Exclusive Interview with Vimal Shah of Bidco Africa, the Leading FMCG Manufacturer in East Africa

Interview with Dr Vimal Shah, Chairman of Bidco Africa

What have been the recent changes and trends since the COVID pandemic began? What is your assessment of the manufacturing sector itself?

When we look at Africa, specifically Eastern Africa and the continent of Africa, we have been affected by COVID in positive, neutral, and negative ways. If we look at the results of the COVID pandemic, it has not been that devastating for Africa in terms of people dying and too many cases, etc. We have somewhat been having good immunity in that sense and it has not been terrible, unlike the US, India, or China where things are really bad. We have had a few cases, the lack of medication, the lack of vaccines recently. But then at the same time, there was some sort of a herd immunity in Africa. Obviously, there were a lot of problems because governments did not know how to deal with the pandemic. They were trying to deal with it the way that the US and European countries were doing. We do not have those sorts of financial resources in Africa to be able to put forward trillions of dollars just as stimulus packages. There were hardly any stimulus packages available for people or companies operating. For those who worked from home or those who worked outside, there were a lot of furloughs and there were a lot of people laid off from various places. Travel tourism was affected in a big way because a lot of people were not able to visit Africa.

Apart from that, essential services like ours and manufacturing continued in some of the countries and we were not that badly hit. Overall, it has not been that crazy. However, when you look at tourism and you look at exports and a few products that had logistical challenges across the globe, what we have been hit with now is huge amounts of freight costs. What was coming out from China is now coming out at four, five, or even six times more in freight costs. Commodity prices went up drastically. That commodity price surge helped in a way for countries that are commodity producers. But those who are not commodity producers, those that are actually users and consumers, were negatively affected and now, they are paying the price of the high costs of importation. In Africa, manufacturing value add is not as big as it should be. We have been exporting a lot of raw materials, whereas finished goods coming from overseas have been coming in at various stages. Overall, cost comparison hit us. At the same time, medical health services were not able to keep up with what they should have because we did not have enough hospitals or nursing homes. Generally, the governments were short of funding and looking for aid from people like COVAX where we are getting free vaccines. We are still struggling with that. Even now, we are getting some vaccines as aid or donor funded. A lot of people are double vaccinated, but we are not 2% or 3% more than the world.

Overall, going forward, we see a lot more opportunity for people to look at business but what changed for us in Africa was the risk perception. The risk perception of the world looking at Africa before was that it is much riskier, it is more difficult, it is not easy terrain. That becomes a boon for us in Africa. If we are based in Africa, then we know Africa and it is a benefit for us. Glocalization was in before, but now it is more localization of countries. Everybody is trying to say, what can I do for myself? This is where we had the beginning of the AfCFTA or the African Continental Free Trade Area. We have a full free trade agreement onboard; however, we have not been able to take advantage of it because we still do not have our logistics and our whole supply chain organized well. So, that is a work in process. But overall, it is not devastating news. There is good news on the horizon.

Bidco has been the predominant player in this field and in the region for quite a long time. What has been the impact on Bidco specifically of these aforementioned issues?

We actually repurposed ourselves into a lot of different products which are more value adding. This includes essential services, soaps, sanitizers, etc. Everything in that range that we used to do before, now are selling much more of.

For Bidco as a company, we are in Kenya, Uganda, and Tanzania. Madagascar we were present in, but we recently shut down. But Kenya, Uganda, and Tanzania have been doing well. Uganda is particularly enjoying the fruits of local agriculture. We had good rains, we had good water, we had good weather which means we had better harvests. Obviously, our product that we produce locally has a much higher increase in value. The economic environment in Uganda and East Africa is generally good, so that has helped a lot. Our governments are proactive on getting things moving. We did not have the luxury of the trillions of dollars of stimulus packages. We have to do it on our own. Banks went crazy because banks do not lend too much because everything looks risky to them. What transpired for Bidco was that we actually repurposed ourselves into a lot of different products which are more value adding. This includes essential services, soaps, sanitizers, etc. Everything in that range that we used to do before, now are selling much more of. Our volumes have gone up across the region. We are producing locally. Importation became a big hassle. Importation of finished goods and ready-made products slowed down which meant that for us in manufacturing who had benefited to a large extent before, now, we have local demand for locally produced products. Supply chains were disrupted and a lot of imports were affected. Because importation became difficult, it was actually a boon for local manufacturers who add value to local products. Also, in terms of our agriculture, some places did well last year because people were still working on farms. They were not scared of COVID because rural areas did not experience that level of big impact. It is the urban areas that were mainly hit. Overall, for Bidco, repurposing ourselves, moving on, we saw a 10% increase in volumes.

Have you expanded your international presence? Did you have some mergers or acquisitions or some joint ventures that happened recently?

We have had some joint ventures and some expansions in the region. We have actually expanded our space in soft drinks and beverages. We joined with a Danish company and we expanded our plant last year. In the midst of COVID, we started exporting from Kenya to Denmark, Qatar, and many other countries. We repurposed ourselves completely and that was quite crucial for us. Now we are looking at supply chains and at local production in a bigger way. We are examining how we can take local fruits and process them into different products and send them to the world. Apart from that, of course, we as a group are looking at many other avenues now. Digitization was a big issue and with that digitization, we are now looking at fintech as well as many more areas because there is a lot more that we can do from Africa. This is where a lot more of repurposing, going to the consumer, B2B and B2C, both business to business and business to consumer, is going to become bigger. Logistics is a big issue. Our exports to the region expanded and that allowed us to look at a lot of the local supply chains, mainly Eastern Africa and up to DRC Congo, South Sudan, Ethiopia. Ethiopia does not have the foreign currency which is the biggest issue there. But the rest of the markets are able to work quite well. We continue up to Zambia, Malawi, and Mozambique. We are looking at all those markets in a much bigger way. More local production in this region will become the main thing going forward.

What exactly have you put into place to expand on this digitization aspect and what are you planning to implement in the future?

A lot of the processes that were manual before are now digitized. Work from home helped and contactless selling helped. People now do not want to go to a supermarket and they do not want to go to a retail store to shop. They want to buy from the convenience of their device and from a device, you just press a button, and you start buying. That convenience became a big thing and acceptance of that became a big thing. We have fast forwarded digitalization by five or six years. What was going to happen in a few years now has already happened because people are acquainted to buying online. Payments are all done online nowadays so there is very little cash moving across the board. It is all digitized. Information flow became a big thing. We put in SAP HANA. We also put in our new systems whereby we are now looking at sales automation, distributor management systems, and retail stores online. We have a lot of our customers coming online. Basically, the speed of everything goes up: it gets faster, it gets easier, and data travels so much more robustly and you can respond to it very quickly. If an order is placed in 10 minutes, you have the order, you are already sorting it out, you are sending it across, we have to organize the logistics, we have to organize the payments. That is a huge benefit here because in Africa, the adoption of digitalization was easy, was faster, was smoother, and we did not have a big hurdle to cross because bandwidth is available, mobile phones are available, digital is available, so the reach became easier.

What are some of your recent success stories in 2021 for Bidco that you are proud of?

What happens with digitization and that the whole sales automation and distribution management systems is that it gives you data on where things are working well and where things are not working well. What we are interested in is seeing where we are not working well, which areas have gaps, and where we need to optimize and really push off. Productivity went up by 60% to 80% from what it was before and we could identify gaps in the market much faster. Therefore, our response times became faster. Secondly, our operating cycles from cash to order, from order to inventory, from inventory to cash became much faster. That also helped a lot. Additionally, we are giving people the ability to choose data. All our customers now have a robot in their WhatsApp where they can get all their payment details, all their order details online in real time where they are. They do not have to call up a factory and ask what happened to their order. There is no need for that. So, customer service levels went up by 100% and the satisfaction of customers was much easier. People can now place an order, they can trace and track where the order is, what region, when it is coming. In terms of logistics, our partners are going paperless now. We do not need to have paper going to them and stamping a document of delivery. It is all done digitized and online. Now, the use of digital signatures is coming in. Payment cards are coming in. We look at that in the fintech area and that will change the landscape. Now, we can do entire expense management all online. There will be a lot more of that coming through and in the next few months, we should start rolling that out.

What projects are you working on currently?

We are working on a major project of transformation where we are looking at becoming much bigger and pan African. This is where we see a lot more scope of coming together, consolidating a lot of industries in different adjacencies, but only in fast moving consumer goods. We are not moving out of fast moving consumer goods. We will stay there. That is an area that we know the best and the consumer at the end has demand that is inelastic. They still consume, but they may be consuming from elsewhere. Therefore, we are looking at bigger distribution. We are looking at coming together especially with family owned businesses who have parents who are not there anymore or patriarchs who are not there anymore and they do not know what to do. We could provide a solution whereby we can come together, start pulling together, and making them part of a big pan African movement. We are calling it Dance Africa and we think it is the big panacea to sorting out a lot of problems such as fragmented markets and small markets where people do not have access. People want to be multi country, they want to be corporatized, they want to get digitization organized. We will do a plug and play where they can come in and work together with us and make things happen on a bigger scale. We can help them to scale up fast and help with putting people together, inviting investors to come together, and really making it a much bigger ship. It is a big mothership that we are building. We believe that for Africa, this would be a big solution for us because we do not expect the west to come in and start sorting things out for us or a big brother coming from Asia. We have to do it ourselves and we really have the mechanics of it. We can operate much bigger, much faster, and much more agilely for Africa.

Do you work on your own or do you work with strategy consultants that are into the joint ventures that are attracting the right partners for you?

We work with many consultants and with many people who are in the business. For them, it has to be best fit for purpose in terms of what they do and then we fit them in and work together. Smart partnerships are in and we are still looking for more. Really, it is an amazing space where it has never been done before and we are looking at that from a different angle. Consultants and people who work on it are advised to come onboard and look at it. However, we are moving away from the idea of a merge and acquisition in the old school way where people are strategic buyers or strategic sellers. This is much more of smart partnering and really a different tool. So, there is definitely room for a lot of people to come together.

What drives you to do what you do? What is your philosophy in life

What drives me and what I push for is staying MAD or “making a difference”. That is what drives me to not leave things the way they are, the way they should be, or the way they were before. Make a change and really make a positive difference to society, to our ecosystem, to our customers, to our people. I am born and brought up in Africa. I am going to die in Africa. This is where Africa needs a lot more self realization, self esteem. I believe that we have to really improve ourselves. We have a lot of positives in Africa and this is something that we do not realize ourselves. First and foremost, with our family systems, we must never eradicate them. We must keep them stronger because those bonds are very strong. Personalization and individualization like in the West is not the culture for us. This is something that is crucial. There is enough love and unconditional love and fondness which we want to portray. Everybody has it in them. The people of Africa are amazing and this is something that people do not know everywhere else. This is something that I want to work on and really keep on doing. As I wake up every day, I ask myself what difference I am going to make today and to whom. Even if I make a difference to a few people, it is not that it is going to make a big difference to the whole world, but it will to anybody here and at the heart of Africa. Secondly, there is no right way or wrong way. We find new pathways and that is where we can actually be far more innovative and really open up mindsets because a lot of our mindsets have been colonized by people who say that is the only way you should think and that is the only way you should look at something. I think we need to be different. This is where I believe that Africa can stand up to become the premier in the next 10, 20, 30, 40 years. Of course, my vision and goal for the company is a 2030 vision. It is to grab, grow, and sustain number one market share in the African markets by 2030. With that, we are looking at expanding into many areas. There is a personal vision also. I am 60 today. By the time I am 70 in 2030, we should have a lot more going on and a lot more happening across the continent.

Did you work on any projects concerning CSR during COVID?

We do not call it CSR. We call it SRC. CSR to me is “cosmetic social responsibility”. What we do is SRC or “socially responsible corporate.” Immediately when COVID began, we started distributing sanitizers, soaps, as well as water bottles and water vessels for people to clean wherever they are. There was a lot of that not available in the public domain and we had to put those up in public places so that we actually had availability of that. Then the supply of water was done by the local people and we kept supplying them with soap for free. Food distribution was done in a big way. Of course, first and foremost was identifying where the needy are, what they need, and getting their needs met. That goes on, but we do not want to publicize it a lot because sometimes it creates very negative publicity when you keep giving and giving and people just do not want to work for anything. So, right now we do it quietly and that is working. But at the same time, wherever there are big needs for education, for school fees, etc. we actually do quite a bit there.

ABOUT BIDCO: Bidco Africa is East Africa’s leading manufacturer of Fast Moving Consumer Goods (FMCG). Started in 1985 as a soap manufacturing plant in Nairobi (Kenya), Bidco has continuously grown over the years to be the home of some of East Africa’s most loved brands across the edible oils and fats, hygiene and personal care and most recently food and beverages.

For more information, please visit: www.bidcoafrica.com.

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