Mohammed Akoojee on Imperial’s ‘gateway to Africa’ plan
Transport group sees continent as last of the big opportunities
● Mohammed Akoojee, CEO of Imperial Logistics, says the transport group is shifting its core strategic focus from Europe to become the “gateway to Africa”.
To this end, it hopes to conclude the sale of its European shipping business in June for R3.64bn and use the capital to get into logistics activities that link Africa to other international markets.
“It doesn’t add value to our positioning in the market in Africa, and Africa is one of the best opportunities we have,” he says.
“We want to create a gateway into Africa for multinationals keen to access the fastestgrowing economies and probably the last major consumer and pharmaceutical goods market opportunities that are left.
“If you want to be a gateway into Africa you need an international footprint. You can’t offer your client a seamless entry into Africa without having that.”
Although it will still be a major player in SA, the company’s exposure to the local economy “will get smaller” as it puts more and more capital into other African markets.
It has been moving in this direction since 2010 when it began building distribution platforms over an increasing number of African markets.
“We saw the consumer goods and pharmaceutical sectors producing massive growth in opportunity. We have a lot of expertise in SA and it seemed logical to expand our expertise, client base and knowledge into Africa.”
Back in 2010, Imperial Logistics had no revenue outside SA. Now, R15bn in revenue and a third of its operating profit come from African markets outside SA. It operates directly in 11 African countries.
“We want to continue expanding our pharmaceutical and fast-moving goods distribution platform across Africa,” Akoojee says. “We want to double our business in the continent over the next five years.”
It’s a no-brainer, he says. “Africa’s got 1billion people, 200-million in Nigeria alone. The consumer goods and pharmaceutical opportunities in that market are massive.”
He acknowledges that Africa is “obviously not an easy market to do business in”.
“But when you’re operating in the sectors we are, there’s a lot of defensiveness and protection in that. People can stop buying cars and a lot of things before they stop buying pharmaceutical products and consumer goods.
“There’s a lot of support from government in that space, because those countries need those products.”
For businesses in sectors more reliant on discretionary spending, the challenges are harder to navigate, says Akoojee, who became CEO of Imperial Logistics in 2018 but has been closely involved in its African growth story from the beginning.
“We’ve seen the resilience in our pharmaceutical business over the last 10 years in spite of devaluation of currencies and commodity cycles.”
A number of South African companies have rushed into Africa singing hymns of praise to its vast potential and their ability to unleash it into their pockets.
Most of them have had to beat humiliating and extremely costly retreats.
Akoojee says Imperial owes its success to a very different strategy.
“We didn’t go in with a South African mentality that says, ‘Here we are and we know everything’. We acquired businesses with strong management and know-how, that understood the local landscape.
“We didn’t go in with the mentality that we were going to apply a lot of our South African logic to operating in those markets.”
He sees the African Continental Free Trade Area as a “massive” opportunity. “There’ll be a lot more local manufacturing, and trade between countries will be much higher, needing more logistics and distribution. We’re ideally positioned for that because we’ve already got distribution networks in those markets.”
The continental trade pact will help Imperial
access and service multiple markets from regional hubs in Southern Africa, West Africa and East Africa, he says.
The intended implementation date is July 1. Although Covid-19 “put a spanner in the works”, he believes the political will and commitment to make it a reality are still there. The pandemic is certainly not all bad news for Akoojee, who acknowledges frankly that infectious disease emergencies “create a big opportunity for us” in terms of demand for pharmaceuticals and protective equipment, which Imperial provides through its distribution networks.
It has a business that sources personal protection equipment, testing equipment and other medical supplies in India and China for African markets and aid groups such as the World Health Organisation and United Nations.
It has an existing client base built up over about six years, and demand is “so massive we haven’t looked at servicing outside that base yet”.
While bureaucracy has been a nightmare for many South African companies in Africa, this has not been the case for Imperial, he says.
“Local relevance is critical for operating in Africa. You’ve got to have good local management that understands the complexity of the market to navigate a way through it.”
MTN took a hammering after Nigeria accused it of moving dividends out of the country illegally, which it denied doing.
“People talk about taking forex out of Nigeria and having difficulty with that,” says Akoojee. “We’ve never had that problem because if you follow the regulations and the rules, you won’t have that issue.
“Understanding the local nuances of getting those things done is important. We have partners in Nigeria that have been operating for a long time there. We don’t buy local businesses without great local partners.”
He says Imperial won’t reduce its exposure to SA but will be putting more capital in other African markets, “so SA will get smaller as a function of that”.
“Not that we don’t see opportunities in the South African market but we’ve already got scale — 5,000 trucks, over a million square metres of warehousing, a logistics company that provides services across pharmaceutical, mining and manufacturing.”
But with 40% of its revenue stream dried up by the lockdown, the company’s taking strain.
“We move a lot of tobacco and a lot of alcohol. That part of our business has not been operating.”
Nor the parts that service the construction, automotive and fuel industries, which are still not operational.
“We have only 60% of our revenue but 100% of our costs, because you can’t just switch your cost base off.”
With most of the economy still in lockdown, retrenchments are inevitable, he says.
We didn’t go in with the mentality that we were going to apply a lot of our South African logic to those markets Mohammed Akoojee