|
 Daily Independent Online.
* Monday, August 09, 2004.
Lafarge to
increase investment in Africa
By Olaniyi Ola
Head,
Property & Environment, Lagos
(With agency report)
Building
materials conglomerate, Lafarge, is broadening its investment in Africa.
The Lafarge Group is the world's leading manufacturer of building
materials - cement, gypsum, aggregates and concrete and roofing materials
- and intends to invest heavily across the continent.
Its president for Africa, Tony
Hadley, who was in the country for the announcement of Bamburi's
half-year results, said this was part of the group's strategic plan to
increase the weight of its investment in emerging markets.
"Within the group, there
is intense competition for funds for investment in emerging markets, and
we see Africa, presenting good market potential", he said.
Indeed, the group's first quarter sales results
highlights Nigeria, South Africa and Kenya as the markets in Africa that
registered tremendous growth in sales volume across the four divisions.
In Kenya, for the six months
to June 30 this year, Bamburi made Sh821 million compared to Sh517
million registered over the same period last year, an increase of 59 per
cent. The good performance was attributed to better price relations,
arising from stable market conditions and growth in demand within its
Kenyan market.
After an
aggressive investment programme that spanned Kenya (Bamburi Cement and
East Africa Portland Cement), Nigeria, Benin, Cameroon, Uganda, Tanzania,
Zimbabwe, Zambia, Malawi, South Africa and Madagascar, as Lafarge tried
to stay ahead of its main rivals, Hudelberg of Germany and South Africa's
PPC group, a decision was taken to increase investment in other areas.
"We have consolidated our
position and presence in Africa and our next development agenda in
emerging markets is to combine large acquisitions and small and medium
sized internal and external developments to cement this forte", said
Hadley.
He explained that part of the
group's strategy in the new development agenda for emerging markets is to
build new plants, buy existing competition and scale them to Lafarge
standards.
Bamburi's acquisition of
Uganda's Hima Cement, as well as its huge stake in local rival, East
Africa Portland Cement (EAPC), is symptomatic of this new development
agenda.
Hadley was, however, hard put to defend the group's
equity in local rivals, a situation critics have used to accuse Bamburi
of monopolistic tendencies, saying only that the investments in EAPC and
Athi River Mining (ARM) are historical.
Lafarge bought its stake in
EAPC from Blue Circle, which was winding up following a Rights Offer by
the latter to finance a new production line.
He said that the cost of doing
business in Africa rises by the day, and the regulatory framework is
skewed, thus making competition uneven. He cited the example of Nigeria,
where foreign manufacturers are charged twice the cost of power compared
to local companies. "You have situations where cement is imported at
a duty of 10 per cent to distort domestic prices while factory spare
parts are levied at 40 per cent."
He lamented at the
unpredictable costs and quality of power, water, telecommunications,
rail, roads and fuel. In listing the challenges the conglomerate faces in
African markets, Hadley pointed at the poor road network and unreliable
availability of coal in Tanzania, frequent fuel shortages and poor
satellite telecom network in Nigeria; high cost and unreliable quality of
power in Kenya; high cost of money (borrowing) in Malawi with interest
rates upwards of 46 per cent, among others.
"Pro-market,
pro-liberalisation policies need to be institutionalised in key sectors
of the economy that have a direct bearing on sound infrastructure,"
he said, adding that absence of proper consultation, implementation and
government participation in private business continue to negate any gains
on the economic development.
He called on governments
desist from interfering with private competition. "The success of
corporates in America, Europe and developing countries (read Asian tiger
economies) is informed by governments that stimulate development platform
then divesting completely from participating in private enterprise.
Lafarge's sales were up seven
per cent to 6,794 million euros as at June 30, 2004 compared to first half
2003 sales of 6,350 million euros. The net scope effect was 0.7 per cent.
Negative foreign exchange variations impacted sales by 3.8 per cent.
"We are pleased to report
the solid level of sales achieved in the first half. Continued
improvement was experienced in all divisions, with more normal weather
conditions in the first months of 2004 and a good second quarter. This
strong first half sales performance confirms our expectation of robust
growth in our operating income on ordinary activities for 2004 excluding
currency fluctuations" said Mr. Bernard Kasriel, the chief executive
officer of the Group.
The half-year results showed
that the Mediterranean Basin, particularly in Jordan and Turkey, and
across Africa, especially in Nigeria, South Africa and Kenya, registered
high levels of growth.
|
