with low-interest rates) and high unemployment depress buyer power. The used vehicle market is also increasingly becoming a threat as it offers
IN NUMBERS
110,000 VEHICLES EXPORTED FROM SOUTH AFRICA IN 2004
AN IMPORTANT ECONOMIC GROWTH DRIVER
After close to century of operations in Africa, South Africa’s automotive industry has grown to become the largest in the African continent and a WWW.CEOBUSINESSAFRICA.COM
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cheaper vehicle options for consumers whose incomes are already constrained. Yet, with the aforementioned trends and developments, it is expected that the market studied will experience growth during the forecast period.
It’s safe to say that South Africa’s automotive would not have grown to the behemoth that it is today with robust support from the government
A BENZ VELO
SOUTH AFRICA’S TOP-SELLING CARS OF 2020
With 31,263 units sold in 2020, the Toyota Hilux remains the dominant player in the local market, with a gap of more than 10 000 units to the 2ndplaced Volkswagen Polo Vivo (19 750 units). The presence of no fewer than 8 compact cars in the Top 20 makes it clear that affordability is key to sustained sales volumes. Whereas in previous years one would see the likes of the BMW 3 Series and Mercedes-Benz C-Class in the Top 20, that's no longer the case. The most expensive volume-selling vehicle is now South Africa's top-selling SUV, the Toyota Fortuner (9,635 units). It's also worth noting the presence of the Haval H2 compact family car in the Top 20. With 4,465 units sold, the Chinese
model's not far off the numbers posted by the Hyundai Venue and Volkswagen T-Cross.
BATTLE OF THE COMPACT CARS
Volkswagen South Africa has the compact car market buttoned up, with the Polo Vivo coming out tops (19,750 units), followed by the Polo compact hatch on 16,335 units. Furthermore, the 9th best-selling compact car was the Polo Sedan (4,282 units). If there is a threat to its dominance this year, it's likely to come from Toyota's rising Star(let), which racked up 3,352 sales in the 4 months that it's been available on the new-vehicle market. With 361 units moved in the month-anda-half that it's been in local showrooms, Toyota's smaller Agya budget car has not quite set off fireworks yet but watch this space. Two old favourites that have fallen off the chart are the Ford Fiesta (1 095) and Honda Jazz (458). And just compare the Baleno's total of 581 with that of the Toyota Starlet – it's a virtually identical product to the Suzuki, which has been on the market for several years now. That must be a bitter pill to swallow for Suzuki.
GOVERNMENT ROLE IN INDUSTRY DEVELOPMENT
It’s safe to say that South Africa’s automotive would not have grown to the behemoth that it is today with robust support from the government. Regulations for local content requirements first appeared in the 1960s and were quite strict and led to a limited number of cars being available to South African motorists. Beginning in the late 1960s, engines had to be built locally for the car to be considered a local product. The South African government has however changed strategy and has been updating its policies to provide necessary support to automotive manufacturers. In a Department of Trade and Industry Budget
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Vote Address delivered in July 2014, the then Trade Minister Rob Davies said that “given that automotive and component manufacturing comprises 30% of our industrial sector, with strong linkages to other manufacturing subsectors, the impact of such investment on our domestic economy is significant.” One of the most successful government policies for the sector was the Motor Industry Development Programme (MIDP)—was introduced in 1995. The program had the objective of increasing South Africa automotive industry’s international competitiveness and encouragement of growth in vehicle and component manufacturing. Reforms introduced under the program were a success leading to the sector exhibiting significant growth – it almost doubled in size since 1994. Its successor, the Automotive Production and Development Programme (APDP), came into effect in 2013 to simultaneously stimulate the expansion of local production to 1.2 million vehicles a year by 2020 and significantly increase the local content. The intention is to achieve this through investments, unlike the MIDP which relied mainly on exports. According to the National Association of Automotive Component and Allied Manufacturers (NAACAM), the program has four pillars: Import Duty, Vehicle Assembly Allowance (VAA) BP, Production Incentive (PI) and Automotive Investment Scheme (AIS) The fourth pillar is not a new initiative but a revised incentive. The Automotive Investment Scheme (AIS) was first introduced in 2010/2011, and, since then, incentives in the public sector have amounted to R6.3 billion (US$436 million) and supported investments worth R23 billion (US$1.59 billion) by original equipment manufacturers in the automotive sector. APDP has been succeeded by South Africa’s latest automotive policy, the South African Automotive Masterplan (SAAM) which was set for launching in January 2021 but was postpoened to July 2021. The new policy aims to rectify this by broadening and deepening local value chains and embedding industry into the domestic economy. Meaningful localisation, at its core, forms part of value beyond compliance as it supports innovation and productivity, and aligns economic performance with social progress, thus driving inclusive growth. Apart from attracting investments in the sector, the government has also been keen in pushing quality standards in the industry. Since around 7% of South Africa’s economic output is attributed to the automotive industry, it is understandable that the government and companies within South Africa have been
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trying to encourage greater quality and greater productivity. The government has been using stricter controls as a way to improve quality. This seems to be working as large improvements in quality have been achieved, and the industry as a whole is more investable to foreign countries. The goal is to achieve production quality equal to that of manufacturers with the highest standards in the automotive industry. With the quality of cars reaching comparable levels to those manufactured in western Europe, exports are increasing. Production has been down, but quality has gone up and is yielding more profit.
IN NUMBERS
463,000 THE NUMBER OF EXPECTED UNITS TO BE SOLD IN 2022
EXISTING PLAYERS EXPAND AS NEW ENTRANTS SET BASE
Several major OEMs from all over the world are investing in the country, for instance, in April 2019, Ford announced that Ford Motor Company of Southern Africa (FMCSA) is expanding its vehicle export operations by adopting a multiport strategy with the first shipment of 1,000 locally assembled Ford Rangers from Port Elizabeth to markets in Europe. The announcement was followed by another in February 2021 where Ford revealed that it will invest US$ 20.13 billion together with its supplier in South Africa to produce new Ford rangers and light trucks at Ford’s assembly plant in Silverton, Pretoria. US$ 686 million of the investment will provide a major upgrade to Silverton’s assembly plant, increasing the plant’s installed capacity from approximately 168,000 units to 200,000 units annually, driving significant improvements in production efficiency and vehicle quality. US$365 million of the investment will be channelled to tools at major supply plant while an investment of US$296 million by 12 auto parts
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MOBILITY & SUPPLY CHAIN AFRICA: MOTOR INDUSTRY IN SA
Since around 7% of South Africa’s economic output is attributed to the automotive industry, it is understandable that the government and companies within South Africa have been trying to encourage greater quality and greater productivity
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suppliers will be dedicated to expand capacity for manufacturing parts for new Rangers and Volkswagen Amarok products and launching operations adjacent to the Silverton plant. Nissan has also announced that it is investing a ZAR 3 billion (US$206.3 million) in its facility in Rosslyn, Pretoria, to produce the next generation Nissan Navara pickup. Following greater investments by its peers Ford and Nissan, Toyota Motor Corporation announced in May 2020, the launch of the Corolla sedan in South Africa. This car comes with 1.8L and 2L engine with a CVT transmission. Toyota South Africa Motors (TSAM) has also announced that they will invest approximately R3 billion (US$206.3 million) in South Africa to produce the new Corolla Cross Sport Utility Vehicle (SUV) at Prospecton’s manufacturing plant in Durban. Volkswagen AG started local production of Gold GTI, T-Cross, T-Roc, and Amarok in South Africa. With a good run in 2020, the National Association of Automobile Manufacturers of South Africa (Naamsa) anticipates another very good year of capital investment commitment by South Africa’s Original Equipment Manufacturers (OEM) in 2021. Naamsa CEO Mikel Mabasa said that many car OEMs, including Chinese heavyduty commercial vehicle manufacturers, expect to make sure they are considering a capital investment project in South Africa this year. Mabasa’s comments indicated that total capital spending by major automakers reached a record high of R9 billion (US$619 million) in 2020 after Naamsa released a quarterly review of the business situation in the new car manufacturing industry. “The ongoing high level of capital investment is due to investment projects by manufacturers in automotive production and development programs. [APDP], usually spread over multiple years and are associated with
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higher levels of production for the export market, “he said. Mabasa speculated on how 2021 will evolve in terms of capital investment by automotive OEMs, and how this year’s total industry investment will be compared to the record investment year of 2020. Also, at a national speech debate in parliament, Minister of International Relations and Cooperation Dr. Naledi Pandor said that Isuzu, Tata Motors, Mahindra Motherson Sumi and Toyota have expanded their investment in South Africa. “The fact that South Africa is still in recession and all these automakers are forced to make very serious investments in South Africa confirms a new investment climate from the auto industry this year,” he said.
GROWTH PROJECTIONS
After a disastrous 2020 that saw South African vehicle sales plummet by 29 percent to just 380,206 units as the Covid-19 pandemic ravaged the economy, the industry is poised for growth in 2021 and 2022. In its latest quarterly review of the South African motor industry, Naamsa has predicted that the overall new vehicle market will grow by 15 percent to 438,000 units in 2021, and then by another 5.7 percent to total 463,000 units in 2022. Although this is encouraging, it will however take years for the market to recover to pre-Covid levels when vehicle sales averaged around 540 000 units a year. Bakkies and other light commercial vehicles will be leading the comeback charge, with LCV sales projected to grow by 16.3 percent in 2021 and 6.2 percent in 2021. Passenger car sales, on the other hand, are expected to grow by 15.5 percent this year and 5.2 percent next year. According to Naamsa, motor company bosses generally agree that the automotive industry is poised for much improved business conditions over the next six months. “CEOs across all vehicle manufacturing segments as well as the CEOs of the independent vehicle importers are by and large positive about a robust recovery in the domestic as well as global new vehicle market over the next six months in line with the economic rebound in South Africa and international markets, from the very low base in 2020,” Naamsa said. “Considering the close correlation between new vehicle sales and the country’s GDP growth rate projected to be more than 3% in 2021, a healthy rebound in the new vehicle market performance is anticipated, from the very low base in 2020,” the industry body added WWW.CEOBUSINESSAFRICA.COM
DIGITALTECH AFRICA
Covid-19 Accelerates Growth of Food & Beverage Ecommerce Market Consumers are embracing ecommerce and eating at home like never before. It’s an evolution brought on by the pandemic but taking hold for the long term By Elly Akoko
As the world grapples with the COVID-19 pandemic and its devastating impact on people’s health, the economy at large, the food and beverage industry has undergone a tremendous change in terms of where and how people source their supplies. In response to the World Health Organization (WHO) protocol on social and physical distancing, the number of people deemed safe to gather in a single place dwindled, with some
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countries initiating lockdowns at some point. This in turn led to most consumers turning to e-commerce platforms as their channel of choice for purchase of food, beverages and other essential groceries, as opposed to physically visiting retail outlets, restaurants, grocery shops etc. According to data from Google, searches for "food delivery services" have grown globally by more than 300% since the outbreak.
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DIGITAL TECH AFRICA: ECOMMERCE GROWTH
IN NUMBERS
13M THE NUMBER OF TOURISTS WHO VISITED MOROCCO IN 2019
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A report by Kantar Group concurs with this finding as by the end of April 2020, the ecommerce share of the food market was cumulatively 12.4% across China, France, Spain and the United Kingdom, up from 8.8% at the end of 2019. In an exclusive Nielsen study of 10 Middle East and Africa markets, consumers indicated they are doing more shopping online than prior to the pandemic outbreak rising by 44% in Saudi Arabia, 41% in United Arab Emirates (UAE), 34% in Nigeria, 33% in Kenya, 31% in Qatar and Bahrain, 28% in Oman, 29% in South Africa and 27% in Egypt and Kuwait. “This pandemic crisis has shown the world that online food delivery is not just a commodity, but a necessity. The food business adapted quickly to the new normal, by availing contactless and cashless deliveries,” said Shreenal Ruparelia Chief Commercial Officer, Jumia Food – a leading food delivery platform in Africa. The extraordinary events caused by the
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COVID-19 pandemic have clearly had a profound impact on the rise of food and beverage ecommerce. However, other growth factors which were in play prior to the pandemic are also expected to contribute to the overall growth of the sector in the years to come. An increase in smartphone users has always given a boost to Food and Beverage e-commerce sales, as they are the primary online shoppers. As per an article published by k-commerce, the world smartphone users reached 3.2 billion in 2019 and are expected to grow by 600 million within the next two years. In Africa, E-Commerce is still at its infancy by global standards standing at less than 2 %, a smaller penetration rate when compared to the over 20% penetration rate in China or 12% in the USA. But it has a promising potential as internet penetration in the region is estimated at 39.3% with 527m internet users, a growth of +12% since 2000, indicates Jumia. The large population of tech savvies are and will continue being millennial and urbanites with a highest spending power and in constant lookout for convenient, personalized, time-saving, costefficient ways to consume, and consume more. Majority of these consumers prefer to buy their food online via web or applications, as it allows them to save time, indulge in a wide variety of food products, discover new cuisines and outlets, benefit from low prices courtesy of bulk purchase, deals and promotions and increasing online launching of products. Overall, the global food and beverage e-commerce market is expected to grow from US$14.9 billion in 2019 to about US$22.4 billion in 2020. The market is foreseen to stabilize and reach US$34.6 billion at a CAGR of 23.4% through 2023, indicates Research and Markets in a report.
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The major global players in the market are Amazon Fresh, Zomato, Bigbasket, Swiggy, MilkBasket, Walmart, Flipkart, Uber Eats, Walmart, among many others. In Africa, the market is currently dominated by Jumia foods, operating in 9 countries. Other local players include Zulzi, Expand Cart, Yamee, Ordera, GoFood, Deliver Addis, who operate alongside multinational such as Uber Eats and Glovo. They are all eyeing the market share of the regions food and beverage industry which is worth US$ 313 billion and is projected to reach US$ 1 trillion by 2030. According to Jumia’s Africa Food Index 2020, the growth will be significantly propelled by the rise of online food sales, which is expected to account for 30% of total revenue generated by 2023.
COLLABORATION BETWEEN RETAILERS AND LOGISTIC COMPANIES HEIGHTEN
Some of the food companies in the world process their own food orders and undertake the deliveries. While others partner with established logistic companies leveraging on their network, technology and expertise for last mile deliveries. The latter is highly used by most players including those who have established logistic departments, as demand for delivery services at times outpaces their logistics capacity. Being a symbiotic relationship, the food delivery businesses also highly benefit from the retailers and food outlets who furnish them with supplies that trade on their platforms. A report from Capgemini in 2019 shows that retailers' net profit could fall by up to 26% in the next three years, if they don't radically improve last-mile solutions, despite increased online grocery sales. The COVID-19 pandemic has accelerated this reality making market players shift focus to expansion, partnerships and acquisition strategies in a bid to make the delivery process efficient and effective. South Africa’s supermarket chain Pick n Pay acquired on-demand online delivery app Bottles to strengthen its e-commerce operations earlier in October. In the same region, UberEats partnered with Game Stores, a subsidiary of South Africa’s retail giant Massmart Holdings, to deliver food and essential products to customers during the nation-wide level four lockdown. This came after Checkers, a supermarket chain owned by Shoprite entered an exclusive partnership with Mr D Food for delivery of alcohol to customers’ homes. Globally, Alibaba, an ecommerce giant has recently invested approximately US$3.6 billion WWW.CEOBUSINESSAFRICA.COM
in the acquisition of a controlling stake in Chinese largest hypermarket operator Sun Art Retail Group. This acquisition comes as Alibaba seeks to strengthen its online grocery delivery capabilities in the wake of Covid-19, as well as its offline retail offering, in an effort to stave off competition in the high-growth market from ecommerce rivals such as JD.com, Meituan and Pinduoduo.
FOOD DELIVERY COMPANIES PULL TOGETHER
Mergers and partnerships between food delivery companies have also come to play. In January 2020, Takeaway merged with Just Eat in an allshare deal that gave Takeaway a greater presence in Canada, the United Kingdom, France, and the isle of Corsica. In total, Takeaway has added 104,256 restaurants under the partnership, which will increase the company's overall distribution footprint by 495%. During the peak of the COVID-19 pandemic, Uber Technologies, the parent company of Uber Eats reached a deal to acquire food delivery rival Postmates in an all-stock purchase worth US$2.65bn. This transaction brought together Uber’s global Rides and Eats platform with Postmates’ distinctive delivery business in the U.S. In Africa, E-commerce platform, Jumia Kenya and Kenyan-based technology food distribution platform, Twiga Foods signed a partnership agreement to enable shoppers on the platform to buy fresh produce as well as processed foods distributed by the farm produce aggregator.
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In Africa, E-Commerce is still at its infancy by global standards standing at less than 2 %, a smaller penetration rate when compared to the over 20% penetration rate in China or 12% in the USA
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DIGITAL TECH AFRICA: ECOMMERCE GROWTH
MEGA FOOD AND BEVERAGE BRANDS VENTURE IN THE GAME
Consumers are embracing ecommerce and eating at home like never before. It’s an evolution brought on by the pandemic but taking hold for the long term
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Growing demand for online food and beverage shopping is also encouraging companies to capitalizing on the opportunity by setting up DTC ecommerce operations. Some made the move in response to low sales registered following COVID-19 disruptions such as closure of on-sale trading outlets. Beverage giant, Coca-Cola launched a home delivery service in Kenya dubbed ‘DialACoke’ which avails a wide range of its products including sodas, water, juices and energy drinks to its customers in a convenient, efficient and safe way. As South Africa eased into Level 3 lock-down and ban of alcohol sales was lifted, liquor stores witnessed a surge in numbers of customers in long queues which posed a challenge on observation of physical distancing stipulated to aid in combating the spread of the corona-virus. To this regard, alcohol producers launched online ordering systems as part of the safety measures. Heineken SA, Diageo and Pernod Ricard in partnership with Touchsides launched the Hola Club Click & Collect platform while South African Breweries (SAB) introduced its USSD cell phone-based ordering platform called Firsti. In neighbouring Zambia, Zambian Breweries Plc, a subsidiary of AB InBev partnered with Tigmoo and AfriDelivery to facilitate delivery of its products to the doorsteps of customers. Though a lucrative opportunity to grow its market, the breweries admits it is at infancy and has not yet gotten great volumes through the distribution line but believes it will soon grow to greater heights with time. “It’s not something that we have been doing a lot in the past; we just started. Together with our partners, we’re trying to encourage people that if you don’t want to go out, but you still want to have our products at home, you can place your order online,” said Zambian Breweries Country Director Jose Moran. Globally, PepsiCo sidestepped retailers and started selling many of its products online via its DECEMBER 2021
PantryShop as Kraft Heinz launched Heinz to Home. Swiss multinational food and drink processing conglomerate Nestlé has recently gone ahead and acquired Freshly, a provider of fresh-prepared meal delivery services in the U.S. The investment is forecasted to post sales of US$430 million in 2020, shipping more than 1 million meals per week. Country Delight, a fast-rising dairy tech startup in India has also revealed its plan of venturing into grocery delivery following a successful series C funding round where it was able to raise US$25 million. The company offers online delivery of fresh, natural cow and buffalo milk and other dairy products and with the new funding acquired, it seeks to expand offering to food essentials such as fruits and vegetables, cold-pressed edible oils, wheat, batters, pulses, spices, pickles, and jams. Done properly, DTC increases brand loyalty and sales. In addition, it provides consumer data insights which enables the companies to make informed decisions. “E-commerce is shaping up to be the next great revolution in the food and beverage industry,” stated Indra Nooyi, PepsiCo’s former CEO. You’d probably think the growth triggered by COVID-19 would taper off as the pandemic subsides and the sales would settle down to their pre-pandemic levels, but historical trends suggest otherwise. The good thing about ecommerce sales is that once they go up, they never quite fall back to the previous levels. “Consumers are embracing ecommerce and eating at home like never before. It’s an evolution brought on by the pandemic but taking hold for the long term,” said Steve Presley – CEO, Nestlé USA
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