MSMEs require a holistic intervention from both government and private institutions if they must play their roles as catalysts for growth.
The huge potential and capability of Micro Small and Medium Enterprises (MSMEs), to facilitate the economic development of any economy cannot be disputed. In Nigeria, the sub-sector, which had largely been neglected by successive administrations, has become the pillar of growth and currently looked upon to solve the country’s increasing unemployment challenges.
The National Bureau of Statistics (NBS) estimates that about 23.18 million Nigerians are unemployed with the country’s unemployment rate put at 33.3 per cent in the fourth quarter of 2020 (Q4 2020) compared to 27.1 per cent in Q2. Although, the MSMEs sub-sector holds the magic wand to liberating the economy, creditors including deposit money banks often labeled them as unorganised and too risky entities to benefit from bank credit.
Nonetheless, this notion has since changed, especially with the outbreak and spread of the COVID-19 pandemic, which has continued to ravage global economies. With the volatility and uncertainty in the global oil market, which showed unprecedented price fluctuation, thereby affecting revenues and limiting government’s ability to meet financial obligations, the need to support small businesses had further been reinforced. In addition, the deteriorating level of poverty in the country also makes such critical intervention into the sub-sector almost inevitable.
Managing Director of Nigerian Bottling Company, Matthieu Seguin, in this interview, speaks on the Company’s 70 milestone celebration, contributions to the socio-economic development of the nation and its impact on the people and local communities. Excerpts:
In Nigeria, the Coca-Cola System is made up of two parts –Coca-Cola Nigeria Limited and Nigerian Bottling Company (NBC) Limited, a consumer-packaged goods business and strategic bottling partner of the Coca-Cola company which manufactures and distributes Coca-Cola beverages across Nigeria. NBC’s operations started back in 1951, when the company was incorporated, and we started to bottle in 1953, at the basement of the Mainland Hotel, which was the first production hub. Today, we have 8 plants and 14 Distribution Centres across Nigeria; we also serve more than 200,000 customers, employ more than 3,000 people as full-time employees, a lot more when it comes to indirect employees, and we do business with over 1000 suppliers, most of whom are local suppliers.
More importantly, the Coca-Cola Hellenic Bottling Company Group, which is now present in 29 countries, really started from here in Nigeria; so that is an iconic heritage, with the Group now recording close to a billion euros turnover yearly in different continents. And it all started from here 70 years ago.
Quite interesting. In addition to that, could you tell us about your relationship with A.G Leventis?
The Nigerian Bottling Company was founded by Chief A.G. Leventis in 1951 and for some time, the Company was a subsidiary of A.G. Leventis. Over time, the business model has evolved, but the Leventis family is still a shareholder, albeit not directly involved in the management of the company. Since we got listed, the company has been fully operated by its management team, while the family sits on the board.
You’ve been in Nigeria for 70 years, and in this period have employed thousands of people, can we talk about your impact in Nigeria? And what would you say has sustained the Coca-Cola System in Nigeria through all these years?
I’ll say it’s a combination of various elements – firstly, it is the quality of our people. To us, regardless of how much we invest, or what equipment we invest in, what matters primarily is the people who work with and are linked to the system – which mostly comprises of the employees of NBC, our customers, and our partners; this has been our fundamental ideology at NBC. The second element is the belief. We’ve been here for 70 years, and we have seen both good and bad times. The first country the group expanded to after Nigeria was Ireland in 1979 and from there it’s just history. The mere fact that we now operate in 29countries, all emerging from here, is a true reflection of our belief. So, the anchor of the belief of Coca-Cola Hellenic and Nigerian Bottling Company has been on the basis of Nigeria. This is why we have believed in the possibilities and future of this country over the last 70 years and will continue to do so in the next 70 years, and even more.
Looking at your investment of over the last ten years, what has been your focus?
The first area is in strengthening manufacturing capability in the areas of production equipment including new lines, warehousing, trucks, and so on. And the impact of this investment is visible across Nigeria. For example, recently I was in Abuja, as we commissioned a newly completed PET production line. Following this, I was also in Port Harcourt to visit our expansion drive over there. We are also expanding our capabilities in Kano and other regions. Basically, in all of our plants, we have been investing in developing new capacity, new production lines, and new equipment. Beyond that, one key element we have been investing all along is in the capabilities of the people. On this a quick example is the Sales Academy in Mushin, which we commenced back in 2015.
Today we have gone digital, to provide online courses where we can provide training to our sales force on how to navigate their roles and grow their capacity.
We also have the Supply Chain Academy where we train hundreds of new line operators per year, and we are able to leverage their expertise across our plants. For example, the new line at our plant in Ikeja is fully manned by the people we have trained in the Supply Chain Academy. As I said before, investing in machinery is easy, but having the right people who are able to man the machines, maintain the machines, and making sure they sustain our quality standards is critical to our business.
When it comes to impact, especially at the socio-economic level, there are many areas through which we have touched the lives of Nigerians. We have implemented several initiatives to support youth development, promote sports development, women empowerment, protect the environment, boost sustainability and much more.
You had mentioned plans to invest massively in Nigeria in the coming years. Will this investment be on production alone?
It will be comprehensive. Some of the investment will be on our people because we need to make sure that we are able to build capacity for the next generation of our workforce. It is incredible when you think about the number of people we trained within the last 10 years alone, we want to do even more in the next five years. So, it is about intensifying every part of the plan for the next five years.
You’ve invested over $1 billion in the last ten years, now, you’ve committed to even more. Should that tell me that you have confidence in the Nigerian economy?
We have always believed in Nigeria and will continue to do so. We have seen the country through moments of great triumph and times of major difficulty. For us, we have always wanted to see the cup as half full, and that enables us to identify opportunities to grow our equity and deliver stakeholder value. In practical terms, we are committed to Nigeria because we see the long-term value of investing in the country, and we see the expansion and the exponential opportunity of the market.
Now in 70 years, you’ve had customers constantly requesting Coca-Cola and all your products. How have you been able to meet the demand?
First of all, we don’t take anything for granted. Over the years, we have seen a lot of competition in this market and in the last few years, we have seen more entrants into the market. That is a good development, and we believe there is room for everyone, so we welcome competition. It basically keeps us on our toes and makes sure that we focus on the right priorities as well as the right innovation in the market. So back to your point, we partner with our customers to make sure that while we are seeking profitability as a business, they are also successful and making a living. If you look at our customers over the last 70 years, many have made a living from selling Coca-Cola products. Some of our distribution partners started with just about five crates back in the day, and now they are selling up to forty thousand cases of Coca-Cola every month. With this, they are able to not only sustain themselves, but also their families, fund education for their children and do much more. We are very proud of this, that as the Coca-Cola System in Nigeria, we can make a difference in the lives of our customers.
What has been the impact of your investment in terms of profitability, employment, and taxes to government?
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In terms of impact in the area of employment, our operations have supported the creation of hundreds of thousands of jobs, directly and indirectly. For examples, recently we have driven direct job creation through the expansion of our production capacity with the introduction of more lines, which require more people to be directly employed by us for their day-to-day operation; but also, indirectly because we need people to set up those lines, and there is a massive impact there. For example, between 2015 and 2019, we accounted for over 58, 000 jobs created across the value chain. When it comes to contributing to the economy and taxation, our VAT is a good example – we have a growing base and we have recorded significant tax remittances to the government over the years. Between 2015 and 2019 alone, tax payment supported by the Coca-Cola System rose to N223 billion. We believe as we scale our operations and expand further, we will be able to contribute more in this regard.
We all know that the Coca-Cola company has hundreds of brands outside Nigeria, does the Coca-Cola System in Nigeria, have any plans to bring in more of these brands to Nigeria to enrich your portfolio?
We are committed to delivering an unbeatable 24/7 portfolio of brands to satisfy our consumer’s beverage needs at any time of the day. Our Schweppes brand is a good example of innovation to meet consumer preferences. If you remember Schweppes a couple of years back, it had these stubby cans that were not really premium. Today, we have been able to evolve Schweppes to a much sleeker, and much more premium brand. We have extended coverage and distribution into more places like hotels, restaurants, and cafes; and in addition to many new flavours launched last year, in the last two to three months, we have introduced two new products- Schweppes Ginger, and Schweppes Zobo. The Schweppes Zobo is particularly special to us (it is not found anywhere else in the world) as it’s an example of how we are able to launch new products, which are locally relevant to our consumers here in Nigeria. Essentially, this is a reflection of how we leverage our new investments to innovate for the market.
Would you like to share with us your proudest accomplishments as the Managing Director of NBC? Considering that you left and came back to Nigeria as the MD of NBC, what are you most proud of?
First of all, I’m very proud and happy to be back here, this is really home for me, and I was honored and privileged to be able to come back. In terms of achievements, I think the best thing for me are the smiles and the openness of our people whenever I visit the plants and the field. Today, I can say we are clear on the strategy and the choices we are making. As a business, we face quite a few challenges that are peculiar to the environment in which we operate, and we are making tough decisions on a day-to-day basis. Yet, in the midst of that, we are very clear and happy knowing fully well that we are innovating to remain the leading consumer packaged goods company. The feeling every day in the office and at the plants is very different. Also, people are opening up and coming forward with what is working and what is not working, and what we can do to make things better – not leaving it to management to decide, or me basically to decide – but for us as a team to tackle the issues together. This is what I’m most proud of.
Your stakeholders and shareholders are watching you as you mark your 70th anniversary, and as they do this, they are also analyzing the market with all the competition, wondering if you’ll be weakened or not. What are you assuring your stakeholders and shareholders as you mark 70 years and beyond?
As I said before, we are very fortunate to have shareholders who know Nigeria very well and are happy to be associated with us, so they don’t look at us like outsiders or wonder why we are taking certain decisions. I’m lucky because I don’t have to explain over and over about the challenges we are facing on a day-to-day basis. Yes, we are very mindful of competition, and as I said before, competition is good. It helps keep us on our toes and helps us not to lose track of what really matters, which is the consumer and the customer. We believe that as long as we keep listening and prioritizing our customers, consumers, stakeholders, and the community – then we are in a good place.
When it comes to where we are going, we have a clear plan and we are moving forward to ensure we stay aligned with our goals for the market whilst keeping customer satisfaction at the core of this.
Let’s talk about your social responsibility initiatives, do you have a roadmap for the years to come?
This is something we are also very proud of. We are here primarily to make a difference deliver deeper experiences for our consumers and impact our communities in positive, definite ways. We believe doing good is good for business and are committed to making an impact in several ways.:
Our first priority is delivering our sustainability commitments. Top on the agenda is our ‘World Without Waste’ agenda. As an organisation, we place a huge premium on entrenching sustainability as a culture that permeates our entire value chain. We want to collect back our primary packaging materials and recycle them. We are also passionate about water stewardship, and we have received global recognitions for our innovations around that area. And then, reducing our carbon footprints is also big on our agenda. We recently announced our commitment to achieve our net zero emission targets by 2040. That is a long way to go but when it comes to water sustainability, all across our plants, we are very clear on the amount of water we use, the quality of water that we use, and the quality of water that we put back into nature after production – that is one aspect. We also provide potable water to disadvantaged communities, like we did in some parts of Kano in 2019, where we provided free, potable water to more than a million people and that makes a big difference.
When it comes to energy, we started optimizing our energy mix since 2011, ensuring a transition to cleaner and renewable energy in most of our plants. The introduction of our Combined Heat and Power (CHP) technology is one of such innovations. In four of our eight plants, we are using solar panels. We started in Maiduguri, and then to Abuja. Now, we are in Kano and Asejire, and we want to complete the rest of the installations at all our plants. Another key focus for us is on packaging. As bottlers of the Coca-Cola brands, plastics form a chunk of our packaging. We have been leveraging several initiatives to address this challenge head on. From January this year, we have reset our frameworks to strengthen our response to the problem of post-consumer waste. We have also integrated incentives into our community recycling programs and raised public awareness on how we can all be involved. Secondly, I have been fortunate to be Chairman of the Food and Beverage Recycling Alliance (FBRA). We are now about 20 members across the industry, forming the Alliance to try to change the narrative. We have set up collection hubs and recycling banks and as the Coca-Cola System, we are leveraging on the Foundation to set up more hubs. Our plan is to deliver additional 20 recycling banks in Lagos and Abuja by the end of this year. Another example is in our Sprite bottle. Sprite is now in clear bottles, because it is easier to recycle, compared to the green bottles. Sustainability will continue to be a defining priority for our business in the coming years.
You talked about certain things you have done, in power and in water and I know many companies are battling with some of these challenges for production. But looking at other challenges, what are the most pressing ones to you, as you produce for the Nigerian consumers?
We acknowledge that the operating environment is tough and can be sometimes overwhelming. But our focus has always been on how best to navigate those problems and create value for stakeholders. We have a rich Nigerian heritage and are familiar with doing business in Nigeria. That also makes it familiar to handle. But, as a country, these challenges should remind us to begin to reflect on the impact of these challenges on the consumers. For example, imagine what the impact of increasing excise tax on soft drinks will mean for the consumer. We can also begin to ask questions like: how do we bring in foreign investments into Nigeria, despite the forex scarcity? Let’s also think of what the impact for this forex scarcity would be on other organisations, beyond the few multinationals like us who were born here and know how to navigate the business landscape, but for many other companies who are upcoming, what would this mean for them? Asking these questions would put us in a better position to design policies that support the growth of the economy.
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As we round up this discussion, what should the consumer, the Nigerian economy, the government, and of course the employees, expect from you going forward?
What we will continue to do as a System is pretty simple – to refresh Nigerians as we have been doing for the last 70 years, and to make a difference, day in, day out, with our consumers, customers, stakeholders, community. As I earlier mentioned, we have continued to touch lives through our initiatives such as youth and women empowerment, supporting the growth of the circular economy, education, sports development, and so on. I go out a lot to our plants, to the markets, and my best way to learn about their expectations is to listen and seek information on how we can improve. From this, we are able to move forward with some very good decisions that enable us to make the most impact in our people, communities and all stakeholders.
No doubt the impact of COVID-19 further dampened the prospects of MSMEs as most of them couldn’t withstand the disruption brought about by the pandemic, leading to massive shutdown of businesses and loss of jobs. Reports indicated women enterprises have been worse hit. It was in realization of the capabilities of MSMEs and the need to ease all the restrictions that have impeded their growth performances that the federal government recently launched a new national policy on MSMEs to better regulate the sector and correct the bias that had worked against the operators.
However, despite the opportunities in the sectors, MSMEs performance as indicated in the new framework, had been dismal due to a combination of problems including lack of access to credit and frequent public policy changes and somersaults. Besides, in Nigeria, there is the outstanding issue of more inclusive participation in the sub-sector by a burgeoning youth population, who require re-orientation to effect optimal migration from a jobs-seeking mentality to one of jobs-and-wealth creation. With a national population of over 190 million people, of which 65 per cent are persons below the age of 35 years, the imperative for more youth participation in entrepreneurship cannot be overemphasized.
There is no doubt that apart from allowing MSMEs to access financing under the apex bank’s Agricultural Credit Scheme, the emergence of the Biometric Identification Number (BVN) and the Global Standing Instruction (GSI) had helped in no small way in enhancing credit delivery to MSMEs almost without collateral requirement.
These initiatives facilitated by the apex bank have come with invaluable benefits. The CBN believes that helping small businesses to grow as well as produce local and export product could invariably help in achieving price stability among others. Now, small businesses can afford to access credit at affordable rates after meeting minimum requirement, which are no longer as stringent as they used to be. Speaking on the development, the Director General/Chief Executive, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Dr. Dikko Umaru Radda said the new policy framework recognises MSMEs by their turnover rather than asset base and split them into nano/homestead and micro enterprises.
He pointed out that inflation and naira devaluation had eroded the asset levels set in 2007 when the first national policy was approved adding that, “As a result, comparison of new investments with the old becomes clumsy and misleading -that’s not the case when comparing turnovers of the same time- certifying asset values are more complex than determining turnover values.”
However, stakeholders have often differed in terms of the most challenging needs of MSMEs – while some believed that lack of access to affordable finance remained a major constraint, other said lack of requisite skills was the bane limiting their development while another school of thought believed both finance and mentorship are required to put the operators on the path of sustainability. The federal government’s efforts has been focused on providing a comprehensive response to the plight of small businesses by seeking to formalize their registrations with the Corporate Affairs Commission, building their capacity and assisting them to access financing.
Radda had pointed out that the sub-sector remained critical to the Nigerian economy as they collectively accounted for a majority of the enterprises in the country and the highest number of jobs created in the economy.
While flagging-off the National Business Skills Development Initiative (NBSDI) in Sokoto recently, he said there were 41,543,028 MSMEs, employing 59,647,954 or 76.5 per cent of labour force and contributing 49.78 per cent and 7.64 per cent to nominal GDP and exports respectively.
He said, “This staggering statistics cannot be ignored in any serious economy. Properly harnessed, MSMEs can trigger an entrepreneurial revolution in industry, agriculture and commerce in Nigeria.
“In recent times, the start-up ecosystem has received a lot of attention globally for their role as economic catalysts. A lot of emphasis has been put on the MSMEs segment leading to the creation of departments which have now become part of the strategic focus of financial institutions, multilateral agencies and economic planners.”
Further determined to support the MSMEs in a most practical way, SMEDAN had developed the NBSD to provide entrepreneurship skills, vocational skills and provision of empowerment materials mostly equipment to fill the capacity gap of the youths.
It is indeed; the first time graduate trainees would be trained and provided with startup equipment to immediately commence their businesses.
According to the SMEDAN boss, “The NBSDI enhances youth engagement in productive ventures, thereby ensuring they earn income through filling the artisanal gap in Nigeria. The initiative is designed to ensure that more professional services will be provided by local and well-trained young artisans leading to reduction in job losses to immigrants from neighbouring countries. It seeks to pursue a drastic reduction in dependency poverty as most of the out of school youths who still rely on stipends from parent are empowered to become self-reliant.”
The programme is currently being implemented in all the states of the federation and FCT where a total of 5,365 entrepreneurs will be impacted with entrepreneurship skills, vocational skills and empowerment materials at the rate of 145 entrepreneurs per state and FCT.
Sokoto was chosen specifically for the official opening ceremony considering the strategic importance of the state as the seat of the Caliphate and a foremost supporter of MSMEs in the zone.
The NBSD is expected to among other things improve business management practice, enhance service provision by trained artisans and increased access to finance, equipment and other business resource.
Other benefits include increase in the number of formalized artisanal businesses, improved market support services by MDAs and responsible stakeholders to MSMEs, improved satisfaction level of customers of artisans through improved service delivery as well as increased patronage of Nigerian artisans.
Radda further said, “In our determination to address the challenges confronting the MSMEs in Nigeria in a holistic manner, the Agency is implementing the One Local government One Product (OLOP) in one hundred and nine (109) senatorial districts in the country.
“This ambitious effort of the agency is based on the successful implementation of the pilot phase of the OLOP programme in Katsina, Kaduna, FCT, Osun and Anambra States. The intervention activities under OLOP, among others, include access to workspace, equipment support, access to working capital, and capacity building.
“In the same vein, the agency is implementing the Conditional Grant Scheme (CGS) for micro enterprises in Nigeria. This programme is aimed at formalizing a majority of the micro enterprises that are mostly operating in the informal sector. This programme, which involves capacity building, registration of the micro enterprises with the CAC, provision of micro insurance, opening of bank accounts and provision of grants (N50, 000 each) has so far been implemented in 16 states where over 25,000 entrepreneurs have been impacted.”
However, beneficiaries have applauded the federal government for its bold initiatives to reposition the country’s MSMEs landscape, expressing their belief that the programme would effectively enhance capacity building, skills acquisition, financial empowerment and job creation.
Reacting to the government’s gesture, Shafi Shafi and Rachael Paul who spoke on behalf of North Central zone, said introducing such a programme for the downtrodden was highly commendable, adding that the scheme was a clear indication that President Muhammadu Buhari’s led administration cares for the wellbeing of the poor masses.”
They added that though the government has graciously trained them and given them drier / pedicure equipment each in their hundreds, the government should also endeavour to provide them with working capital for them to begin their journey towards their financial freedom.
Similarly, Fatimah Yarima and Fatimah Muhammed who spoke on behalf of North East unanimously said they were provided with sewing machines and further pleaded with SMEDAN to help with more machinery and capital to begin their businesses in earnest.