Here to Stay

Julius Berger arrived in Nigeria about 50 years ago. What is left of your German heritage and how localized is the company now?

Today Julius Berger is an indigenous Nigerian company. We are headquartered in Abuja with additional permanent locations in Lagos and Uyo, and we are listed on the Nigerian Stock Exchange. Over 96% of our workforce is Nigerian, and we are dedicated to our investments in Nigerian content. Throughout our 50 years of operating in Nigeria, we have played an important role in the country’s development, starting with our first construction project in the country, which was the Eko Bridge in 1965. Julius Berger was founded in Germany more than 100 years ago, and the Eko Bridge was a gift from the German government to Nigeria to celebrate the fifth anniversary of the country’s independence. The project managers saw considerable potential in Nigeria, as a result of which the company Julius Berger Nigeria Limited was registered in 1970. Over the years, there was a gradual process in the 1970s and 1980s of increasing Nigerian participation in the ownership structure and shareholding. At the end of the 1980s, the company went public and was listed on the Nigerian Stock Exchange. Currently, Bilfinger Berger, a German construction company, owns approximately one-third of the shares; the other two-thirds are under Nigerian ownership, including individuals, pension funds, states, and large and small investors. We retain our German roots, but the bulk of the company is Nigerian owned. We think it is a very good thing because the current legislation process and agenda of the government is increasingly in support of indigenous companies. We aim for a symbiosis of both strengths, the first being our status as a non-traditional indigenous entity, and secondly by innovatively leveraging the German attributes of reliability and efficiency. We employ this formula here to demonstrate that it is possible to achieve much in Nigeria. I think that a company like ours can act as a practical showcase, or as a case study of Nigeria registering progress in capacity building.

What are some of the company’s main strengths that it seeks to leverage?

Julius Berger’s commitment to Nigeria is one of the greatest strengths. We have huge investments in this country, not least of which are the roughly 20,000 people on our payroll. These investments are not solely monetary, but in facilities we need to run our business. Nigeria is headed in the right direction, even if not the most stable country in the world. Businesses here require a plan for the worst-case scenario, and the potential return on investments must clearly be weighed up against the risks. Operating exclusively in Nigeria, we do not have the opportunity of packing up our operations and returning to a home country if the worst occurs. Yet this reality only further confirms our commitment, as this will remain our country come what may. These are our biggest strengths and also relate to our interaction with Nigerian society, corporate responsibility, and trying to understand the needs of our country apart from our core business. Through Bilfinger Berger we have a pipeline to the Western world. This gives us access to cutting-edge technology and the international market in terms of procurement and recruitment. We would not be able to ensure quality and reliability with Nigerian resources alone. That said, while our business dealings and the projects we deliver are part of a global issue, the company’s decisions are made locally. We are not remote-controlled from abroad, which we view as a major success.

How do you make sure that the best practices are applied when it comes to corporate governance and social responsibility?

For close to 25 years, we have been a publicly listed company. We are working in-line with the regulations of the Nigerian Stock Exchange and Security Exchange Commission. Global legislation has changed over the past 10 years. However, although legislation may have changed, society has not, and there are “gaps” of disconnection. Since 2007, we have implemented a quite rigid compliance system that is also transparent. We apply this system throughout our organization to protect people as well as our staff, management, and society as a whole. This is not an easy task, but there is no compromise for us. We have a strong conviction that there cannot be a difference between Nigeria and other parts of the world. Also, in the last couple of years, the Security and Exchange Commission in Nigeria has done a very good job of closing loopholes and keeping the private sector in check. We, as a leading contractor in the construction industry, are always the main target. We are proud to be the most exposed company and work very closely with the regulatory agencies. Our hope is that this also pressures other companies in the sector, in terms of good governance. Over the past couple of years we have established transparent policies that are constantly reviewed. Four areas of focus support our corporate responsibility effort. The first focus is health. We are closely involved with local clinics, particularly in the areas where we work. Our second is education, where we support schools and many other aspects of education in the nation. And the third focus is sports, where 20 years ago we sponsored a highly successful football team. We no longer support professional sports, having shifted our efforts to vital areas, particularly for the youth. Our fourth and final focus, which we have been involved in since the company’s inception, is support for national emergency management. This includes assistance in the event of natural disasters such as floods and fires, as well as unforeseen accidents like air crashes.

You have taken on the challenge of constructing the new Second Niger Bridge. Could you elaborate on this project?

If you look at the Nigerian economy and lack of infrastructure, the construction of the Second Niger Bridge is key—economically, politically, and socially. We have been following the developments surrounding this bridge for a while now. Around 10 or 15 years ago there were many developments surrounding the project, although nothing came to fruition. Just under two years ago, we became convinced that on this occasion the government was serious, and we actively started to participate. There are challenges, but we are confident of being able to overcome them. The primary challenge, I believe, lies in the fact that the bridge is to be built under the public-private partnership (PPP) model. If you look at the legal environment and the policy landscape, PPP is a quite new formula that we have never dealt with. Due to the nature of this project, we have aggressively looked at the possibilities of and partners for this undertaking. We were very proud that our consortium was declared the preferred bidder. If a non-indigenous company, for example, from India or China, had emerged as the preferred bidder, it would have been bitterly disappointing.

That gives an indication as to your commitment to the country if you approach it on a personal level.

That’s absolutely correct, and we are in the process of closing on the financial aspects of the contract, having started some preliminary works, such as soil tests.

From a regulatory standpoint, how should the government change its policy framework to support the private sector and the creation of further PPPs?

The most important consideration is for the country to ensure consistency. It is sometimes difficult to understand, plan, and predict what the government’s policy will be two years down the road. Many changes have the potential to negatively impact private business, which only have a certain margin for flexibility. In Nigeria, a business plan requires huge flexibility. Beyond consistency, we need transparency; the rule of law, so crucial for the private sector in terms of orientation; and the protection of investments. There is still a lot to do toward achieving this.

Do you see the 2015 presidential elections as a challenge or an opportunity for the next administration?

I perceive it as a particularly good opportunity. Of course, like in any election, there will be challenges. Since the advent of democracy in 1999, each election has become more transparent, free, and fair. I am convinced this election will be a further improvement on previous ones. This will be another opportunity for Nigeria to show the world it is on a solid path.

How is your company contributing to the realization of Nigeria’s goals for Vision 2020?

Our core business is civil construction, that is, the spectrum of buildings, infrastructure, and civil works for industrial plants. When we are awarded a contract, we guarantee the quality of work and value for money. We deliver sustainable solutions that will meet the challenges of a growing nation 2020 and beyond. The major area to be developed in achieving the goals of Vision 2020 is the downstream and manufacturing sectors. Vision 2020 will be very difficult to achieve if the focus lies exclusively on oil-producing plants and roads. Employment in manufacturing plants is necessary. These factories will generate revenue and add weight to national GDP. Nigeria, I believe, is more of a trading society. This is good to a certain extent, but the real economy is the downstream industry—manufacturing, agriculture, and so forth. We are repositioning our company to be prepared to deliver our services to investors in this industry. In fact, we have already begun to play a role in this, with some evidence of success.

© The Business Year – April 2014