Tolaram's free zone invites Singapore firms to invest in Africa

SINGAPORE - If not for the fact that it is building West Africa's largest deep water port and free trade zone, Tolaram Group would be best known as the company which taught Africans how to savour instant noodles.

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Today, the Singapore-based group, whose annual turnover tops US$1.2 billion (S$1.6 billion), is one of Africa's largest conglomerates, with interests in infrastructure, finance, fast-moving consumer goods (FMCG), paper, energy and other businesses.

Its businesses span 15 countries and employ 18,000 people, while its products reach consumers in about 80 countries. But it is in Nigeria that the company has its deepest foothold.

Quite an achievement for an outfit that began as a tailor shop in Malang city, Indonesia, in 1948.

Mr Khanchand Vaswani, who moved there from the sub-continent during India's post-independence turmoil, called his tailor shop Toko Vaswani before renaming it Toko Tolaram in honour of his physician father, Dr Seth Tolaram Vaswani, in Pakistan's Sindh province.

Over the years, the company ventured into carpets, textiles and yarn in Indonesia, then expanded into the region.

By 1975, led by the founder's son and current chairman Mohan Vaswani, Tolaram relocated its headquarters to Singapore.

It also started diversifying into real estate and consumer goods.

By the 1980s, a third generation of the family fresh from college - led by Mr Vaswani's nephews and current chief executive Sajen Aswani and his brothers Haresh and Narinder, who is called Sonny - joined the business. The company also started recruiting professional managers.

Then came a restructuring that saw 75 per cent of the group placed under the Tolaram Family Private Trust Company, whose seven-member board comprises key family members.

The remaining 25 per cent was placed under the Ishk Tolaram Foundation to undertake community upliftment projects in various countries.

Tolaram Group also operates the highly regarded Maitri Asset Management, a multi- family office and bespoke investment vehicle.
 

Oodles of noodles, and more

Group managing director and Africa operations head Haresh Aswani, 60, is particularly proud of the strong foothold the group has established in Nigeria.

"By the mid 1980s, when I joined, the company had a presence in Lagos, and was distributing consumer goods in at least 14 African countries," he said.

"I went to Nigeria in 1988 to see my brother Sajen, and he asked me to stay on. The rest is history."
Mr Haresh Aswani, known affectionately as "Baba Indomie" (Father of Indomie), was born in Indonesia and raised in Malaysia. He has been a Singapore citizen since 2004.

Under his watch, Tolaram introduced instant noodles to African consumers.

"We tied up with Indonesia's Salim Group to import its famous Indomie noodles," he recalled. "We were confident we could build the brand, and by 1996 had a joint venture plant in Nigeria."

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It did not go exactly as planned. "Between 1996 and 2001, the business lost so much money that the Salim Group asked us to buy them out. We convinced them to stay on as partners."

What followed was savvy consumer education. "By 2002, the instant noodles had become a hit in Nigeria, and the business turned profitable."

Tolaram has since introduced the instant noodles to other African markets as well.

Observers say that episode encapsulated the company's "can-do" spirit: Study the market. Identify the need. Introduce the product.

Between 2000 and 2010, the company restructured its businesses, including scaling down its textile arm and focusing largely on its consumer, infrastructure and energy projects.

It also inked several big joint ventures, including those with American cereal giant Kellogg's, Danish dairy producer Arla, and consumer-product giants Colgate- Palmolive and Kimberly-Clark. Today, these partnerships have enabled the group to dominate the Nigerian market for FMCG and food products via 700,000 retail points.

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Tolaram also operates a paper production facility in Estonia that is overseen by Mr Haresh Aswani's younger brother Sonny, who is also Estonia's honorary consul to Singapore.

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Mr Haresh Aswani himself has served as Singapore's honorary consul-general to Nigeria since 2006.

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Digital journey

In 2004, with more professionals on board, Tolaram started making headway in fintech.

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"We looked at Indonesia, where we originally started as a company," said Mr Navin Nahata, Tolaram's managing director for fintech and infrastructure. "The country had a huge unbanked population."

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The company secured the requisite licences and launched the digital banking business around 2010, issuing unsecured loans of US$2,000 per individual for up to 12 months.

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"We assessed loan applicants by their digital footprints," said Mr Nahata. "We used big data analytics and did credit scoring based on 10,000 data points collected via applicants' social media profiles."

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The business took off, making Tolaram Indonesia's leading virtual digital bank by 2014 - long before the concept gained traction in Singapore.

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That was when the company decided to buy Amar Bank, a small, dormant outfit in Indonesia with a national banking licence.

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"We figured it would give us a physical branding," Mr Nahata said.

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Amar Bank soon turned profitable and was listed on the Jakarta bourse in January last year. With assets totalling US$300 million, it is now regarded as the leading Indonesian digital bank, with more than 400,000 credit customers.

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Tolaram has invested about US$70 million in Amar.

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Mr Nahata said Tolaram plans to roll out similar digital micro-credit operations in Nigeria, Brazil and other developing markets.

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Free zone and Lekki Port

But it is the US$2.1 billion Lagos Free Zone, with its adjacent Lekki Port, that Mr Haresh Aswani considers the jewel in Tolaram's crown.

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Located 60km east of capital Lagos, on an 830ha site, the massive project is Nigeria's first privately owned special economic zone, with a fully integrated deep- sea port.

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Designed by Singapore's Surbana Jurong and built in partnership with China Harbour Engineering Company, it is backed by the Nigerian government. The project is financed by a combination of equity from partners, local debt financing 

and loans from China Development Bank.

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When phase one is completed next year, the free zone will host more than 100 businesses engaged in manufacturing, commercial, logistics and supply chain management. The facility will generate its own power and have residential complexes, medical facilities, transport depots and warehousing facilities.

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More than a dozen companies have already started moving in, including Kelloggs, Arla, Raffles Oil, Indofood, Colgate-Palmolive and Insignia Print Technology.

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"The free zone will be a game changer," said Mr Haresh Aswani. "It is a plug-and- play park about the size of some 16,000 football fields, offering the best-in-class infrastructure."

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The adjacent Lekki Port is the single largest private infrastructure investment in Nigeria and its first and only deep sea port. Economists estimate its aggregate impact on the Nigerian economy over its 45-year concession period to be around US$361 billion.

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When completed in 2023, it will be able to handle ships carrying 18,000 standard shipping containers.

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Singapore connection: The missing link

One regret Mr Haresh Aswani has is the dearth of Singapore businesses in Africa. "Besides a few players like Olam and Wilmar, Singapore is very under-represented in Africa."

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Indeed, total Singapore investment in Africa is barely US$23 billion. Mr Haresh Aswani reckons this could be due to the overload of negative headlines.

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He urged Singapore companies to look beyond the headlines, "Africa is a huge, young and fast-growing market of 1.2 billion people. And Nigeria is the most populous country and the biggest economy on the continent."

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Tolaram's free zone and Lekki Port should be the first port of call for Singapore companies wanting to explore the continent, he said.

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Nigeria has signed the African Continental Free Trade Agreement.

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"We have created a safe beachhead for companies, including Singapore and South- east Asian corporates, to set up a base to expand into any part of Africa," said Mr Haresh Aswani.

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"Low-risk, tax-free, duty-free, secure, gated and guarded. We are keen to share the excitement and potential of Nigeria.

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"There is no restriction on foreign ownership or talent within the free zone. So businesses can come and do what they do best. We'll take care of the rest!"

Whether that is the clarion call Singapore companies need remains to be seen.