Profit-making idea: An efficient maintenance repair operations (MRO) industry

Profit-making idea is a series of short posts, each with a piece of information that we think you might find useful: for investment, for growing your company or to start a new business. Read our previous posts here.

How we made it in Africa asked Isaac Kwaku Fokuo, founder of investment advisory firm Botho Emerging Markets Group, to identify one untapped business opportunity in Africa. Here was his response:

“I believe we are at a point in time on the continent where we are starved for projects that will have a profound ripple effect on other activities. So, if I had $100 million to spend, I would build a company that focuses on building the value chain of an efficient, effective, and highly profitable maintenance repair operations (MRO) industry.

“MRO simply refers to supplies and goods within the production process that guarantee that all areas of business operations can function properly. This is different from an original equipment manufacturer (OEM) product which is an end product. For example, a car is an OEM product, but its steering wheel is an MRO product.

“Our continent is poised for growth and we keep talking about the fourth industrial revolution and some even argue that China will outsource its manufacturing to Africa (I am not one of the proponents of this argument). Yet, we do not produce a lot of the inputs needed to manufacture at scale and boost intra-African trade on “made in Africa” manufactured goods.

“Currently, if I am a production manager in many African factories and my conveyor belt breaks, it will be difficult for me to find a part and get the line working in under a day, let alone less than two hours. Picture the loss of productivity in such a case and think of how often essential parts of production lines tear or need to be replaced.

“To solve this, my MRO distribution centres will serve the demand from local manufacturers and they would also feed inputs into critical operations of different industries such as manufacturing, construction, and more.

“In addition to this, the company would help build an effective, scalable e-commerce platform that allows businesses to get what they need promptly because one of the biggest impediments to business in Africa is that we do not have time-efficient solutions to some of these foreseeable problems. We import a lot of things, and this not only stalls processes but it also has significant financial implications, which creates a lot of inefficiencies.”