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Why BASF has chosen SME partners in Kenya business

Michael Gotsche
BASF vice-president and Africa Market area Africa Michael Gotsche during the interview. PHOTO | SALATON NJAU 

The world’s largest chemicals products maker, BASF, has intensified its activities in Nairobi, eyeing a slice of the market across East Africa. BASF vice-president and Africa market area head, Michael Gotsche, spoke to the Business Daily.

WHO IS BASF AND WHAT ARE SOME OF ITS PRODUCTS IN THE KENYAN MARKET?

We are business-to-business company engaged in manufacturing chemicals for use in making a myriad of products across the world. We supply chemicals to last-mile companies that make products used in various aspects of our lives.

In Kenya, we are currently implementing a cold storage pilot project in partnership with the Nyandarua county government that will be used in storing potatoes. Plans are underway to set up a potato products processing factory in the second phase.

WHY DID YOU CHOOSE KENYA AND HOW HAS YOUR SOJOURN SINCE 2011 BEEN?

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Initially we had BASF Africa in South Africa but realised we needed a more central location that grants us new opportunities across all the sectors we operate in — agriculture, industrial, and medical, among other areas.

WHAT IS YOUR MODUS OPERANDI?

We work with partners in various industries. We provide solutions via our chemicals that are raw materials for a variety of end products. Right now, we are training small and medium enterprises in the skin and hair products space in Kenya. We offer them technical expertise and formulas for various products that they eventually make using chemicals we supply. This provides Kenya with new impetus for expanding its manufacturing base.

YOU DON’T MAKE END-PRODUCTS, DO YOU?

We seek partners in all our markets we get into as this enhances technology transfer to local citizenry who also benefit from sales of various products they make under our supervision. Kenya must embrace such partnerships between global conglomerates and local SMEs as this fosters job creation as well as enhances local production of globally known brands.

DO YOU WORK IN ANY OTHER SPACE?

Post-harvest losses is a major problem in Kenya and that is something we look forward to addressing on a big way. We are talking with Kenya Investment Authority seeking a partner to manufacture polyurethane insulation panels that can be used for cold storage facilities.

In Nyandarua, we are having one built that will comprise of a cold chain facility, a processing unit complete with its own solar generation unit. We look into sustainability as core to our corporate strategy goals. Profits go hand-in-hand with environmental protection.

PLEASE EXPOUND…

Our raw materials as well as end products do not harm the environment during their use or after life as they are compostable products. We have mooted a new eco-friendly material for making containers which when disposed of rot away. We are pursuing new technologies that will ensure all our industrial processes back home and in partner industries are CO2-free.

ANY NEW INVESTMENTS IN KENYA SOON?

We are training manpower via partnerships with SMEs that make our end products. If the market demand for various products continues growing, then we shall also expand our presence with factories and research labs.

WHY THIS GROWING INTEREST IN KENYA, AND THE REGION?

We are witnessing new partnerships that are opening up markets and we deemed it important to enhance our presence so as to understand the market. The Africa Free Trade Area reality is now with us and we resolved to train our partners to boost our products’ presence.

DOES YOUR BUSINESS BENEFIT KENYANS IN ANY OTHER WAY?

Yes, we are engaging local interns across our operations to spur knowledge transfer at all levels. This is aimed at helping young Kenyan graduates understand the ‘world of work’ and prepare them for the workplace.

WHAT IS ATTRACTING YOU TO SKIN AND HAIR PRODUCTS?

This is big business and Africa presents us with enormous opportunities in this field. We are here to respond to product demand arising from rising population, the middle class, social media influences and global make-up trends.

We are listening and our partner SMEs will be engaged in collecting feedback for needs-based product development.Africa’s hair and skin types can only be understood via research that will see new products developed.

HOW CAN KENYA DEVELOP ITS INDUSTRIES?

The government must outlaw importation of finished products by taxing them heavily but promote importation of raw materials for end-product development in local industries. We train local company staff to make products and provide materials for them.

SO WHAT HAPPENS TO LOCAL COMPANIES WITHOUT DEEP POCKETS?

They will benefit from Just-in-Time (JiT) deliveries where they access raw materials from our warehouses. This ensures they meet market needs while managing their cash flows. Companies must adopt JiT as an operational practice to stem costs arising from the need to hold raw materials in their stores awaiting processing.

WHO ELSE ARE YOU WORKING WITH IN KENYA?

We are supplying nutritional additives to a local company set to start making food supplements later in the year. Their investment is in a blending plant while we shall train their staff as well as provide formulas for the various products.

HAS THE KENYAN GOVERNMENT BEEN RESPONSIVE TO THIS STRATEGY?

Yes, we met President Uhuru Kenyatta at State House, Nairobi and what remains is to meet the technocrats who shall actualise our deal that will ignite new partnerships with SMEs in the construction, agricultural, health and in the automotive space among others. We are a chemistry solutions company.

HAS YOUR FIRM EXPERIENCED CHALLENGES DOING BUSINESS IN KENYA?

Yes, say in our planned investment in a compostable plastic panels business where the HS Code is the same as that for imported finished products. This ensures cheaper finished products come in as opposed to raw materials that are usually channelled to local factories. We are already using this product in a pilot fish cold storage facility in Mfangano that has helped fishermen reduce losses associated with poor storage. This will soon be replicated in other areas where post-harvest losses are immense.

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