Ndegwa: We Should Diversify Our Economy and Add More Value
The Managing Director/Chief Executive Officer of Guinness Nigeria Plc, Mr. Peter Ndegwa spoke to journalists on some initiatives of his company and on the Nigerian economy. Goddy Egene brings the excerpts:
Recently the World Bank revealed that Nigeria has improved. You have been in the country for more two years. What areas of the economy do you think have actually improved?
There is no doubt that a number of areas have improved. First will be the availability of liquidity on the foreign currency side especially for manufacturers who import raw materials and also spare parts for our plants. We have seen some level of stability both in terms of the expected range of price versus the volatility we have seen in the currency before. That is good because it improves predictability, ability to plan and even when costs are higher, it helps that we know what the price is, which is key.
The second is the availability of gas. About 12 months ago we had fluctuations on the availability of natural gas that we use to power our plants. When we had shortages we had to go into the use of diesel, which is more expensive, less environmentally-friendly and more erratic. Previously, we had incredible delays in getting work permits or travel permits. However, in these areas, we have seen some level of improvements. Areas I feel we could improve further are the congestion at the seaports. Our exports have doubled in the last 18 months and one of the reasons why we are doubling exports is to get foreign currency, which is very helpful for us. But we have seen some level of delays as a result of the congestions at the ports, both in terms of outbound and inbound of raw materials. As a result, two things happen to the business eventually, we incur demurrage and more transport costs and also when we don’t get the materials on time, it is challenging to ensure continuity of production. However, it is good to see that government wants to spend more money on infrastructure.
I know the company will like to be in Nigeria for a further 67 years and more; what initiatives are on going to drive that?
Despite the challenges we have been seeing in the environment, we continue to grow our business. How have we been able to grow our business? We have invested in our production capacity to produce spirits locally and today we are producing Smirnoff, Gordons, and McDowells locally instead of importing. We are not only saving the country some foreign currencies, but this is also allowing us to price these brands at the right price so that consumers can afford them. Our investment in spirit shows that we are committed to the future.
The second is we have also increased our local sourcing. We used to source about 40 per cent locally, now we are sourcing about 75 per cent of local materials like sorghum, glass, packaging materials like labels and crown corks. This reduces our cost of doing business.
Innovation continues to be a core part of our business and we have come to be known as the business that innovates. One aspect of that is our spirits innovation however we have also expanded our participation in some of the other categories including beer and soft drinks. We are the only total beverage business which has spirits, beer and soft drinks, giving us a bit more opportunity to service consumers, compared to if we were specialists in a particular area. It is about expanding our portfolio through innovation and also through building existing brands. It is about lowering our costs both through local sourcing and locally produced brands instead of importing. We also continue to drive our productivity agenda, which is all about reducing waste and being more effective. Finally, it is being close to the consumer in terms of the way we go to market, our products being better distributed.
As Africans, how can we look for ways to source alternatives for the things we depend on from countries outside the continent?
On this topic, I like two things the government is saying, one is diversify from oil. The overdependence on oil is basically part of what you are speaking about, and then add more value locally rather than being an import country. So it is not just dependence on oil, but add more value. Let’s localize production, source locally, let us export. In particular ECOWAS is a big market for Nigeria. The regional blocks are within Africa, we can source more trade regionally within Africa. Part of the reason why our exports are increasing is because we have increased exports to Ghana and Cameroun to some of our sister companies. Certainly I think we should diversify our economy and also add more value.
Guinness Nigeria Plc is associated with numerous initiatives and campaigns targeted at responsible drinking. What factors underscore your interest in this area?
As you know, Guinness is a household name, it is a brand that is known for quality and it has been in Nigeria for 67 years. So, for us, it goes beyond just alcohol. The whole issue of alcohol in the society, and in particular, our response to the drinking agenda, is very important to us. While our commercial interest, investment and paying dividends and returns to shareholders are very important, success for us is more than the commercial aspect. Reputation, trust and respect are also very important. What consumers, customers and society think about us is a big part of what makes us successful. As leaders in the alcohol industry, we want to make sure that we also lead the agenda in raising awareness about responsible drinking with stakeholders, not just consumers but communities, suppliers and the public. Alcohol has been part of the society for a long time and had been used in celebration for many centuries but if misused, it can cause harm, which is the primary basis of all the messaging on the responsible drinking campaigns that we do.
The other context is at a global level. Diageo, our parent company, is a part of the global producers and marketers of alcohol. The chief executives (CEOs) of global companies that produce alcohol came together and made a commitment that across the countries they operate, they will ensure that they focus on efforts that reduce the harmful use of alcohol. So, as part of Diageo, the activities that we take part in locally are a part of that bigger commitment and global collective. Also in Nigeria, we are part of Beer Sectoral Group (BSG) for beer and for spirits, we are also part of the Spirits and Wine Association of Nigeria (SWAN) and we work with these groups to tackle the misuse of alcohol.
Speaking about your initiatives, what else are you doing locally to enlighten the public about responsible drinking?
The first one I would like to mention is the ember mother months campaign carried out in partnership with the Federal Road Safety Corps (FRSC) across the country. It’s a responsible drinking campaign is targeted at commercial drivers and motorists, especially those using public transport. It aims to help them to understand the importance of not drinking when driving or about to drive. This year so far, we have launched one of the ember months campaign in Agege Motor Park here in Lagos and we will also be launching in other parts of the country, including Abuja, Kano, Benin and Onitsha, just to sensitize the commercial drivers on the risks of harmful misuse of alcohol especially when driving. We have partnered with the FRSC for the past 13 years on this campaign. In 2015, we gave them breathalyzers to enable them test drivers and this also provides a way to check that our education/awareness initiatives are working.
Secondly, this year, we are starting a radio programme where we will be giving a lot of information about responsible drinking, making people aware of the various elements about responsible drinking, for example how they shouldn’t drink if driving and how much alcohol is permitted in your body according to regulation. Our overall message to drivers is ‘Don’t Drink and Drive’ and we have mostly focused on this campaign around the ember months. However, from 2018 we have decided to extend it through the year, from January to December. This is because accidents don’t just happen towards the end of the year, and drinking doesn’t stop at the end of the festive season, it goes throughout the year.
Thirdly, for the first time ever, we will be organising structured trainings for new driver’s license applicants and fleet drivers across the country and this plays well into our education piece for responsible drinking.
Some reports have suggested that issues around underage drinking may be more prevalent in developing countries. Do you have any programmes targeted at this group?
As part of the global CEOs commitment, one of the areas we focus on is underage drinking.