Logistics In West Africa

Interview with Stéphane Eholie, Chief Executive Officer of SIMAT (Société Ivoirienne de Manutention et de Transit)

According to SIMAT, what are the main challenges that Côte d’Ivoire currently faces?

The country’s future rests in the revival of its economy and in its positive growth, but it chiefly depends on the struggle against youth unemployment, an issue that can be solved through job creation.

What is SIMAT’s advice to investors who have their sights set on Côte d’Ivoire?

Côte d’Ivoire is a considerably rich country with a great amount of resources despite the many crises it faced after the elections. In its current state, Côte d’Ivoire is quite conducive to doing business. Now is the best time to take action. Investors must keep in mind that there is money to be made if they will just believe in the country and in the people, who have great potential. They must not forget that Côte d’Ivoire is a locomotive of the West African economy.

What risks should potential investors be aware of? What problems should they expect to face?

Safety may be something to worry about since the country is currently at a level 3, however, the government is doing all it can to restore safety. Other than safety, not much else will decrease value or prevent project launchings. Everything else is in place to ensure success for potential investors.

During the first quarter, the fall of GDP was estimated at 10%. What is expected for 2011-2012?

Côte d’Ivoire has truly been through a lot. From November 2010 to the end of April 2011, the transit/port sector was blocked for a total of six months, along with the auxiliary transport sector and all related activities. The company could not work and suffered a great amount of financial losses, yet Ivorians considered themselves lucky to be alive and were thankful to God. They were ready for a new start. This country is beautiful; activities were resumed overnight once the post-electoral situation was solved. Compared to last year’s performance, the company’s current achievements probably amount to 80-90%. The future appears bright.

Côte d’Ivoire is special in that raw materials and semi-finished goods are both imported and exported. With the help of foreign investors and financial institutions as well as the major upcoming project, 2012 should be a very satisfactory year.

What impact did the financial crisis have on SIMAT?

The financial crisis had a great impact on SIMAT. The company lost a considerable amount of money, but SIMAT’s prospects are now looking better. SIMAT’s aim is to attain equilibrium by the end of 2011.

One of the main drivers of the national economy in Côte d’Ivoire is the port. It reflects the strength of the economy and in that sense, the port can be considered its very heart. Now that the company’s visibility is better and once the safety issue is eradicated, it will continue to grow. Both Côte d’Ivoire’s image and trust have been restored in Africa and in the rest of the world. The government is doing its job. Entrepreneurs are working hard as well. Fear has almost vanished. With all of these reasons, 2012 should be a glorious year for SIMAT and the main actors of the economy in Côte d’Ivoire.

The company enjoyed a 21% growth in 2006, 10% growth in 2007, and 16% growth in 2008, correct?

SIMAT enjoyed growth for three consecutive years beginning in 2006. SIMAT also experienced a decrease in profits in 2011, an understandable statistic considering the company was unable to work for a span of six months. However, SIMAT will do everything within its power to reach equilibrium by the end of 2011. Instead of lingering in the past, SIMAT looks forward to the future and the time from 2012 to 2017, which should be a favorable time span.

That’s where Alassane Ouattara’s program comes in. SIMAT is trying to follow his very ambitious program. If the government has ambition, entrepreneurs have every reason and right to be ambitious as well. To SIMAT, ambition is investing, creating added values and jobs, generating funds, and repeating the entire process.

In terms of management, SIMAT needs entrepreneurs who can compete on a global level, offer high-quality services, and put Africa on the map as far as entrepreneurs are concerned.

Today, SIMAT is ranked third in the transit sector after Bolloré and GTMA. What is the company’s strategy in a medium term?

As a direct victim of the crisis, SIMAT could not avoid being strongly affected by it. SIMAT is a local company, not a multinational company without a network. Thus SIMAT was directly hit by the crisis and the problems that it caused.

The first step for SIMAT is to reengineer the company so that it can rebuild itself by strengthening its own resources to face competition more easily and efficiently. This stage will occur in 2012, which is when the company will consolidate its gains. By the end of 2012, SIMAT will start its five-year plan that revolves around external growth, which is how SIMAT intends to become a sub-regional group and network. Fundamentally, this is where a structure such as SIMAT belongs.

As entrepreneurs, SIMAT needs to be able to meet its clients’ needs. Compared to the governmental program, it is extremely important that local entrepreneurs are able to control their destiny. It is important that they prove their ability and that they have a clear vision of their enterprise. This is the only possible way that the African economy can be integrated.

Investment and bank financing were mentioned earlier. Does the company receive a sufficient amount or is money an issue?

In the business, both capital and access to resources are very important. The main problem is the company’s limited resources despite a considerably high interest rate. In order for developing countries to become emerging countries, political will to help entrepreneurs needs to be stronger so that they can compete with foreign companies.

The difference between multinationals and SIMAT is that SIMAT’s access to resources isn’t as vast. If only they could meet expectations, SIMAT could show the world what Ivorian entrepreneurs are truly made of. SIMAT believes in globalization both for businesses and the people. Around 15 years ago, there weren’t as many Ivorians trying to do business and creating companies as there are now.

Since 2007, SIMAT has been a part of Europe’s stock exchange since globalization is achieved through worldwide recognition obtained on the markets. Not only do capital markets give companies credibility, but it also allows them to do business with other countries. Therefore, if SIMAT can create a healthy environment by looking at what is done elsewhere, the company will achieve a lot.

So that means SIMAT is registered on the stock exchange?

SIMAT is quoted on the stock exchange since 2007 on Paris’ free-market Euronext. In the course of the next six months, the company intends to register on Alternext.

SIMAT ceded 20% and is currently trying to raise funds. Currently, the biggest challenge lies in access to capital and long-term resources. The company is fighting for it right now, as it is most important in SIMAT’s sector especially. The company hopes that the next six months can help it achieve that.

Discuss the profitability for investors in the years to come.

Profitability for investors is certain. The country’s activity is high and the growth percentages for SIMAT speak volumes. If SIMAT considers its market shares and Côte d’Ivoire’s increasing GDP, investing in the company is sure to be profitable. SIMAT has been in partnership with PANALPINA since March 2010.

SIMAT has worked on its team’s strength and the logistics of its equipment and warehouses. Everything SIMAT earns, it invests. As time goes by, the company is doing all it can to meet its clients’ needs and to obtain the 9001 ISO certification, 2008 version, by the end of the year. This means that SIMAT is trying to match up to European companies. What makes SIMAT special is that instead of being regarded as a typical African company, it is regarded as a company with the same management and work standards as a European company. This viewpoint is exactly what SIMAT is trying to convey.

SIMAT is open to investors and the stock exchange, but what about the banks?

There are two things to consider in the business: advances from banks that fund the working capital while ensuring a company is run efficiently and the question of long-term work, which requires a good deal of capital. In that regard, there are two things that SIMAT fears. The first is reengineering the company in financial terms, an ongoing enterprise that they plan to finish in the next two to three months. The second is obtaining capital so that the company can stand on solid ground, a venture that can be done with the introduction of investors who believe in SIMAT and in Africa.

The reason why SIMAT is doing this is because they have nothing to hide. The stock exchange constitutes financial leverage and is not to be ignored. Globalization also concerns Africa. If SIMAT’s standards are the same as the standards in Europe and if the company’s results are as good, if not better, then there is no reason not to invest in SIMAT.

The company has been wrongfully accused of being a family business and of being a one-man show. It’s time to challenge this view. The company believes its strategy is the right one, but in the long run, SIMAT must not forget that the biggest problem lies in obtaining long-term capital. This is what everyone will say.

If competitors have the means to raise long-term capital at a lower interest rate, then they will surely have the advantage. This is what SIMAT is trying to remedy, slowly but surely.

The company uses niche markets as a strategy. How does SIMAT obtain market shares? What are some further details about that aspect?

When SIMAT was founded in May 2001, the company already had clients since they had been involved with another company before. Yet SIMAT did everything by itself with the same team and with the same people. But service is not quantifiable; it is very people-oriented, and in SIMAT’s line of business it’s important to dedicate yourself. Along these lines, some people work with the company because they like what it does while there are other people who work with the company because it gives high-quality products and service.

If one were to take a cab and tell the driver about SIMAT, out of ten drivers, eight of them actually will know the location. So SIMAT’s strategy focuses on communication and information. The company puts together a website and has been traveling extensively, making its presence known in Burkina and Mali and spreading the word around wherever it travels. If SIMAT reviews the past few years, it can see how much it has grown. It started with SME’ and SMI’s and now clients are coming to the company directly, saying that they want to work with SIMAT and with its structure. The company has also integrated information and communication technologies into the business; everything SIMAT does is computer-assisted.

It is a combination of the aforementioned items that proves that SIMAT has the ability to meet clients’ needs. The only thing holding SIMAT back is long-term capital. As an example of that reality, one needs a lot of shops to succeed in this field. In SIMAT’s case, demand is high but offer isn’t- at least not yet. As a result, every year SIMAT grows a little more, gets more market shares, builds more shops, and buys more equipment to increase productivity. It isn’t easy, but no one said it would be. The company works 15 hours a day, 7 days a week. The company dedicates itself completely because there are always problems that someone must solve. One must love the job to do it because it’s very stressful.

In global trade, there are three main actors: the bank, the forwarder, and the insurer. Without these three components, one cannot work and thus these three elements are key. For this reason, SIMAT plays a very important role in the economy; both for imports and exports, a forwarder is absolutely necessary.

It may be noticeable, but SIMAT is very passionate. The company employees love what they do and do not complain, rather, they look forward. One needs to dream and believe in what one does. The company does not want to linger on negative aspects; they only want to see the positive ones. Most of all, one’s love of Africa and its people needs to be strong, and that is the case for SIMAT.

The next ten years will be big for Africa.