In this interview with The Worldfolio, Ghassan Yared, CEO of Forewin Group, discusses the role of the private sector in Ghana’s economic growth, how Forewin Group has managed to diversify into one of Ghana’s biggest conglomerates and their new venture with Actis, “The Exchange” project.
Like the rest of the world, Africa remains uncertain about what is to come after global geopolitical shifts like Trump’s election in the US or Brexit in the UK. How can Africa take advantage of this new global landscape and gain investor confidence?
Let me go back more than 10 years when we started talking about emerging markets. Before the world economic crisis, everybody was putting attention on Africa and saying: ‘the future is Africa; the population of Africa; it’s going to happen in Africa.’ And people started preparing business plans, visiting aggressively, but in the back of their mind, in my opinion, the reason why they did not succeed since then is that all the international and multinational companies were coming with their ideas which they wanted to execute as learned in Europe and in the US and implement it in a market in the African continent – not understanding that this is a different environment. There is a different way to do and conduct business. And many of them turned back and went back home. When the crisis started, everybody lost interest because they had their own concerns and own worries to take care of. People kind of forgot about Africa.
Now things are changing again. Economies are getting better, multinationals want to go more multinational, there are mergers and acquisitions, and everybody wants to be part of the big cake; and the big cake is now Africa.
I think that Africa is a good option for the US to replace China in the short, medium, and long-term. Don't forget that China’s economy is booming but most of their raw material is coming from Africa. So, If Trump’s relationship today with China and the Far East is not as it should be, in my opinion, African leaders should take advantage of this to get together and make their environment attractive enough to countries like the US.
With Brexit, the UK wants to improve their bilateral relations and trade relations with Africa because they need something to replace Europe and tomorrow maybe another country will emerge; and South Africa will want to expand; and North America will want to expand. So where do they expand? They look for a similar environment; similar weather and then they can find it here. For example, I know Peru and Ghana have a lot of similarities: similar environment, weather, and opportunities of growth in agriculture, mining and energy.
So, having said that, if you put everything together, there is a great opportunity for Africa as a continent. Now, do our leaders see this as an opportunity? And what are they doing to capture this opportunity or to create an environment to bring those investors and make them feel comfortable in the medium and long-term?
Let’s agree. Africa is the place. Africa is an alternative. If I was a world leader, Africa would be my best option to move into a different innovative direction.
What I can say is that our new president has started to create a clear vision. He is putting some guiding principles for his ministries, playing by the rules, creating trust among organizations of the ministries where there are no more overlapping responsibilities that are creating delays to doing business; and no hiccups and uncertainties for investors.
I think he knows exactly what this country needs. He is building trust among people, organizations and ministries, to give a good image and to attract those investors to come and say: ‘now, this is a sound environment. We are here. We can invest. And it’s for the medium and long-term.’
Ghana had been one of the fastest growing economies in Africa. Despite the fact that growth has slowed sizably over the last few years, Ghana today, with a growing middle class, energetic start-up scene and new pro-business government, looks to become Africa’s fastest growing economy once more. How can Ghana recover its leading position?
Educate people first. Make the people respect the rules. Make people understand that they need to bring trust. They need to bring a trust-powered system for investors to come. Ghanaians, in general, they have a good attitude. It’s a positive attitude. They are friendly.
So, we have the people. Now we have the leaders. Up to a certain extent, I’m very satisfied with the choice of ministers. They are experienced people and they mean business. Of course, there will always be some funny stories that you hear, but in general I am quite satisfied with this and positive that under Akufo-Addo’s leadership, things will move in the right direction. So, there are preparations on the ground. At the same time, he is showing those people that you need to behave in such a way but also there are lots of opportunities, like backyard farming, which is a perfect alternative to importing. It is a perfect alternative to create a balance in the economy.
But also for this you need to educate people, you need to train them, you need to give them some seeds, you need to give them some skills. Once you start farming you have the use of the farm. If you take it you need to sell it. If not, it will go rotten. So, at the same time he came with this ‘One Factory, One District’ thing. This is easy to talk about, but difficult to implement. Because it’s not about ‘come my friend, bring your money and put the factory here.’ No, it’s a supply chain. You have to go through the model from the beginning.
Now, if you want to go with one factory, one district, those factories need raw material. Raw material is agricultural. I have been participating at a lot of summits and a lot of meetings – group meetings with the government. So, we’re trying to look at different ways to drive this vision, to connect the pieces together. So, you need not only the farmers to use tractors and equipment in every district but to have enough input for the industry and to have places like frozen/cold storage areas and warehouses. It can happen. But it can happen if you work on a million things at a time.
What role must the private sector play to achieve this?
The private sector is the ignitor of this economy. It’s not the government. One thing that we always repeat as entrepreneurs here is that we are not Government competitors. We are not Government enemies. We are partners with the Government. If we succeed within an environment, within an economy that will help the Government balance and invest in infrastructure.
How would you describe the business climate? What are the major challenges and what are the advantages of setting up a business in Ghana?
If we are talking about history, let me tell you: Africa is an environment that is very volatile, with ups and downs. And there can be a lot of hidden, unforeseen Government policy that comes overnight without being expected. Increasing electricity costs by 100%, interest rate increases, Ghana cedi devaluation. If somebody sneezes in Nigeria we, Ghana, are affected. So, we live in an environment that is really like shifting sands, if you move to make an effort you go down.
Sometimes you better step back, sit and watch. Because if you do make an action during this crisis you will go. And a lot of companies have gone. That’s where we come in. That’s why I succeeded. Time after time. Because every time there is a crisis I always take advantage to adjust the model very quickly and very swiftly to make sure that I am maintaining my existence.
In 1993, you founded Forewin Ghana Limited, which quickly became a leader of reference in the field of distribution and marketing and today enjoys one of the most diversified portfolios in the country. What have been the key elements behind Forewin Group’s success? What challenges have you had to overcome?
In the distribution company, when the crisis started back in 1999, the trade here was based on credit. You gave credit and then by the time you got your money, the cedi had devalued, and you lost your money. So, my biggest challenge was how to convert my savings into cash. So, I decided to invest in a chain of cash and carry outlets. In a period of twelve months I had opened 48 outlets and these outlets were selling cash. So, I converted a good percentage of my savings into cash that limited my exposure to the cedi devaluation. We took some overdraft from the bank to balance it and then we went on with a fixed high cost, but with a fixed cost not a variable cost. And that’s how we survived the first time.
I have a very big tag line, I always say it: ‘We see crisis as solid roots to success.’ Because every time there is a crisis we come out better and stronger from every situation.
Even in the last two years, we have acquired a lot of brands that people lost. We keep on investing. And another secret of our success is that at the early stages, before the year 2000, I realized to survive in such an environment with lots of uncertainty and hidden surprises – you need to diversify into many businesses. That’s why from distribution I started expanding.
I took a license for a free zone. I built the free zone enclave back in 98-99, so I expanded my territory by creating a distribution center to West Africa out of Ghana. It had nothing to do with the Ghana economy so that was a business that was booming.
From there I invested and I took a license for duty-free. So, I opened duty-free shops on the borders. And then I started creating my private label because I thought that to be safe long term you need to own your own brands.
Today we have an industrial park in Tem where we produce agrofood and then distribute it on our own, on the local market and on the export market. And then we realized that the future was online. We established zoobashop.com and I went into a partnership with a friend and we can proudly say we are the first online shopping website in Ghana.
And then from there I had a great opportunity four years ago. I partnered with a Belgium company with 40 years’ experience in heavy machinery. We serve road construction firms, mining companies, real estate developers – you name it.
We know all different kinds of businesses, and then we connect them together and understand what’s going to happen from here. Then we travel a lot and we understand what the future looks like. Then we try to be ahead and try to be innovative.
We are lucky to have the financial power and the will to do so with a team that is very well experienced.
You have recently partnered with Actis UK to undertake the construction of the largest mixed-use development in West Africa, ‘The Exchange’ project. Can you share some details on this ambitious project and how it will serve to market Ghana internationally?
Actis are the largest real estate fund in sub-Saharan Africa. This project is the biggest single project they have done.
We went into partnership where we wanted to go in 50/50. So far, we have 49%, they have 51%. We have equal seats on the board and I’m the chairman. The idea is very simple: we have created a destination in Ghana and our tagline is: ‘Your daily destination in Accra.’
This project is going to be the welcoming face of Ghana. This project is going to be the Mandela Square of Ghana. There’s no single visitor to Ghana that will not come and visit this project, simply because we are located close to the airport.
We have a four-star Radisson Blu hotel. The first Radisson in Ghana. It’s a business hotel. We have a very large food and beverage court inside the shopping mall. We have a kindergarten, we have a very large gym, we have it all.
We have four high-end residential buildings, designed by HOK from the UK, one of the big international firms. I think despite the crisis, despite the situation here, our timing is perfect for this project. This project is going to finish when Ghana is booming. This project is going to succeed because of our reputation and because of Actis’ reputation.
You have also been fundamental in attracting investment into the country partnering with many international firms. Why is Forewin the perfect partner of choice for UK companies seeking business opportunities in Ghana?
I’ll tell you honestly. We are already very much diversified, but there are still areas where I see room for improvement or new areas we can go into. Agriculture is a major area of development.
So, it is a big area of investment, as is aquaculture. You know, we import a lot of frozen fish. So why can’t we farm our own fish? Poultry is another area. So, our strength is that we still have the appetite as a group to invest time and money. I would also mention, probably, real estate, not in the short term but in the medium term.
But other than that, tourism. But it’s not our field. Tourism is an area where I see potential in Ghana but the problem is that they need to do a lot of adjustment and I’m not sure that the Government is ready to do that today.
We’re looking for big, experienced partners that want a local group to double up with them. With our reputation today, if I partnered with Actis I can partner with anyone else.