Procter & Gamble To Invest $170m In South Africa

VENTURES AFRICA –  Leading Global consumer product manufacturer, Procter & Gamble (P&G) has revealed plans to invest about R1.6billion ($170 million) to build a multi-category manufacturing plant in South Africa to serve its consumers in Eastern and Southern Africa.

The plant which is expected to create over 500 jobs will manufacture products like detergents and feminine hygiene goods for local and export markets. Construction of the new plant is expected to start in 2014 while production will  commence in 2016 or early 2017.

In 2009, P&G built manufacturing plant for production of Pampers nappies in Kempton Park, Johannesburg. The company already has two plants in Ibadan, Nigeria, and is building one in Lagos.

According to vice president of Procter & Gamble’s global business units, Dimitri Panayotopoulos, the group is considering tapping into the developing markets in Africa by expanding to other parts of the continent.

“We are in Africa because of the size,” Panayotopoulos said.

“It’s about a billion people, that’s the size of China and India for example, just under, and the population is growing, the economies are getting more and more stable, so huge opportunities here.”

“We have businesses in Nigeria, in Kenya, Uganda, Tanzania — we are going to go to Angola, Ethiopia. We want to be in every country,” Panayotopoulos said.

He added that: “In the last 10 years we’ve gone from about 20 percent of our business being in emerging markets to about 40 percent. Obviously there is a huge upside; this is where the babies are being born, where more and more consumers are getting ready for our products, so it’s really taken off in the last few years, last 10 years for us.”

Africa is growing to be a major investment hub for international companies because of its huge population base and its growing middle class cum accelerating urbanisation which suggest a strong consumer boom and a steadier economic environment. The Economist Intelligence Unit predicts that by 2030 sub-Saharan Africa ‘s top 18 cities could have a combined spending power of USD 1.3trillion with growth slightly to pick up to 4.4 percent this year and to almost 5 percent next year.

“Several of the oil-exporting countries in the region, including Angola, Cameroon, Chad, Equatorial Guinea and Ghana, will benefit from rising hydrocarbons output. New mining production in several countries will also be a positive factor for growth,” it said.

Meanwhile, vice-president of Procter & Gamble’s Southern and East African operations, Standa Vecera, said, “Countries like Africa, China, India and Brazil are the markets of the future because that’s where the population is, that’s where the growth rates are. Outside South Africa, the way retail is conducted is through very small, high-frequency stores, where people shop on a daily basis — there is big opportunity in Africa.”

Asserting his belief on the opportunities presented in South Africa, Vecera said “We’re seeing big shopping centres being built and there is still scope to develop store formats that cater to lower-income consumers close to the townships. Some retailers in South Africa are addressing that and developing models that they can expand outside the country to the rest of the continent.”

“We are seeing consumption in our categories growing. It’s because of economic growth and people having more money, but it’s also about making sure that they have access to products they want,” Vecera said.

Vecera however stated that trade barriers between African countries remained one of the biggest challenges in creating a sustainable brand on the continent.