Published on 15 Jul 2022

Taking risks, addressing need, and diversifying business

How Tolaram broke new ground in Nigeria

By Bhawesh Kumar

At first look sub-Saharan Africa (SSA) appears to be a difficult place to do business. While its population (216 million) has grown at over 2.6% between 2010 and 2020, the average GDP growth in this period has been just over 3.4%. The Covid-19 pandemic that followed resulted in a sharp economic reversal. According to the World Bank the annual GDP growth rate for SSA in 2020 was -2%. Although economic activity bounced back strongly in 2021 it is unlikely that Africa will see a sustained healthy growth it once enjoyed during the pre-pandemic era any time soon. Lack of infrastructure, over-reliance on natural resources, underdeveloped regulatory environment makes Africa a tough market to enter.

Yet at the same time the vast continent offers plentiful opportunities for those who care to look closely. Its abundant natural resources, a bulging youthful population, an aspirational middle class and a relatively less crowded competitive business space makes it an attractive place to invest. There is a lot of value yet to be created and investors with vision that are ready to stay the course for the long term have a good chance of making the most of what the continent has to offer.

More than 100 Singapore companies have found opportunities in sectors such as food products and consumer goods, oil and gas, digital economy, and urban solutions. Nowhere in Africa is this pulsating market environment more visible than in Nigeria. It is a rich green agricultural land, blessed with natural resources and home to 200 million people. With a GDP of US$432bn (World Bank, 2020) it is by far the biggest economy in Africa. By 2050, Nigeria will have more people than the United States.

If business opportunities in Africa appear enticing today, there is a Singapore company that saw and seized the moment more than four decades ago - Tolaram, a family-run business based in Singapore. The firm once operated more than a dozen mills, across the globe and ran a trading business but stiff competition from China eventually made it difficult for the firm to sustain the textile business. That led to a pivot from manufacturing textiles to consumer goods in 1996, and beginning 2008, into infrastructure. 


From Surabaya to Lagos

Tolaram was founded by Khanchand Vaswani in 1948. He was the youngest son of a physician and named the firm after his father Seth Tolaram. It was common for the Sindhis to conduct business overseas at the time – a tradition that dated back to the colonial era when enterprising communities from the Indian subcontinent took advantage of the British and Dutch trading posts. The family, which was earlier based in the Sindh province of undivided India, already had existing business ties in Indonesia. They were forced to migrate there following the violent partition of India in 1947.

Khanchand and his family finally docked in Surabaya, Indonesia and soon set up a textile retail business in nearby Malang. With an ambition to expand further, in 1957 he handed over the business to his only son, Mohan Vaswani, who is now the Chairman of the firm. Tolaram relocated its headquarters to Singapore in 1975 to leverage the republic’s position as a regional hub and subsequently ventured into Nigeria through the help of a close business associate whose family had been doing business there for generations.

Unlocking Nigeria

When Vaswani first travelled to West Africa in 1977, he discovered an untapped market for consumer goods in Nigeria. At that time, Nigeria had a population of 67 million with a per capita income that was substantially higher (US$536) than that of Indonesia’s (US$334).  Yet it was far from being viewed as an ideal investment destination at the time. The newly independent republic had barely started to recover from a bloody civil war and was still bristled with unrest. It briefly returned to civilian rule in 1979 before the military seized power once again. Political instability, corruption and lack of governance threatened to derail the economy. Yet, the firm did not lose sight of the opportunity and decided to tap the unmet market demand through imports. That turned out to be the key to its early success.

A severe financial crisis in 1980s, however, meant that Tolaram could no longer remit foreign exchange out of Nigeria. Yet, amid this upheaval the firm spotted yet another opportunity. In the sprawling urban suburbs, women were struggling to feed their families decent meals – not so much because they could not afford it but because traditional cooking took hours and commuting from home to work was taking longer and longer in cities like Lagos. Instant noodles could provide an excellent solution. Added with protein and garnished with vegetables, a pack of instant noodles could become a quick and complete meal that working moms could put on the table quickly.

The problem was how do you persuade people to try it? “ For most Nigerians, instant noodles were not the idea of a meal. Some would run away thinking we are serving them worms. We spent much time and resources on sampling and trials,” says Haresh Aswani, Managing Director for Africa. “Tolaram hired students to persuade commuters to sample products at crowded bus junctions,” he said. “Nigerians tend to like spicy meals with a lot of meat. We developed flavours suited to the local palate, like our best-selling chicken flavour. We made losses for a long time but persevered.” And it worked. Tolaram today derives four-fifths of its total revenue through its consumer packaged foods business. Indomie, the flagship brand, is a category defining household name in Nigeria– much like what Nissin or Maggi is in Singapore. According to the World Instant Noodles Association, Nigeria is ranked the eleventh largest instant noodle market in the world. Nigerians consume 2.46bn servings of noodles a year. Today there are more than a dozen brands of noodles in this highly contested market but Indomie accounts of nearly three-quarters of sales, according to the company. Tolaram started its first production unit in Nigeria in 1996 and has since opened two more. These factories in Ogun State, Port Harcourt, and Kaduna produce nearly nine million packets per day. Chicken flavoured noodles make up 80% of the sales. A 70gm packet costs as little as US$0.20 and can turn out to be even more affordable if bought in bulk.

“It has been said by many that Africa is a land of opportunities, but few truly understand Africa,” says Aswani. There are tangible factors like the sheer vastness and diversity of the continent with 54 nations. But it is the cultural and developmental diversity among societies made up of hundreds of ethnicities, cultures, and traditions, bound together by a shared colonial past that makes Africa so fascinating. For businesses, in these seemingly daunting challenges lie the chance to create solutions bespoke for each of the continent’s diverse markets.

He claims that Africa has been “overlooked" by most multinationals leaving a “huge" opportunity for other players. “We have been in Africa for decades and multinationals now look up to us as a potential partner,” says Pawan Sharma, Tolaram’s Head of Africa Consumer Business. Tolaram has joint ventures with other international brands such as Kellogg’s, Colgate, and Arla. The firm now has operations in three continents and recorded an annual revenue of US$1.33bn in 2021.

The Strategy

“To deliver a quality product in Nigeria, you will need to control the entire value chain. One needs to undertake forward and backward integration of varying degrees to deliver consistently,” Aswani says. Tolaram has integrated its businesses from farm to plate to ensure consistent supply of raw materials and product reach. “When we started our manufacturing operations, we realised that there were no reliable third-party logistics providers. We then acquired a local logistics and haulage company – BHN,” says Sharma. Aside from having a flour mill and seasonings factory, Tolaram also has one of the largest palm oil plantations in Nigeria, as well as a cooking oil refining factory supplying the needs of its food businesses. Multipro, the largest sales and distribution firm in West Africa, is also part of Tolaram’s businesses and value chain. It manages the warehouses, and fleet of vehicles under BHN to distribute products across the region.

According to Aswani two factors contribute to their growth strategy - product portfolio expansion across all FMCG categories, and geographic expansion of their operations to other parts of Africa. Even as it manufactures a range of products for global brands such as Kellogg’s, Indofood, and Colgate locally it has also launched consumer products under in its own house brand. Hypo Bleach was launched in 2005 and quickly became the leader in the domestic bleach market. “Hypo Bleach now commands 90% of the market,” Aswani claims. Following this success Tolaram launched the Hypo toilet cleaner in 2018. It too proved to be a runaway hit with consumers. A 2019 poll conducted by Nairametrics, a financial information and content creation company based in Lagos, showed that 58% of Nigerians preferred Hypo over any other brand. The genius was to make the two products available to in small sachets. Nigeria, after all, is an extremely price-sensitive market. “The key to growth is to localise research and development and make products affordable through innovation, costs reduction and via backward integration,” reveals Aswani.

“In Africa, consumers mostly buy from small retail kiosks, open markets, and mom-and-pop stores. Having a deep distribution network is, therefore, a competitive edge,” Aswani says. Currently, Tolaram owns and operates 23 manufacturing facilities across the continent, 20 located in Nigeria, along with 24 regional distribution hubs.


“Mohan Vaswani had long had a dream to build infrastructure in Nigeria”, says Navin Nahata, Managing Director, Fintech and Infrastructure. The company is currently developing two major projects just outside Lagos -- the Lekki Deep Sea Port and a 850-acre industrial park called the Lagos Free Zone (LFZ). “The two projects are conjoined in some sense and have been through challenges, even a near-death experience since the project began in 2008. But the port project achieved financial closure in March 2020. There has been rapid work going on since then and the port is nearly 90% complete,” says Nahata.

Tolaram has 22.5% stake in the project. The controlling stake (52.5%) is held by the engineering, procurement, and construction (EPC) contractor China Harbour Engineering Company. The rest belongs to the Nigerian government. Tolaram, however, has a 45-year build-own-operate and transfer (BOT) lease on the port.

While the port is expected to become operational by the end of this year, the free zone itself is still in the early stages of development. When complete the Lekki deep seaport will be Nigeria’s largest private investment infrastructure project to date and cost US$1.3bn to build. The cost for the free zone is likely to be $2bn over the next 10 years. It will be a years before these projects start contributing to the company’s revenues, but Nahata is optimistic. He believes the infrastructure business vertical has the potential to rival the company’s consumer business in a few years.

When Tolaram decided to take on the two massive infrastructure projects 14 years ago it was considered an audacious decision. The company had no experience carrying out EPC projects nor had it any experience running ports. “The initial outlay for the project was nearly US$2bn. Nigeria had not seen any private-public-partnership until then. There were no laws or institutional knowledge for such a business model. But based on our experience with logistical challenges in Nigeria, Tolaram knew that the country needed a modern port.” Indeed, when Tolaram first began manufacturing it was so hampered by lack of infrastructure that it had to invest in building approach roads, and power plants to keep its factories running. 

A near-death experience with the Lekki project came after early success when Tolaram was in sight of achieving financial closure in 2012, with the participation of a consortium of six banks and institutions participating, including Africa Finance Corp and Standard Chartered Bank. In the few years that followed, Nigeria hit political and financial turbulence. Oil prices fell by a half between June 2015 and February 2016. The naira was devalued by a third and business sentiment hit a new low. “By the end of 2016, nearly all our partners had pulled out citing high risk. That was the lowest moment,” Nahata admits. The consortium pulled out of the project and Tolaram was left with a huge risk exposure - US$160m of its own equity or nearly a fifth of the total revenue in 2016. “We went back to the drawing board, scaled down the project to enhance its feasibility and engaged with our Chinese EPC partner, who joined the project as the majority investor,” Nahata says. 

Advice for Singapore firms

Tolaram is based in Singapore but most of its business is largely in Africa. How then does its business serve Singapore? “Aside from creating functional roles at our headquarters” says Aswani. “Singapore’s leadership team tap on global talent and partnerships to support the good work of our businesses in Africa. We assist and act as a local guide to Singaporean companies willing to start in Africa. We show that if you the right things and persevere, Africa is a wonderful place to do business”.

Tolaram still makes most of its revenues selling consumer packaged goods in Nigeria but its commitment to expand in Africa and to diversify conveys a new direction the continent is taking. After years of investing in manufacturing facilities, building distribution networks and persevering with the port project, Tolaram is now considered to be serious local player who is there not just to make profits and repatriate them, but willing to bind its future to the future of Nigeria and its people. It certainly appears to have earned that position.

When asked what advice he has for Singapore investors interested in seeking opportunities in Africa, he said: “Commit for the long term. Do not let your perception of Africa be your guide. Today, technology has bridged the information gap between the developed and the developing industries. People’s aspirations and desires are similar.”

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