One of Indonesia’s biggest conglomerates, Bakrie Group, last year partnered with British-Nigerian entrepreneur Ladi Delano to form Bakrie Delano Africa (BDA) with the intention of investing $1 billion in Nigeria over the next five years. How we made it in Africa’s Dinfin Mulupi interviewed Delano, BDA chief executive, about this joint venture and the opportunities in Nigeria.
My first question would be: Why Nigeria?
Nigeria is attractive to the Bakrie Group as an investment destination for several reasons. Firstly, it is experiencing excellent rates of economic growth, approximately 8% per year, which is forecast by a wide cross-section of respected economic commentators to continue over the medium to long term. Indeed, Nigeria is widely predicted to overtake South Africa as the African continent’s largest economy within three to four years. Within the context of this strong overall economic growth, there are individual sub-sectors where rates of growth exceed 8%.
These individual sub-sectors are also areas where the Bakrie Group in Indonesia has a lot of operational experience. This experience is not only in the sectors per se, but also at a similar stage in the respective sectors’ growth curves.
Finally, as an indigenous company, Bakrie Delano has deep rooted relationships in Nigeria too, which is a very important point. Business relationships on the ground are vital when operating in any market, especially emerging markets.
The combination of these three factors: rapid economic growth, an operational track record in particular sectors and local knowledge makes Nigeria very attractive.
I am sure our readers are wondering: who is Ladi Delano?
I have been an entrepreneur in emerging markets, generally south-east Asia and China. During this time, I have been involved in a variety of sectors and also natural resources M&A and structured finance.
One of your goals is to encourage the wider Nigerian diaspora to repatriate skills and capital for the benefit of the country and its economy. Explain how you hope to achieve this?
Bakrie Delano Africa is seeking to not only derive an attractive return on its investments, but also to create jobs, permanently, in Nigeria. Nigeria requires foreign direct investment to grow, but this is less attractive if companies investing there do this via a foreign workforce. We want to invest in Nigeria to generate a meaningful profit, but we also want to put something back into the country enabling the workforce to develop its own skills. In turn, this will make Nigeria even more efficient benefiting workers and investors alike.
The more Bakrie Delano Africa can be seen as succeeding in this respect, the more other companies (including members of the Nigerian diaspora) will feel comfortable, and be attracted to, making similar investments to ours.
What criteria will you use when choosing projects to invest in?
Our investment appraisal process initially reduced the shortlist of sectors to invest in from fifteen to three, so we are already very focused on sectors we believe are attractive. From then on, our criteria will include three considerations:
- Will we generate a decent return on investment and cash flow as quickly as possible?
- Does the Bakrie Group have relevant expertise and experience it can leverage?
- Will our investment also create jobs and have a positive impact on Nigeria’s economy and its workforce?
If the answer to these three questions is yes, then individual projects start becoming very interesting to us.