Thursday, Dec 14, 2017
Industry & Trade | Africa | Democratic Republic of Congo

Socimex Group

A long-term asset for DRC’s economy


1 year ago

Ibrahim Issaoui, CEO of Socimex Group
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Ibrahim Issaoui

CEO of Socimex Group

CEO Ibrahim Issaoui tells us about Socimex’s impressive track-record in creating value through covering Congolese society’s needs, his vision on the achievements made in DRC and why private investment remains crucial to unlock the immense country’s potential.

 

How would you describe the government's support in promoting local industry? What are the areas in which further cooperation could take place?

Our history in the country has come a long way. I arrived in DRC in 1982. I witnessed the progress made by the country over the years. Indisputable improvements have taken place. The government wants to encourage the private sector and local industry, but it is a task and a process that requires a lot of work, as it does not happen overnight.

Socimex Group operates in strategic sectors of the economy, including industry. We installed a vegetable oil refinery in Kongo Central province, in the city of Boma. In this context we have signed a Memorandum of Understanding with the government, through which we received benefits that allows us to secure these industries, while we help to boost industrial activities in the country.

 

How did Socimex evolve to become one of the leaders of the country’s consumer goods sector?

What is crucial for us is firstly the quality of our products and services, as illustrated in Socimex’s logo. The quality in service, distribution, job creation, etc. is and will remain our primary concern: we work on the long term.

Congolese people identify with some of the brands we produce; they are products that deserve to be on international markets. We also distribute other important brands for which Socimex is the only authorized dealer in DRC. These brands have kept the same level of quality since their initial introduction in the market until today.

Around the world, Socimex works with serious and responsible companies that meet international standards and enjoy a very good reputation. All products used in DRC and distributed by Socimex are fit for human consumption and of a high quality. We do not neglect the quality of our products because consumers are our brothers, our neighbors and ourselves as well.

 

The government has established a program to modernize and rehabilitate existing transport infrastructure. What will be the impact of these projects on the country’s industrial competitiveness when implemented?

DRC remains a place with many opportunities. Transportation is central to economic life; necessary for the development of a country, especially a country of such size. Just 10 years ago the country was split into several parts; there were very difficult to reach places, which could only be travelled to by air. Even merchandise was often flown; so the transportation cost was exorbitant. People could not afford the products being transported. This has led to significantly increase the cost of living in the country.

For instance, in early 2000, the transport cost from the city of Matadi to the capital, Kinshasa, was $100 USD per ton because there were hardly any roads. For about 354 km, road conditions were deplorable and the small trucks used for transport could take a week to make the trip. Today we have good quality roads and transport costs have fallen by half, so product prices have also been reduced.

Thus, the creation of transport routes develops a country's economy and directly impacts the operations of various companies established in DRC. This also reduces the final cost of products to consumers, to the extent that any additional costs of goods increases the product price and reduces consumers’ purchasing power.

 

You started with an import-export business, and then diversified your activities to other key sectors that present numerous opportunities for partnerships, collaborations and investments. What is the vision behind this diversification strategy?

When doing business, no accurate growth plan is followed and all future projects stages are not clearly defined. It is true that there is a course of action to follow, such as respect of the laws of the country, but the expansion and growth strategy is not defined at the beginning.

For example, in the transport sector, I started with basic foodstuffs such as rice, sugar and others. These products require logistics, so we looked for logistics services on the market, and found no one that met our expectations. So we had to find a solution by ourselves. It is on this basis that we created a transport company that could provide logistics services for us and for third parties.

Until not too long ago, we imported vegetable oil, while 50 years ago, Malaysia imported DRC palm oil. It didn’t make sense that we were importing, so we oriented ourselves towards the Kongo Central province, a traditional stronghold of palm oil extraction that today no longer has any production. The idea of transforming Socimex into a major food industry player came from this observation; so we decided to create a vegetable oil extraction plant in Kongo Central, which in turn encouraged the population of the province to plant more palm trees and start producing locally.

This is not something that was planned 40 years ago, but happened through experience by taking action, developing ideas, and trying to meet the needs of the population.

What can you tell us about your short-term development strategy?

We are seriously considering establishing a vehicle manufacturing plant in DRC. Central Motors is a company that belongs to Socimex Group. It distributes Hyundai and Mazda products in the country and is greatly involved in a major public government transportation program, called Esprit de Vie, which uses our Hyundai buses, as well as hundreds of other buses from Korea.

The main challenge we face is the lack of factories close to supply us with spare parts. Besides this, DRC is practically a landlocked country where transport is tremendously expensive. In order to manufacture vehicles locally, windscreens, rear-view mirrors, sheet steels, tires, wheels, etc., would have to be made locally because if imported, the prices of the cars would be way too expensive for consumers. If the local production is more expensive than imported products, local industry makes no sense.

To manufacture locally, it is necessary to allow the consumers to buy cheaper local products than the imported products, while keeping in mind that the quality has to be the same or superior to that of the imported product. You do not want to lower the price by lowering the quality; it would not make sense, and it is by no means our purpose.

 

What are the main challenges that you face in your daily operations?

Current challenges are linked to neighboring countries such as Angola and Congo-Brazzaville. These are countries that have other revenue sources such as petroleum, and they were able to develop thanks to their income, which is why they have invested heavily in infrastructure. The advantage of these countries is that their incomes are not entirely based on customs duties and taxes, as is the case in DRC.

We suffered for years because all food products imported into the country were heavily taxed upon entry and so quite expensive on the DRC market. We raised this issue to the government, to which it promised to find solutions: 28 economic measures that will soon be implemented to reduce the cost of certain products. There are still many challenges to overcome, but DRC is a country that has come a long way; the involvement and cooperation of everyone is required to solve these kinds of issues, and develop the country.

 

What are the opportunities that the Congolese market offer and how important are strategic partnerships in your operations?

In DRC opportunities are enormous and we strongly encourage all investors to come and invest in the country. The country’s population growth represents a significant opportunity. According to studies made by international firms, the future is in Africa and particularly in DRC because it is a country of roughly 75 million people who could double within the next 25 years. In terms of market size, the Congo comes second after Nigeria in Africa.

DRC remains a great country that has impressive natural resources: agriculture is undoubtedly the sector that can bring the most to investors. But to do this, we must invest heavily in infrastructure, which will reduce the cost of products, the cost of transportation and the export cost of these products. Once overcome this challenge, the DRC will become a large producer and exporter of food. It will also be necessary to redistribute the products processed within the country to consumption centers and abroad; infrastructure modernization and construction projects – such as the deepwater port of Banana- have a direct impact on the economy and the country's competitiveness.

 

Why should Socimex be considered as a preferred partner for international brands seeking to expand into the Congolese market?

Socimex is not everyone’s partner. There are many of our compatriots in the private sector who are also distributors of certain brands.

Partnerships and relationships develop over time. We try to work on brands local perception while they are looking for reliable and serious partners. People do not work with us because they love us, but because it's a win-win partnership.

 

How would you describe DRC’s international perception and how can it affect the inflow foreign investments?

Medias rule the world. They are the first visible power. Sometimes people repeat what they hear in media without having real or contrasted information. When you decide to speak badly of someone or a country, people remember what they heard. Today we all have access to communication and information, and what is said about the Congo does not help the country move forward and develop.

It is a safe country, unlike what many people may believe overseas. We must encourage people to come and invest in Congo, which will help stop the country bad publicity.

 

What message would like you send to readers?

The African people generally are welcoming and peaceful people. I encourage investors/readers to come and invest in DRC; there is room for everybody today, but tomorrow maybe it won't be the case anymore. The moment to invest in Congo is now. 



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