Industrialisation and innovation

It’s light, corrosion-resistant, strong, durable, flexible, impermeable and recyclable; it’s one of the most important metals used by modern societies, it has many uses and applications and it is considered indispensable to modern life because of its outstanding physical properties. It’s aluminium.

Aluminium, according to the Raw Materials and Research Development Council is “the most abundant metal in nature representing about 8.2% of the earth’s crust. However, large commercial exploitable reserves of bauxite that could justify the setting up of alumina plant in the country are yet to be found.” A kilogram of aluminium requires 2kg of bauxite.

Besides access to bauxite, cheap energy is critical; aluminium is energy intensive. A ton of aluminium needs 15,148 kilowatt hour (kWh) of electricity. This is why aluminium smelting is moving to countries with an abundance of natural gas, like Bahrain and the UAE, and strong demand, like China.

Though Nigeria lacks bauxite in commercial quantities and is yet to tap its prodigious gas reserves to power its electricity supply industry, its economic growth is being driven by non-oil sectors that use plenty of aluminium. Wholesale & Retail, manufacturing, building and construction, respectively, contributed 9 percent, 8 percent and 14 percent to GDP growth in the third quarter of 2013. This is expected to continue.

Aluminium’s strength, lightweight, electrical conductivity, malleability, excellent thermal properties and resistance to corrosion make it the metal of choice in a number of industries: building and construction, transport, electrical, machinery equipment, packaging etc.

For instance, because it is thick, light and conducts electricity over a long distance and at a high voltage it’s the metal for making wires transmitting electricity over a long distance.

Its other properties endear it to packaging and the manufacture of light vehicles. Aluminium neither tarnishes nor rusts. When it comes in contact with air, it quickly generates a tough, transparent layer of aluminium oxide, this makes it non-corrosive.

Aluminium insulates excellently, easily forms (flexible), remains tough as temperature drops and thus makes aluminium ubiquitous for containers, flex-packs, bottles and cans. Its high strength-to-weight ratio makes it suitable for planes, trains cars – mobility and energy conservation are important these days as the world urbanises.

In Nigeria, low- to medium-low technology industries (recycling, rubber and plastics products, food products, beverages, tobacco) are emerging. Last year, Fidelity Bank financed Africa’s largest aluminium can factory in Aba. GZI, the company, started with 600 million cans per year in 2010; its target is to increase it to 1.2 billion cans a year. Though bottles are the primary package in Nigeria, cans are growing fast.

What’s more, with the generation, transmission and distribution of electricity set to improve (by 2020?) coupled with plans to assembly cars; Nigeria’s seems to be on a path toward industrialisation.

Assembling cars and turbines in Nigeria is like getting on an elevator that takes you up a 200 storey building called industrial revolution. Making cars that match the taste and pocket of Nigerians’ will also change the business of original equipment manufacturers (OEMs).

Booz & Company, a strategy consulting firm (now owned by PwC) reckons that “Cars for [emerging markets] must be built from the ground up, frugally not cheaply. It takes a special engineering mindset to do it successfully.”

Carmakers and their suppliers are developing new technologies and business models attuned to the characteristics of, say, small cars. Small cars are lighter and fuel-efficient. Alternative materials e.g. aluminium, plastics, lightweight alloys and composites are being manufactured. Suppliers are also upgrading motorcycle spare parts.

People, ideas and companies spilled over into car manufacturing from the bicycle industry. Spokes, pneumatic tyres, ball bearings, steel tubing and differential gears, innovations from the invention of the bicycle were used in the car industry. Henry Ford was a bicycle mechanic. Car manufacturers like Peugeot, Opel, Morris and Rover started out as bicycle companies.

Toyota is investing to expand its already global presence further into Africa with its $2 billion purchase of CFAO, a distribution company with outlets across the continent. Other European, Japanese and American companies are investing huge amounts to make India their hub for low-cost cars.

However, and this worrying, there is no deliberate effort to make these emerging industries into networks, clusters or ecosystems. Savvy governments like Lagos are making it attractive for technology companies to locate in Yaba. The University of Lagos and Yaba College of Technology will, in addition to state permits to build taller buildings and fast broadband connection, attract companies to Yaba.

Companies invest where the brains are. Collaboration – among experts, researchers, industry and government enhances innovation. Innovative entrepreneurs that recombine in new ways related ideas and products are more likely to emerge from such an ecosystem.

Today, Apple has set in its wake the combination of the half-complete bits (ideas, standards specifications, protocols, programming language and software) – components of the internet revolution – onto easy-to-use mobile devices. The authors of Good Capitalism, Bad Capitalism, a book on entrepreneurship, contend that “Successful innovative entrepreneurs are the ones who recognize and then realize the commercial opportunities that such recombinations offer.”