Despite Nigeria’s recession and its attendant challenges manufacturers and other investors are facing, the Managing Director of Philips Morris Limited (PML) Nigeria, Mr. Coskun Dicle, holds the opinion that the country is still an attractive destination for foreign investors.
According to Dicle whose company began operation in 2015, doing business in Nigeria at this time might not be as difficult as it is being portrayed outside the country.
Dicle, who speaks on the many jobs the company has created and its plan for business expansion, maintains that this is the best time for any investor to invest in the Nigerian economy.
He also speaks on the challenges of doing business in the country, expectations of foreign investors from the government, the Tobacco Control Bill and other sundry economic issues.
Coming into Nigerian market
Africa is at the forefront of investment focus for many international companies across a wide range of industries. Within Africa, Nigeria’s human and natural resources, coupled with the fact that there has been political stability and democratic governance since 1999, make the country an attractive investment destination. Civil rule promises stability and so long as that is guaranteed, global investors would be attracted. And so long as leading investors from across the world are attracted to any economy, it will continue to witness growth. From our industry perspective, despite our global market leadership position as Philip Morris International (PMI), we were not present in Nigeria and one of our global competitors was enjoying what we can call a monopoly situation in Nigeria.
We commenced business in Nigeria in 2015, after obtaining all necessary statutory and regulatory approvals. Our objective has always been to provide our international brands of the highest quality, as alternative choices to the legal aged smokers who have made the choice to continue to smoke.
Beyond Nigeria’s position as Africa’s largest economy, Nigeria is also home to a consumer population that is both sophisticated and discerning. Nigerians recognise and appreciate quality while placing significant importance on the value-for-money proposition. This type of environment is one where PML and its products can add value and thrive. In fact, we estimate that our employment footprint will reach approximately 2,000 Nigerian talents through direct and indirect employment.
Furthermore, through our global efforts on tobacco harm reduction and reduced risk product development, which we hope to make available in all the markets where we operate, we are committed to meet the market’s demands for the best quality, innovative products, now and for many years to come.
Doing business in Nigeria
It has definitely been worthwhile. Looking back to the time I started as Managing Director in Nigeria, precisely in February 2016, I can say we have had a fast learning curve discovering the uniqueness of doing business here. Our experience shows that doing business in Nigeria at this time might not be as difficult as it is being portrayed outside the country, particularly in the media, which has created an erroneous perception of the Nigerian business terrain as a difficult operating environment. For us, this time is the best time for any investor to invest in the Nigerian economy. I believe that Nigeria’s economy is growing. It will not grow over night but gradually. Despite all the concerns about the state of the economy, I would say that Nigeria offers tremendous opportunities for investors. Nigeria has the largest population in the African continent (estimated 170 million); the largest black population in the world; it is the second largest economy in Africa (with a GDP of over $300 billion); one of the highest growth rates in the world currently (6.7 per cent); accounts for over 50 per cent of the GDP of the West African sub-region; accounts for over 50 per cent of the population of the West African sub-region; blessed with abundant natural resources (minerals and arable land), and the democratic structures are becoming firmly entrenched.
What is missing is the capacity to harness these opportunities for the common good. I am confident that this will happen before long. I also believe that with government’s intervention in addressing the power supply challenges, infrastructure deficiency as well as the recent economic reforms focused on the ease of doing business in Nigeria, the business environment can only get better. From PM’s perspective, the operational and economic outlook is extremely positive and we are here to stay.
The plan is to steadily grow our investment in Nigeria. Since 2015, when we started our operations by taking advantage of the ECOWAS Trade Liberalisation Scheme (ETLS), which enables free movement of goods within West Africa, we have gone from 100 per cent importation of brands from our manufacturing plant in Senegal, to taking the bold step of starting to locally manufacture our brands in Nigeria with our strategic partner, International Tobacco Company Limited (ITC). Next, we have already created approximately 500 direct and indirect employment opportunities in the country and are still creating new ones with the hope to grow our footprint by as much as four times in the near future. To aid in this, and in pursuit of our long term investment plans in Nigeria, full-scale local manufacturing of our brands will begin before the end of the year through strategic partnerships.
Additionally, we have started exploring the possibility of producing in Nigeria, with key partners and local farmers, tobacco and/or other agricultural crops for the local and international markets. We would work with local business partners to share our know-how and help to ensure good agricultural practices to obtain good quality crops, high yields and good income for farmers, while minimising environmental impact and fostering sustainability. PMINTL Nigeria, through our investment plans and commitment to Nigeria, will be a significant taxpayer – contributing to the government revenue, providing foreign direct investment into Nigeria, creating sizeable direct and indirect employment opportunities to Nigerian talents with ongoing focus on education and development. Overall, we are committed to contributing to the local communities, while operating with integrity, and look forward to becoming a major player in the Nigerian economy to establish a long-lasting presence. This goes to show the confidence we have in the Nigerian market, and our focus on local manufacturing and other investments will certainly continue.
Impact on the operating environment
Our industry is highly regulated. PMI maintains a global policy of compliance with rules in each market where it operates. So, our best way of impacting our environment is through quality processes and ensuring full compliance to all laws and regulations. For instance, we are very much interested in partnering different government agencies on jointly fighting illicit trade of cigarettes to ensure that every pack sold in Nigeria contributes to the tax revenues of the Federal Government.
Every market has its peculiarities. For PMI, countries that have signed up to and are guided by the World Health Organisation (WHO) Framework Convention on Tobacco Control (WHO FCTC) resolutions have some unanimity in the treatment of the tobacco industry and this helps to maintain a unified approach in addressing the challenges facing the tobacco industry, such as illicit trade and youth smoking, among others.
Since the enactment of the National Tobacco Control Act, 2015, which has led to the setting up of the National Tobacco Control Committee (NTCC) with a view to ensuring compliance with the law by all stakeholders, there have been a lot of activities within the industry and all players are aware that it is no longer business as usual. We welcome these developments in the hope that they will help the tobacco industry operate within the provisions of the law to the benefit of all stakeholders.
Nigeria’s Tobacco Control Bill
We were fully aware that the National Control Bill was being discussed at the National Assembly as we sought our registration. We strongly believe that proper regulation of tobacco products is essential to ensure that adult smokers are aware of the harmful effects of smoking, that tobacco products are not made available to minors, and that legitimate companies can compete on a level-playing field with clear rules.
Illicit tobacco trade
Available statistics from different sources estimate the size of the illicit tobacco trade to be between 10 and 12 per cent of the global cigarette market. This is alarming not just because of the income it denies various governments and the world economy but growing concerns that such income is further employed to support other illegalities.
Contraband cigarettes deprive governments of billions in tax revenue yearly, while consumers lose because they often end up buying fake products of poor quality that are not subject to any regulatory scrutiny or quality control procedures by manufacturers.
Around the world, PMI undertakes a broad series of measures to fight illegal cigarettes to ensure our brands are protected and consumers get the genuine product they expect. We support strict regulations and enforcement measures to prevent all forms of illicit trade in tobacco products, including tracking, tracing, labelling, record-keeping requirements, and where appropriate, implementation of strict licensing systems. We are also working with a number of governments around the world on specific agreements and memoranda of understanding to address the illegal trade in cigarettes.
We are planning to meet with all relevant authorities in Nigeria, in particular with Nigeria Customs Service (NCS), to present our tools and know-how to foster cooperation in addressing illicit trade together.
Regarding the operating environment, it will be nice to see more of an improvement in power supply and quality of infrastructure. On industry specific changes, I would like to see more efforts towards the fight on illicit trade and counterfeit products as this will invariably increase revenue generation for the government. I am also keenly looking forward to the continued implementation of the Act and other subsidiary legislations with a view to ensuring compliance by all stakeholders.
Since our entry into the market, we have been very clear about our commitment to Nigeria and the contributions we can make to the local economy. It has always been our strategy to manufacture our brands locally. Having found the right partner in ITC, we are proud that this is happening in less than two years of our presence in Nigeria; this will no doubt contribute to the local economy and establish a long lasting presence for our company.
There is also the advantage of significant job creation, which PMI globally is passionate about as attested to by the many top employer awards received across the countries and regions where we operate. We are already providing direct and indirect employment to thousands of Nigerians through our distributors, agencies and the support we are giving to the trade.
Cost of doing business in Nigeria
It is costly doing business in Nigeria, and this was discussed at various meetings. There are two big things, energy and the logistics needed to support moving goods across the country and different markets. Being an export organisation, we have to compete against other factories in these markets that do not have the same challenges. However, to manage our costs, we localise a lot of our operations, growing, packaging, manufacturing, among others. A number of our competitors who are transactional have challenges with the inflation and foreign exchange pressure but due to our deep roots, we only see these challenges as opportunities.
Working in Nigeria
I absolutely love Nigeria and Nigerians; the passion and energy is unmatched and contagious. I have enjoyed every bit of my time here and made many good friends because everybody is so warm and welcoming. I have also developed new taste buds and I relish all the local dishes especially pepper soup and suya. It is impossible not to fall in love with Nigeria!
Future in Nigeria
We are optimistic about the prospect of our business in Nigeria and against this background, we are currently focused on building our business organisation, hiring local talents and strengthening our infrastructure and ties with our counterparts in the tobacco value chain. But I can assure you we are here to invest and we are here to stay.
We have planned to invest heavily into Nigeria’s economy, which I know would provide a lot of job opportunities for the youths of the country. Nigerian youths deserve the best, and that is why we are in Nigeria. When you look at the economy, there are a lot of challenges but we are not looking at those challenges at the moment, we are looking at the future. The future is bright for any investor like us in Nigeria.
I am a family man who loves to spend time at home with my family and socialise with friends. I also love to travel around the world and explore new things. I’ve lived in six different countries and so far, I’ve been to at least 55 countries that I can remember, and I hope to further increase this number.