Top PVC Pipe Manufacturer in Africa

Interview with Ramzi Omais, Chief Executive Officer of SOTICI (Société de Transformation Industrielle en Côte d’Ivoire)

Côte d’Ivoire went through some difficult moments over the past few months. Looking forward, what are some of the main challenges Côte d’Ivoire will face?

Côte d’Ivoire has indeed gone through turbulent times. Moving forward, the main challenge will be reconciling and reuniting the country, restoring security, and repairing the infrastructure. Sotici is in the industrial production sector and a lot of our customers are public water companies. Thus, one of the major challenges for the government is to find adequate financing for projects from international donors to help restore Côte d’Ivoire.

What advice should European, American, or global companies who would like to invest in Côte d’Ivoire follow? How should they do business in this African market?

European, American, and global companies need to come and live at least three to six months in Côte d’Ivoire before deciding to invest in the country. This idea doesn’t apply just to Côte d’Ivoire; it applies anywhere in the world. One needs to study the market, know the people, and understand that it’s a French based system. The tax system and all of the investment codes arebased on the French system.

You’ve traveled all around, you’re an international businessman. What is different here than in other countries in the world?

Internationally, there is the French system and the American system (British system). The French system is very bureaucratic and procedural to someone who is more familiar with the American system. One must know how the system works and use that information to his advantage.

Africa is big. There are a lot of opportunities. Anyone who wants to invest should come to the country. The people of Côte d’Ivoire are very friendly and investors can learn a lot. It would be difficult; they would need to adapt, but this concept is true anywhere in the world.

Although run down, Côte d’Ivoire is lucky to have an excellent infrastructure in terms of electricity, drinkable water, and roads. These elements are missing in countries such as Nigeria and Cameroon. Côte d’Ivoire has a developed economy and is an emerging regional player. People are optimistic about the country’s future.

What are some of the problems?

The biggest problem was and continues to be security, however, it is improving each month. Hopefully by the end of the year, the government will completely restore security.

There are other problems such as infrastructure, but the airports are improving slowly. The power network escaped destruction, which is a crucial factor for the industry. Without a good power grid, there cannot be a good industry.

What is the state of the industry sector and what are the prospects for 2011-2012?

Each sector has potential. Investment in telecommunication companies and investment in water companies are all coming back to Côte d’Ivoire.

There are a lot of prospectives for investment. As for Sotici, the company has already invested enough to increase its range of products. Yet every industry needs to reinvest each year in order to be up to date on technology and to maintain the capacity to resupply. This concept is particularly important when products are exported to 26 countries within companies like Sotici.

Sotici is an export driven international company that exports from Mauretania to Chad. Only 20% of its business has been local since 1999. Before 1999, Sotici was 50% local and 50% exports, but today it is more than 80% exports. However, local business is coming back as the reconstruction of the country continues.

Sotici is one of the largest companies producing PVC, PV, and PVC joints. What is the company’s strategy for the short and medium term?

Sotici has a “number one quality” policy. The company has been improving its quality system since 1994 and was the first company in Côte d’Ivoire to obtain a French quality diploma. Additionally, Sotici needs to do business with all of the customers in its sub-regions. Our product range includes PVC pressure pipes, PVC drilling pipes, PVC telecom pipes, PVC drinking water pipes, and much more.

The large infrastructural projects are coming online in Côte d’Ivoire, and Sotici will be there to meet the future demand from these companies. One of the most pressing concerns in Côte d’Ivoire is access to drinkable water. The second concern is waste. International financial institutions have recognized these needs. To remedy these concerns, the financial institutions are providing funding to public institutions in Côte d’Ivoire.

Sotici believes in Côte d’Ivoire’s policies and hopes to supply all of the country’s structures.

What is Sotici’s marketing like? Considering product, price, and marketing, how is Sotici positioned in this market? How is the price strategy structured?

Sotici covers 90% of the country’s needs and is the only company with the diploma and quality system. Furthermore, Sotici received ISO 9003 certification in 1998, ISO 9003:2000 certification in 2000 and 2003, and ISO 9001:2008 certification in 2009. These certifications are a witness to Sotici’s unrelenting interest in quality improvements.

The policies of many private companies that deal with the government have been to choose upfront payment because the government can’t pay them back. Is that a problem for Sotici?

Sotici doesn’t work directly with the government; it works with the water company, which is a private company. The water company used to belong to WEIG but WEIG sold its majority shares to ECP (Emergent Capital Partners), an American investment fund based in Tunisia.

Globally, they are supported by African governments in different countries. They bought out the majorities in both Sotici and SAYU, which is an electricity company. Sotici still has WEIG’s management system but the investment companies have the majority in both the water and the electricity company.

How do you foresee Sotici’s turnover for the next few years? Will it grow?

There is a big need in the water sector and waste systems and Sotici is perfectly placed to capitalize on the opportunity. The company is the No.1 to supply the market. Also, Sotici will continue in its investment plan to double the capacity to meet the pent up demand.

The company has an excellent technical support working with ALPHACAN, the affiliate of the group ARKEMA, the leader on the PVC market in France. They have been Sotici’s partners since the creation of the company in 1973.

Some of the companies we’ve met said that the biggest challenge in Côte d’Ivoire is financing.

The banks give Sotici 6% interest rate for short-term loans and 7-8% for long-term loans. It is part of the costs; Sotici does not consider it to be a major disadvantage.

Banks are suppliers of money; if the banks are good, you pay them, if they aren’t good, you find a different bank. The French banks in Côte d’Ivoire are good partners. They’ve been helping us with the development of Sotici since its creation. They’ve always been there to help Sotici with anything the company has needed and we cannot criticize them.

It’s 4-5% interest rate in Europe. When one considers the risk of development and the risk of the country, it’s still a good price. Yet they only give these prices to companies like Sotici because we have been partners for forty years.

But if you need a much larger investment, can they provide that. If you needed to double or triple all of a sudden?

Even if Sotici wanted to quadruple, it couldn’t be done since Côte d’Ivoire doesn’t have the human resources. For twenty years, ever since Félix Houphouët-Boigny died, the schools and universities have been going downward. For highly qualified people, one would have to look in Europe.

The challenges are working and following Sotici’s customers. Everyone needs to work more; the Chinese are working 28 hour shifts. We need to work at least 10-15 hours per day.

Does Sotici compete with the Chinese?

In the past, Sotici’s competitor was Europe, but now the cost of labor in Europe is relatively high and so it is cheaper to ship from here than from Europe. Pipes are a very heavy material; it needs to be hauled and when it reaches more than 300 kilos, it requires labor. In Europe, it would cost 2,000-3,000 Euro. Here it’s only 200-300 Euro. Sotici is competitive with Europe, but in China it would be maybe 50 Euros. Competition from China is slowly approaching and that’s why Sotici has ;to be prudent when it invests so as not to make its clients look elsewhere. We can supply our clients. We have the space to stock whatever the clients need and as long as they trust and rely on Sotici, we can supply them. Sotici is the number one company in West Africa.

Does Sotici face competition from other, more remote, countries?

Today, the main competition comes from Spain and Italy. Sotici has an advantage being in Africa. But in Africa, one must know the people and how to manage them, drive them, and listen to them. One needs to be in the factory every day. But it’s like managing any company that needs to be followed.

Is Sotici at a disadvantage with customers thinking better products would come from Europe?

Product quality is the same in both countries, however, the service is better because we own the company. If there is a problem, we can solve it. If a truck is on the front line and has a problem, you can call and we can give you the green light. If you have a quality problem, we can send a controller to talk to the customer. Sotici provides permanent service. This is important. The company is close to the client. We apply the quality system that we put in place and that is our advantage.

As a company who has been in Côte d’Ivoire for a long time, what is Sotici’s responsibility to Côte d’Ivoire?

Sotici’s responsibility is to succeed and to keep working.

What is Sotici’s philosophy toward Côte d’Ivoire?

Sotici’s philosophy is that it is located in Côte d’Ivoire and that is where we will stay. We won’t move no matter what happens. Whatever government or invasion occurs, Sotici will stay because all of our assets are in the country and we need to stay by our assets.

Do you also feel you Ivorian?

In my heart, I am Ivorian, French and Lebanese. I have all three nationalities. I was born here, sent to boarding school in Lebanon for ten years until the war began, and then I went to France for ten years for my bachelor’s and master’s degree from the University of Paris One. So I also feel French. I went to New York to work on the commodities exchange for two years then came back here when I needed to take over.