In this exclusive interview commemorating the Centre for Management 8th Africa Cementrade Summit, held from 15 to 16 March 2016 in Kigali, Rwanda, we caught up with Mr Njombo Lekula to find out more about the cement titan that is PPC Ltd, its Pan African operations and his thoughts on the continent’s infrastructure development trends.
Who is PPC and when was the company founded?
PPC Ltd was established in 1892 as De Eerste Cement Fabrieken Beperkt. A leading supplier of cement and related products in southern Africa, PPC Ltd has nine cement factories, four milling depots and nine ready-mix batching plants in South Africa, Botswana, Zimbabwe and most recently Rwanda which has capacity to produce around eight and half million tons of cement products each year.
As part of our strategy and long-term plan to more than double our business every 10 years, we’re currently expanding our operations in existing markets and extending our footprint into the DRC and Ethiopia. The recent acquisitions of Safika Cement and Pronto Readymix (including Ulula Ash) are part of the company’s channel management strategy for South Africa. PPC also produces aggregates, metallurgical-grade lime, burnt dolomite and limestone, with PPC’s Mooiplaas aggregates quarry in Gauteng having the largest aggregate production capacity in South Africa.
Which markets do you operate in?
PPC is expanding its footprint into the rest of Africa, we currently have a presence in South Africa, Botswana, the DRC, Ethiopia, Mozambique, and Rwanda, as well as Zimbabwe. PPC products are also sold in Lesotho, Swaziland and Burundi.
What trends are you seeing across the region with regards to construction?
According to Absa Africa Equity Fund, the investment case for the cement industry in Africa is underpinned by the fast rate of urbanisation growth and the consequent need to upgrade infrastructure to accommodate people migrating into urbans areas, particularly as political stability sets in and demand for service delivery and housing grows across the continent. The total value of projects under construction in Africa increased 15% year on year, climbing from USD325 billion to USD375 billion during 2015 (source: Deloitte’s Africa Construction Trends Report, 2015). The Report indicates that the East African region represents 20% of all projects in Africa, and 15% in Dollar value at USD57.5 billion.
With Rwanda’s economy growing at an average of just under 7% over the past five years, cement consumption is expected to grow from 550 000 tonnes per annum in 2015 to 850 000 tonnes per annum by 2020. As the only local cement producer in Rwanda, CIMERWA’s new 600 000 tpa plant is well positioned to meet the country’s growing demand for quality cement.
What makes PPC products stand out from others?
PPC lives by its motto of providing ‘strength beyond the bag’. With over 120 year’s technical experience, PPC is proud to provide quality products, consistently. In the production of cement it is the manufacturer’s task to ensure that the properties of cement are kept at a certain level, with variations as small as possible to meet the standard specifications and to comply with the demands and needs of the market. Instead of using quality control as a reactive process where products and processes are tested and action taken when these are found to be outside specifications, a pro-active approach where quality is the golden thread running throughout the entire process is the approach taken in PPC. A series of quality control tests are run on both sample materials and the equipment used in the production process.
The PPC technical team is also on hand to provide technical support to industry players, assisting with the correct mixing methods and application techniques, ensuring the final product meets the contractors’ specifications.
What makes PPC an ideal partner as the region gears up for increased infrastructure development?
Creating long-term foundations for success requires a new approach to business, planning and implementation. It requires building your present on a realistic – yet optimistic – view of the future. PPC’s view on the future is aligned to the African Union’s vision for our continent – a continent that is “integrated, prosperous and peaceful, driven by its own citizens and representing a dynamic force in the global arena.”
PPC’s business model is therefore built on:
1) A purposeful approach to partnerships (i.e. government, local investors and teams)
2) Broadening our notion of stakeholders to include key communities
3) Redefining investment beyond project finance to include our people – both current and future
4) Sustainability as “common practice”
You operate in landlocked markets like Rwanda and Zimbabwe. How can these countries increase their competitiveness through infrastructure?
Infrastructure development is a vital component in encouraging a country’s economic growth. Developing infrastructure enhances a country’s productivity, consequently making firms more competitive and boosting a region’s economy. Not only does infrastructure in itself enhance the efficiency of production, transportation, and communication, but it also helps provide economic incentives to public and private sector participants. A country such as Rwanda for example, which has no railway, pays a hefty premium for its logistics needs. The transaction costs of freight as a percentage of the value of imports of Rwanda and Burundi are between 35% and 40%. A cost much reduced by rail and air freight infrastructure. The location of Rwanda, Burundi and DRC in the Great Lakes region also provide the opportunity for water-based transport systems (Source: Federal Reserve Bank of Atlanta).
If one considers infrastructure in its broad sense (telecommunication, roads, ports and bridges, schools, access to electricity, piped water and sanitation) it becomes apparent that it is a key enabler to human and social development. Infrastructure therefore plays a pivotal, often decisive role in determining the rate and level of development of a country’s economy (The Significance of Infrastructure Development in the Realization of Sustainable Development in Africa: the case of Research and Development, Lucas Mutheiwana).
The accessibility and quality of infrastructure in a region help shape investment decisions and determines the region’s attractiveness to foreign investors (Source: Federal Reserve Bank of Atlanta). Rwanda is located at the heart of Africa and is poised to play a central role in the economy of the region, connecting markets and enabling intra-regional trade. Solid infrastructure will position it well to maximise on the potential its geographical location presents.
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