Manufacturing under stress Nigeria

Nigeria
Manufacturing under stress
Nigeria may have the largest domestic market in Africa and may be attracting greater FDI than ever before, but its manufacturing sector has been going downhill rapidly. Williams Ekanem explains why the country’s producers are raising the alarm.

During the African Nations Cup football tournament in Ghana earlier in the year, Nigeria, which considers itself the ‘champion’ of Africa in most aspects of life, had to swallow the bitter pill of defeat against their arch West African rivals, Ghana.

Now it seems that it is not only in football that Ghanaians are taking over from Nigeria, it is also happening in business. In July, Dunlop Nigeria plc, which is quoted on the Nigerian Stock Exchange, announced plans to substantially scale down its activities in Nigeria. Although the tyre company did not publicly announce it at the time, industry sources say it has its eye on relocating to Ghana.

After producing tyres in Nigeria for 45 years, Dunlop said it will be closing its N8bn ($68.3m) tyre plant and will now import tyres from South Africa and other Dunlop factories around the world. The fate of at least 1,200 Nigerian workers hangs in the balance.Dunlop is not the only company considering taking this route to maximise its industrial capacity: Unilever, a household products manufacturing company with substantial investment in Nigeria, considered a similar option some months ago. Michelin, another tyre manufacturing company, has closed down its business in Nigeria after 30 years of operations in the country. When the tyre company folded its local production in the country, it took to the more lucrative option of full-scale importation of tyres and is said to be considering returning to the West Africa sub region via Ghana to stay in competition.




Ecobank's Route to the Top in 'Middle Africa'
IF IT'S July it must be Burundi. It was Gambia in January, Malawi in March and Kenya in June. And so one of the continent's fastest growing multinationals, Ecobank Transnational Incorporated (ETI) , continues its march through Africa.
"We don't have an Africa strategy. Africa is our strategy," says Arnold Ekpe, one of Africa's top businessmen and Group CEO of Ecobank.
The west African banking group's expansion has picked up pace in the past year, with six new country operations launched since January. Its latest subsidiary -- Ecobank Burundi -- opened in the central African country in July, bringing to 24 the total number of countries in which the group has banks across the continent. ETI started life as a regional bank back in 1985 with 1200 shareholders from 14 countries. It aimed to fill the gap created by the lack of commercial banks in west Africa. It was incorporated with an authorised share capital of $100m and start-up capital of $32m raised from shareholders across west Africa.
As a result it always had a regional strategy, starting with west Africa and moving to east and now southern Africa. Currently, the bank has 7000 shareholders, including institutional investors, and more than 8000 staff across 27 African nationalities, highlighting the pan-African nature of this network. The group has its headquarters in Lome, capital of the tiny west African country of Togo, which many South Africans would be hard pressed to find on a map.
Why choose one of Africa's smallest countries to base one of its largest companies? Ekpe, who hails from Nigeria, the giant down the road, says the government in Togo offered the company privileges such as tax-free status, certain exchange control exemptions and other measures to lure it to set up there.
"This suited our regional objectives at the time but now it has become a competitive edge. It's a very neutral place to be based," he says.
Ekpe talks about being the leading bank in what he calls "middle Africa" -- that large swathe of business opportunity between the Sahara Desert and SA. And it seems to include that slightly smaller area between the Atlantic Ocean in the west and the Indian ocean in the east.
Ecobank's expansion strategy is primarily one of acquisitions. For instance, it has taken majority stakes in International Bank for Africa in Chad, Loita Bank in Malawi, Bank of Commerce, Development and Industry in Rwanda, BICA in the Central African Republic, Societe Burundaise de Banque et de Financement in Burundi, and EABS Bank in Kenya.
Ekpe says acquisitions have been a preferred, but not an exclusive, strategy and where a desirable target does not exist, greenfield operations have been established. But in every case, the institution carries the Ecobank name. "We are always the major shareholder because we put the Ecobank reputation behind every subsidiary and we need to control this reputation." Ekpe is steeped in Africa's banking world with a management pedigree in banks such as Citibank and United Bank for Africa, one of Nigeria's biggest banks. He is no stranger to Ecobank, having first served as its CEO from 1996 to 2001.
He was asked to rejoin the bank in 2005. Ekpe says that the group aims to be one of the top three banks in its markets. The group's emphasis is on cross-border business as well as high street banking. The regional strategy is backed up by a strong technological component, with backroom operations harmonised across operations.
Some of the countries are tiny markets and getting ahead is not difficult. But what about a country such as Nigeria, which now has some of the biggest emerging banks on the continent? Ecobank has been in talks with one of Nigeria's biggest -- First Bank of Nigeria -- but three years down the line, a deal is yet to be signed, signalling that it may be doomed. Analysts say that the delays are about management issues rather than about mutual benefit -- Ecobank needs First Bank's market share in Nigeria and the latter would like Ecobank's regional spread.




African Business’ Annual Rankings

Africa’s banking sector, miraculously spared the fallout from the subprime disaster, continues to consolidate growth and improve performance. The total assets of the 100 banks that appear in our rankings reached $856bn – a rise of 36% over last year while aggregate Tier 1 capital rose 47% to $60.6bn. However, the continent’s 25 top banks hold almost 85% of the region’s banking assets with the ‘big five’ South African banks alone accounting for 42% of the total continental assets. Nigerian banks, as they have done for the past five years, continue to climb up the leader board and although they may still be far behind the South African behemoths, they are laying a strong challenge to North African financial institutions. But, wherever in Africa you look, the industry, once viewed as rudimentary at best, has been transformed so radically over the past decade it is now almost unrecognisable. Modern, reliable, automated banking has become a matter of fact. Institutions are fewer but stronger. Line managers are better qualified and retail and corporate clients can expect improved services as the continent’s financial systems become ever more sophisticated and complex. Over the last five years, our annual rankings have made intriguing reading — while the positions at the very top have shifted only slightly, the ‘second’ rank has shown considerable activity. What the charts will show in another five year’s time is anybody’s guess but the one set of figures you can count on to continue increasing will be in the total assets column. More...







Robben Island in troubled waters
Nelson Mandela’s world-famous prison home for 18 years is sinking under the weight of a multitude of financial and regulatory problems. Tom Nevin reports

If there is a shrine to South Africa’s liberation heroes it is Robben Island. It was on this small, 1km wide patch of arid earth in the Atlantic Ocean some 11km from Cape Town, that struggle icons led by Nelson Mandela were incarcerated for decades to keep them from leading the fight for freedom against apartheid.

Since 1994 it has assumed a virtually spiritual significance and in the last 14 years has been visited by millions from around the globe, all keen for a glimpse of what Mandela’s life for 18 years on the tiny prison island might have been like.

So it was with a sense of outrage and betrayal that South Africans learned of a raft of administrative troubles there, including alleged mismanagement, a budget crisis, and seizure, by the sheriff of the court, of the new motor launch that ferries visitors to the Table Bay island prison. The island is also infested by 4,000 rabbits that have overrun the world heritage site which is treasured for its colonies of penguins and endangered birds.