By Charles Nwaoguji
MRS. Vera Nwanze, Country Manager, PMINTL, is one of the stakeholders that have remained optimistic about Nigeria’s economic outlook.
Despite the dire challenges facing the country, she believes Nigeria will come of it a stronger economic power.
The Philip Morris International boss in Nigeria shares on her company’s return to the Nigerian market and why the economy has stronger global appeal among discerning investors.
EXCERPTS…
Why PMINTL Limited’s returning back to Nigeria
There is the global recognition of the economic growth opportunities in Africa. On the heels of its near-record economic growth over the past decade, and growth prospects relative to the developed economies, following hundreds of international investments have poured into the continent. And as you know, Nigeria became Africa’s largest economy in 2014, a testament to changes in vision, governance and leadership since the return of democracy in 1999, which has also driven reforms in key sectors of the economy and made her market more attractive to global investors like PMI. It is those opportunities that we seek to explore in the years ahead and which have informed our return.
We have made a strategic decision to invest for the long haul because our goal is to become a major contributor to the development of Nigeria’s agricultural sector, and to be a key partner that adds value to the economy. We are optimistic that the economy’s prospect is bright and we are hoping to make our contribution in the process.
How we intend to add value
As a leading tobacco company, we think we can help foster employment opportunity in the manufacturing, distribution and trade sectors, and in the process contribute to government’s revenue. We also believe that our entry into the market will foster competition and consumer choices, which is good for economy, innovation and ultimately for the good of the state.
Allegations of illegal entry against PMINTL
These allegations are false. PMINTL Nigeria Limited was legally incorporated in December 2014, and as stipulated by the laws in effect, we sought and received approval to operate in Nigeria from the Standards Organisation of Nigeria, the Nigeria Customs Service and the Ministry of Finance. We have also begun engagement with other relevant government agencies including Consumer Protection Council, Nigerian Investment Promotion Council and the Federal Ministry of Health. As the local affiliate of the world’s leading tobacco company, we are guided by the same principles and exacting standards that govern the global operations of our parent company, Philip Morris International. We strive to be transparent in our governance practices and policies and responsive to our shareholders, while managing the company for long-term success.
Why our factory is in Senegal
PMINTL Nigeria Limited is a part of a global organisation and it is common for manufacturing plants to be located in a given country to serve as a regional commercial hub.
But PMI has been present in Senegal for over 20 years, and our affiliate in Senegal serves as the regional hub of PMI’s operations in the West African sub-region. The brands we have introduced into Nigeria are imported from Senegal under the ECOWAS Trade Liberalisation Scheme, as part of our market entry strategy that would be in place for an initial phase until we move into the next level of our investment in Nigeria which includes local manufacturing arrangement.
The ECOWAS Trade Liberalisation Scheme might be pivotal for the establishment of a common market and regional integration but there are concerns among industry watchers that operating under the scheme, which stipulates “the liberalisation of trade by the abolition, among member states, of customs duties levied on imports and exports…” could deny the Federal Government of Nigeria revenue from import duties and levies.
But it is up to the ECOWAS countries and their governments to decide on a trade liberalisation scheme that protects their national interests, while helping boost the economy and trade within the region. PMINTL Nigeria will comply fully with the legal provisions of the treaty as they apply in all the markets in the ECOWAS sub-region where our operations touch.
However, since cigarettes fall under the category of excisable products in Nigeria, PMINTL Nigeria Limited is fully compliant with the excise tax rates applicable to the importation of cigarettes. We have already paid and we will continue doing so.
Our stand on 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.
How to control 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, to present our tools and know-how to foster cooperation in addressing illicit trade together.
Alleged migration of tobacco companies to developing countries
PMI is present in both developed and developing countries, with products sold in more than 180 markets. Partial or total bans on tobacco advertising, marketing and promotion have been in place around the world for many years. These rules are not, as many people mistakenly believe, limited to the EU and other developed countries. In fact, broad-based tobacco control policy is common throughout the world today, including, for example, in Algeria, Brazil, Chile, Egypt, Gambia, Kazakhstan, Malaysia, Senegal, Thailand, Turkey and Ukraine.
Wherever we do business we comply with local tobacco regulations. In addition, we adhere to a set of strict, internal marketing practices, which not only guide our compliance with the laws but also require in some cases that we take proactive steps beyond what is required by local law. We believe that creation of the National Tobacco Committee will help to establish a level playing field for all operators in tobacco market as well as to provide clear and rigorous enforcement of the law.
Outlook for Nigeria’s economy
Presently, one of the major attractions of the Nigerian economy to global investors, to my mind, is the stability that has been bestowed on it by the sustenance of democratic governance. International businesses and investors want to flow with stable policies. For a country that endured long spell of military intervention in governance from independence in 1960 with civil rule lasting barely six years from that date to find herself under unbroken civil leadership since 1999 is remarkable. 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.
For us this time is the best time for any investor to invest in Nigeria economy. I believe that Nigeria economy is growing. It will not grow over night but gradually. Despite all the concerns about the state of our economy, I would say that our country offers tremendous opportunities for investors. We have the largest population in the African continent (estimated 170 million); we have the largest black population in the world; ours is the second largest economy in Africa (with a GDP of over $300 billion); we have one of the highest growth rates in the world currently (6.7 per cent); we account for over 50 per cent of the GDP of the West African sub region; we account for over 50 per cent of the population of the west sub region, we are blessed with abundant natural resources (minerals and arable land) and our democratic structures are becoming firmly .entrenched.
What is missing is the capacity to harness these opportunities for our common good. I am confident that this will happen before long.
Future of Philip Morris 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 economy which I know would provide a lot of job opportunities for the youths of the country. The Nigerian youths deserved the best, and that is why we are in Nigeria. When you look at the economy, there are a lot of challenges but we not looking those challenges at moment now, we are looking at the future. The future is bright for any investor like us in Nigeria.