Nigerian company, GZ Industries, a top aluminium can manufacturer in West Africa,announced its plans to build a 1 billion rand plant in South Africa. The company will partner with South African company, Golden Era Group, who deals in packaging. The partnership between the two companies is aimed at increasing expansion in the continent.
The factory, which will be located in Johannesburg, will begin operations in the second quarter of 2016, and will have an annual production capacity of 1.2 billion aluminium beverage cans. This capacity is supposed to increase to about 3.5 per year by the time the company is fully completed and has accessed new markets in the southern part of Africa, and sufficiently expanded.
Canmaking in Africa is witnessing an increase in demand following a consumer switch from subsistence existences to packaged goods, and canmakers are using it to their advantage by investing in the industry. Last year, GZI expanded to East Africa (Nairobi, Kenya), after the completion of its third plant in Aba, Nigeria. Production in the factory started in the first quarter of 2015. GZI was incorporated in Nigeria in 2006, and is owned by four private investor groups.
Investment in locally owned companies within Africa has significantly contributed to the continental expansion of these companies in the long run. Expansion is usually part of the vision of most companies, either as a short or long term plan. In particular, the Nigerian market is a favourable target to investors and businesses that wish to expand, due to the opportunities that abound in the country.
Nigeria is usually on the ‘receiving end’ in business, which is beneficial to the economy, but makes it difficult for local companies to reach their full potential given its inherent capabilities. These restraints are based on challenges such as corruption and infrastructure. Within the continent, South Africa is home to numerous companies that have expanded into Nigeria, as well as acounts for top foreign direct investment (FDI) in Nigeria. Shoprite, DSTV, Game, MTN, among many others are examples of South African businesses that are currently in the country.
According to Mark Tunmer, the group Chief Executive of Imara, an asset management company, MTN would not have been the company it is today if it had not expanded into Nigeria. Thus, in continental – and even global – business, Nigeria is crucial to the success of most companies.
However, with recent pan-African achievements such as that of GZI, Nigeria may be positioning itself to maximise its abundant resources, better develop its economy, and with time make an active play at the markets in other countries.