Mrs Vera Nwanze, Country Manager, Philip Morris International, discusses her company’s entry into Nigeria and why the Nigerian economy has greater global appeal. She shares these and more with OLATUNDE ODEBIYI.
Why has PMINTL Nigeria Limited entered the Nigerian market at this time?
There is 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, international investments have poured into the continent. As you know, Nigeria became Africa’s largest economy in 2014, a testament to the changes in vision, governance and leadership since the return of democracy in 1999 which has driven reforms in key sectors of the economy and made the Nigerian market more attractive to global investors, like PMI.
Given that you were here before and now making a re-entry, can one expect that you would be in Nigeria for the long haul and why?
We have made a strategic decision to invest for the long term. Our goal is to become a contributor to the development of the agricultural sector, and to be a partner to add value to the economy
Kindly clarify how your company would be adding value to Nigeria’s economy in diverse ways.
As the leading tobacco company, we think we can help foster employment opportunity in the manufacturing, distribution and trade sectors, and contribute to government revenue. We also believe that our entry into the market will foster competition and consumer choice, which is good for economy, innovation and ultimately for the state.
There were allegations of illegal entry made in some national publications against PMINTL Nigeria Limited last September. How do you react to this?
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 Nigerian 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.
You have mentioned PMINTL’s plans for investment in Nigeria’s Tobacco Industry but your factory is in Senegal, not Nigeria. Why is this so?
PMINTL Nigeria Limited is a part of a global organisation. It is common for manufacturing plants to be located in a given country to serve as a regional commercial base. 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 could deny the Federal Government of Nigeria revenue from import duties and levies. How do you explain this seeming discrepancy and your company’s strategy to boost Nigeria’s economy?
It is up to the ECOWAS countries and their governments to decide on a trade liberalisation scheme that protects their national interests, while helping to 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 Ltd is fully compliant with the excise tax rates applicable to the importation of cigarettes. We have already paid and we will continue doing so.
Your company entered Nigeria just as the National Tobacco Control Bill was signed into law. What is PMINTL Nigeria’s stand on regulating the industry?
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.
What do you consider to be the volume of the illicit tobacco trade and how can governments across the world curb the menace?
Available statistics from different sources estimate the size of the illicit tobacco trade to be between 10 percent and 12 percent 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, recordkeeping 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 Nigerian Customs Service, to present our tools and know-how to foster cooperation in addressing illicit trade together.
There are allegations that tobacco companies are migrating from developed economies like Europe and America to evolving ones like Africa to avoid stringent legislations. How true is this in the case of your company?
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.
What is your take on the outlook of the Nigerian 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.
What does the future hold for the Philip Morris business in Nigeria?
We are optimistic about the prospect of our business in Nigeria. We are currently focused on building our business organization, hiring local talents and strengthening our infrastructure and ties with our counterparts in the tobacco value chain. We are here to invest and we are here to stay.