For a man who has been in business for close to four decades, building a conglomerate that now boasts a presence in four regional countries, you would think Bidco Africa Vimal Shah has seen it all.
But the current coronavirus pandemic has changed the landscape for companies in a way that even the business guru concedes is unprecedented.
“These are unusual times that no one saw coming. We are being put to the test on how prepared we really are as individuals, companies and countries,” says Mr Shah during a recent interview with Financial Standard.
He, however, says companies must take it in their stride if they are to weather the corona storm, drawing from lessons learned from past crises such as the 2007/8 post-election violence in Kenya that coincided with the global financial crisis.
These lessons seem to have served the former chairman of the Kenya Association of Manufacturers (KAM) and the Kenya Private Sector Alliance (Kepsa) well, steering the business that started in 1985 from the family living room to become the largest manufacturer of edible oils in East and Central Africa.
The company also produces detergents, baking powder personal care products, food and drinks.
But what has kept him going, having served as the firm’s chief executive for many years during which time the company has expanded into Tanzania, Uganda and Madagascar?
“Passion. This is home. I am a planter, not a harvester. Here at Bidco, we want to plough back to the economy. We are not here to harvest only and so we invest in the people without getting tired,” says Shah.
He says only the resilient companies will survive the coronavirus pandemic by innovatively re-engineering their operations to fit in with the new way of doing business.
For some companies, this has involved instituting mass lay-offs and hefty pay cuts but Bidco has yet to effect such drastic measures.
He says the company has taken the route of reorganising how it deploys its workforce, including having them work in shifts to soften the blow on family livelihoods.
“Bidco has reorganised the whole workforce to meet the measures issued by the government with regards to social distancing to curb further spread (of the disease). There has been no job losses, no pay cuts and no unpaid leaves to staff,” says Shah.
The company is also among corporate entities at the forefront in helping the less fortunate in society to deal with the effects of the pandemic.
“We are spreading the happy, healthy living ethos,” says the boss.
From the outset, Bidco has been using its salespersons around the country to identify people who most need help to avoid misappropriation funds.
The company has donated goods such as food, soaps, detergents, edible oils, beverages, sanitisers and handwashing stations.
Shah says such private sector-led initiatives will be key in turning the tide against Covid-19.
“The private sector proactively got its act together and came together as a think-tank and became the backbone of a coordinated response and most of them came on board pro-bono without looking for any returns, and this is commendable and I salute them all,” he says.
“The board of the Covid-19 Fund is made of members predominantly from the private sector, and the majority of the contributions to the emergency fund have come from the private sector players.”
A study by the United States International University-Africa showed that 71 per cent of people who have received aid in the informal sector got it from private sector entities, with only two per cent of the aid coming from the national government.
But amid the optimism and stories of philanthropy, manufacturers such as Bidco are also feeling the effects of the pandemic.
“Discretionary spending has taken a huge dip as people have all postponed all nonessential products to a later date. However, for those that offer essential products and services like Bidco Africa, we have had to put proper measures to ensure constant supplies of food and hygiene materials,” says Shah.
It’s a catch-22 situation as everything is interlinked in the manufacturing value chain.
“As manufacturers, we have to look at the availability of raw materials, the supply chain, the logistics to the market, the channels that need products for the consumers, and so on. If any of these are broken, the effects are felt financially, physically and emotionally by both businesses and consumers,” he says.
New value chains
The disruption in operations has seen many local industries venture into new activities as they fill the supply chain gaps owing to the limitation of importation.
Shah reckons that the world will have to adapt to the new normal.
“Our first goal is to consolidate our businesses to do whatever we can to ensure that as a group, we align and adjust to the new normal faster and with a lesser impact so that we can get to building our nation back to greatness,” he says.
“We will need to rethink all our new products and new value chains. A lot more of thrust on value addition and local resource manufacturing will be our main focus in order to reduce our dependence on imports.”
Kitui County Textile Centre (Kicotec) and Eldoret-based Rivatex are some of the local manufacturers that are now manufacturing face masks, which are in high demand after the government made it mandatory for everyone to put one on while in public places or public transport.
Kicotec, which is based in Syongila, has been turned into a 24-hour production house where 30,000 pieces of masks are being produced daily.
Rivatex is also running mass production of face masks. These companies have had to stop production of everything else to concentrate on the protective covering.
Tuskys Supermarket and other retailers have also found a silver lining in the corona era.
While traffic to their outlets has been dwindling, demand for essentials, such as foodstuff, soap and sanitisers, has risen. They have also increased their home delivery services.
Shah, however, reckons most small and medium enterprises (SMEs) might come out of this pandemic weaker or fade out altogether.
Companies that survive, he says, will have to seriously rethink their relevance and fight for their space.
He says the recent tax relief measures by the government while commendable were not enough to help such businesses weather the corona storm.
“In my view, the government should have, instead of reduced VAT to 14 per cent, levied the usual 16 per cent and spared two per cent to help in the provision of medical facilities and payment of medics. Manufacturers will just pass on the VAT to consumers, so it won’t benefit the former,” says Shah.