Swiss Companies Eying on Ethiopia
In recent years, there has been a giant leap forward in making Ethiopia ‘African Lion’ economy. According to the World Bank, in 2017 the country’s economy is the most expansive on the continent for the year followed by Tanzania, Ivory Coast and Senegal. The country’s GDP has also grown at around 10 percent per annum in the last decade and this trend show no signs of stopping. Presently, highflying foreign companies are engaging in various investment opportunities in the country. Sika Abyssinia, part of Swiss Group Sika AG, is one of the foreign companies investing in Ethiopia. The company has invested in the construction sector and recently inaugurated its first production facility in Ethiopia. ABN spoke to Petrisor Grindeanu, the General Manager of the company about the investment opportunities and challenges in the sector and status of the company.
What initiated your company to invest in Ethiopia?
Ethiopia is one of the fastest growing economies in the world. The country has good investment opportunities and environment. Apart from this, Ethiopia has a comparative advantage in terms of competitive labor and cost of eclectic power which can attract foreign investors. In connection with the advancement of the country, the construction sector is booming. Based on our study, the construction sector is growing more than 20%. Of course, this is a good opportunity for Sika to invest in the country.
In how many countries does your company work?
Sika is active in more than 99 countries on all continents. In Africa, the company works in 19 countries including Ethiopia. Sika Abyssinia, part of Swiss Group Sika AG, has recently inaugurated its first production facility in Ethiopia. The total investment capital of the company is nearly 10 million USD. Up on fully operational, the company will create jobs for about 100 Ethiopians.
How do you describe the contribution of Sika Abyssinia in the construction sector?
First of all, Sika comes to invest in the country with rich experience in the construction industry. Sika is one of the first companies that start to produce special construction material and has an experience of more than one century. Sika is operating everywhere in the world. Currently, we have more than 100 subsidiaries in the world and I can say we are a leader in manufacturing special construction products. Our products have been used even in big infrastructure projects such as for the construction of dams, roads, bridges, industrial buildings, warehouses, factories and residential houses.
At this moment our factory produces a full range of admixture products like accelerator, retarder, water reducer, plasticizer, super plasticizer and waterproofing. It also produces a full range of silicones and epoxy flooring systems. Admixtures primarily reduce the cost of concrete construction, modify the properties of hardened concrete and ensure the quality of concrete. It is totally new solution for the country. The use of admixture in construction can improve and strengthen the construction of a building. For instance, among the products, carbon fiber is a new type of product that we introduce in Ethiopia. farther more , we plan to manufacture special mortar by next year.
In fact, we are not just a supplier of the product. We are also supplying a solution. Besides the factory production facility, we have a big research and development (R&D) center. In the center, we test all the new materials and the products as well as the finished goods. Whenever we offer solutions to customers, we test and demonstrate them in the center. Moreover, we offer technical training to our customers. This means that we are not selling only the product but the full package for the customers that include testing, training and the know how so as to use the product appropriately. We also provide training to our employees in the country and abroad in other Sika sister companies mostly in Africa and Europe. I would say that Sika is playing its role in transfer of technology as the company has rich experience in the construction sector.
Tell me about export plan of your company ?
As Ethiopia is the second populous country in Africa next to Nigeria and the country is a big market for us. We can supply various construction products which are highly demanded in the local market that have been imported from abroad. We are also planning to produce other special construction products that have never used here in Ethiopia. Generally, it is a golden opportunity for us to come and invest here. I do believe that we will be successful and contribute a lot to the construction sector of the country. Apart from supplying our products to the local market, we plan to export to Sudan, Djibouti, South Sudan, Somalia and other neighboring countries. The Ethio-Djibouti railway construction, which has been finalized recently, is a good opportunity to export our products to neighboring countries.
How do you describe the investment climate in Ethiopia?
Ethiopia is among the country which has good investment climate. The investment incentive in the country is very attractive that is the main reason why we are here. We have also received a lot of support from the government offices which enables us to build successfully our first production facility in the country. In fact, we have had an opportunity to invest in other countries but we prefer Ethiopia as the country has a bright future. The country has good investment climate and when I compare it with other countries it is far much better than others.
Did you face any challenge during the investment process ?
To tell the truth, scarcity of foreign currency, customs and banking procedures are the major challenges that should be improved as quickly as possible. Limited number of raw material suppliers is also another challenge that we have encountered. Besides, the supply of the raw material is inadequate. Only cement and sand is abundant. As far as I know, a big Swiss company namely Omya shows great interest to invest in Ethiopia. This will be a good opportunity for us as it can solve the shortage of raw material supply in the industry.
What are the potential prospects you see in Ethiopia?
Sika is a leader in manufacturing admixture and other construction products in the world. Almost everywhere in the world in big projects like the construction of sky-sappers use at least one or two Sika’s product or solutions. In car manufacturing almost every car in the world has used our company’s product. In the industry, our products are widly used in water proofing, bonding, sealing solutions, noise dumping works are worth mentioned.
Sika’s products are highly demanding in Ethiopia and other neighboring countries. This is because we invest a lot on R&D so as to manufacture innovate products and meet the demands of the customers as well as maintain the company’s brand identity. Every year we have come with patents for our innovative products. In the last two years, for example, we have about 70 patents for new products.
now a days , the construction sector in Ethiopia is continually growing from time to time. This fact shows that the demands of our products will increase highly in the years to come. We have already started to supply the products to big construction companies. From now on, we will be the major suppliers to grand construction projects like the dams, roads, the industrial parks, refurbishment of electric lines and other infrastructure developments undertaking in Ethiopia as well as in the neighboring countries. Generally, Ethiopia is a best place to invest and our company has good future prospects.