(Bloomberg) -- Singapore’s Tolaram Group sees the potential to increase sales significantly from its Nigerian operations as a result of the newly ratified African free-trade agreement.
The company operates 18 manufacturing plants in the West African nation, making products from noodles to household bleach. It plans to export to countries including Kenya and Ethiopia as the African Continental Free Trade Agreement takes effect, said Pawan Sharma, who oversees Tolaram’s West African operations.
What Trade War? Africa Sidesteps Tariffs, Starts Free-Trade Pact
The African Continental Free Trade Area came into force on paper and will be the world’s largest free-trade zone once it’s fully implemented. It aims to bring all members of the African Union into a single market of about 1.3 billion people by removing trade barriers including tariffs.
“We have been talking about it for some time now, but this time I think African leaders are serious about it,” said Sharma, who is also chief executive officer of Tolaram’s consumer business.
The company currently exports to West Africa countries including Ivory Coast, Senegal and Burkina Faso from Nigeria. The unit generates revenue of about 200 billion naira to 300 billion naira ($550 million to $830 million).
Tolaram expects sales from the country could rise by about 50% over the first five to 10 years of the implementation of the free-trade deal, Sharma said. By comparison, the biggest food company on the Nigerian Stock Exchange, Nestle Nigeria Plc, reported 2018 revenue of 266 billion naira.
Read more about the Tolaram Group and its global expansion
In Nigeria, the group plans to expand food output and introduce new products to boost sales, Sharma said in an interview in Lagos.
Tolaram established a new beverage unit last month in Lagos and intends to open another food company in 2020 with capacity for 20,000 tons a year. It’s looking at introducing products that aren’t available yet in Nigeria, he said.
While Tolaram is considering building new plants in Ghana and Ethiopia, those plans may be abandoned if free trade becomes a reality across the continent, Sharma said.
In that scenario, “you don’t have to put manufacturing plants everywhere,” he said. “You can focus at one area, have economies of scale and cut costs.”
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