Isabel dos Santos speaks at LBS Africa Business Summit 2017

good to come back together again for up for a keynotes a great welcome Isabelle Santos talk to us a bit about I guess her vision of what made in Africa means I'm again I'm not going to go into the full biography you've got us in front of you but I supposed to say you've run some big companies in different fields over the years and are currently putting your time into into the oil the national oil company but let's just take a step back and again I can't start with a big picture which is you know hey yeah when I talk to a lot of people about Africa they kind of keep saying things to me like you know you know has Africa become the resource curse and that hope rising Africa narrative of a few years ago looks great when resource crises arise and we're now seeing it the flipside of that today is what tell us about what what's happening from your perspective hi Jonathan thank you for having me and I want to thank also London Business School for inviting me here say hello to everybody you're right it's a it's a challenge I mean you know we're growing now slower than we were three four years ago commodity prices are down so what do we do what are what are our challenges but at the same time when you look at Africa I mean we are blessed continents because we're full of commodities they just naturally are there so can we then say that we're not going to explore them probably not then you mentioned we have been resource driven that's true but when we look at commodities we have two types of commodities we have the hard commodity so we'll think about the mining and you know different mineral resources but we also have the soft commodities which is all the agricultural based commodities and I think on those one especially on the soft one on the soft commodity there's a lot of work that we can do and the reason why I feel that very strongly is because we have a very good internal market so we have a growing population we have a growing middle class or this middle class is consuming and we need these products these agricultural products for our own consumption and currently many of country many of the countries are still importing a lot of you cultural goods the point was made earlier this morning about Nigeria and in fact it's the point that often gets made to me by Nigerians is that the fall in oil prices is actually a bit of a blessing rather than a curse because it's forcing Nigerians to look at themselves and say you know all of that stuff from toothpicks to wheelbarrow that we used to import we can start making for ourselves I mean is that a view that is going traction and the other big oil economy on the continent well thank you Chinese sayings as you know crisis there's an opportunity and you're right the oil sector has been so predominant in countries like Angola and Nigeria then in a way you kind of hacked a little bit of our attention we have been very focused on the old sexy on the oil services and has been a very dominant layer in our economy today that the old sector is a lot less influential there's more opportunities for private sector and more attention also given to private entrepreneurs to go in and diversify and to produce new things you mentioned toothpicks while I was reading a funny story this morning which was about tomatoes and tomato paste and how both in Angola and in Nigeria tomato paste is still imported well isn't that well I mean that we're importing tomato paste from California or from Italy consumers does not grow in Africa can we not make our own tomato paste so maybe now we'll have time to focus on those things and and realize that there are real opportunities and they make money too that's the other thing is people have to remember yes you can make money in other sectors that it's just not the oil sector so in fact let's stick with simplified because it is such a big issue and and I can see the Nigerians in the room are laughing because you know mr. Dongo she has in fact been putting a lot of money insert into tomato paste okay yeah I think he's been a bit under that key that I believe the years who can correct me from Nigeria I believe that the day he was ready so open his factory there was some tomato disease and unfortunately all the tomatoes and there hit the hive so you had to kind of start over absolutely they grow very fast the only thing about for about six weeks to grow it to eight weeks I mean Leonard his let's stay with you go back to Angola which is just really you know there are these opportunities whether it's the amount of hair delivered to whatever what you know can big businesses be doing what can you know but big oil companies be doing what can the government be doing to really stimulate growth like did the for me one of the biggest drivers to assimilate the internal market is undoubtedly getting our retail to be much more modern so modernizing retail modernizing distribution and why do I mean by that well think about Europe if you go back in the 80s or 70s when these massive hyper markets and supermarkets started growing what impacts did they have to the small farmers and producers well they were able to come to these producers and say look you're growing potatoes or lettuce or milk I will buy a certain part of your production and I'll guarantee that used to have a certain amount of income in a way that gave the producer an incentive to go and to produce because he knew that he could then sell his production off to a Harper market a supermarket that would be distributing that so this is a model that we've taken into Angola I've launched a product a project about six years ago it was it was a difficult project to build because let me not hide it it is it is very expensive to build modern infrastructure retail infrastructure in Africa it's costly you have to buy land you have to build buildings you have to put warehousing logistics so it's not an easy feat but it is possible and so we went ahead we we created a project it's called canned and oh it's a it's a large-scale retail supermarkets and one of our first concerns is okay so we've built this big hypermarket now how do we fill it in do we do as in the past import containers gonna get four ik licenses and import food and sell or do we think different and we said less things different so we went ahead and we spoke to about 300 local producers different kinds of growers people did grow from aubergines to cucumbers sweet potatoes two fishermen or people who raise cattle chicken and we gave them kind of a futures contract so they have a off taker for their projects now you'd be impressed how much the production just grew just over the last year because we've only been open for about a year their production is now doubled and we have a lot more interest so we start off with 300 people in this club which we call the producers club and now we're just you know doubling the numbers and having more and more people interested in this program so that is really interesting so you're providing them with the kind of guaranteed or sake you're giving them a market what else did you have to do to to help get them producing the kind of quality and scale that you need it I mean how much I'm happy you come to that question because I mean you know this is a question we said well I want to produce chickens but then I don't have corn and then I want to produce corn says I want to produce corn but I don't have the fertilizers so of course there's a whole issue of the supply chain and yes today in many African countries if you look at the supply chain which is going from land to plant to protein to the Shelf there are links that are still missing but at the same time that's an opportunity because if you don't have fertilizers maybe that's an opportunity for you to stop a fertilizer company or if there's no corn maybe that's an opportunity to feed them to be a corn grow that supplies the guy sells a chicken so even though we have missing links in the supply chain at the same time we should look at them as opportunities especially because there are some there are real moneymakers yeah so again just filling in on some of the conversations we had earlier and some of the issues people wrote a lot of this is about yeah if you've got a small business that may be doing you know the corn or fertilizer very difficult to get bank financing very difficult to get a bank to even look at it if you can then get them to look at it difficult to get affordable finance any user is you know how many of those barriers were out there when you know when you look to building these supply chains and hoping people well I really like the way you use the word small and yes they are small but they're not that small if we look at the tendency for example here in Europe when you had the crisis some of the southern European countries like Portugal Spain and Greece what happened to a lot of young graduates and people who are working in finance or in consultancy firms some of them got you know you're no longer had a job no longer had an opportunity to work in the city and they decided to go back and start for example organic farms right and they've been successful and then they making money out of that so what are we looking at these farming models that I'm talking about I'm not necessarily talking about your small farmer I'm talking about cash crops I'm talking about building a small business where you could end up having a hundred 200 employees or your turnover it could be a few million dollars a year so this is kind of a more of a more structured approach to to production and this has to be led by people who are educated so we need to have people who are educated who now realize that agriculture is a moneymaker it is an opportunity we can make money out of it a lot of what you've been talking about has being a local sourcing into into supermarkets again tying back to another theme that we discussed earlier was really about getting in traffic and trade going and we all know it's too low and in fact there is a there was a great little anecdote that the former president of Nigeria President Obasanjo once told me like trying to get trade going between Nigeria and Angola and his story goes that he lit a trade delegation a government delegation I went down it said what can we sell you now God and said we want Indomie noodles I don't know if you had and if you've got them yet other live there there but the same we made you a chair in middle and he said that's great he went back to Nigeria I can we make these noodles how do we get them to Angola everyone said well mr. president there aren't any ships that's regularly travel between you know between Leguizamo London he said what let me on the notion there no ships and all of message him well so if you got onto Calabar there a couple of pirates and smugglers who may take some noodles burn for you and he had to say well you know we can't sell we can't sell needles too but besides that point the question is you've looked at local how much are you looking at the region so when you when you look at local you definitely build local business and the tendency for that local business once they have a guaranteed al-shaikh is to to grow I mean if these are good entrepreneurs and and they're active and it's full of energy they should be grow their business and once they start growing their business I believe that they will not only be selling to us but they'll be try to sell to other people and export is the next step so as an example further for example we have a supplier of pineapples who is now currently exporting the pineapples we have a supplier of bananas who started by being our supplier and is currently doing a you know 20 containers every month of bananas over to Europe so in a way it's a comfort when you have a local off taker they're already guarantees or your fixed costs then that allows you and you can go to a bank and say look I have a guaranteed contract I have a local off taker the bank can also help you grow your business and as your business grows then you can look at the next step which is who else can I sell to and of course exporting is the natural as a natural step should you export to your neighboring countries absolutely I mean for example where buy meat from Botswana and it's coming by truck we are buying products from South Africa and it's coming by truck so yes it's possible fortunately the infrastructure in Africa has improved greatly if you look over the last 10 years many African governments have improved their infrastructure and have committed great deal of money on updating the port and an improving the road and rail network correct I'm going to go to the floor in just a minute so get your questions ready and if the people with the roving mics can get themselves ready to go back and ask you one one or two more questions before we do that which is really wearing your asses as chairperson of saan and goldenaxe oil company and you know I guess when oil prices are high you know a lot of money's being made it is not difficult to run a big oil company and I guess get them you know as the tide goes out as they say you see who's left swimming naked and I just kind of actually had a sense of what are the kind of changes that you having to now effect to really drive those efficiencies that they have three four years ago weren't that important well Jonathan I have to say that I was probably unlucky and I never got to run your company when he was full of cash and and doing extremely well so I you know I was brought in to the sonic all about nine months ago me and a new board we were appointed back in July 2016 and we came in as a new board I came in because I come from a business background I've had extensive experience in different domains from retail to industry to banking to media to telecom and I've been managing companies for a long time starting them from from small building them up really going through every single stage of what it takes for companies to be successful I've always said that I failed quite a few companies so it's normal to fail he goes it goes with the territory and when Sun of all became a challenge for the government the government was very brave and they did something fantastic which is to say okay we have this great asset great corporation it has always been a provider of wealth to us but how can we think different now that the oil prices are down and now that we're facing this downturn how can we make it more efficient how can we make it more modern and so they called in a new board that mainly was came from IOC s and like myself from the private sector to kind of restructure and rethink the corporation so our first challenge was really a cultural challenge because when you want to change a company the first thing you have to do is to understand how do people in that company view the company what do they feel about it and how do they think they can change the company so our first challenge was really the culture change and the culture change was that we were initially a public company there was a service provider we were a large employer so issues like performance merit profits they were not at the center of our business that was not where our company is about so the first step was really to get the organization to focus on how do we deliver more profit how can we become more transparent in our communication with our stakeholders that extremely important and then how can we then become better performance and then creating obviously a merits structure inside the company so only those with true capabilities to be placed at the highest level so that was also a big big change from the past and hopefully all of that is will translate into positive results and if one looks at the kind of transitions that other big oil companies have had a go through state-owned oil company something like Saudi Aramco that the prime example I mean in some cases that they've been saying let's bring in some private investments and and and the like to try and bring in that discipline of the market is that at all on your agenda at the moment or yeah well when you look at analyses like around putana law or you know the National Oil Company of Malaysia or you know when you look at winning Petronas when you look at several companies what you sees as these companies tended to do very well they had a very diversified portfolio so they had excess amounts of cash and they went ahead and they committed to a number of investments a lot of those investments were not necessarily in their core business they were not necessarily oil and gas so they diversified and they invested from real estate to logistics to transport to power production agriculture and now that these companies have less cash and that they really have to look at their bottom line well obviously refocusing back on what they should do and do well oil and gas becomes P so what we're doing now for example at our company is really refocusing back on the core business and oil and gas looking seriously at oil and gas opportunities and being a lot more criterias when evaluating those opportunities in the past there was like kind of an oil frenzy you know when a world $100 it didn't matter all you wanted to do is produce oil today all the oil investors are a lot smarter they say we don't want to produce at any cost we want to produce at the right cost so we need to have the right development project when we're going to develop a field we have to be careful that the amount of investment we commit to the field is a life investment we should not over invest and once we need to run the tails how can we run it very efficiently how can we have the correct OPEX cost so that then we have the right price for barrel and what's great I think the whole industry is kind of come on board on that and we all real aligning on this one IIIi could keep going Graham and I'm gonna have to discipline myself so it's your turn all right good afternoon my name again machine and from Mackin group and I'm an LPS alone whether for good or bad it seems that the era of hydrocarbons oil and gas is coming to an end and I'd like to know if whether it's Angola or Nigeria or component if we haven't missed out on a big opportunity now that this era is fading away in essence what I'm trying to ask is where are the Mobile's and the caverns and the shells that should have come out of Africa in the time that we have this boom all right Petronas or Petrobras which are state-owned companies we don't seem to have any of those and then the follow-up question will be is that not and on the lining indication of a bigger problem so that by the time we move away from the hydrocarbons are moving to something else will we still be unable as a continent to produce giants that competes with other countries and whatever these industries are correct thank you there was another one here in the same row thank you good morning my name is Abdul Malik Holloway I come from Morocco I'm the CEO of The Huffington Post North Africa let's give in a quick have a very simple question and the one sentence comment what are you doing at Sun on goal in order to build an ecosystem of suppliers and small companies that would work with you in order to create more jobs and create a dynamic of companies that might be able to subtract development and industrialization of Angola and the comment is about the tomato in Morocco with the largest supplier of tomato X largest exporter tomato in in in Africa but the tomato is made 80 percent of it is made out of water and in Morocco we subsidize water so basically we printing money and exporting it to Europe so sometimes you know growing the food chain it's very good on paper and on PowerPoint and I can tell you this because I'm a former strategy consultant but in some ways in some ways what are the real comparative advantages and sometimes it's better to focus on extractive industries and bring out some stuff that would create more added value and not just look at the short-term value that we can get from the tomato industry thank you great thank you two questions yes are there and over there so he's okay let's got there first man affairs hello my name is Marcelo and I have a quick question more to build on top of the diversification comment I spent the past couple of years working and supporting most tech and innovation entrepreneurs on the continent and I've worked in Angola quite a bit as well and I was just curious on your view of that kind of emerging tech and innovation ecosystem that's coming in Angola and how it can impact you know big companies like yours and how you can work with smaller entrepreneurs in big companies but also how these people can start transforming a country that's you know fairly focused on one specific type of industry thank you Croatian and question number four like it was a woman over here with a long hair I said before coming here I think I've heard your name and is always associated with all sorts of rumors and Prejudice given your unique background and today I must say I've seen you hearing you speak and all those rumors are are gone because yes thank you sir Lee so I'm curious it's more about your personal growth because I don't think we chose our family and guess what there are certain successful family politicians like Singapore where a family doesn't doesn't necessary mean bad governance and everything Sun care just as sorry I questioned injury messages you as a female leader this is owner and also potential leader for the country so how do you break all those barriers and get to get away from those rumors and became as we you are right thank you very much to Jonas off the top of the bottom rope I think we started a tub yeah so I think that's a great question you asked me about the IOC s and how come we don't have African own diocese well I'll tell you what I share your vision I think we should have some and the good news I think we will have some so when you look at the oil sector the oil sector is very it's been around for a long time you know it's probably been around for over 150 200 years and you look at a company like our Sun and all we've only been here for four decades with 41 years old I'm not sure how old is the National Oil Company of Nigeria maybe somebody can help how old is uh sighs fifty years old yeah so when you compare you know we have NLCS there are about five decades old compared to the big American oil companies there maybe a hundred years old so it's a question of time one for the NLCS and for the IOC s is similar but it's also question of drive setting up an IOC difficult so setting up an oil operators difficult it's also tremendously expensive so we need capital and the great news what I heard today is that the banking in Africa is growing insurance is growing pension funds are growing so all of these sources are going to be African sources of funding and hopefully will be chaired and led by African people and I believe that the IOC s for in Africa will will happen so hopefully you can start one up and we'll see you there and then the other question is whether I'm doing quite quite sure whether we make mixed a big opportunity and whether we can still have African giant I think absolutely so to go to Brazil and it is an example well everybody knows havaianas and those little flip-flops yeah and that's that's a giant and when you look at Brazil and you I don't know how many people have been to Brazil but look at the infrastructure in Brazil is it that much better than in Namibia or in Ghana or in Nigeria probably not probably around the same how were they able to produce a giant like a Vienna or for example if we look at their chicken company they have one of the world's largest chicken companies how would able to produce that I think they can because they had critical mass and they had to drive and they had division well Nigeria has great opportunities it definitely has a critical mass in terms of demographics you have a lot of consumers which is great you have the drive you have educated people there's more and more funding coming too so yes I think countries the countries like Nigeria Ghana Angola Kenya I mean to name a few but I really think that all across Africa in all African countries you could you could see the surge of of giants coming up I think diversification and innovation with African chanclas other tomatoes and that is what also well know I have to agree I mean I wouldn't I would I would definitely not advise to diversify in something that you're not competitive I mean last time I went to a conference this young men said yeah my friend he tried to produce milk in some place or another and it really worked for him well the first rule of any business I mean check your fundamentals are you going to be competitive if not just you just move your business somewhere else or do another business so that's the first rule and of course if your input is very expensive so if energy cost is very high or if water cost is very high then maybe you need to look at what can you truly be competitive now also you need to take sometimes a mid-term approach because sometimes for example things like energy may cost a little high today but they could be investments that are being done like building new power new hydropower stations and in three four years time your energy cost is going to be a lot lower and then you have to judge can I survive those three or four years by being slightly less competitive but I know that in six years time because my energy source is going to be such low cost I'm going to you know make all my money back and to ask you about what we were doing in terms of diversification and industries now Angola has a very positive legal framework in terms of diversification so we have a heart we have a high requirement to incorporate locally produced and locally manufactured goods into an oil and service industry we recommend around a 50% incorporation which is a very very high incorporation that has allowed for several industries to grow so we produce in Bella codes which is something quite complex in India oil sector we produce all kinds of different things for for the industry we also are able to assemble platforms and FPSOs locally and we can also manage maintain FPSOs which again it's uh you know we have some quite sophisticated shipyard and yes that has provided a lot of jobs now the challenge is as you mentioned once the oil price and the old sector goes down what can you do with these industries can these industry service other industries and that's what's important so not only should we create a cluster that can service your oil and gas but when we are creating these industrial clusters can we make sure that they also have other clients that are not oil and gas so that we diversify their their risk in terms of a downturn and I guess the last question is uh how's it felt being a woman Markus an African woman in a in a business community that's probably metal dominated and absolute racist yeah well me just there was somebody who asked me about IT and I have to say if you gave me a choice to start a company today I would start an IT company I was benchmarking Amazon and you think about Amazon Amazon is it an IT company or is it a retailer it's a digital retailer which is unbelievable so to do when you look at iti TS absolutely in everything so you can start a nice and you become a retail company so if I had to do a business and I know lots of you like I see in text so I would definitely bet on an icy solution I'm not sure who had that question was coming from somewhere here and in terms of prejudice yes it is it is a challenge yeah women very hard for women out there I don't see enough women at the top I think it's very sad that often I would enter board meetings and I'll be the only woman in the board meeting and sometimes I find us rather unacceptable but can we do more about it yes we can I think has to be somewhat policy led I think we have to look at our corporations and organizations and to see that we need we need to change we need to change practices we need we need to have human resource policies at the level of like a chart where we really say you have to evaluate women fairly you cannot discriminate women because she's a mother or because she's expecting a baby and she's not going to be working for six months all of a sudden she's no longer a valuable asset so we need to create that that through policy it's not enough just to tell people you actually have to implement serious policies about that so great we're about to get between people in their lunch but there is a question there um hi my name is Cara I'm from Kenya um I just have a quick question on sovereign wealth ones especially with respect to Angola I believe you go one of the largest wealth funds in in Africa maybe interesting to just hear your view on some of the elements you touched on with Sean and go how do you change governance in a lot of the African sovereign wealth funds where you get a lot of headlines when they're started or about to be started and then you hear nothing so how do you change the governance and the transparency of these wealth funds and how do you change the impact these wealth funds have in terms of investing in in people in normal business over the long term correct and got us a quick question here and if you could keep it quick and I'm going to ask you to say thank you very much my name is Ali Maru between good and measure the LSD a few months ago a few weeks ago so my question isn't on the investment a lot in the oil and gas space as you know many African countries are oil dependent I'm due to the drop in price of oil has been a positive investment in the oil and gas industry so how can i Earl and Gus country from countries from Africa are dependent on oil and gas address this potential challenge waiting to happen thank you okay so just to quickly answer the last question so sovereign wealth funds and Business Corporations like Senegal we behave slightly differently because we have a different mission our mission as a corporate company as on goal is really to run the company efficiently and deliver profit to our shareholder which is the state and ultimately we are a business so our approach has to be a business approach we're governed by the governance that business is governance in terms of sovereign wealth funds they tend to take a longer approach and some of their investments and some of their positioning are not necessarily just driven by profit some of them are driven also by the social benefits that will be created by that investment in a certain community so in a way we kind of have some different different challenges and to quickly just answer the the downturn in oil it will be it will be a challenge we are probably facing another two three years of a price and being quite soft so it will be you will it will not be easy so it's an opportunity I think that we have in some cases resilience I think the most African people are quite resilient we we all have a lot of history and you know we all come from these backgrounds where we have faced so many challenges in the past in our different countries whether political challenges or war issues or economic issues so I think we are we're quite strong people and in two three years we'll be in a definitely in a much better place here today as well I've got some slightly bad news for you which is that all of the other speakers I've as my last questions them I've given them a hypothetical 1 million dollars and said where would you invest it since you've already told us you're going to be and if I teach you units ask on the nominal existing billion dollars if you would please join me in thanking [Applause]

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Length: 33min 48sec (2028 seconds)

Published: Wed May 03 2017