This article and embedded image is courtesy of David Hundeyin and The Africa Report.
A Nigerian carmaker with Chinese technical partners, working out of a less-than-ideal semi-rural location in Umudim, Nnewi, plans to not only out-compete Toyota and Honda in annual new car sales, but also to eventually displace used car imports.
It intends to do this while charging $19,000 for its cheapest base model in an extremely poor market with zero export potential, while eschewing automation to employ as many people as possible.
Innocent Chukwuma is not the typical Nigerian multimillionaire.
Since founding Innoson Group in 1981 as a motorcycle spare parts importer, Chukwuma has amassed wealth by figuring out how to stay one step ahead of Nigeria’s famously volatile regulatory environment.
It is his most recent venture that best illustrates this entrepreneurial talent and provides key insights into the extreme sport of running a consumer business in Nigeria.
Innoson Vehicle Manufacturing (IVM), which is the Innoson Group’s latest addition, potentially upends all existing conventional wisdom about how Nigerian consumer businesses must relate to the market and the authorities.
On paper, IVM is producing poorly-marketed $19,000 vehicles with near-zero export potential for an impoverished Nigerian market that did not ask for them and cannot hope to afford them.
It looks like a zombie business that should not exist.
Baffling strategy
Nigeria registered just over 10,000 brand new car sales in 2018, with the country’s auto sales market dominated by used vehicles imported from Europe and North America. According to US government data, the miniscule market for brand new vehicles in Nigeria is currently dominated by Japanese brands like Toyota and Honda.
Innoson has a technical partnership with several Chinese automakers, enabling it to manufacture models like the BAIC BJ80 under its own brand name. It has a goal of eradicating “tokunbo” (the local Nigerian term for “imported used car”) from the Nigerian market, but exactly how it intends to do this remains unclear.
The pricing strategy is a head-scratcher. Per head GDP figures for Nigeria and surrounding countries show that there is statistically no market for products that require significant discretionary income. Nigeria’s 2018 per head GDP, for example, was just $2,028. Nearby Ghana, Cameroon and Benin were about the same or worse.
The cheapest vehicle in IVM’s product range – a four-speed, 1.5 litre automatic B-segment sedan called the ‘Fox’ – starts from about $19,000.
According to the company, the Umudim facility currently has a production capacity of about 10,000 vehicles a year, with plans to expand this to 60,000.
Chukwuma has also said that IVM would rather employ human labour over automation wherever possible, because he believes that business should contribute to society, rather than simply seeking profitability.
Nigeria’s Civil War
To understand IVM and its apparently impossible strategy, it is important to situate it in the context of the rise of Nnewi as an industrial hub in south-eastern Nigeria. The story began in the immediate aftermath of the 1967-1970 civil war.
The war saw a nationwide series of property seizures targeting people from the Igbo ethnic group, regardless of whether they were part of the Biafran war effort.
After the war, a large number of such expropriated properties and businesses were not returned, which created a new phenomenon within the typically enterprising and travel-focused Igbo culture.
Driven by the bitter memory of these losses, a drive to “invest at home” was born, leading to the now-common spectacle of palatial countryside homes that lie empty all year round until their owners return from Lagos, Abuja and Port Harcourt for Christmas.
Another outcome of the post-civil war Igbo movement was that certain previously unheralded areas were earmarked for development of industrial clusters.
Nnewi was one such area, going in the 1970s from an unspectacular rural area into an international vehicle spare parts business nexus, and then into a manufacturing hub. Those who made this decision did so in spite of factors like the ease of doing business, infrastructure and access to power.
Innocent Chukwuma was one of the spare parts importers who decided to locate their business in a challenging location. Over the next three decades, this group of entrepreneurs became extremely skilled at being the proverbial ‘water’, improvising niftily and finding their way around Nigeria’s market and regulatory minefield.
During the Structural Adjustment Policy era of the 1980s and the accompanying austerity, Chukwuma famously turned the reduced general disposable income into a business opportunity by disrupting the motorcycle import market with Nigeria’s first motorcycle assembly facility in Nnewi.
IVM is following a similar template. The prevailing idea of a carmaker has been entirely coloured by Ford Motor Company and the democratisation of the personal automobile, which is why factors like affordability and marketing are so important.
In reality, prior to the Ford revolution, cars were generally built to order for rich people and government bodies – and the industry worked just fine.
IVM has now realised that it is possible to have their cake and eat it – they can bill themselves as Nigeria’s answer to Henry Ford while actually running a business whose bread and butter is government supply contracts and made-to-order cars for rich clients.
Import substitution
Since 2013, Nigeria has pursued an automotive policy that seeks to help local assembly by discouraging imports through tariffs of as much as 70%. President Muhammadu Buhari’s administration has doubled down on this and other import substitution efforts, effectively leaving Innoson (the only Nigerian carmaker working under a local brand name) as the “star pupil” in its class.
Despite having held a position in Goodluck Jonathan’s re-election campaign organisation, Chukwuma has avoided the typical consequences of such political exposure by positioning IVM as a key part of the answer to Buhari’s economic rallying cry.
Just like under the previous administration, he has successfully leveraged IVM’s perception as the first “true” Nigerian carmaker to seal several supply and maintenance contracts with Nigerian state and federal government bodies, as well as the army and airforce.
While IVM pays only the barest minimum attention to its consumer-facing branding and marketing efforts, the company has a sleek and extremely savvy lobbying and networking reach that brings the bacon home through government contracts and made-to-order luxury vehicles.
Since formally commencing operations in 2010, the Umudim production line has remained busy. The company is notoriously secretive about its annual sales figures, but a visit to the factory always shows dozens of pickup trucks, buses and SUVs emblazoned in the colours of different government agencies.
As with so many other instances of doing business in Africa, there is a lot more going on than meets the eye.
Clearly, Innoson Vehicle Manufacturing will never have the production capacity and market dominance of Toyota. It will also never have the technical excellence and global marketability of Tesla – but the point is that it does not need to.
This small automaker is demonstrating that indigenous African market strategies for delivering expensive products to poor markets can indeed work. The secret lies in knowing how to work the angle and ‘be water’.
Apparently, nobody in Nigeria knows how to do this better than Innocent Chukwuma.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
Nigeria’s Innoson: Making Cars or Selling a Feeling?
This article and embedded image is courtesy of David Hundeyin and The Africa Report.
A Nigerian carmaker with Chinese technical partners, working out of a less-than-ideal semi-rural location in Umudim, Nnewi, plans to not only out-compete Toyota and Honda in annual new car sales, but also to eventually displace used car imports.
It intends to do this while charging $19,000 for its cheapest base model in an extremely poor market with zero export potential, while eschewing automation to employ as many people as possible.
Innocent Chukwuma is not the typical Nigerian multimillionaire.
Since founding Innoson Group in 1981 as a motorcycle spare parts importer, Chukwuma has amassed wealth by figuring out how to stay one step ahead of Nigeria’s famously volatile regulatory environment.
It is his most recent venture that best illustrates this entrepreneurial talent and provides key insights into the extreme sport of running a consumer business in Nigeria.
Innoson Vehicle Manufacturing (IVM), which is the Innoson Group’s latest addition, potentially upends all existing conventional wisdom about how Nigerian consumer businesses must relate to the market and the authorities.
On paper, IVM is producing poorly-marketed $19,000 vehicles with near-zero export potential for an impoverished Nigerian market that did not ask for them and cannot hope to afford them.
It looks like a zombie business that should not exist.
Baffling strategy
Nigeria registered just over 10,000 brand new car sales in 2018, with the country’s auto sales market dominated by used vehicles imported from Europe and North America. According to US government data, the miniscule market for brand new vehicles in Nigeria is currently dominated by Japanese brands like Toyota and Honda.
Innoson has a technical partnership with several Chinese automakers, enabling it to manufacture models like the BAIC BJ80 under its own brand name. It has a goal of eradicating “tokunbo” (the local Nigerian term for “imported used car”) from the Nigerian market, but exactly how it intends to do this remains unclear.
The pricing strategy is a head-scratcher. Per head GDP figures for Nigeria and surrounding countries show that there is statistically no market for products that require significant discretionary income. Nigeria’s 2018 per head GDP, for example, was just $2,028. Nearby Ghana, Cameroon and Benin were about the same or worse.
The cheapest vehicle in IVM’s product range – a four-speed, 1.5 litre automatic B-segment sedan called the ‘Fox’ – starts from about $19,000.
According to the company, the Umudim facility currently has a production capacity of about 10,000 vehicles a year, with plans to expand this to 60,000.
Chukwuma has also said that IVM would rather employ human labour over automation wherever possible, because he believes that business should contribute to society, rather than simply seeking profitability.
Nigeria’s Civil War
To understand IVM and its apparently impossible strategy, it is important to situate it in the context of the rise of Nnewi as an industrial hub in south-eastern Nigeria. The story began in the immediate aftermath of the 1967-1970 civil war.
The war saw a nationwide series of property seizures targeting people from the Igbo ethnic group, regardless of whether they were part of the Biafran war effort.
After the war, a large number of such expropriated properties and businesses were not returned, which created a new phenomenon within the typically enterprising and travel-focused Igbo culture.
Driven by the bitter memory of these losses, a drive to “invest at home” was born, leading to the now-common spectacle of palatial countryside homes that lie empty all year round until their owners return from Lagos, Abuja and Port Harcourt for Christmas.
Another outcome of the post-civil war Igbo movement was that certain previously unheralded areas were earmarked for development of industrial clusters.
Nnewi was one such area, going in the 1970s from an unspectacular rural area into an international vehicle spare parts business nexus, and then into a manufacturing hub. Those who made this decision did so in spite of factors like the ease of doing business, infrastructure and access to power.
Innocent Chukwuma was one of the spare parts importers who decided to locate their business in a challenging location. Over the next three decades, this group of entrepreneurs became extremely skilled at being the proverbial ‘water’, improvising niftily and finding their way around Nigeria’s market and regulatory minefield.
During the Structural Adjustment Policy era of the 1980s and the accompanying austerity, Chukwuma famously turned the reduced general disposable income into a business opportunity by disrupting the motorcycle import market with Nigeria’s first motorcycle assembly facility in Nnewi.
IVM is following a similar template. The prevailing idea of a carmaker has been entirely coloured by Ford Motor Company and the democratisation of the personal automobile, which is why factors like affordability and marketing are so important.
In reality, prior to the Ford revolution, cars were generally built to order for rich people and government bodies – and the industry worked just fine.
IVM has now realised that it is possible to have their cake and eat it – they can bill themselves as Nigeria’s answer to Henry Ford while actually running a business whose bread and butter is government supply contracts and made-to-order cars for rich clients.
Import substitution
Since 2013, Nigeria has pursued an automotive policy that seeks to help local assembly by discouraging imports through tariffs of as much as 70%. President Muhammadu Buhari’s administration has doubled down on this and other import substitution efforts, effectively leaving Innoson (the only Nigerian carmaker working under a local brand name) as the “star pupil” in its class.
Despite having held a position in Goodluck Jonathan’s re-election campaign organisation, Chukwuma has avoided the typical consequences of such political exposure by positioning IVM as a key part of the answer to Buhari’s economic rallying cry.
Just like under the previous administration, he has successfully leveraged IVM’s perception as the first “true” Nigerian carmaker to seal several supply and maintenance contracts with Nigerian state and federal government bodies, as well as the army and airforce.
While IVM pays only the barest minimum attention to its consumer-facing branding and marketing efforts, the company has a sleek and extremely savvy lobbying and networking reach that brings the bacon home through government contracts and made-to-order luxury vehicles.
Since formally commencing operations in 2010, the Umudim production line has remained busy. The company is notoriously secretive about its annual sales figures, but a visit to the factory always shows dozens of pickup trucks, buses and SUVs emblazoned in the colours of different government agencies.
As with so many other instances of doing business in Africa, there is a lot more going on than meets the eye.
Clearly, Innoson Vehicle Manufacturing will never have the production capacity and market dominance of Toyota. It will also never have the technical excellence and global marketability of Tesla – but the point is that it does not need to.
This small automaker is demonstrating that indigenous African market strategies for delivering expensive products to poor markets can indeed work. The secret lies in knowing how to work the angle and ‘be water’.
Apparently, nobody in Nigeria knows how to do this better than Innocent Chukwuma.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
10 Cape Town Beaches Awarded Blue Flag Status
Ten beaches in Cape Town have been awarded Blue Flag status.
The Blue Flag beaches are:
Seaforth has been givened pilot status, which refers to a trial period, whereafter it could be awarded Blue Flag status.
Blue Flag is an international accreditation awarded to beaches that display excellence through meeting 33 criteria covering four categories: environmental education and information, water quality, environmental management, and safety and services.
“The City is honoured to once again be part of the Blue Flag programme, with 10 of our beaches making the cut,” said the Mayoral Committee Member for Community Services and Health, Zahid Badroodien. “The Blue Flag beaches are geographically well positioned around the metropolitan area, from Silwerstroomstrand in the north, beaches on the Atlantic Seaboard, to the secluded little Bikini Beach next to the Gordons Bay ‘harbour in the south. “These beaches are visited by thousands of residents and tourists every year and the City is making sure that they are of a high standard.”
Since the second week of September, lifeguards have been stationed at various bathing areas around the city. More than 330 lifeguards will be on duty to ensure public safety, the City said. During the 2018/19 summer season, the Recreation and Parks Department noted a near 50% reduction in the number of fatal drownings compared to the previous season.
“The reduction was as a result of increased education and awareness around the type of behaviours that put bathers at risk, but also the heroics and vigilance of our lifeguards. “It is a massive undertaking to keep an eye on the thousands of people who descend on our beaches over the peak summer season, particularly on the priority days like Boxing and New Year’s Day.
“Our staff work tirelessly to ensure a quality experience for all visitors to our facilities, but ultimately it’s a two-way street and we need the public to support us by listening to lifeguards and other City staff, and to swim only in designated areas. “Other concerns that our lifeguards have to contend with include drinking and swimming and unsupervised children,” said Badroodien.
For more information about visiting Cape Town, browse the Cape Town Tourism website by clicking here.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: John O’Nolan [1], [2].
South Africa’s e-Visa Pilot Is Live
The Department of Home Affairs (DHA) has started with the testing and piloting of the electronic visa application system, the e-Visa.
The DHA revealed their plans at a briefing recently.
This follows President Cyril Ramaphosa’s promise at this year’s Africa Travel Indaba in Durban, to introduce a world-class e-visa system and reduce the red tape that travellers face when visiting the country.
Ramaphosa said at the time: “We must reduce the onerous and often unnecessary bureaucratic red tape that tourists who want to visit our countries face. This requires us to streamline our tourist visa regimes.
“As South Africa, we are committed to working towards the African Union’s goal of visa-free travel and a single African air transport market. We are in the process of radically overhauling our visa dispensation for the rest of the world and introducing a world-class e-visa system. The challenges are going to be ironed out,” he said.
DHA revealed in a statement that the decision to introduce the e-Visa provided many benefits. “It is reliable, client-friendly and convenient for visa applicants, airlines, trade partners and Home Affairs officials.
“Once fully rolled-out, prospective visitors will apply online for visas, at home, office or place of work. It will lessen administrative burdens, including those involved in receiving applicants at visa offices, printing visa stickers and returning passports to applicants.”
It also revealed that the department was testing the new system with Kenya.
“As part of the pilot, a team of DHA immigration and IT officials visited Kenya. This team is scheduled to return to Kenya next week, on December 9, 2019. The first Kenyan tourist who applied for the visitors’ visa on the new e-Visa system arrived yesterday (Saturday) afternoon and more are expected this week as part of the pilot.
“We are continuously monitoring this pilot process to ensure that user experience is not compromised,” the statement revealed.
China, India and Nigeria will be included to the pilot early next year, which will run until March 2020.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: PretoriaTravel [1], [2].
Equatorial Guinea to Construct a Gas Mega-hub Project
Equatorial Guinea’s government has announced its plans to construct a natural gas mega-hub project.
This will consist of interlinked production, aggregation and processing facilities offshore and onshore, and will tie in to existing facilities. The project is led by the Ministry of Mines and Hydrocarbons (MMH) in collaboration with oil and gas companies.
The first phase of the project is to implement a new gas supply agreement signed between the MMH and Noble Energy, operator of the Aseng and Alen fields in Block I/O. Gas will be supplied to the Punta Europa gas complex, which includes the Malabo power station, AMPCO methanol plant and Equatorial Guinea LNG plant. The agreement, combined with new sub-sea pipelines linking the Aseng, Alen and Alba fields, will replace some of the gas production lost as the Alba field declines.
Building on the new Punta Europa-Alba-Alen link, the gas mega-hub will link into other existing and future gas projects and maximize the gas infrastructure of Equatorial Guinea and potentially that of neighbor states. This will reduce dependency on single upstream developments for industrial development, and will allow gas to be directed to where the value is greatest.
The project is envisioned to create 2-3,000 direct and indirect jobs for the citizens of Equatorial Guinea, with the state standing to receive more than $2 billion in revenues. A key component of this will be local content, ensuring that Equatorial Guinea’s local companies are part of the value chain.
On announcing the new venture, the Minister of Mines and Hydrocarbons H.E. Gabriel Mbaga Obiang Lima said: “Equatorial Guinea is developing the leading natural gas economy in sub-Saharan Africa and leading the region in proving new technologies and concepts. This gas mega-hub project is totally unique in Africa and it requires an unprecedented level of cooperation between government and energy companies.”
The gas mega-hub project will change the dynamic of future upstream gas projects in Equatorial Guinea, with a ready market promoting further exploration for gas, an increasing role for Punta Europa as the primary user and onshore base for new gas projects, and a view to developing discoveries as tie-ins to the mega-hub, rather than as standalone upstream developments.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: Jamar Penny [1], [2].