July 6, 2017

Doing business in Nigeria not as difficult as expected —MD, Philip Morris Limited

Doing business in Nigeria not as difficult as expected —MD, Philip Morris Limited

•Cosken Kagan Dicle

In this interview with the Managing Director of Philip Morris Limited, manufacturers of Malboro and L & M brand of cigarettes, Mr. Coskun Kagan Dicle, explains why the company ventured into the Nigerian market despite the challenges of operating environment, among other issues

•Cosken Kagan Dicle

By Naomi Uzor

WHY did you venture into the Nigerian market at the time you did?

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, combined with the fact that there has been political stability and democratic governance since 1999, make the country an attractive investment destination.

From our industry perspective, despite our global market leadership position as Philip Morris International, we were not present in Nigeria and one of our global competitors was enjoying what we can call a monopoly situation in Nigeria.

Monopoly situation

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.

Recount your experience in Nigeria. What challenges come with the operating environment?

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. With the 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.

What is your investment plan for Nigeria?

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). This goes to show the confidence we have in the Nigerian market and our focus on local manufacturing and other investments will certainly continue.

How does Nigeria compare with other markets where you operate?

Every market has its peculiarities. For PMI, countries that have signed up to and are  guided by the 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, youth smoking, etc. Since the enactment of  the National Tobacco Control Act, 2015, which has led to the setting up of the National Tobacco Control Committee 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.

In what areas would you want to see changes?

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.

Why did PML start local manufacturing in Nigeria at this time?

Since our entry into the market, we have been very clear about our commitment to Nigeria and about the contributions we can make to the local economy.

 Significant job creation

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.