Prospects of Nigeria’s construction industry enormous — Lafarge Africa boss

Africa

In this interview with NIKE POPOOLA, the Country Chief Executive Officer, Lafarge Africa Plc, Khaled El Dokani, speaks on prospects and challenges of operating in the construction industry

What are the major challenges of the COVID-19?

The main challenge is how to make sure that our people are healthy and safe; this was our key and number-one priority. There is a lot of lack of clarity around the COVID-19 when it started. I think there was a lot of unknown facts about the COVID-19, the way it had been communicated even on a global level. So what we set as our main challenge and priority in the organisation was how we can make sure, while we are running our business, our people are well protected, looking up to their health and safety within this environment. Followed by that, the market showed a little bit of stagnation, particularly in April, and within that, how can we manage our cost, how we align our priorities to minimise the impact of the stagnation that took place across the country and particularly in our business. In April, I think our action plans resulted very well in managing these challenges and whereby our results were quite fruitful. The challenge is not over yet, we still believe the COVID-19 will still have its own implication on the market and in our business sector and probably, until the year end. And that is why our key challenges still remain the focus on the health of our people, followed by the focus on how to maintain a strong cash position and manage our cost to be aligned with any potential drop in our business in the coming few months.

What are the prospects and challenges in Nigeria’s cement market?

The market generally is good. The way it started before the COVID-19 showed a very positive result. With the COVID-19 arising, the lack of clarity, how it is going to evolve, how it is going to impact the overall economy of the country, our cement business is partially driven by how much the Federal Government and the states are spending on infrastructure, whether there will be a downsize in these projects, or will it impact the scale of the projects and of course it will have its impact on our business. This is mainly the real challenge  in the near future.

How has the forex constraint affected businesses in the country?

The constraint on the foreign currency is not something new. I recall and I have been in the business group for quite some time, and I know that Nigeria, back in 2016 and 2017 had the same issue. It is mainly driven by the oil price drop and the shortage of demand on the oil sector. Still, Nigeria is financially quite driven by export of oil and the price of oil. I don’t see it as a long-term challenge. There is a current challenge in the forex, the naira has been devalued by the central bank recently, and there is a shortage of availability of foreign currency. However, I personally believe this is not a long-term embedded problem in the economy, it will soon be resolved once the oil price recovers. And the Federal Government and states are aligning the budget to cope with the new norms.

To what extent will you say Nigerian banks have been supporting businesses to grow?

I believe that the Central Bank of Nigeria and the Nigerian banks have done a great job honestly, over the last few months. I have attended personally several webinars handled by the central bank as well as the Nigerian Stock Exchange. The CBN has given clear instructions for the banks to facilitate on the loans, now borrowing at a very reasonable interest rate level. CBN is taking the mandate of encouraging very much replacing imports by in-house investments, whereby the country can rely more on its own local and internal resources. I think they have managed a lot to get certain grace period to the recovery and the repayment period of the loans whereby for individuals and corporates, and all of these are practices that the CBN has put in place that to a great extent has not deepened the problem and allowed a lot of businesses and individuals to cope with the problem, so I will really commend a lot what the central bank and the local banks have done over the last couple of months.

Would you say  there has been a remarkable demand for building and home ownership in the country, despite the fact that mortgage is not well developed in the country?

The population of Nigeria grew at an average of 2.5 to three per cent every year; the outlook of total Nigerian population by 2025 is around 225 million and 240 million. That means there is a natural growth of need in the country for building growth, for building houses, and the Nigerian economy is growing generally, combined with annual growth rate of about three to four per cent. So the fundamentals of the economy is pretty strong, it is a consumer market whereby we will always see standing, whether on construction or building  houses, renovating houses, roads and infrastructure, government facilities, so all of these is there. And I think what we are talking about this is whether the country needs to grow, five or six per cent per annum or more per annum, but the country will keep on growing naturally because there is a natural increase in demand all over the year.

Before joining Lafarge in Nigeria, which other countries did you operate from where the company has its presence?

I am from a finance background and I joined Lafarge back in 2004 as the country’s CFO of Algeria for the business of Lafarge over there. I spent five years in Algeria and then I moved to the United States as the vice president of development and strategy. I spent about four years in the US and then, I moved back to the Middle East where I was a general manager in Saudi, and then I moved as the country CEO in Qatar two years in a row, and after that, I became the chief executive officer in Iraq in 2018. I spent one and a half years in Iraq. We developed a very good and strong turnaround in the business over there, and then, I joined Lafarge Africa here in Nigeria in January 2020.

How conducive is the Nigerian business environment compared to other places you have been to?

Definitely, each country has its own challenges and in the way we manage business. In Nigeria, I think we hold a very good position in the country; the market now strong, the future outlook is quite positive and resilient. The market in Nigeria is the biggest in Africa; population is around 200 million which shows a lot of potential for our construction material business in the country. In the same line, the country is still large, a lot of infrastructure, houses which again shows a very good outlook for our presence in the country going forward.

I think I joined in a time when the world has a lot of challenges on the ground, mainly after the Q1 result were we have shown a very strong performance in the COVID-19. We have to align a lot of our strategies and future plans to manage the ambiguity of the situation. The main focus we had over the last six months and particularly in the last quarter was around health, cash and cost, and these were the three pillars were we managed to allow the whole organisations around and the result has been pretty good and positive, Q2 and H1 result.

Movement from loss to profitability, dividend payment?

The company has started a very strong exercise since 2019. It started with the divestment of our South African business, which had exposure to foreign currency, and this divestment has created a cash inflow that we will use significantly to strengthen our balance sheet. So the divestment of our South Africa business last year brought a lot of value to our financial result. Also, there has been a lot of cost management and controls implemented last year and it was carried forward and this year as well where it has strengthened our position.

In the coming two years, we will focus primarily on two things, our health and safety. Cash and cost together go hand in hand as well as our plan to grow in the market, and show more strength and presence in our key market where we are selling our product.

What are the developments and innitiaves to boost local production of construction materials in the country?

For Lafarge Africa, we are a global leader and in the building materials solutions. One of the solutions that have been developed was the roads in products where we are engaged in new innovation of products that better constructs roads, that provides more durability, less maintenance, and these products are being used pretty well in our few projects that we have done in Nigeria as well as worldwide. We have developed stabilisation technology that we provide as well because Nigeria from a wider prospective is a heavy raining country where road stabilisation technology is very important to maintain long life, durability for the road being constructed.

How would you assess human capital development in the construction sector?

Human capital is the real asset for Lafarge Africa. We have a lot of development programmes when it comes to our people and our team in the organisation. We have strong collaboration with the professional engineers, we have a lot of webinars and engagements with professional bodies. We open practices, trainings, internships for fresh and new graduates. One element of the human capital is we promote very much gender diversity, we recruit males and females at our organisation at the same time on competency. So human capital is one of our main strength as well as in Lafarge Africa. Our target is how to make Nigeria one of the exporting unit for talent within our group.

How should industries ensure sustainability and protection of the environment where they operate and ensure social responsibility?

Sustainability and the corporate social responsibility, go hand in hand. We are committed to reducing our environmental impact by ensuring all our operations comply with the regulatory laws and regulations. We ensure standards to our products as well. We continue to use waste materials and bye products from other industries as alternative resources for energy. We collate the wastes directly from industries that create wastes and we process it on our platforms and use it as a source of energy which has a much better impact on our environment as well. We recover energy and we get materials from which are waste, ranging from household plastic to industrial chemicals, so the range of the waste management that we consume in our business is quite big. The activity on the community is quite big, they reduce the volume of land waste, and safe the public and provide a cleaner environment as well.

On the CSR, we are engaged in a multiple times. One of the things is our contribution towards the COVID-19, and the community relief programmes that has been designed. The company has allocated N500m towards the support of the community, at different levels, so in the first phase, Lafarge Africa community relief programme was converted. One of our our facilities was converted to be used as isolation centers, and we provided infrastructure supports, generators, ambulances, and critical personal protective equipment as well. We have reached out to over 20,000 people in the different communities were we have our plan. In addition, we support water sanitation and hygiene initiatives for host communities. The companies host community and sensitisation programmes also on COVID-19 have so far directly impacted thousands of people, at the grassroots level. On the CRS, we are very well engaged. We have our regular planning and budgeting for CSR initiatives every year. However, this year in particular, we have increased our support to the communities to mitigate parts of the concerns and risks, that was triggered by the COVID-19.

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