In conversation with
Mr Abdool Tayob
Chief Executive Officer | Bakers S.A. Limited
FDI Spotlight: What is the main philosophy and DNA of Bakers S.A. Limited and did you ever envision the company to become the powerhouse it is today?
Mr Abdool Tayob: The company comes from humble beginnings – it was started by my father in the 1970s, but only became a formal business in the 1980s, run and owned by the family. I do not believe my father thought the company and the vision he had would grow to where it is now. When I joined the company, I knew the potential was there for it to be something great.
Bakers S.A. Limited is, and has always been, people-centric and we like to build long-lasting relationships with all our stakeholders. We have a strong focus on quality and our customers; everything we do is focused on providing the highest quality of service and looking at how we can make a difference. We invest a lot in our corporate social responsibility.
There is a saying that “business is what it is”. However, I believe more in the philosophy: “people deal with people”. There are many interpretations to that saying, but at Bakers, it is taken at face-value. The company is built upon the idea that people come first and business comes later, and we have created our company culture around it. It gives us the motivation to improve, innovate and provide the best service to our customers.
What key areas of growth and what expansion strategies have you identified for Bakers S.A., especially considering the December ANC Conference and the upcoming 2019 elections?
Mr Abdool Tayob: The ANC Conference in December is something we need to look at from a positive perspective. All South Africans, especially those in the business sector, have to have some mental immunity for our country’s politics. It is easy to always be negative about the challenges and to only focus on that negativity. However, I believe we should try to focus on our strengths and always remind ourselves that there are many things to be positive about.
It is important to acknowledge the issues we have, but the only way to overcome them is to face them for what they are and to look at how we can use the strengths to solve the problems. South Africa, in a nutshell, has always had a rollercoaster environment. We have to manage the situation and keep in mind it is a balancing act, recognising that both the good and the bad have a direct and indirect impact on the economy.
For many years, Bakers market segments and target markets were broad-based. However, over the last 36 months, we have focused on more specific target markets, namely brown and white goods. In relation to the economic growth within Africa, these segments have great potential due to urbanisation and infrastructure development.
Bakers has the potential to grow and secure economies of scale, put multi-brand principals together, and do smart logistics with world-class infrastructure, including the entire package that goes with this. South Africa itself has been experiencing great growth in this area, specifically regarding low-cost housing.
Cross-border transport is also a potential growth area for us. At the moment we provide logistics services to all the SADC countries that share a border with South Africa. That is where the focus area is and Namibia especially is doing well.
With the executive analytical team, I identified that through getting the multi-principal economies of scale going, we will position ourselves as a specialised logistics provider for that segment. It will allow us to invest in the best infrastructure systems; because we are dealing with economies of scale, we can do more.
It is a win-win situation for our customers and for us: we will keep the cost of logistics at a service level. Therefore, we will drive costs down and increase the service level because you have more from the same service provider on the same network. We also see great potential in fast-moving consumer goods (FMCG) markets in bulk movements of these products.
What are your plans for forming more partnerships, globally and in Africa?
Mr Abdool Tayob: Six months ago we started what you can call a warehouse agency in Zambia for both white and brown goods. We see opportunities where we can act as an agent for logistics companies as it makes it easier for them; we have partnered with the major brands and have cut out the need for them to hire individual agents, marketing teams, or any others they would need.
We intend handling the commercial sales and the delivery and anything else the company would need in terms of logistics.
This Zambia warehouse is dedicated to one brand, for now, but we see the potential in others. Have a set-up first – somewhere you can kick-start the business – and then partner with others.
South Africa used to have a strong innovation culture, but in recent years, investment into innovation has dropped. Do you believe this culture be recreated and what have you as Bakers S.A. done to remain competitive?
Mr Abdool Tayob: South Africa’s tough economic climate and serious skills shortages within the research and development area have led to the drop in investment. Not only has it led to the loss of investor confidence, but companies, including Bakers, have had to cut budgets. This means that funding into certain areas has been downsized or cut completely, which leads to foreign investors shying away because they do not want to invest in a country that does not invest in itself.
That said we decided to keep investing into innovation as much as possible. As mentioned, while we have had to cut costs in this area, it is something we believe in and would rather take the risk of investing in something new over the risk of not developing anything. In today’s South African business environment one needs to take a risk.
We have invested in a software system that merges different software innovations to have a package that is aimed at tracking and tracing products. It is exclusive in South Africa. We have invested in research and development of staff motivation training, and we have taken more of an in-house approach. This allows us to be the masters of our own destiny.
There is a lot of work that has to be done in South Africa, to train the people. While the nation needs doctors and scientists, it also needs a wide variety of skills, the softer skills such as project and people management.
The regression of investment into innovation is a double-edged sword, if you want to grow and establish South Africa as the gateway into Africa. The government needs to put that idea under the spotlight and make more of an effort to invest into an initiative that focuses on innovation that will grow the country. I believe it needs to start in the schooling system; we need to invest in the youngest students and carry it through tertiary education.
Each industry has its challenges and lack of skills, but there is a lot that can be done. As Bakers SA we have established two training centres, and we have seen it takes more time than it should to get the people to where they should be. We have seen that if the person has had quality schooling, it does not take longer than it should to give them the skills.
South Africa has one of the highest rates of failures for SMEs How can we create a more conducive environment for them to flourish?
Mr Abdool Tayob: I believe it is linked to nurturing the businesses: we need an incubator for them. It also goes back to the skills shortage and the schooling: people start businesses without the proper knowledge or training with little to no support and with inadequate skills.
The problem does not come in with setting up the business, it comes in when they pass that phase and have to keep the business going because that requires knowledge of how to work with finances.
The government should have robust structures in place to support these SMEs. I have met a good number of entrepreneurs in the logistics industry: they know how to drive a truck and therefore they buy one and then a second truck. However, once they move to the third one, the struggle begins on how to sustain the business and grow it from that point on.
What is your level of confidence in South Africa, on a scale of 1 – 10?
Mr Abdool Tayob: I would place my level of confidence at seven out of ten. For me, the potential outweighs the challenges and I believe the potential is keeping the country going. We have great diversity, our people have a fantastic work ethic and we have good infrastructure.