Issue 24 November 05 - February 06

Traders' guest editor, Alberto Gaspar, is the regional director for DuPont Africa. Mr Gaspar has had extensive financial experience in DuPont's European markets. His involvement with the company dates back to when operations began in South Africa twenty-two years ago. Since then he has assisted in setting up DuPont's treasury organisation in Europe and in the exploration of emerging markets in Europe. His interest in Africa lead him back to South Africa three years ago to expand DuPont's business operations on the continent.

How does Africa, on the whole, differ from other emerging economies in developing countries around the world?
Emerging markets evolve rapidly and as with any emerging market, there are a series of questions that need to be asked before any company moves in, i.e. when are the countries ready in terms of infrastructure and security? What are the key needs of these countries? Where can you make an economic difference?
DuPont's focus on Africa, though not exclusively, is on nutrition and agriculture because we believe that these are the continent's greatest needs. It is common knowledge that in most high-population countries with an unstable economy - the focus is usually on nutrition. Our directive is thus to take it to the next level and make it a viable market that feeds into the growth of the economy.

How does Africa fit into DuPont's overall strategy?
DuPont's developing economies have been split into four regional control areas - Africa, Central Europe, Eastern Europe, and Turkey and the Middle East. In each of these regions individual managers have been positioned to facilitate and monitor growth in that region. Africa was the first region created.
Prior to this decision DuPont's pri¬mary focus was South Africa. There had been business activity in other African countries but it hadn't really followed a focused strategy. Through our African expansion strategy my position was ex¬panded to explore the rest of Africa and we are currently exploring the mecha¬nisms to take this emerging market to the next level.
We've made it fairly widely known through the World Petroleum Congress as well as through various business partners and industry leaders, that we are interested in establishing official DuPont representa¬tion in Nigeria and Angola. Our target is to have implemented something by the first quarter of 2006. We want to develop these markets using local representation and capitalising on local knowledge.

What is your strategy regarding entering emerging industries as well as expanding your presence in current industries?
As a company we consist of twenty-one different strategic business units. Our current drive is to approach opportunities as a single entity. Within each industry, we want to identify our complete offering so as to provide cross-business solutions.
Using oil and gas as a basic example, we offer safety in terms of protective clothing, we also have a safety consulting business, further down the line we have piping products and in addition, we can of¬fer solutions through our coating business. During the World Petroleum Congress where key oil and gas players were present our approach was to participate as a single company and present all our business solutions and capabilities in oil.

Could you elaborate on how the oil and gas market is directing your strategy towards other markets in Africa?
Our primary focus areas for the African continent as a whole remain agriculture and nutrition, but oil and gas is certainly becoming a part of our current focus - South Africa, Nigeria and Angola are big players. We would like to increase our market share dramatically in these three countries through various opportunities, following a holistic approach. DuPont is already selling the majority of our product offering into those countries and although sales volumes are large, we see more opportunity for growth.
Nigeria and Angola, in particular, are large agricultural markets. We have crop protection products such as herbicides and through another company we supply hybrid seed. A third company supplies soya into the food industry operating in these as well as other African countries. We are also placing increased focus on the packaging industry and the supply of industrial polymer. Nutrition as a continent-wide focus starts off with crop protection products and flows through the value chain to the supply of soya products and the packaging of those products.

What would you say is the most important strategy for a company entering into Africa?
You have to experience it, when you sit around a room and discuss African markets you are a world away from the real¬ity. Experience is essential in entering emerging markets. Consumption in Africa is huge, but it's a question of under¬standing the markets through involvement that will allow true penetration.
In assessing the primary needs in those countries you can either be pretentious about it and reject further exploration in countries because of their 'third world' status, or you can go in - much like MTN did in Nigeria - and find out what the needs are.

Could you give us some background as to a few of your partners in Africa?
DuPont Africa uses business partners for distribution and rep¬resentation across the continent, particularly in Kenya, Ghana, Côte d'Ivoire, Nigeria and Cameroon.
PCI is one of those operating in Nigeria. Miss Peggy runs the operation in Nigeria and is managing our refinishing business as well as our titanium dioxide business. As we enter into new markets, Miss Peggy has been extremely instrumental in helping us with some of the key business people operating in industries where we are focused. Our team has spent a lot of time with her over the past few months discussing, specifically, the industrial applications of packaging in Nigeria. We have another business partner in Nigeria who has been instrumental in helping us build relationships with some oil companies in Nigeria. His company has been appointed as a distributor or agent for products used in the oil industry.
Our partners have been instrumental and vitally important to us. They allow us to speak about the technical aspects of our products to industry players, while they concentrate on maintain¬ing the relationships.

Could you give us some background on supply and logistics in Africa?
This is an ongoing challenge for companies operating in Africa. DuPont Africa's supply comes directly from Europe. Typically this raises the question, what next? Should we hold products in South Africa or in Europe? Currently products gets shipped in according to normal logistics flow, which works well for us at the moment, but we are certainly looking into the next step - setting up local logistics to hold products locally. We are speaking to a company who deals with logistics in Africa to establish a strategy and explore these options.

What would the benefits of bringing your logistical opera¬tions onto the continent be for DuPont?
If our customers have the financial, manufacturing and logistical capabilities and they buy in bulk, then the logistics are simple - we ship the product directly to the client and they hold it. But if we want to start looking at smaller companies in smaller industries, it's obvious that they may not have the same capabili¬ties. DuPont wants to provide them with solutions as well. It follows the 'just in time' concept - companies may not have the financial, manufacturing or storage capability to hold products, so we can provide it to them as they need it. I believe that this concept is ideal for smaller companies operating in Africa and naturally, we want to service the entire market.

What is your involvement and attitude towards regional and continental organisations such as NEPAD?
As a company we have been keeping up to date with NEPAD developments as best we can. We are members of the various chambers of commerce and industry and we support initiatives such as this. I personally think it's positive as it enhances the capabilities of South Africa's neighbouring states. I think that NEPAD in particular shows signs of being similar to the unifica¬tion of Europe with its drive to eliminate cross-border transac¬tions and ease the flow between countries.

What are your views on the deregulation of key sectors? How do you think this would affect business on the continent?
I think that deregulation can only been seen as positive. The world over - industries have taken major steps forward as a result of commercialising operations. The format under which it is done needs to be taken into consideration though.

Taking into consideration your experience in Africa, how has funding affected dealings with your clients? What is your opinion regarding funding solutions for Africa?
I think industry continues to look at how to fund and capture growth while minimising financial risk. There are two options in Africa: customers must either pay cash for their product or show proof of some type of financial assistance. We do offer facilities to our customers. Though it is accepted that there is risk in African countries, I would certainly like to see the financial sector share the risk. I can see that this is already happening, but they certainly have a long way to go.
My view is that funding is often project orientated, it services the overall requirements of the projects, but it does not always service the smaller players, who really need it. Industry leaders, such as ourselves, and government certainly play a role in this.
The opportunities are there and we need to drive the change. We all need to focus on changing the perception of Africa. It's not a continent of challenges, but rather a continent of solutions.

For further information, contact:
DuPont/South Africa
Tel: +27 11 654-8600