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Changing the perception of Ghana companies

Interview - July 9, 2014
William Kodwo Tewiah spent months researching Ghana’s downstream sector and noticed a gap in the supply chain in which he could fill. This led him to establishing Zen Petroleum which specializes in hydrocarbon management solutions for mining and bulk consumers such as ports, heavy transport, and construction industries. In this interview he talks about how he came to set up Zen, his plans for the future, as well as the challenges facing Ghana and the opportunities for investors in West Africa.
H.E. Pres. John Dramani Mahama is calling for a focus on diversification and value addition in order to stimulate the economy. Which sector do you believe should be the focus of these efforts?

Agriculture is a no-brainer, because we spend a lot of money importing items that we could grow here quite easily. The petroleum sector, our area of operation, is also an exciting sector. The service industry could be quite big for Ghana because of where we are geographically positioned. I think a lot of companies look to Ghana as a strategic host to do business in West Africa, so the service sector could be a big industry for Ghana. Tourism is also an area with huge potential. Ghana is safe and peaceful, and Ghanaians are some of the friendliest people on the planet, so the opportunities for tourism are significant.

What are the challenges in achieving sustained economic growth for Ghana?

We need a consistent and reliable regulatory environment to operate in. When you are in an environment where the rules vary quickly, it becomes very difficult to have sustained growth of any kind. Case in point today, is the sudden forex directive from the Bank of Ghana, which has effectively frozen USD transactions overnight. It should have been done selectively over a period of time to allow businesses to adapt. Such measures will have an adverse impact on sustained economic growth for Ghana. We need a stable, legal and regulatory framework in which to operate where the rules are transparent, consistent and clear, and everyone is playing by the same rules.

You need people, well-trained people and an educational system that educates people to a good standard to think out of the box. You need infrastructure – roads and hospitals, etc. Accra has changed significantly in the last 30 years. It can take you easily hours to get from one part of Accra to another, so you need good infrastructure, good education, stable rules and regulations, for sustainable growth.

What is the opportunity that you saw in the niche market of supplying the bigger companies with fuel that led you to found Zen Petroleum?

It was not the result of me sitting down and studying the market and coming up with a clever idea. I got to learn that the mining companies were having lots of challenges getting clean fuel and took an interest in coming up with a solution.

The first thing I established was that all the players here, including multinationals and foreign companies such as Shell and Total, do not actually import fuel. The fuel is imported by Ghanaian companies called Bulk Distribution Companies (BDCs). At the time, there were only three of them, and that the transport was outsourced to local companies.

I spent quite a number of months researching and understanding the downstream sector. I used to hang around fuel depots and import terminals in Takoradi and Tema to understand the supply chain; it was clearly a supply chain issue.

After a successful tender at Goldfields, I was awarded a supply contract for half of their requirement, based on a commitment to get cleaner fuel than what they were getting from Shell at the time. I operated for the first year at virtually no margin because that is what you have to do as a new company sometimes to enter an industry. Fuel distribution is critical to any big mine, so the risk of bringing in a new player with no track record and no experience was huge. Imagine they turn up one day and the fuel is not there, the mine shuts down and they lose millions. There has to be a compelling reason why they would go with you. The offer to do it for virtually no margin to ourselves was compelling because the mine was saving over $3 million in the first year based on our supplies alone. They hedged their bets by giving us half their requirement and the other half to a multinational.

What would you say was your biggest challenge that you had to overcome?

In terms of operations, it’s relatively straight forward. However the perceptions being a Ghanaian business are harder to overcome. There is a widely held perception that Ghanaian businesses are technically weak, financially unstructured, lack expertise and prone to cutting corners. Any new Ghanaian company will have this to contend with. As a result we go to great lengths not only to meet but to exceed our customers’ expectations by investing in experienced professionals, investing in training and creating a disciplined approach focused on delivering the highest possible standards in the most efficient way.

What is your philosophy to get the most out of your employees?

Our philosophy is “give 100%, all the time, every day, without fail”. We work as a team and every part of the team is vital. I tell a field pump attendant, he is just as important as I am. If I let him down, he will not progress. If he lets me down, same will happen.
We tell everybody in the organization this: You are working for a Ghanaian company and we need to set a good example for ourselves. We need to try a lot harder than anyone else. That is a challenge we have, so we try to create the spirit, teamwork, and passion. We look for people who are passionate about what we are trying to do. If we give it 100%, then we only need 5% luck. If we give it 90% we might need 50% luck. We do not want to depend on luck. Giving it our all is entirely within our means, we decide what time we come to work, how late we work, how much effort we apply to our work etc.

Your activities have an obvious risk both for your employees and the environment. How do you assure that you have safe and environmentally friendly business?

It is an issue that affects the whole industry in terms of what we do and how we manage things. For us as a company, what we can do is to make sure that we train our staff and invest in the highest health and safety standards possible. There are risks associated with handling and distribution of fuel, by being proactive and responsible, we can minimize the risks to acceptable standards.

For now we are running a fuel efficiency trial for one of our mines and if it is successful and we can prove savings, then they would actually use less fuel. It seems contradictory that an oil company that sells fuel is trying to do a trial that would help them reduce their fuel consumption, but for us we believe it is the responsible thing to do. It reinforces to our customers that we have got their long term interests at heart. It is the sort of thing we believe you have to do as a responsible business in West Africa.

We strongly believe that business in West Africa is about more than just making money. It is also about how much you give back, and how much you reinvest, not only with your people but in the community, as well. It goes against normal business thinking because the typical attitude is to see West Africa as a high-risk area and so make profits quickly and get out even quicker. That is the norm in these parts of the world. As responsible Africans, we believe sustainability is the way forward. It is how much we give back as compared to others that matters most.

We invest in the communities in which we operate, we’ve invested in road safety initiatives with the Ghana Police and we were the first oil marketing company in Ghana to sell low-sulphur diesel to the mines, helping them to reduce their carbon footprint.

What are your expansion plans in the region?

We want to be in seven West African countries in the next two to three years with an average target market share of 20% in each country.

You are an example of a Ghanaian businessman servicing one of the most important economic activities in your country and have been proven very successful by doing so. What would you say is the example you are sending to your fellow people?

Our message is simply that it can be done. It can be done if you do it the right way, if you play by the rules, if you try to motivate people, if you have passion for what you do. You can take on any task that you want to if you apply yourself to it.

It always seems impossible at the beginning, but if you give it a go, you can come out on the other side and you can prove that it is possible. I believe that gives hope and encouragement to others. In these parts of the world, that is what is really lacking. People do not believe it is possible to succeed unless you are corrupt or unless you cut corners.

There are examples that we take encouragement from. Kasapreko Company (KC) Ltd., UT Bank, and the Databank Group are local companies. They were born and bred in West Africa and they inspire us to press on. Hopefully, if we add our company's name to that list, we can also encourage more people to support local companies.

What would you say to our readers who are UK investors looking to bring their investments to Ghana?

Come to Ghana, but come with your eyes wide open. There are fantastic opportunities but there are also lots of challenges. For us, West Africa is a fantastic, exciting opportunity. It is one of the least developed areas of the world, with rich, undeveloped mineral wealth and resources. It is a fast-changing environment, so you need to be flexible, fluid, and prepared, but if you can face all these challenges, it is an amazing place.