BusinessDay

DP World expands logistic foothold across Africa, prioritising Nigeria

DP World, a Dubai-based logistics firm that has bought two companies over the last three months is looking to benefit from Nigeria’s fast-moving consumer sector in its aim to gain more footholds across Africa.

In March 2022, DP World announced a 90 percent controlling stake in Imperial logistics, a South-African logistics company, and in July, it further acquired a controlling stake in Africa’s FMCG Distribution Ltd., a Chanrai Summit Group subsidiary.

The company in a statement, said its acquisition of both companies, is in line with its plan to expand its footprints across the African continent leveraging a potential-filled industry as it eyes a larger market with increased trade activities, and more distribution channels such as the FMCG industry and other opportunities.

“This transaction is aligned with our ambition of becoming the leading market access and logistics partner in Africa by connecting trade flows into and out of Africa, which has a significant presence in Africa, a market where trade is expected to grow at more than twice GDP driven by population growth, accelerated urbanisation and rising middle classes,” Ahmed Bin Sulayem, DP world’s group chairman and CEO, said.

According to Allied Market Research, the global FMCG logistics market was valued at $1,056.58 billion in 2019 and is projected to reach $1,400.80 billion by 2027, registering a CAGR of 4.6 percent from 2020 to 2027.

According to Frank Ojadi, a lecturer at the Lagos Business School, the number of port owners in the world has led to fierce competition, driving port owners to compete for as much of the worldwide market as they can.

“DP World is expanding its frontier to obtain access to other countries and continents because of competition pressure, and that is why they got interested in establishing a presence in African countries,” Ojadi said.

The Chanrai Summit group trades and conducts business under several names across the spectrum of its economic activities. With subsidiaries like the Africa FMCG, Afriventure, a supply chain and distribution business with clients like P&G, that is present in significant African markets and distributes goods like Lucozade boost, Ribena, Kerrygold, Orbit, Snickers, M&M, Mcvities, among others.

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In January 2021, Procter & Gamble (P&G) awarded a significant contract to Imperial’s joint venture with Chanrai Summit Group for end-to-end distribution and logistics of P&G’s consumer goods in Nigeria.

In April 2022, Africa FMCG, a branch of Chanrai Summit Group, its flagship company, Fareast Mercantile Company, purchased the energy drinks Lucozade and Ribena for $ 14million from Suntory Beverage & Food Limited (SBF). The closing of the share transfer and loan transfer arrangements said to have cost $7 million each, are expected to close in the second quarter of 2022, in which DP World now has a controlling stake.

Leveraging on its business legacy built through the Chanrai Group of Companies for over 130 years, AFMCG has developed longstanding relationships with multinational FMCG companies, established itself as a leading player in the Nigerian consumer market, and demonstrated good corporate citizenship through its broad-based social impact initiatives.

Mohammed Akoojee, chief operating officer of DP World Logistics and Group CEO at Imperial, said the company is gaining foothold in Nigeria through AFMCG and this is due to the large population and the opportunity to sell pan-African solutions to its clients.

“Being one of the largest economies on the African continent, with attractive demographic and macroeconomic fundamentals, Nigeria boasts of a significant consumer market and AFMCG presents an ideal opportunity with the necessary scale for us to leverage to sell truly pan-African solutions to our principals and clients,” Akoojee said.

Ojadi added that DP World’s development through the acquisition of a majority stake is intended to build capability reaching far into Nigeria’s hinterland and other areas of the world in order to have a stronghold to compete against others.

“So beyond just offloading vessels and containers, a good number of them need to find a growth path, an expansion convention, and that is where AFMCG comes to play because they have a very strong distribution and logistics capability, and by acquiring them, DP World can expand into the hinterlands of the port, distribute their products and have a longer reach in Nigeria,” Ojadi stated.

Currently, DP World operates nine ports and terminals across 8 countries in Africa – Algeria, Angola, Egypt, Mozambique, Rwanda, Senegal, Somaliland, and South Africa.

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