As part of a series on Development practice in Africa, Temi Phyllis Pratt (MSc Development Management) interviews key African stakeholders working on the continent to drive development across a number of sectors. In this second interview, Dr Amy Jadesimi, CEO of Lagos Deep Offshore Logistics Base (LADOL) discusses the role of the private sector in industrialising Africa and being the driving force of job creation in Africa, with a specific focus on Nigeria.
Dr Amy Jadesimi is a leading advocate for private sector development in Africa. She is currently the CEO of LADOL, a $500 million Industrial Free Zone. Amy was a Commissioner for The Business & Sustainable Development Commission. She then joined the UNDP Steering Committee on SDGs and the UNICEF Advisory Group in 2019. Amy received financial training at Goldman Sachs after receiving her MBA at Stanford Graduate School of Business & medical training at Oxford University. Her accolades include being listed in the Top 50 Women in Technology by (Forbes, 2018), Oil and Gas Leading Woman of the year (Foreign Investment Network, 2018), voted the Young CEO of the Year (African Leadership Forum, 2018), an Archbishop Tutu Fellow, a Young Global Leader – Alumni (WEF), a Rising Talent (Women’s Forum for Economy and Society), one of 20 Youngest Power Women in Africa (Forbes), one of Top 25 Africans to Watch (Financial Times), one of the Most Influential People of African Descent (Under 40) Worldwide (United Nations International Decade for People of African Descent (UN IDPAD), 2018) She has been recognised as one of the 50 most Influential Women in Business by publications which include: The Africa Report, Jeune Afrique and the Africa CEO Forum. She currently serves as a member of the Advisory Board of Prince’s Trust International and is a contributor to Forbes.
TPP: Tell us about LADOL & Its role in facilitating economic development in Nigeria?
AJ: LADOL was founded in 2001 and is an industrial free zone based in Apapa Port, Lagos (Nigeria). It became a free zone in 2006 and our first major client came on board in 2010. It is a long term development project.
Over the years we have attracted investments worth $500 Million and have developed the area from what was a disused swamp into a small village supporting a fully integrated logistics base and shipyard. Underlying the vision of the local Nigerian investors was the desire to create a place where you could carry out the most challenging industrial projects in the world. The involvement of the private sector in developing Nigerian Port facilities took off in 2006, at a time when the Nigerian Government was inviting private capital to invest in specific areas of the Nigerian economy.
LADOL was the first new investor creating infrastructure in the Port in decades. From inception we aimed to increase the size of the market by carrying out projects that had never been done in Nigeria before. Our objective was to create a multiplier effect on job creation, i.e. for every one job in LADOL five to fifteen jobs would be created outside LADOL.
TPP: What was your approach?
AJ: So, if we look at the fully integrated logistics base, the initial focus of that sector was the oil and gas sector. This is because it is the largest industry in Nigeria. The objective was to decrease the cost of servicing this sector and increase the efficiency in Nigeria by increasing local content.
Providing a one-stop shop for the oil and gas industry through an indigenous company. In order to do this, we invested tens of millions of dollars in developing our service offering which meant building infrastructure, facilities, operational teams, procuring equipment and investment in skills and training for all employees. This was all done ahead of the market, i.e. before we had clients.
This investment put us in a position where we are a logistics service solutions provider to the in Nigeria. We are implementing an electronic management system that will make us fully cashless and paperless so that when we interact with the companies, we provide them with a service that is end to end.
So, we bring in their cargo, we inspect it, we label it, we maintain it and then we ship it offshore to them. Down the line we will get involved in quality control both within and outside of Nigeria. Our current offering allows companies to focus on their offshore operations, whilst we do the administrative and support work they need as part of their business operations.
This is important because by providing this 24 hour one-stop shop and logistics solution, we have been able to halve their cost of business operations in Nigeria. This 50% cost reduction in business operations has helped companies make further investment in Nigeria as opposed to other regions.
The competition that we have in Africa is not between or within African countries but rather between for example Nigeria and other non-African countries where the return on investment may be higher because the cost of doing business is much lower. The cost cutting makes Nigeria a more attractive investment prospect.
TPP: How are you aligning your business with the 17 sustainable development goals?
AJ: We are focused on all the goals but have the highest impact on goals 1, 5, 8, 9 and 17. But as we launch our sustainable industrial special economic zone master plan in 2020, we will be able to significantly impact all the goals. The 17 SDGs were embraced by us because we also realised that this is a very good business model for the future. By embracing them, we have put policies and procedures into the DNA of the company which has made us a strong, sustainable and scalable organisation. Ultimately, this will contribute to making us more competitive and profitable. For example having a diverse workforce in terms of gender, tribe etc… has helped us build excellent meritocratic teams across the company, which are at the heart of our success.
LADOL is also fully ISO Certified, in fact we were the first company to become ISO 45001 certified in West and North Africa. We also have ISO 14001 and 9001 certifications. We are one of only two indigenous companies operating in the maritime sector with these certifications. Because we have these certifications, we have strict policies, procedures, working structures, and vision and mission statements, continuous improvement strategies etc. all developed and implemented throughout the company.
Each department in the company, as they implement these policies and procedures, keeps the SDGs at the heart of their work and each department, will have different SDG goals. For example, HR may focus on SDG 5 ( Gender Equality), our operations department which looks at logistics and ship repair, will definitely be tackling SDGs 8&9 (Decent Work & Economic Growth / Industry, Innovation & Infrastructure) . Our unique business model allows us to expand to have a significant impact on all the SDGs as we are effectively running a small industrial town.
For us, the challenge and success lie in leveraging the Oil and Gas industry to create a long term plan to sustainably diversify the economy and end up in a place where, the Oil and Gas sector goes from being the largest foreign currency earner to the smallest foreign currency earner. We are unique because we can tackle all of the goals across a large spectrum because we do so many things, but as we move forward, and we build infrastructures and facilities to support a wide range of industries, we will be asking our new tenants (of the industrial free zone) to sign a sustainability pledge: that they will operate their business sustainably and meet certain targets year on year. Depending on the business, they will have specific targets. And the idea there is that it is a win-win, as it is now universally accepted that sustainability equals profitability. If you can find a way to operate your business sustainably, you will be more profitable. Signing this pledge is thus of benefit to these companies and is in line with the strategy of the zone. We are also building support infrastructure that will enable them to operate sustainably.
TPP: What is the level of support at the Local and National Level for the Industrial Free Zone?
AJ: Local support has historically been erratic. We have not always had government policy that has been real private sector friendly, particularly indigenous private sector. Now we have a government that is trying to set a level playing field, and they have outlawed monopolies. These monopolies prevented an indigenous company like LADOL from accessing the market- keeping it small, inefficient and expensive. There is space being made now for the private sector but a lot more needs to be done. Especially in regard to maintaining these policies and having greater accountability in government. The government needs to make sure that financing is available for indigenous companies – what we need is not the short term expensive financing that is available now, but we need long term cheap financing that will enable the kind of infrastructure and facility development that are essential to Nigeria creating the jobs that it needs. New jobs, tens of millions of jobs we need to lift people out of poverty, will be created by the private sector. So, we need to grow the private sector and to do this, we need to have, a steady and cheap access to long term capital available for those indigenous private sector companies, that favours sustainable companies.
TPP: What role should the international community play in supporting the development of the private sector in Nigeria?
AJ: They have been somewhat erratic. A significant number of Nigeria’s market failures are instigated or propagated by foreign companies. Some of our governments and agencies have been good at dealing with these issues, and some have not.
If Europe is concerned about the migration from poor countries to rich countries, it needs to do a better job of policing its own companies that participate in hampering the industrialisation efforts of low income, high growth countries, particularly African countries.
The recent Oil price crash has meant that international Oil and Gas companies working in Nigeria have pushed for more local content, pushing for more transparency and accountability in the sector. We have seen for example, companies such as TOTAL pushing for the integration of Egina, one of the largest most complex oil and gas vessels in the world, to be done in Nigeria for the first time – despite wide spread opposition. We hope that other International Oil and Gas companies will now lead the way in ensuring that in the next 20 years, local content and job creation are a priority in Nigeria, as this will lower their costs dramatically, increase local stability and help grow the Nigerian economy – enriching a hound million people, who will drive the global economy. – A prosperous Africa will lead to a prosperous world.
From a development perspective, there is room for Development Finance Institutions to do a better job of fulfilling their mandate by developing new instruments of finance that will put money in the hands of indigenous companies and entrepreneurs. They are having a rethink of how best to engage with sustainable indigenous businesses, but it is still very much work in progress.
TPP: An example of Job creation and delivering business value: A Case study of the Total-Egina Project.
AJ: The Shipyard (which is phase of the development of the special economic free zone) is quite special, it was built as part of local content capacity development for the Total – Egina FPSO Project. This project cost just under $16 Billion and when Nigeria embarks on such massive projects, it also includes a requirement for the oil company to do capacity development
Total & NNPC financially supported the development of the shipyard as part of the development of the Special Economic Zone. The Shipyard has been a significant part of our master plan, as such, LADOL also privately put in $40 Million into this project.
The shipyard is also very strategic because it changes drastically the way local content can be done. Historically , if you wanted to build something that was big and weighed at least 1000 tonnes, you could not assemble it in Nigeria because we did not have a shipyard that had the capacity to lift something like that or the capacity to integrate or assemble the components required to build a large structure. So, if you did fabricate in Nigeria, these fabricated pieces will be shipped to the other side of the world to be fitted as part of a large structure and then shipped back to Nigeria.
This example illustrates the difficulty of making it economically viable to build big structures in Nigeria. This meant loss of jobs and huge loss of foreign investment.
By having the fabrication and integration yard, we can assemble the structures in Nigeria. So now it is economically attractive to fabricate in Nigeria. Fabricating and maintaining in country are cheaper for business. You train local staff in wielding and engineering, build locally in fabrication Yards across Nigeria. Then the fabricated pieces are barged to LADOL for integration. This a giant step for local content and part of the process of reversing the resource curse, as we can use the facility for non-petroleum sector fabrication as well – bridges, railway, building construction etc… This success shows that the largest and most complex industrial projects can be done in Nigeria, the next step is to build and this success and make Nigeria the hub for the region.
The multiplier effect on job creation for the logistics base will be about 1 to 5. The multiplier effect on the shipyard will be 1 to 10.
Altogether, directly and indirectly, LADOL is now positioned to create 50,000 new jobs because what we do has such a significant job creation multiplier effect.
TPP: How is the free zone supporting economic development in Nigeria?
AJ: Over the course of the development of the special economic zone, we are also driving diversification. We started out focusing on the Oil and Gas Sector, because it is the biggest industrial sector of the Nigerian economy, but we want to diversify industrial activity and create a sustainable industrial economic free zone serving a wide range of sectors.
Phase 2 of the development of the zone, is targeting non-oil and gas tenants. And we are now building infrastructure that will allow us to turn the zone into a circular economy. We are targeting specific sectors and companies that are focused on areas such as, technology, green energy, manufacturing, and agriculture, Upskilling, Apparel and Urbanization.
TPP: What is LADOL’s role in driving industrialisation across Africa?
AJ: LADOL is building a blue print for the sustainable industrialisation of Africa. To this end, we have worked very hard over the last 2 years to develop our master plan, for a Sustainable Industrial Special Economic Zones. We are also working with a Danish organisation: Partners 4 Green Growth (P4G) to start to replicate this model in Kenya and Ethiopia. Systemic, a company that specialises in building sustainable businesses is our partner on this project.
It is our opinion that real local content (local engineering and manufacturing ) is key to African Economic Growth and we believe that special economic zones are a good tool that can be utilized, especially for industrialisation and other activities to enable the rapid industrialisation that needs to take place across the continent. We believe that sustainability is the key to this. Especially, if you look at the application of the 17 sustainable development goals as a template for the new economy business models that we need. Africa needs new business models and solutions, there is no copy and paste for what needs be done to transform our countries and continent.
Practically speaking, the entrepreneurs, civil society groups and the Governments that will create these new businesses will be able to borrow technologies and knowhow from the West. This knowhow must then be applied by local companies to develop our new economy solutions. As we learned at LADOL, local ownership, investment and commitment is key because building these business is hard, takes a long-time and primarily benefits the indigenes of these countries – who have therefore have the incentive and stamina to stay the course.
With regard to job creation, LADOL continues to take advantage of the highly trainable human capital that is available in Nigeria. We provide them with targeted upskilling opportunities and steady jobs which have prospects for growth and career development.
Temi Phyllis Pratt is a development consultant and programme manager with a geographical focus on Africa and the Middle East. Her interests areas include; education, human capital development and technology for development. She is currently working at the intersection of education and development and is a Director at Canon Education – A STEM education-focused social enterprise providing much-needed education services & infrastructure to children and young people from low-income communities in Africa. Follow them on instagram: @canon_education.
The views expressed in this post are those of the author and in no way reflect those of the International Development LSE blog or the London School of Economics and Political Science.