CASE STUDY | Running an Engineering Business in West Africa
Published On: Wednesday, 5th Dec 2012
SMF Ernest Poku is currently working in Accra, Ghana as the Country General Manager and Director for an oil services company servicing the regional oil industry.
I manage 25 staff at our Ghana operations base and hold full profit and loss responsibility for the operations.
Most of our products are mechanical engineering focused supplies to the upstream oil and gas industry in the region. I regularly travel to Ivory Coast, Togo and Nigeria in addition to my work in Ghana. I travel to meet with customers and discuss their needs in terms of engineering services, often I need to demonstrate that these services can be effectively sourced in the region rather than ordered from the EU or USA. I often identify new opportunities and add new products and services to our portfolio.
The West African region is much more diverse than I ever imagined and bears some interesting similarities to the European Union. There is a burgeoning Economic community of West African states consisting of 15 states and a population of 300m people; the big difference is that this population is dominated by Nigeria with a population of over 160m people. Nigeria is currently the second largest economy in Africa and projected to become the largest economy within a decade; it is an economy dominated by the oil industry. Ghana by contrast is the second largest economy in ECOWAS with a population of 25m people and the highest growth rates in Africa with 14.4% growth in 2011. There is even a common currency between a number of the French speaking states in ECOWAS, the CFA which existed long before the Euro and there are discussions on a regional currency union ongoing.
Working in West Africa has its pleasures and challenges. One of the things I didn’t realise before I arrived here was how much I would have to travel by plane to visit different cities. The cities are densely populated and the countryside is sparsely populated and the road network is very poor; motorways between cities are rare.
Accra, the capital of Ghana is equidistant between Lagos, the capital of Nigeria and Abidjan, the capital of Ivory Coast. Both are only 45 minutes away by air and over nine hours by road. In Europe the journey to these cities which are only 300km apart would take around three hours. I find myself regularly flying four times a week as a result. The other surprising thing is that direct air links between these countries are a relatively new innovation, only a couple of years ago it would be quite normal to have to fly via London or Paris to travel the region safely.
Operating a company in Ghana requires a more vertically integrated approach than in Europe. We have had to develop our own water and electricity supply, construct buildings, develop good logistics infrastructures to secure the materials we need to run the facility and train our local staff in-house.
I have been surprised by the large numbers of university graduates and the relative lack of skilled technicians. We have found it challenging to recruit high quality skilled builders, masons, carpenters, machinists and mechanics. There is a lack of high quality vocational training in Ghana which is holding back the industrial development of the country. University graduates are important but only as part of an overall mix of skills in the population.
On the same theme, the Ghanaian government is very keen on encouraging local content to ensure that the oil companies operating in Ghana do not solely use expatriate labour in the oil and gas value chain. This landmark legislation aims to have 90% local participation in the oil industry within a decade. This is a very exciting initiative and as a dual British-Ghanaian national, I am interested to see how successful it is. This policy has been successful in encouraging local participation in the Nigerian oil field and Ghana hopes to emulate their success. If Ghana can use oil and gas to develop its local industrial capacity it may well meet its aim of becoming a middle income country within a decade.
If you’re wondering how you can help countries in West Africa develop, I would urge you to consider doing business in West Africa, currently most goods are exported as raw materials but there is low cost power and labour (hydro power dominates here), an English speaking and well educated workforce on the same time zone as Europe and generous corporate tax holidays. Every business established here makes a huge difference to the economy. Oh and by the way the temperature is between 25 and 35 degrees centigrade all year round!