Due to Ebola, the company is well stocked with protective masks and cleaning agents, Srivathsan said while working from home in Singapore, where Olam is based.
Temperature controls for people entering Olam buildings and hygiene protocols have been quickly rolled out, he said. The company has been able to supply masks and thermometers for health workers in hospitals in Gabon. The key issue is “inventory planning,” he said. “We started early.”
West Africa’s 2014–2016 Ebola epidemic was the largest since the virus was first discovered in 1976. It began in Guinea before spreading to Sierra Leone and Liberia. A further outbreak in the eastern part of the Democratic Republic of Congo started in 2018.
- “Given the Ebola experience, Africa operations planning has been credible,” in the current crisis, Srivathsan said.
Olam operates in 25 countries across Africa, as well as in the Middle East and South America.
READ MORE Africa faces a coronavirus catastrophe
The company, which doesn’t have any manufacturing operations in China, has been able to keep manufacturing running, Srivathsan said.
- It has set up a central committee on Covid and imposed a complete ban on company travel, including within Africa, which has now been in place for two working weeks.
- There have been no African port shutdowns so far, he added, though conditions in southern and eastern African ports have become “slightly more difficult. We expect some supply-chain disruption,” he said.
- Olam is experienced is managing supply chains that don’t work, he says. In Lagos, the company has its own fleet of trucks – and its own private diesel stations to ensure they are filled.
The company in January announced a plan to separate its operations into food ingredients and global agri-business units. Olam, which trades in Singapore, said it might list the units as two separate entities. That strategy has not been fundamentally changed by coronavirus, Srivathsan said.
- If the pandemic is brought under control in the next three to six months, then Olam is likely to stick to its original plan of 18 to 24 months for the listings, he said.
- A longer coronavirus crisis would likely mean the timetable has to be extended, he said.
It’s too early to start to quantify the financial impact of the pandemic on the company, he said. The collapse in oil prices will lower Olam’s energy costs, while affecting countries such as Nigeria which now face “huge headwinds,” he said.
- But Srivathsan does not see demand for Olam’s products being destroyed. “People still have to eat.”
- He argued that the stock market reaction to the crisis has been exaggerated, as in the great financial crisis of 2008. It’s “normal human psychology” to look for safety.
- Rapid government support packages show they have learned from past crises that they can’t afford to delay, he said.
Bottom Line: Olam’s experience with Ebola and broken supply chains leave it in a stronger operational position than many younger companies.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options