All posts by : PEMANDU Associates

By Woody Ang & Alaudden Mostafa

The potential remains limitless

Mining and quarrying have been age-old practices in Oman dating back more than 2000 years. The Sultanate is endowed with a variety of mineral deposits such as chromite, gypsum, limestone, building materials and marble. These minerals remain an important asset to Oman’s economy, with the country still possessing approximately 97% unexploited mineral potential from its industrial and metalliferous deposits.

While the mining sector acts as a catalyst for the growth of core industries like steel and cement, its contribution to GDP is still very modest at 0.5% as of 2017. One reason for this is because the sector is led primarily by small-to-medium sized companies, dealing mostly in traditional mining industries such as building aggregates. Given the low-value, high-volume nature of these industrial minerals, there is limited potential for increasing contribution to the overall Omani economy in its current form. The past 5 years have seen production value drop by 3.4%, even though production volumes have grown by 4%. The complex nature of regulating the mining industry has further compounded this scenario. Impediments to investment and growth include the lack of an attractive investment environment and inconsistent enforcement of regulations, particularly in the collection of royalties, and tedious licensing processes. This highly capital-intensive industry also demands a consistently updated geological data at national level, which Oman does not yet possess.

Given the combination of these factors, existing investors and mining operators are limited in number and the country has seen a noticeable reduction in exploration and developmental projects. This impacts the sector’s growth and sustainability prospects and its potential contribution to GDP.

Against this backdrop, Oman recognised that significant steps are required to remove the obstacles to sector growth. To lead the sector’s transformation effort, the Public Authority for Mining adopted a collaborative, result-driven approach for Oman with the introduction of the Mining Lab via PEMANDU Associates’ Big Fast Results Lab Methodology. The lab focused on three key pillars: optimising industrial minerals value contribution, reviving significant value contribution from metalliferous minerals and improving the sector’s business environment and governance.

Investors and Private Sector lead the way

When attempting to identify the real economic potential of these industrial minerals, many conclude that a simple extract-and-sell strategy is sufficient to generate growth. The Lab provided a platform of discourse and rigorous analysis which revealed that this widely held view was untrue. Despite the availability of these natural resources, Oman struggled to deliver a competitively priced product to market. The final cost of industrial minerals such as limestone are highly dependent on the geographical distance and logistical requirements between both the source mines and the destinations seeking the commodity. It was therefore important for Oman to find ways to capitalise on its geographic location to reduce the cost-to-market.

Following careful consideration and selection, the Lab recommended the formation of a Centralised Trading Company (CTC) led by a consortium of private industry players to optimise the handling of outgoing production to better fit market demand. The CTC will look to maximise value extraction by also optimising available logistics and exhibiting strict cost discipline to derive maximum value for the country’s producers.

To complement the CTC, focus will also need to be shifted beyond upstream activities towards higher value downstream manufacturing. The Lab identified and prioritised nine private sector-led integrated downstream industrial minerals projects aimed at delivering tangible results leading up to 2023. Amongst the pathfinder projects include the extraction of basalt to produce continuous basalt fibre, the extraction of dolomite to produce magnesium metal and the extraction of potash to produce premium grade potassium.

Despite metalliferous minerals being the high value contributor amongst the existing commodities, new exploration activities have dwindled over the past decade with almost no new development projects to replace ageing mines. This is particularly evident in the copper sector where there are currently no active mines despite strong proven resources available in the country.

The Lab nevertheless enabled the identification of private sector-led upstream and downstream projects for copper and chromite, along with potential downstream development opportunities in magnesium and silicon. These projects include 14 copper project sites and three new concentrator plants to reinitiate copper production and enable feed to downstream by import substitution of concentrates.

Aside from copper, 28 private investment -led chromite project sites and one beneficiation plant were identified to increase chromite production and optimise utilisation of local chrome resources in Oman, which can be fed to downstream ferrochrome plants.

After six weeks of robust deliberations, the Lab successfully unlocked the Washihi Integrated Copper Mining Project, Oman’s first copper mining project in 14 years. The project marks a resumption of copper mining activity, which truly is an example of Big Fast Results in action.

It’s all about the right Business Environment

With investors ready to commit, it is imperative that the business environment is made as conducive as possible to realise these investments. The existing licensing process requires dealings with eight different government entities whilst there is little transparency on the tax and royalty regime – these will now need to change.

Firstly, it was decided that the licensing process will be simplified via a single entity adhering to a clearly stipulated approval timeline and implementing a pre-approval clearance mechanism. With the introduction of this new process, previously lengthy license processing timelines that could take months and sometimes years will now be a thing of the past. This will also eliminate the prior lack of standard operating procedures that necessitated investors to follow-up with the Public Authority on the status of the requested approvals regularly on their own.

Secondly, the Lab also recommended a dynamic royalty rate to replace the previous flat royalty rate of 10% across commodities; a rate which is relatively higher than in other mining countries. The proposed dynamic royalty initiative will apply commodity-based formulas where different minerals will be subjected to different valuation methods or rates. In addition to this, the Lab also proposed a royalty discount mechanism upon fulfilment of certain set criteria which include downstream production promotions, amongst others. Such incentives should ensure higher in-country value and will incentivise industry growth.

Exciting times now lie ahead for Oman’s Mining sector and there is great optimism on the newly-formed winning coalition between the public and private sector. Oman has taken bold decisions and significant steps towards improving the outlook for the sector. In total, the Labs unlocked more than 10 new exploration licenses and documented another 50 applications to be further reviewed for potential approval. This injection of urgency is a far cry from the original state of having minimal to no new exploration projects.

With committed private investments amounting to more than OMR50 million for shovel-ready projects, the Public Authority of Mining is committed and fully aware of the need to lead the way in breaking down the silo mentality that often permeates within Government. All that remains is for the key industry and Government stakeholders to maintain the discipline of action and stay the course that they have plotted together. The mining engine of Oman has gotten a much-needed restart and the country hopes it will begin to truly fulfill its untapped potential.

By Ku Kok Peng

The word ‘govern’ comes from the Latin term ‘gubernare’, which means ‘to steer’. However, the success of any government has less to do with the act or omission of steering, but more to do with ‘what’ and ‘how’ it has steered.

Our experience around the world has shown that many governments inherently have several challenges in discharging their responsibilities. Chief among them is the lack of clear focus on their strategic priorities, as most governments are unable to resist the temptation to do more in every area. Even when they get their priorities right, governments are large entities and tend to work rigidly and in silos, without detailed, implementable programmes.

Successful governments invariably exhibit both ruthless focus in areas where they can or work to be competitive, as well as having a practical execution plan that they facilitate, with recursive iterations in implementation.

Ruthless prioritisation

Ruthless prioritisation is totally necessary given that resources such as time, man-power and funds are always finite. Governments must prioritise sectors and industries that would create the most beneficial impact for its economy. This would enable the government to dedicate the right amount of resources to ensure that these prioritised areas can be facilitated for increased growth. It also acts as a signpost for investors to know what areas their investment will be given the whole of government support and facilitation.

Singapore, with no natural resources, set its mind very early on to focus on services supported by evolving manufacturing activities. Today, it is one of the world’s leading financial and logistic hubs as well as high-value R&D and industrial centres. In a similar vein, South Korea prioritised on export-led industrialisation as their main strategic plank, focusing on heavy industries and ICT activities.

Following the global financial crisis in 2009 and with an economy stuck in the middle-income trap, Malaysia too decided to embark on a more pronounced productive sector prioritisation. Blessed with natural resources to produce agriculture and fossil commodities, rapid downstream value-addition to these sectors was pursued to secure markedly higher income.

For instance, the oil and gas sector developed its erstwhile neglected mid and downstream value chain more concertedly, investing in storage and integrated petrochemical complexes that also allow it to tap higher value market segments but also paved the path into trading activities. Meanwhile, palm oil diversified very rigorously from edible oils and fats and basic oleochemicals to much richer segments of oleo derivatives, nutraceuticals and pharmaceuticals.

With a solid base in the electrical and electronics industry, steps were also taken to move up the value chain while closing the gaps in components, devices and services value chains along the way. Efforts were focused on three catalytic sub-sectors namely, electrical and electronics, chemicals, and machinery and equipment (M&E), with aerospace and medical devices identified as adjacent sub-sectors with high-growth potential as part of a 3+2 strategy. (Note: 3+2 refers to segments in E&E, chemicals and M&E plus aerospace and medical devices.)

Malaysia is fortunate that its earlier industrialisation path, driven primarily by FDIs in assembly of E&E & M&E products, created a complex economy that made later industrial prioritisation under the National Transformation Programme, including expansion into areas such as Internet of Things (IoT), aerospace, advanced materials and medical devices, an easier task.

It literally took a leaf from Ricardo Hausman’s theory of monkeys and trees[1]. The renowned economist uses the metaphor of a forest, where products are trees and firms and talent are monkeys. The closer the trees are to each other, the easier it is for monkeys to swing from tree to tree. “Economic development,” he said, “is the process of the monkeys colonising the forest.” In the Malaysian context, sub-segments such as E&E are the trees. They are heavily populated and primarily located in the northern corridor. They also produced highly skilled talents that have been able to spread into adjacent sub-sectors such as aerospace and medical devices due to common skills such as precision engineering and robotics.

Active Facilitation

Strategic direction for economic development alone is not sufficient. It needs to be complemented by active facilitation during the delivery and implementation of strategic economic plans and projects. This entails building the collaboration between the public and private sectors to improve cohesion and obtain results from these projects. Once key economic areas have been identified, the implementation of priority sector projects identified need to be closely monitored and where necessary, intervention and problem-solving needs to be carried out to resolve any implementation issues.

Having a multi-layered governance structure that operates both intra-ministry as well as inter-ministry is crucial. A multi-layered governance would improve communications between and within ministries to ensure programmes are implemented and problem-solved with the support of all relevant stakeholders. Governance will be even more effective if it has the commitment of the highest leadership, who can act as the ultimate arbitrator, especially on cross-ministry issues that hold back project implementation.

Invest KL, a special purpose unit set up in 2011 with the sole objective of attracting 100 MNCs to set up regional hubs in Greater Kuala Lumpur, is a good example of successful active facilitation. It proactively scouts and handholds the investors’ entire investment process, in collaboration with other counterparts in the government such as the Malaysian Investment Development Authority (MIDA), the Kuala Lumpur City Hall and Ministry of International Trade and Industry (MITI). As at end-2017, Invest KL has attracted 73 MNCs with investment commitment of over RM11 billion and almost 11,000 jobs created[2].

Similar successes were recorded across the prioritised sectors, from resource-based industries to services sector, thanks to the robust and effective governance structure that was put in place.

Delivery Units Deliver

First established in the UK as the Prime Minister’s Delivery Unit (PMDU) in 2001, the delivery unit model was emulated in Malaysia (PEMANDU – Performance Management and Delivery Unit) as well as Chile, Albania, Romania and Indonesia under different monikers at the national level. Conceptually, it is a discrete unit at the centre of government with a mandate to improve citizen and economic outcomes and improve oversight on government effectiveness and efficiency[3].

In engaging key stakeholders to establish priorities, delivery units provide clarity to investors, both foreign and domestic, on sectors that will receive support in terms of resources and attention. This greatly helps them in making their final investment decisions. In addition, by proactively facilitating the implementation process, the investment hits the ground much faster, which also translates into earlier return on their investment.

The delivery unit model shares many features of the Problem-Driven Iterative Adaptation (PDIA) approach which hinges on trying, learning, iterating and adapting[4]. It promotes active experiential and experimental learning with evidence-driven feedback built into regular management that allows for real-time adaptation.

In the case of Malaysia, the economy flourished and investment gushed in with the introduction of the National Transformation Programme that was launched in 2010 and overseen by PEMANDU. The growth rate of realised investments almost doubled following the establishment of the delivery unit. Additionally, the share of private investment increased to 68% in 2017 compared to 52% in 2009 prior to the formation of the delivery unit.

The investment levels achieved contributed to Malaysia’s growth with GDP consistently in the range of 4% to 6% since 2009, and the gap towards the World Bank’s high income threshold in terms of GNI narrowed from 33% in 2010 to 20% in 2017. Malaysia ranked 24th in World Bank’s Doing Business Report (2018), retaining its spot among the world’s top 25 economies on the Doing Business measures.

While the outcomes of the delivery unit model vary from country to country, and even from area to area, it undoubtedly assists governments in prioritising the ‘whats’ and further improving the effectiveness  of processes to get things done.

From the case of Malaysia, the answer to the rhetorical headline question is firmly in the affirmative.

[1] http://www.investkl.gov.my/assets/multimediaMS/file/InvestKL-Performance-Report-2017.pdf

[2] https://harvardmagazine.com/2010/03/complexity-and-wealth-of-nations

[3] http://documents.worldbank.org/curated/en/318041492513503891/Driving-performance-from-the-center-Malaysia-s-experience-with-PEMANDU

[4] https://www.oecd.org/dac/accountable-effective-institutions/Governance%20Notebook%202.3%20Andrews%20et%20al.pdf

By Dr. Sarinder Kumari & Dhanendra Sivarajah

Agriculture quality standards have become imperative not only to ensure safe and quality products but also for farmers to access international markets.

A highlighted by the World Trade Organisation (WTO) and academicians, tariff barriers have been replaced by sustainable requirements for market access as a means of protecting domestic  producers. Understanding the requirements of the importing country and ensuring these elements are incorporated and harmonised with the standards of the importing countries is key as defined by the WTO Technical Barriers to Trade, an agreement which strongly encourages members to base their measures on international standards as a means to facilitate trade. Hence, it is essential for Malaysian farmers to practice Good Agriculture Practices that are aligned with international standards to access these markets.

These standards were introduced in accordance with Malaysian Standards that define processes in resource management for good and sustainable agriculture production which improve farm productivity and ensure produce is safe and of quality, with the welfare and safety of workers taken into account.

Spearheading a new approach to standards adoption

However, the introduction of the local standards brought on a different set of challenges.  Among those highlighted by the farmers were limited market access, insufficient capacity building programmes to assist in compliance to standards, as well as questions from the importing countries on the standards applied.  The value of certification was also questioned by farmers who saw the exercise as adding more work to an already laborious industry. Consequently, farmers were selling to middle-men, often at a minimal price, who were able to stretch their own profit margins through with their ability to penetrate the hypermarkets and as well as the export market.

To overcome these challenges, a mini-lab facilitated by PEMANDU Associates (during its time as a Delivery Unit in the Prime Minister’s Department) in collaboration with the Ministry of Agriculture was held, involving farmers associations and other relevant agencies.  It was decided in the mini-lab that a rebranding of all three schemes under a single brand name was to be introduced to create a brand name that is easily recognised in the foreign market – this standard would also be harmonised with all other good agricultural practices used by other countries for the export market.

Thus, a series of focus group meetings chaired by the Undersecretary of the MOA as well sessions with the then-Minister of Agriculture, led to the birth of the Malaysian Good Agricultural Practices (myGAP) in 28 August 2013. Since then, myGAP has become known internationally and is synonymous with other standards such as GlobalGAP, JGAP (Japanese certification) and China GAP (China certification), to name a few. 

Further to this, the MOA and its respective agencies also stepped up efforts in educating the public on the importance of certification to ensure sustainability, quality and lastly to also allow for market access, with the respective departments aggressively involved in promoting myGAP in their bilateral talks for market access.  All main initiatives and sub-initiatives had individuals accountable for its implementation who were able to provide regular and comprehensive progress reporting.

Breathing new life into Malaysian produce

After the launch of the myGAP Certification and its brand promise of “Producing More, Improving Lives”, the MOA continued to work with various stakeholders to not only educate the farmers about the need and benefits of myGAP, but also encourage them to look beyond just farming but towards creating a safe and sustainable community.  In an effort to further enhance the standards usage among farmers, MOA also allocated funds to assist farmers in upgrading their storage, sewage, collection, and other facilities that are requirements under the myGAP certification programme. Besides funding assistance, farmers also benefited from capacity-building programmes, awareness and promotion programmes.

The capacity-building programmes involved educating the farmers on the requirements of myGAP and its importance, which was then followed by assistance in completing the checklist in preparation for compliance and audit. This effort encouraged strong participation from farmers who were keen to understand the certification process.

Mr. M. Kaliyannan, who puts his customers at the top of his priority, has adopted myGAP in his 39-hectare watermelon farm to ensure higher standards of quality and safety for his crops. With myGAP, he has been able to widen his market for Grade A watermelons to foreign markets such as Dubai and Hong Kong. His revenue has increased more than 20% when compared to before myGAP.

“Under myGAP, there are many practical steps to follow including staff training, usage of pesticides, safety, and best practices for planters. I’ve seen many positive results since the adoption of myGAP.

“My ambition is to be the king of watermelon in Malaysia by exporting my entire Grade A products to the rest of the world. The myGAP programme is a good initiative, especially to assist us in the agriculture sector shared. I would definitely continue to encourage other farmers to follow my steps so that they can be successful as well,” he says.

Beyond addressing the supply side, the MOA also worked with hypermarkets in running awareness campaigns and promoting certified produce to encourage consumers to demand for produce that are certified. This has resulted in benefits for farmers by leveraging hypermarkets as a means of directly accessing the customer and avoiding the middle-man, and MOA’s efforts in increasing the number of certified farms in Malaysia.

Giving farmers a leg up into foreign markets

In 2017, with the introduction of myGAP, the cumulative number of farms certified with myGAP increased by 451% from 1,378 farms in 2011 to 6,226 farms in 2017, as more countries require the certification for the export of fruits and vegetables. Brunei become the most recent adopter of the certification, starting in January 2018. There was also an increase in the number of livestock farms were certified by the Department of Veterinary Services, as China, a major market for edible birds’ nest, started making it mandatory for bird’s nest imports from swiftlet farms to be myGAP certified, further proving that adopting international standards does help secure local exporters’ market penetration.

To further strengthen the transition to a globally accepted standard, the Ministry included routinely monitored KPIs that trigger problem-solving sessions which allow for effective intervention. The result of the effort is felt by the operators, as demonstrated by the following feedback received in a survey commissioned by Standards Malaysia back in 2014:

Farmers acknowledged that myGAP propagates prudent and economical administration of chemical fertilisers, which in turn helps check/control pest infestation, contributing to increased yield and reducing cost.

The feedback obtained from the farming community shows that while the process of converting from a local to a global standard does come with a learning curve and temporary pain points, the benefit of securing market access and improving profits is well worth the investment. The transformation to the global standard was made possible by bringing the public and the private sector together to problem-solve anticipated issues for the conversion, and relentlessly monitoring the work toward a common purpose.

“Before I adopted myGAP, I had to spend about RM16,000 on chemical fertilizers, but after the adoption, I was able to save money because I only spent RM2.000 by using the Sri Product via the Natural Farming concept. Now, I am using 70% of Sri Products and 30% chemical fertilisers. With myGAP, I am able to sell my rice for RM6.00/kg compared to before when it was only RM2.00. I have also sold rice seeds to Sendi Enterprise for RM1,350/tonne and sold rice at RM1,200/tonne to Bernas.” – Abdul Razak Chik, better known as ‘Pak Lang Sri’, who owns a paddy farm in Sekinchan, Selangor.

By Woody Ang & Khoo Woon Hann

Gas is a finite asset

The gas industry is a substantial component of Oman’s economy, contributing significantly to export earnings and serving as an important enabler to local industries. In 2017, Oman produced 41 billion cubic feet of gas, of which 32% was exported by Oman LNG while the remaining 68% was consumed locally, with consumption growing at an average of 2.3% per annum for the past eight years. Its proven total gas reserves stood at 25 trillion cubic feet as of end-2017.

As a GCC country rich in natural resources, Oman’s gas reserves are however a finite asset. Its current supplies remain healthy in the short-to-medium-term, but with pressure now to diversify the economy and reduce its over-reliance on oil and gas, its gas assets will need be utilised to directly spur other economic sectors. Gas requirements for economic generation, particularly in the manufacturing sector, will need a long-term supply commitment, and the country will need to balance this with its existing industrial and residential commitments, the latter of which continues to grow as the nation’s population increases.

Against this backdrop, and as part of a wider programme of economic diversification, the Omani Government saw a need to carefully manage supply and demand in the gas industry to mitigate any probability of a gas deficit situation in the medium-term. The supply-demand dynamics were further impacted by the fact that 97% of its power was generated from gas-fired plants. From an energy security perspective, Oman needed to consider diversifying its sources and avoid over-reliance on gas. Preserving this precious finite resource and allocating it to industries that generate the highest economic returns then became a priority for long-term sustainable development.

Complementing the effort to manage its gas resource was the need for effective governance that provided a conducive planning and regulatory environment for Oman’s industry players. The Ministry of Oil and Gas serves as an able custodian for the Oil & Gas industry, while the Electricity sector is managed by separate Authorities who do their best within their respective mandates. Moving forward, consolidation of the strategy and planning of these two closely related sectors would allow for harmonised development, taking into consideration a rapidly changing economic landscape.

Delivering tangible transformative outcomes

Through the PEMANDU Associates’ BFR Methodology Labs, Oman devised and adopted a 3-pronged strategy specifically for the Gas sector: (i) Ensuring long-term gas supply security, (ii) Optimising growth-driven gas demand and (iii) improving infrastructure capacity and efficiency.

Firstly, thorough investigation was conducted on all existing gas producing assets and development plans for greenfield projects. Specific supply-based projects were identified with the potential to increase Oman’s gas production substantially by 2042, and as a result, extend Oman’s available gas supplies. These projects include immediately implementable initiatives such as flare gas reduction, replacement of gas usage in existing operations to generate thermal energy, increasing asset productivity through modern technology; and longer-term greenfield and brownfield gas development projects.

Secondly, to complement the effort to increase gas production, the Lab deliberated on ways to optimise demand. After careful selection, a set of robust and stringent gas allocation criteria was developed and proposed. The ultimate objective was for Oman to allocate gas to industries that generate the most economic returns. Future applications for gas usage will be assessed and then prioritised using these new criteria. This represents a paradigm shift to a more objective, measurable and impactful allocation practice. In addition, a standardised gas application process was designed and communicated to all impacted stakeholders from both the public and private sector.

The third strategy for the Gas sector is to improve gas infrastructure capacity and efficiency. The Lab assessed high industrial growth areas against the availability of pipelines to meet future demand. This culminated in new pipeline projects that will transmit extra gas transmission capacity to critical regions like Sohar, Duqm, Sur and Salalah by 2019.

One of the key components in Oman’s Energy sector is the Electricity sub-sector. A comprehensive transformation of gas consumption would not be complete without assessing this sub-sector, where gas contributes 97% to all power generation capacity. There is thus a critical need for energy diversification for electricity generation to include renewable energy sources.

Two major outcomes were achieved in the Lab. First, 17 non-gas power generation projects were identified and prioritized for implementation. These projects will cumulatively provide up to 11% non-gas source generation by 2023. This is a substantial achievement considering Oman is still a developing nation with overall projected electricity demand expected to increase further in the next five years. The projects encompass utility-scale solar PV plants, wind farms and waste-to-energy plants. The Ibri 500MW solar power plant is an example of Oman’s government drive to diversify its energy source mix. This project is expected to be completed by 2021 and will be the first large scale solar project in the Sultanate.

Lastly, the Lab recommended that harmonised planning and development of Oman’s Energy Policy be institutionalised. Currently there is no one single entity, nor there exists a process that will enable the holistic development of an Energy Policy that considers interest of all sectors. The solution adopted will involve expanding the jurisdiction of a single existing entity to include policy-making for both the electricity and gas sub-sectors holistically.

Momentum for the future

The key lessons revealed through Oman’s Energy Lab is the need for a coordinated and structured approach for planning in this critical sector. Since the sub-sectors are all intricately linked, changes in policy and executive decisions must be done taking into consideration ramifications to all stakeholders. The Lab discovered that one of the biggest hindrances that industry players faced was due to the lack of central coordination of policy decisions and follow-up actions. If possible, policy-making should be centralised to encourage greater efficiency.

In addition, for a country facing diminishing reserves of a finite resource, demand planning such as consumption optimisation and subsidy rationalisation should take precedence. The political will to shift from a way of potentially wasteful cheap resource consumption to a more conservative approach of utilisation needs to be present. The BFR Methodology Labs have certainly provided the platform for a collective realisation that continued reliance on gas as Oman’s sole energy source will not be sustainable for the long-term, and has generated the momentum for the country to aggressively diversify into renewable energy. The future of energy diversification and security looks to be on the right track.

By Reinier Starink and Zehan Teoh

“The ERGP had determined US$195.98 billion in private investments required to achieve its target of unlocking sustained inclusive diversified growth for the maximum welfare of Nigerians”

The second largest economy in Africa after South Africa, Nigeria is a uniquely diverse country comprising 371 ethnic groups with over 520 spoken languages. Its economy, however, was dependent on revenues from oil exports and thus had been adversely impacted by the decline in global oil prices in 2014 to 2016.

This resulted in the country experiencing a recession in 2016, leading the government to formulate the Economic Recovery and Growth Programme (ERGP) 2017-2020 to transform the economy. The ERGP requires US$245.13 billion to implement and had determined US$195.98 billion in private investments required to achieve its target of unlocking sustained inclusive diversified growth for the maximum welfare of Nigerians.

With this agenda in hand, the Nigeria’s Ministry of Budget and National Planning, tasked with overseeing the ERGP, appointed PEMANDU Associates to synthesise its plan into realistic implementable initiatives, looking to our experience in deploying our proprietary BFR methodology in effecting economic transformation in countries such as Malaysia, Oman, South Africa and India.

Specifically, they sought help in mobilising private sector investments in six sectors identified as the economy’s most productive. The sectors were then clustered into three workstreams based on their relevance to each other: Manufacturing & Minerals Processing, Agriculture & Transport and Power & Gas.

“The initial interactions with the CEO and leadership of PEMANDU Associates was reassuring and gave a lot for the team to anticipate as to how the Labs would be run, and how this would constitute a key developmental experience for the country, the team members and the Lab participants. The CEO’s inspirational approach was therefore commendable. 

The Labs provide extensive involvement of most stakeholders to co-create solutions rather than have the solutions developed by a small team of consultants or just involving the stakeholders for consultation only over a few hours.

Towards the end of the project, the PEMANDU Associates project team and PEMANDU Communications, that assisted with preparing for the Open Day, appeared very outcome-oriented and this was positive. The communications team indeed appeared very positive in their approach and this was commendable.”

– Folarin Alayande, Co-ordinator, ERGP Implementation Unit/Senior Special Assistant to the President (SSAP, Economic Recovery and Growth Plan (ERGP)

Overcoming challenges, bridging gaps

Challenges in crafting a three-feet plan for these clusters for Nigeria, as with most countries in the world, were multi-faceted, stemming from the polarity in expectations between the public and private sectors. Governments typically have a record of amending policies and plans, while the private sector are generally motivated by the bottom line, hence may be cautious in participating in grand government plans.

This was a specific challenge tasked by the Nigerian government to PEMANDU Associates to decrypt. Drawing from PEMANDU’s previous experiences in mobilising private investment, such as the US$444 billion in investments facilitated and identified under Malaysia’s Economic Transformation Programme and the 775 projects valued at US$96 billion identified in the Urban Development Lab in Andhra Pradesh, we found that most economies in the world are dependent on the public sector to spur investments and expenditure.

Our role in Nigeria was to develop and enable a programme that would ensure the government continuously works with the private sector to own, initiate and implement transformational projects that would yield positive multiplier outcomes for the economy.

Thus, for much of the first half of 2018, the PEMANDU Associates project team was stationed in Abuja to conduct the necessary groundwork and undertake Wave 1 of the ERGP Focus Labs.

Under this project, PEMANDU Associates helped the Nigerian government identify US$22.5 billion in private investments which could be unlocked from the implementation of 164 projects, paving the way for the creation of 513,981 jobs.

This was done by encouraging the private sector to take a proactive participation in the ERGP Focus Labs.  This proved to be a unique value proposition to the industry captains and with the support of the government who sent key decision-makers to the labs, it generated positive interest amongst the private sectors.

A total of 500 participants from both the public and private sectors, comprising the relevant stakeholders from the three workstreams, were brought together under one roof for six weeks.

Given the existing polarities, the exercise was expectedly met with its fair share of scepticism, with some private sector stakeholders turning up with their products with sales in mind, while some expected to garner public investments. Some, were taken by surprise at the level of involvement required of them, having been used to government-led economic initiatives. So, the challenge was to shift expectations and mindsets from ‘What is in it for me’ to ‘How can I contribute in terms of planning for my sector’.

Nonetheless, the presence of public sector decision-makers in the Labs, and the participants’ determination to achieve tangible results allowed them to put aside their cynicism and work towards to common goal. The private sector became the engine of the labs and the shift in conversation was a remarkable breakthrough.

“We would like to especially commend the management and project team of PEMANDU Associates for organising and facilitating the smooth conduct of the ERGP Focus Labs of the Federal Government of Nigeria, particularly the Agriculture/Transportation Projects.

Our company, Trucks Transit Parks Ltd, benefitted immensely from the programme in the following ways:

– highlighting to the government the social necessity that the project seeks to address;

– bringing to the notice of the government challenges faced by our company in progressing the project;

– assisting us to more properly package our project for fast-tracking by the government;

– enabling us identify certain inherent challenges to attracting investments into the project; and

– putting us in direct liaison with key regulators.

This would not have been possible if not for the professional approach of PEMANDU Associates’ hard-working team.”

– Jama Onwubuariri, Director, Trucks Transit Parks Limited, ERGP Focus Lab member

Getting to work

Once participants were on board, the next challenge was identifying and prioritising initiatives. Projects were categorised to their level of readiness and conversations were created to discuss their business model; from how to grow, plan and finance, with each project put under scrutiny.

These buckets of conversation separated projects ready for implementation and acceleration from projects under incubation. Creating relevant conversations which engaged participants successfully retained participants throughout the whole six weeks of the Labs, producing frank, transparent conversations.

The outcome of the Labs and its in-depth, implementable programmes were presented during an Open Day in Abuja in May 2018.

The Open Day, which was attended by the public and private stakeholders as well as the media, served to communicate the ERGP Focus Labs initiatives to the public.

Together with the Labs, the exercise served to inject greater transparency into the government’s initiatives, representing a good start for the Nigerian government to win over the hearts and minds of the country’s people in its bid to transform the economy.

In applying our 8-step Big Fast Results (BFR) Methodology, the approach in its start will always be met with a degree of cynicism. As experienced in previous projects, however, these sceptics are very quickly won over when they witness how the methodology works, our flexibility to adapt to client needs, all the while staying focused on meeting a clear set of deliverables.

Key to success in any of our BFR consulting projects has always been the team’s commitment to understand the country’s dynamics, the unique relationship between the private and public sectors, its tipping point, diversity and issues. The BFR Methodology has always allowed PEMANDU Associates to take a collaborative approach with participants to steer the conversation towards a true outcome guided by an objective. Leadership commitment and participation is always a mainstay in allowing incredible sharing of knowledge resulting in implementable outcomes.

Nigeria has today completed Steps 2 (Lab) and 3 (Open Day) of 8 and now has a clear plan for the first phase of its ERGP. The Government will now need to set these action plans into a detailed programme by way of a Roadmap for implementation. Coupled with the discipline of action and rigorous monitoring, the Nigerian Government has set itself on the path of transformation. And while the public and private sectors have painstakingly converged to realise this programme of change, the ultimate stakeholders who stand to benefit from this work are the people of Nigeria.

How do you say, ‘True North’ in a different language? As one of the main elements which anchors the work of PEMANDU Associates, translating the term True North, and so much more, lay at the heart of projects the organisation recently undertook in non-native English-speaking countries.

“It was definitely challenging – the work bandwidth tripled!” says Mohd Fauzi Puniran, a Vice President who was assigned to the Federal Road Agency Transformation Lab in Russia in late 2017. The Federal Road Agency (Rosavtodor) is responsible for overseeing the road transport industry and transport engineering in Russia, and had sought PEMANDU Associates’ Big Fast Results (BFR) Methodology to identify its True North to guide its management of federal roads. The Agency also requested our assistance to determine related initiatives to support regional economic growth.

“Some English words just do not make sense in Russian due to contextual issues, and may even appear offensive once translated. Hence, we worked closely with interpreters and our Russian counterparts to ensure the correct meaning was conveyed upon translation,” Fauzi, who was the engagement manager for the project, explains.

This process was painstaking, with the involvement of interpreters who would translate simultaneously while the Lab was underway. Each workstream was also co-facilitated by a Russian co-facilitator in addition to a PEMANDU Associates facilitator. This allowed the project team to gather the required input during the Lab towards preparing the final Lab report.

Hence, for the two months of the Lab, the team’s typical day consisted of 16-hour days spent facilitating the Lab, summarising the Lab findings in English then translating it to Russian. This was done not only to develop content for the final Lab report, but also to prepare for subsequent days’ proceedings throughout the duration of the Lab.

The team also put in effort behind the scenes to ensure the language barrier did not disrupt the work flow or working relationships between the Russian client and our associates, who are based in Malaysia, where English is the accepted language for business in addition to the national language, Bahasa Malaysia.

“We undertook frequent engagement with our client even outside of working hours. It also helped to build relationships among key stakeholders. Another strategy we adopted was to keep things simple. This did not only apply to our choice of words, but also in the way we conducted the Lab. It was important to explain each task undertaken during the Lab, so the Lab members not only understood the words we used, but also the meaning behind each action,” says Fauzi.

Zehan Teoh, a Senior Vice President at PEMANDU Associates who was stationed in Russia for a separate project, agrees on the importance of keeping it simple, adding that the fluency of language sometimes emerged secondary in communicating with clients and stakeholders.

Speaking on his experience in the country, he observes, “Very often we noticed that between non-native English speakers, although the vocabulary used was stripped down, it did not mean that information was being left out.

“Verbal cues are only part of the entire spectrum of communications, you also have non-verbal cues and body language.”

He adds that while translating on-the-go, be it from English to Russian or vice versa, did pose a challenge in the working environment, another important element it impacted was the ability to build trust amongst the project team and their Russian stakeholders; a crucial determinant in the success of any project.

Like Fauzi, Zehan saw that finding local advocates to help explain the context of discussions went a long way in ironing out communications breakdowns. Again, non-verbal cues, as well as staying engaged in discussions, even if they are being a conducted in a language you are unfamiliar, with also play a crucial role in building trust.

“Although the vocabulary used was stripped down, it did not mean that information was being left out.”

“Be sincere through your body language and show interest in trying to understand what they are saying. Even exhibiting that first step of being willing to reach out and being present will give your stakeholders the encouragement that you are sincere. Hence, even without a common language of communication, there are other ways to build trust,” he says.

The challenges posed by language barriers are also present in PEMANDU Associates’ currently on-going Senegal Agropole Lab project, which aims to identify projects to add value to priority crops and establish shared infrastructure and services for increased efficiencies by 2020 in South Senegal. This was despite half of the project team being fluent in French, the country’s official administrative language.

“The biggest challenge with the assignment is the subtle nuances between languages requiring Lab output to be monitored closely. Working with our client to ensure the meaning and context for the Lab output was captured and translated correctly was essential for future implementation. From a project management point of view, this required more time than usual, which means it put further pressure on a highly intense assignment like a Lab, says Yoong Huey Yee, a Vice President who is engagement manager for the project.

She points out however, that the difference in language allowed the project team to bond with the client due to the extra effort demonstrated. “Our fluency in French added to the client’s appreciation in our effort to make the assignment a success, despite our mother tongue being English. Working closer also facilitated trust-building,” she says.

She also agrees with Zehan’s advice that certain factors transcend language barriers, such as humility, attentiveness, respect and empathy, all of which helped the project team bridge the communication gap.

Beyond proving the importance of a common language in undertaking projects, our work in Russia and Senegal testifies to the universal transferability of PEMANDU Associates’ BFR Methodology – one that transcends differences in language in the pursuit of driving transformation.

By Nyoomi Rasiklal Kamani

“We feel that only when we are challenged with our backs against the wall, innovation and ideation takes root…”

Having joined PEMANDU a little over a year ago, I have been witnessing evident outcomes achieved by our Big Fast Results (BFR) methodology. Some of the governments that have actually deployed this methodology, customised to deliver their economic transformation, included Malaysia, Tanzania, South Africa (whose ‘Phakisa!’ transformation programme translates to ‘Faster!’), Oman, Maharashtra, Andhra Pradesh. More recently, PEMANDU has been tasked to work on similar projects in Russia, Botswana, Nigeria and Senegal, of which I have personally been involved in.

Anchoring BFR is a 6-8 week lab process, where our consultants, analysts and project stakeholders engage in intense discussions to achieve consensus on a project’s high-level True North and its granular action plan which outlines step-by-step actions, persons responsible, timelines, budget requirements and measurable targets.

Our labs are also divided into four phases: pre-labs (determining the work scope), labs (where our stakeholders are required to be present), post-labs (where the detailed implementation plans agreed upon in the labs are scrutinised) and syndication sessions (ensuring that our client and all their stakeholders provide feedback on the lab and agree on its final outcome).

Business Unusual

As a newcomer to BFR, I admit that there were nuances which caused me to pause momentarily as the 6-8 week period is both rigorous and can be overwhelming, especially to a newbie. However, I was able to see the importance and significance of this timeframe as it involved analytics, solutioning and detailing of intended plans to mobilise transformation.

This time is used to not only gather, process and syndicate data but also build rapport between our consultants and lab members. Every problem or case for change is often overarching. Hence, to ensure that the interest of all parties is acknowledged, we invite representatives from each party.

This usually involves individuals from private and public sectors, smallholders, entrepreneurs and ministry representatives. Engaging the participants in the labs was also a first for me. I witnessed that most participants would come with a pre-set idea of the direction they would want to pursue. Hence, there was a need to break these silos down, so that all possible ideas, solutions and determinants were robustly discussed and agreed upon. In theory, the lab may seem to be a workshop but in reality, it is a platform that requires able facilitation to derive the right mix of solutions that will deliver the True North.

Emotions usually ran high as each lab member would defend the interests of their stakeholders. The management of these polarities represented a large chunk of our work. Often debates may come from disenchanted stakeholders who had participated in previous studies and research papers by other institutions, contrary to present environment. Managing discussions based on these pre-set ideas is a common feature in labs. Participating in a lab also requires different individuals to work together and this dynamic may also be a challenge that requires facilitation.

Witnessing the more seasoned PEMANDU consultants in action allowed me to gain a new perspective in facilitation. The polarities were managed through constant open communication to encourage our lab members in uncovering a common goal.

Economics can make sense

Theoretically, we could write down the True North at the front of the lab room, emblazoning the Gross National Income, private and public investments we are pursuing. However, this doesn’t translate as a common language. We have to strip these numbers down to the bare essentials – identifying how these numbers are arrived at, how the lives of their stakeholders stand to benefit from the transformation, what are the common social impact and how the targets will even be achieved.

These rounds of communications represented how we had to facilitate conversations between stakeholders by redirecting them to parties who will be affected by the changes proposed and encourage clear communication between them all.

Another reason why these labs are business unusual is because when we get all of our stakeholders under one roof, this removes the typical delays impacted by locale differences, as well as those with fragmented interests but have chosen not to participate. In our labs, we get them to plan, agree and detail their vision so that their results are Big and Fast – as promised. The labs are also where we pursue the most important component of transformation – gaining stakeholder buy-in. Without stakeholder buy-in, it is difficult to push the plan into immediate action.

Being Accountable

At the end of every lab, we publish syndication and budget reports. This means lab members cannot just agree on something at a superficial level. We question, challenge and encourage until each lab member understands the rationale behind a particular transformation initiative and are able to commit themselves and volunteer to lead the initiative. It is also here where they are required to confirm the anticipated resource and budget, as well as committing to a feasible timeline for the project.

Embracing the Big and Fast in BFR

It is this comprehensive process which necessitates the 6-8 week lab we highly recommend to our clients. But having participated in several labs since joining PEMANDU, I’ve come to realise, there are often different horses for different courses. I recalled reading one of PEMANDU’s first lab projects when I was still a student. It was on the development of Malaysia’s Economic Transformation Programme. I remember wondering what were these labs and what constituted the work in conducting 12 labs over two months in 2010, involving 6,000 stakeholders. Now I know!

PEMANDU has always encouraged the Lab participants to play the game of the impossible. We feel that only when we are challenged with our backs against the wall, innovation and ideation takes root. A need for commitment manifests itself and from there, being accountable and driven to deliver comes second nature.

It is a mindset PEMANDU nurtures from an employee’s first day, up until the impossible is merely another item on our checklist and always bearing in mind that if you do business as usual, you cannot go big or fast; and to get Big Fast Results, you cannot do business as usual!