COVID-19 Crisis Presents Opportunities for Africa to Develop Local Production Capacity
As the Coronavirus pandemic continues to ravage the globe, African countries should see the crisis as an opportunity to develop their local production capacity as against the tradition of relying on imports. Managing Director of LADOL, Dr. Amy Jadesimi in this interview with newsmen speaks on the potentials available in the continent, particularly Nigeria, with the strong belief that the planned African Continental Free Trade Area (AfCFTA) Agreement remains an added advantage once it takes off. She speaks on the intra-Africa trade that AfCFTA will introduce and how LADOL Free Zone is working hard to achieve a new industrialisation of the nation’s agriculture sector through the provision of requisite infrastructure and manpower development capacity that will meet Africa’s market demand. Excerpts:
Expectations as LADOL Diversifies
We are actually an industrial free zone, which has developed in over the last 20 years and we are targeting a range of sectors to support, most importantly the agriculture sector.
Perspective on AfCFTA
I think that the African Continental Free Trade Agreement has the potential to move the African continent to a similar trade trajectory as that enjoyed by the EU in the 50s, 60s and 70s. And that is because the African continent has abundant of raw materials and we have the largest growing young population in the world. So, potentially, this is one of the biggest markets in the world, but we have to make sure that that market is serviced by local production. So, it is not just about importing from wealthy countries and distributing that through the AfCFTA. It is about leveraging the fact that we have this agreement to trade finished goods among African countries and to create finished goods amongst African countries. That is exactly what happened in the EU and it creates a tremendous amount of wealth and there is no reason why we can’t do this in Africa.
The most important thing for African to begin to do, at least this COVID-19 crisis has thought us that again, is to develop local production and industrial capacity. And that is what LADOL is all about. It is about developing locations, home-grown, in which high-value industrial activity can take place, in which we can manufacture everything from what we need in healthcare, to what we need to process our agricultural products, to what we need to build bridges, to build ships. So, we need to develop home-grown capacity for production at a very high level. And the only way to develop that, is by Africans investing in Africans. That is how every country in the world developed. And this agreement creates a continent-wide market, which we can leverage to raise the finance we need to develop this production capacity.
Impact of COVID-19 on Business, AfCFTA
The Covid-19 crisis has created a new normal and there are challenges in any change of the magnitude as the one that Covid-19 has instituted. However, I think that the way in which Nigeria, our government and the private sector and people in general have adapted is instructive. We have already created new ways in which to produce, we have created greater independence from international import and we need to build on that. The CBN is already making more funds available. They have already put palliatives into the private sector. Of course, more needs to be done. But since these were the first moves that were made at the beginning of this crisis, I have faith that more similar moves would continue to be made to support local industries. So, everything is now driving towards the development of local industries. And under this new normal, it should be a prerequisite for us to manufacture locally. That should be the first target of any new scheme in which we embark.
SMEs in Nigeria
The World Bank estimates that 680 million jobs need to be created. Eighty per cent of those jobs would be created by SMEs, and the same is true in Nigeria. That means to say that SMEs are the drivers of economies across the world and they are the drivers of Nigeria’s economy. So, protecting them is enormously important. We have already seen schemes put forward to protect them, and I think that is good. But, the banks need to provide more finance for SMEs. We need to find a way to free SMEs from the requirements to bring huge amounts of security before they can access funding. We need to find a way to create level-playing field for the SMEs. If you look at the oil and gas sector and the impact that the Nigerian Content Development Monitoring Board has had, we need to replicate that in other industries, where you can use an enabling law like the Local Content Act to build up a range of other SMEs and give then access to the marker. And if they provide funding for them in the same way that NCDMB provides funding for indigenous companies on the oil and gas sector.
Infrastructural Development
We developed LADOL out of a disuse form because, we recognise that development of infrastructure and facilities was a prerequisite to industrialisation, particularly large scale industrialisation. And that is true across the country. Government definitely can’t do that alone. We need the private sector to be as big as the public sector. That means massive infrastructural facility development, human capital development on the private sector side. To do that, private sector needs the market. They need to be able to access that market, access financing and they need a consistent regulatory environment which supports local development. I think that we are on the way to having those things, but more needs to be done. And I think that this crisis has shown us that more needs to be done very rapidly.
LADOL and Agric Sector
LADOL started serving companies in 2006. We started by for using on the largest industry in Nigeria, that is, the oil and gas. In that industry we halved the cost for deep offshore logistics support, doubling the return on investment for the oil companies in the deep offshore space, making Nigeria a more attractive investment destination, which is really important. We also enabled the largest vessel ever to berth in Nigeria, the Egina FPSO, to come in, proving that the most challenging industrial projects in the world can be handled in Nigeria, with our facility in LADOL. Meaning that Nigeria is a hub for high-value industrial activity.
Having now completed one of our development of this industrial free zone, we now started phase 2. Our master plane consists of developing a circular economy where we are targeting specifically non-oil and gas sector and those sectors include first and foremost the agricultural sector. We are in discussions with two companies who would move in to LADOL and carryout large scale industrial processing. At the same time, we are looking at leveraging our existing facilities, for example, cold storage that we use for our existing client, to also support agricultural companies straight away.
Companies Moving to LADOL
We are hoping that on the agricultural side we have our first major client move in this year.
Collaborations
Collaborations are one of the areas of the SDGs, goal 17. As most people who know LAFOL know, we are aligned with the SDGs. Collaborations are one of the goals because sustainability is about building, sharing economies. It’s about working with others and ensuring that one plus one equals greater than two. In other words, collaborations can build exponential growth. And in a country like Nigeria where we have huge growth potential and low income for the moment, collaborating amongst one another would enable us to achieve that high growth potential much soon. And we need to change our thinking. We need to change approach, particularly in the private sector from a zero sum game, where I win, I win; you win, you lose, we both lose, where people are just looking at very narrow games from basically an agency model. We need to move to a model where we are making our individual contributions to create a landscape where very large scale industrial activity can happen. It can only happen if we work together.
Manpower Requirement for Agric Sector
Within LADOL we are building a training academy. And that training academy would cover a wide range of sectors. It focuses on filling the gaps and creating career paths for people. Not just training for one specific project but, training for life. Helping people develop skills where they can build a career ,working with clients , small and big companies to identify the gaps where they need people to come in and help them build their companies. At the end of the day, success or failure, anything is about the people. Even when you are starting right at the beginning of a project, it is about people sitting round the table and their skill sets, their determination, and how they attend to their mission. Those are what determine success or failure. So, to me, we need a huge amount of training in Nigeria. Across the world people need training. What we learned in the past two decades, is the importance that countries need to change their way of doing business .Everybody in the world needs to think of new ways in improving on their career. It is about continuous learning, continuous reskilling. Being a doctor, I am quite familiar with that because, it is the same thing when you are a doctor. In medical school there are certain ways in which people diagnosed and treat, which 10 years later may become obsolete. Similarly, when people think of their career now, they have to think about continuous learning, think about continually rethinking how you approach your career, how you approach a problem. And that requires us as business owners and developers to have training and human capital development as a continuous part of our yearly expenditure.
AfCFTA under COVID-19
Here’s the situation. Before the current covid-19 crisis, I thought those estimates were conservative. Now we are in the middle of the crisis, we don’t know where this is going to go. Across the world we see countries who thought they had dealt with Covid-19 and Covid is coming back. There is a huge amount of uncertainty around Covid-19. But what I do think is that from an African perspective, Covid-19 has made it clear that we as Africans need to develop home-grown solutions. And all our governments, NGOs, private sector, we are all committed to that now. Even the international community is much more committed to do, much more than we were before the crisis. So, my prediction is that when we come out of this crisis, we are actually going to see a much more significant impact on the growth of the Pan African economy from the full implementation of the African Continental Free Trade Agreement, provided of course that we adhere strictly to local content policies as part of the expansion and the development of trade under this agreement.
.
Expectations as LADOL Diversifies
We are actually an industrial free zone, which has developed in over the last 20 years and we are targeting a range of sectors to support, most importantly the agriculture sector.
Perspective on AfCFTA
I think that the African Continental Free Trade Agreement has the potential to move the African continent to a similar trade trajectory as that enjoyed by the EU in the 50s, 60s and 70s. And that is because the African continent has abundant of raw materials and we have the largest growing young population in the world. So, potentially, this is one of the biggest markets in the world, but we have to make sure that that market is serviced by local production. So, it is not just about importing from wealthy countries and distributing that through the AfCFTA. It is about leveraging the fact that we have this agreement to trade finished goods among African countries and to create finished goods amongst African countries. That is exactly what happened in the EU and it creates a tremendous amount of wealth and there is no reason why we can’t do this in Africa.
The most important thing for African to begin to do, at least this COVID-19 crisis has thought us that again, is to develop local production and industrial capacity. And that is what LADOL is all about. It is about developing locations, home-grown, in which high-value industrial activity can take place, in which we can manufacture everything from what we need in healthcare, to what we need to process our agricultural products, to what we need to build bridges, to build ships. So, we need to develop home-grown capacity for production at a very high level. And the only way to develop that, is by Africans investing in Africans. That is how every country in the world developed. And this agreement creates a continent-wide market, which we can leverage to raise the finance we need to develop this production capacity.
Impact of COVID-19 on Business, AfCFTA
The Covid-19 crisis has created a new normal and there are challenges in any change of the magnitude as the one that Covid-19 has instituted. However, I think that the way in which Nigeria, our government and the private sector and people in general have adapted is instructive. We have already created new ways in which to produce, we have created greater independence from international import and we need to build on that. The CBN is already making more funds available. They have already put palliatives into the private sector. Of course, more needs to be done. But since these were the first moves that were made at the beginning of this crisis, I have faith that more similar moves would continue to be made to support local industries. So, everything is now driving towards the development of local industries. And under this new normal, it should be a prerequisite for us to manufacture locally. That should be the first target of any new scheme in which we embark.
SMEs in Nigeria
The World Bank estimates that 680 million jobs need to be created. Eighty per cent of those jobs would be created by SMEs, and the same is true in Nigeria. That means to say that SMEs are the drivers of economies across the world and they are the drivers of Nigeria’s economy. So, protecting them is enormously important. We have already seen schemes put forward to protect them, and I think that is good. But, the banks need to provide more finance for SMEs. We need to find a way to free SMEs from the requirements to bring huge amounts of security before they can access funding. We need to find a way to create level-playing field for the SMEs. If you look at the oil and gas sector and the impact that the Nigerian Content Development Monitoring Board has had, we need to replicate that in other industries, where you can use an enabling law like the Local Content Act to build up a range of other SMEs and give then access to the marker. And if they provide funding for them in the same way that NCDMB provides funding for indigenous companies on the oil and gas sector.
Infrastructural Development
We developed LADOL out of a disuse form because, we recognise that development of infrastructure and facilities was a prerequisite to industrialisation, particularly large scale industrialisation. And that is true across the country. Government definitely can’t do that alone. We need the private sector to be as big as the public sector. That means massive infrastructural facility development, human capital development on the private sector side. To do that, private sector needs the market. They need to be able to access that market, access financing and they need a consistent regulatory environment which supports local development. I think that we are on the way to having those things, but more needs to be done. And I think that this crisis has shown us that more needs to be done very rapidly.
LADOL and Agric Sector
LADOL started serving companies in 2006. We started by for using on the largest industry in Nigeria, that is, the oil and gas. In that industry we halved the cost for deep offshore logistics support, doubling the return on investment for the oil companies in the deep offshore space, making Nigeria a more attractive investment destination, which is really important. We also enabled the largest vessel ever to berth in Nigeria, the Egina FPSO, to come in, proving that the most challenging industrial projects in the world can be handled in Nigeria, with our facility in LADOL. Meaning that Nigeria is a hub for high-value industrial activity.
Having now completed one of our development of this industrial free zone, we now started phase 2. Our master plane consists of developing a circular economy where we are targeting specifically non-oil and gas sector and those sectors include first and foremost the agricultural sector. We are in discussions with two companies who would move in to LADOL and carryout large scale industrial processing. At the same time, we are looking at leveraging our existing facilities, for example, cold storage that we use for our existing client, to also support agricultural companies straight away.
Companies Moving to LADOL
We are hoping that on the agricultural side we have our first major client move in this year.
Collaborations
Collaborations are one of the areas of the SDGs, goal 17. As most people who know LAFOL know, we are aligned with the SDGs. Collaborations are one of the goals because sustainability is about building, sharing economies. It’s about working with others and ensuring that one plus one equals greater than two. In other words, collaborations can build exponential growth. And in a country like Nigeria where we have huge growth potential and low income for the moment, collaborating amongst one another would enable us to achieve that high growth potential much soon. And we need to change our thinking. We need to change approach, particularly in the private sector from a zero sum game, where I win, I win; you win, you lose, we both lose, where people are just looking at very narrow games from basically an agency model. We need to move to a model where we are making our individual contributions to create a landscape where very large scale industrial activity can happen. It can only happen if we work together.
Manpower Requirement for Agric Sector
Within LADOL we are building a training academy. And that training academy would cover a wide range of sectors. It focuses on filling the gaps and creating career paths for people. Not just training for one specific project but, training for life. Helping people develop skills where they can build a career ,working with clients , small and big companies to identify the gaps where they need people to come in and help them build their companies. At the end of the day, success or failure, anything is about the people. Even when you are starting right at the beginning of a project, it is about people sitting round the table and their skill sets, their determination, and how they attend to their mission. Those are what determine success or failure. So, to me, we need a huge amount of training in Nigeria. Across the world people need training. What we learned in the past two decades, is the importance that countries need to change their way of doing business .Everybody in the world needs to think of new ways in improving on their career. It is about continuous learning, continuous reskilling. Being a doctor, I am quite familiar with that because, it is the same thing when you are a doctor. In medical school there are certain ways in which people diagnosed and treat, which 10 years later may become obsolete. Similarly, when people think of their career now, they have to think about continuous learning, think about continually rethinking how you approach your career, how you approach a problem. And that requires us as business owners and developers to have training and human capital development as a continuous part of our yearly expenditure.
AfCFTA under COVID-19
Here’s the situation. Before the current covid-19 crisis, I thought those estimates were conservative. Now we are in the middle of the crisis, we don’t know where this is going to go. Across the world we see countries who thought they had dealt with Covid-19 and Covid is coming back. There is a huge amount of uncertainty around Covid-19. But what I do think is that from an African perspective, Covid-19 has made it clear that we as Africans need to develop home-grown solutions. And all our governments, NGOs, private sector, we are all committed to that now. Even the international community is much more committed to do, much more than we were before the crisis. So, my prediction is that when we come out of this crisis, we are actually going to see a much more significant impact on the growth of the Pan African economy from the full implementation of the African Continental Free Trade Agreement, provided of course that we adhere strictly to local content policies as part of the expansion and the development of trade under this agreement.
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