Psaltry International Ltd: Challenges Refining Cassava Starch in Rural Nigeria
Psaltry International Limited was an agricultural processing company located in rural Nigeria. The company refined cassava into high-quality food-grade starch, which was used in many consumer products. As of 2016, Psaltry had 300 employees and operated two production lines. The company was growing rapidly, but its founder, Ms Yemisi Iranloye, faced key strategic decisions about whether to expand production, and how to source two water and electricity for the company’s factory. These inputs were difficult to obtain because of the lack of government-supplied infrastructure in rural Nigeria. Indeed, although many outsiders considered the Nigerian business environment to be challenging due to problems like corruption and the threat of violence, from Ms. Iranloye’s perspective the challenge of obtaining power and water was every bit as important.
One possible solution was for Psaltry to increase its own power generation and water supply capacity. This approach would require substantial up-front investment. It also carried a risk, as local communities could not rely on government-operated infrastructure, and might expect Psaltry to provide them with power and water. Although Ms. Iranloye was proud of Psaltry’s track record of promoting community development, she was acutely aware that Psaltry was not in a position to fully satisfy local communities’ needs for power and water.
For water, Ms Iranloye considered three main options: drilling deeper wells, building a dam, or building a supply pipe to source water from a government dam. For power, her three main options were to build a biogas plant, rely on costly diesel generators, or increase the company’s use of government-supplied electricity.
These options varied in both their cost and the likely ways that they would influence Psaltry’s relationships with the state government and local communities. In addition to deciding on how to source power and water, Ms. Iranloye needed to decide whether and at what price to supply power and water to local communities.