March 2, 2021

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AfricaTopForum – News Around Africa

LADOL: Leveraging diversification to deepen local content

9 min read

The Lagos Deep Offshore Logistics Base (LADOL) was designed as a special economic zone that supports a wide range of industries. However, after initially focusing on attracting companies in the oil and gas sector, it has expanded its focus by targeting other sectors such as manufacturing, agriculture, health, technology, and green energy. LADOL’s push for diversification, says its CEO, Dr. Amy Jadesimi, will turn the zone into a circular economy and deepen local content. Group Business Editor SIMEON EBULU and Assistant Editor CHIKODI OKEREOCHA report.

 

 

It takes a woman with extra-ordinary energy, courage, expertise and, above all, patriotism to play in the heights of the economy that are largely male-dominated and deliver result that has continued to astound and dwarf the performance of her male counterparts.

Since joining the Lagos Deep Offshore Logistics Base (LADOL), a special economic zone inside Apapa Port, Lagos, as Chief Executive Officer (CEO), Dr. Amy Jadesimi, has not shied away from playing big in prime sectors such as maritime/shipping and oil & gas.

For instance, under her charge, LADOL undertook the construction of the fabrication and integration yard of the Floating, Production, Storage and Offloading (FPSO) oil platform,  EGINA.

The EGINA FPSO is the world’s largest offshore oil production vessel, and was specifically built for French oil giant Total to exploit its EGINA oil field off the coast of Nigeria.

It is the first FPSO to be fabricated and integrated in Africa and the largest vessel ever to berth in Nigeria. And Samsung Heavy Industries’ (SHI’s) subsidiary – Samsung Heavy Industries Nigeria (SHIN) – got the contract to build the EGINA FPSO in 2013.

Expectedly, since its inauguration, commendations from companies, stakeholders and governments across the globe have continued to pour in for Jadesimi for spearheading the successful execution of the integration facility.

However, while this is on, the 44-year old United Kingdom (UK)-trained medical doctor- turned businesswoman has turned her attention to another game-changing strategy to further enhance the fortunes of LADOL and, by extension, the Nigerian and African economies.

She is expanding the focus of LADOL and targeting non-oil and gas clients in manufacturing, agriculture, health, technology, and green energy sectors. The sectors are considered key to driving industrialisation in Nigeria and Africa.

Jadesimi, who noted that most LADOL’s clients initially were the international oil companies (IOCs) and other oil & gas firms, said LADOL was expanding and diversifying from that sector to support the afore-mentioned sectors where it is looking for new opportunities and clients it can provide services to.

She said, on the agricultural side, that LADOL was looking to leverage its cold storage and facilities to support agricultural clients. According to her, this has become necessary in view of the lack of cold storage for those in agro-allied export business.

Jadesimi said aside targeting technology companies that want to set up data centres in Nigeria, LADOL was also looking to support operators in the manufacturing sector such as those who want to assemble or manufacture solar power units.

She explained that as a free zone, LADOL was under the Ministry of Industry, Trade & Investment, as such the recent endorsement of the African Continental Free Trade Agreement (AfCFTA) was in line with enabling LADOL to support manufacturing in Nigeria, and Africa. She also said the health sector was under LADOL’s circular master plan, hence, it was looking at having a cluster of companies on the hospital side. This, according to her, will include testing, manufacturing and diagnostic. “We are still talking to several companies right now in those different areas about setting up a health care cluster inside LADOL,” she stated.

Explaining the modality, Jadesimi said the company already had preliminary business analysis and feasibility study, which it had shared with companies it had been discussing with to show the business opportunity.

She, however, said, there are other companies that have done their feasibility, and they would come into the zone, set up their companies while LADIOL would support them. “So, this is about us supporting other people’s businesses; we wouldn’t be running health care businesses ourselves; we will be supporting other people as they do it,” Jadesimi clarified.

She added that LADOL would help incubate businesses that come to the zone and also help them with feasibility studies. “We are doing something that hasn’t been done before, and creating a sustainable environment. Evidence shows that sustainability boosts profitability,” Jadesimi stated.

What this means, according to her, is that if a company is sustainable, it would make more money in the medium to long term than if it isn’t sustainable, which invariably means that how a company is set up and how it does its business is important. “This is a relatively new area, and we have to go beyond just being a landlord to work with people to help them create a successful business,” she emphasised.

Although some companies LADOL is talking to are big, as such they will just come and set up on their own, LADOL is, however, building facilities to accommodate smaller companies that do not have the money to build huge factories, particularly Small and Medium Enterprises (SMEs).

Justifying this approach, Jadesimi said: “We are working with SMEs because 80 per cent of jobs that need to be created in Africa will be created by SMEs. So, to help SMEs, we build facilities. To be an SME and manufacture, you don’t have to build a huge factory.

“So, we are building facilities so that the companies can rent our spaces whether it is office space or workshop space, and they can run their businesses out of those spaces that we have provided which will enable more local companies, more SMEs in particular to be able to operate locally and contribute to the local and pan-African market.”

Deepening local content

Operators in some of the sectors targeted by LADOL are optimistic that its ongoing diversification strategy, which is a shot in the arm of the Federal Government’s drive for local content development, will trigger massive job creation and enhanced technology transfer.

Such optimism is not without basis, considering that LADOL’s involvement in the EGINA project was a victory for local content.  Jadesimi confirmed this much when she said: “From local content perspective, the EGINA project was very significant victory for local content.

“By enabling the FPSO to come into Nigeria, to be actually fabricated and integrated in Nigeria, it set a standard that future projects will achieve much higher levels of local content.”

Proherbarium

According to her, the Federal Government, through the Nigerian Content Development and Monitoring Board (NCDMB), was instrumental to the success of the project and had set the stage for deepening local content by insisting that whoever did that FPSO had to integrate and fabricate locally because the facility has to create 30,000 jobs.

“Most of these jobs will be outside LADOL because a facility of this kind has a 10-15 times multiplier effect on job creation. So, for every one job created in LADOL, 10-15 jobs are created outside of LADOL.

“And if you look at other countries that have done this kind of work, you see the same kind of impact. So, this is actually a strategic local content capacity development, and by having this facility we have increased the demand for local fabrication and integration,” Jadesimi said.

Explaining further, she said if something was fabricated and integrated in Nigeria, its job creation potential would be highly significant. Her words: “When they fabricate in other parts of the world, they do 70 per cent of the work outside of the yard where integration is taking place.

“In the case of Nigeria, we are doing the fabrication in Port Harcourt; you will now put what you have fabricated on a badge and now badge those fabricated pieces to LADOL to be aggregated and integrated into a larger hub. That’s how you get that strategic increase in job creation.”

Noting that it was the same thing with engineering and design, Jadesimi said one interesting thing about LADOL’s push for local content was that it significantly lowers the cost of doing business.

According to her, engaging a Nigerian welder, engineer or designer, for instance, will be much cheaper than engaging a foreigner or flying him into Nigeria, as the costing of the project will be in dollars. “If you have Nigerians doing that job, you have higher resilience, higher accountability and its much cheaper. So, it’s a win-win not just for Nigeria, but for the company,” she added.

Jadesimi said interest by operators in some  sectors being targeted for setting up in Nigeria and Africa has been on the increase. She attributed the increase interest to the realisation that their system is not secure if they don’t have significant presence in the market they are serving or wish to serve.

She said LADOL was in a way reversing the resource curse by leveraging the business it was doing with petroleum companies and IOCs, and expanding that and diversifying away from that sector to support agricultural and green energy sector. This, model, according to her, is being replicated across Africa.

“We are working with an international organisation called P4G (Partnering for Green Growth) and another British company and together we are replicating the LADOL model in Ethiopia and Kenya,” Jadesimi divulged.

Partnering for Green Growth (P4G) and the Global Goals 2030 is a new initiative with the ambition of becoming the world’s leading forum for developing concrete public-private partnerships at scale to deliver on the UN Sustainable Development Goals (SDGs) and the Paris Climate Agreement. The Government of Denmark is providing initial funding for P4G from 2018-2022.

The road to a circular economy

However, LADOL’s latest push into other sectors outside oil & gas is hardly surprising. According to Dr. Jadesimi, since the plan for LADOL started in 2001, it was designed to be a special economic zone that supports a wide range of industries, and over the years, as the plan evolved, that core vision and mission to make Nigeria the hub for industrial activities in Africa never changed.

This was why in 2017, based on the success of Phase 1 of the development of the zone, LADOL rolled out Phase 11 of the zone’s development and created a new master plan. The new master plan identified companies that will be able to work togeth er inside LADOL free zone and form a circular economy, which Jadesimi described as “A very unique and attractive business model.”

A circular economy, according to experts, is an economic system that eliminates waste and the continual use of resources. The circular economy aims to keep products, equipment and infrastructure in use for longer, thus improving the productivity of these resources. All “waste” should become “food” for another process: either a by-product or recovered resource for another industrial process or as regenerative resources for nature.

Jadesimi said although building a circular economy is a challenge, LADOL has been able to do that because it started with a master plan where it did analysis of vatious industries, even different companies and identified which could work inside its zone, next to each other, in a synergistic manner, so, the input of one is the waste of another.

She gave more insight: “Some of the agricultural companies we are targeting are into cashew nut processing, which is a big untapped industry in Nigeria. The waste from the cashew nut processing is going to be used for our biomass plant and that will reduce the cost of power in the zone by 90 per cent.

“And there are other benefits that will come. To have a circular economy, you need to build the backbone all through the zone and we are in the process of doing that now where you have the utility backbone or the utility corridor that connects all our clients in the zone and allows them to share services, waste, even materials, and we are also building something that will enable them share equipment.

“So, this will be one of the only truly circular economies in the world, and I think the first sustainable industrial special economic zone. And as I said, the master plan that we created is already being replicated. So, this is something that has been 20 years in the making and it’s now becoming a reality on the ground which is very exciting.”

Her successes notwithstanding, Jadesimi agrees that gender inequality is real hence she canvassed the need to level the playing field for women to achieve their full potential. “It is a reality that women get paid less than men for doing the same job; there are disproportionately fewer women in leadership positions than men.

“Women get excluded from education. They get forced to marry, either physically forced or economically forced to marry, when they would rather not marry. It is a reality that across the world, to varying extent, women are relatively disenfranchised; equality has not been achieved anywhere in the world,” she said.

The LADOL boss said this is despite the fact that women-led start-ups have a much-higher survival rate. “Women-led businesses are two or three times more likely to survive. In Nigeria, 50 per cent of the population is women. So, we can’t leave women behind and expect to succeed,” she said.