- Interview with Bashorun Adebisi Alli Adesanya, Executive Chairman, Nigerian Bottling Company and Mr. Andreas Loucas, Managing Director of A.G. Leventis (Nig.) PLC -
While the Leventis Group is actively present in more than 160 operations in various sectors of up to 35 countries in the world, few people know that the company has been present in Nigeria for close to 80 years now. Could you start by giving us a brief history of the Leventis Group in Nigeria?
Adesanya: That is a very long history. It all started with Mr, now Chief, A. G. Leventis, of blessed memory. He came to West Africa in 1920 and his base was in Abeokuta. After some time, his employer transferred him to Ghana and then he resigned his appointment to set up his own business in 1937. He started growing in Ghana and after some years he took a look back into Nigeria again and started business here, which was around 1942. Headed by his brother, C.P Leventis, the whole business started in Nigeria. Initially it started with a retail trade by importation of merchandise and then exporting produce such as palm kernels, groundnuts, cocoa etc.
The trading increased in retail and wholesale so much so that the company had department stores and agency for overseas retail shops, which was set up here in the early 50s. Later, in assembly of motor vehicles, we introduced Mercedes and Mitsubishi into Nigeria and a number of other brands to our group. We also owned and operated hotels: we still own Victoria Beach hotel. For historical purpose, we built the Federal Palace Hotel in 1960, which we later sold, and now we retain the Mainland hotel.
We also used to be agents for generators, computers, air conditioners and all kind of household products. Then we have the Coca Cola franchise that we have had since 1951, which started as a small business under the now Mainland hotel and then later moved to Apapa. It has grown to about 16 plants scattered around the country. These companies have about 9000 direct employees and about 500,000 indirectly, like dealers who depend on the Coca Cola business. Of course, we have what might be called vertical integration or backward integration whereby we set up a number of allied industries manufacturing plastics, bottles, crowns etc.
Initially all these were meant to service the bottling industry, but as business grew, we had to re-arrange the whole group and then the Frigoglass Group (a Leventis company based in Athens) came to Nigeria to make a direct investment. Then we had to separate the industries from the bottling company and we now have that group under a manufacturing arm, which is now controlled by the Frigoglass Group. That is the structure of The Leventis Group in the country.
What have been the keys to the success of Leventis Group in Nigeria?
Loucas: I believe first and foremost it is the commitment by the Leventis family to Nigeria and also their readiness to adapt to changes in the circumstances in Nigeria. As we say here "No condition is permanent" especially with respect to the business in Nigeria. The Leventis Group, throughout its 80 years history of business here, have had very strong commitment to Nigeria by simply being adaptable. We always look out for opportunities and changing trends and try to adapt to them and make the most of them.
A G Leventis was incorporated in 1958 as a limited liability company and converted to a public company on November 29, 1978. Its principal activities include sale and servicing of cars, commercial vehicles, agricultural and construction equipment, property letting, What type of vision or objectives is driving the diversified business of AG Leventis?
Loucas: A G Leventis started business in Ghana back in 1937. It was incorporated under its present name in Nigeria, in 1958. They started business in trading, both importing and exporting and later they diversified to manufacturing and other things. The company AG Leventis was always the holding company that created the other units and then when they matured, they split and became public companies in their own rights. Most of these businesses however needed to stand under the umbrella of AG Leventis initially.
After splitting up into these units, the company interests were within core businesses. It is not a particular line of businesses. We have a real estate division, which is quite substantial. We have property in choice-areas like Victoria Island, Ikoyi that we are renting out. We also own properties in Abuja, Port Harcourt and all parts of Nigeria. In addition to that, we specialise in diesel and gas generators. When natural gas was distributed to industrial parts of Lagos, we were there. We started supplying some industrial units with gas generators. Very soon we will start assembling generators.
We have Leventis Foods, which is the biggest automated bakery in Lagos. We produce bread and related food items. As Bashorun said earlier, out of the Victoria Beach Hotels, we have one left which is the Mainland Hotel; probably one of the first big hotels in Lagos. It is a hotel with history: Queen Elizabeth attended a function there when she visited Nigeria in the 1950s. It has been renovated recently, while the location is useful, being central to both Lagos business area and to the airport, the environment around needs to be developed and we are talking to the government to improve the environmental conditions around the hotel. Basically, the hotel has done well in the recent years and we shall continue to do so.
The other unit is Leventis Motors, which was the engine for growth in the group between the 50s and 80s. Here we assembled commercial vehicles, and we are still producing certain items for motor vehicles. We assemble semi trailers for tractors, bodies of commercial vehicles and buses. On top of this we do engine overhauls, as well as sales and service of motors.
Are there plans to further diversifying this "already diversified group" in the future?
Adesanya: AG Leventis is a company that always ventures into new businesses. We are always on the look out for opportunities to see where we can further diversify. Recently, we started a new company, called Leventis Environmental, which has the opportunity to help in the cleaning of environmental pollution created by oil spillage in the oil producing areas of Nigeria. This is in association with the technical support of a company from the USA, which is a subsidiary of the Leventis Group. This activity falls in line with the philosophy of the Leventis Group to work hard to protect the environment. In this sense one of the Leventis family, AP Leventis, is very active in Nigeria's conservation sector. In fact, he is one of the founding members of Nigeria's Conservation Foundation.
Of course, now the government is coming up with a number of proposals such as the focus on local content in the oil industry. We are looking at this to see how, as an established company, we can seize some business opportunities here and at the same time help the Federal Government to achieve its objectives in this area.
With improved audited financial results for the year ended December 31, 2004, A.G. Leventis Nigeria Plc has continued to increase investors' confidence in its activities. Much of this has been attributed to the success of the recent restructuring program. How has the restructuring program brought positive change to the business of A G Leventis?
Loucas: We have actually repositioned the company in certain areas. We have re-examined our human resources and we now believe we are employing competent staff. We also believe we are now in a position to start delivering good returns to our stakeholders.
Nigerian Bottling Company Plc (NBC) was incorporated as a private limited liability company in 1951 and became public in 1972. What have been the keys to the success the company has achieved in this time?
Adesanya: I took over at NBC in 1978 and that was when they had five factories. Since then, we have been able to add more. In fact, we were at a time grown to 24 around the country and later, for reasons of consolidation and so on, we were able to reduce them to 16, but bigger in size, which is what we have now.
I think the reason behind the success first of all has been that of doing what we know how to do best. Then we have been lucky to pick the kind of dedicated human resources that we have. They have also been supportive of the operation and they also believe in what we are doing. Another secret of our success is clear objectivity, sincerity of purpose and a genuine intention to succeed in what we are doing. That has been the main drive. But the strongest of all is that we believe in the tomorrow of Nigeria. So we believe in the issue of ploughing back much of our profit every year to expand the business.
In terms of expanding the business, what are the next steps? What other business areas are you planning to focus on?
Adesanya: Well, currently we are looking at adding new drink flavours, products and innovation to what we are doing. We have done a lot along the line of diversification or what is called backward integration. We are considering getting involved in the production of sugar. To that end, we are talking to the Federal Government and we believe we will make success of it, as we are the biggest sugar consumer in the country. We are looking at an investment of about $150million over a period of five years.
We now do fruit juice locally and we are planning again to have local input in the fruit juice sector, by owning a plantation.
In recent times, the manufacturing industry has been affected by adverse conditions in the country, but throughout this the NBC has managed to continue growing. What are your competitive advantages over the competition?
Adesanya: Like I said, we are doing what we know how to do best. We do know that a lot of things that we look at the government to create are things we have managed to put in place ourselves. Power generation, water supply and in some cases roads which are obviously an important distribution channel. We have control over our distribution channels. We have a fleet of 1,500 vehicles delivering to retailers all over Nigeria.
More than anything else, we have really built up our business in such a way that we do not rely on government to provide this or that and this has given us an edge over others in the country.
What is your vision for NBC and its related companies?
Adesanya: What one must know and which we know very well is that Nigeria is a land of big opportunities. It is a virgin land for growth. Leventis group believes very much in the future of Nigeria. That is why we keep investing and re-investing in whatever we are doing. No matter what happens, Nigeria will continue to be Nigeria, and we believe that given proper management, Nigeria will be great. Therefore, we know that no company or group can be a success in isolation. The success of our business depends on the success of the country itself. We believe that the future is bright and, as such, we can confidently say to other investors who have not tasted Nigeria before, to please come over.
The A.G. Leventis Foundation was established in May 1979 and has been a key initiative for the The Leventis Group supporting educational, cultural, artistic and philanthropic causes across the world. What is the vision driving the Foundation in Nigeria?
Adesanya: Chief A.G Leventis of blessed memory, died in 1978 and he said in his will that a certain amount of annual revenue in Nigeria should be directed towards rural development. When we look at that, we feel that the best way to do that is to go into agriculture, because as of that time, if you looked at the age group of farmers in Nigeria, there was no one less than 55 years old and there were no successful plans in place to change this scenario. All the youths were running out of the farms, running to Lagos to look for city jobs.
We thought that at first, we should go and keep those people at their bases. Catch them young, get them involved in agriculture and provide them with all necessary ingredients to make them stay where they are. That informed our decision to set up agricultural schools. We have four strategically located around the country. We have one at Dogodawa in Kaduna, one at Panda in Kano, one in Ilesha in Osun and there is one in Agenebode, Edo State.
What we do with these schools is bring in the young boys who must be literate enough. Put them on a one-year course. Nine months are dedicated to practical courses like plant protection, animal protection, rural enterprising, agricultural engineering etc. At the end of the day, when they are a going to go out, we ask them to do a business plan of what they have to do and how they intend doing it and how much is going to be the cost of their input.
Usually as a condition, we want children whose parents have a farmland; I mean those from a farming family, so that they can go back to the farm. When they organise their businesses plan, we then assess it and give them a soft loan to start off their businesses. When we started we were having about 178 students annually and today that has increased to about 300 students annually.
The multiplier effects of
that are tremendous because these people go back to their respective
areas to lecture and spread the gospel to their neighbours. We are going
to supervise what they are doing, making sure that annually we call
them together and we call the ex-students to come and tell their success
Loucas: Also, the foundation has helped Nigeria on the cultural side. We have undertaken some cultural projects.
Adesanya: Yes, we do a lot of that. In addition to this, we work in collaboration with for instance, the University of Agriculture in Abeokuta, whereby we do exchange of students. It is quite a wide operation in the country. This is based in Abeokuta, because that was where AG Leventis started. We have a scholarship scheme in place annually.
A central theme of Nigeria's economic reform program is diversification of the economy to reduce dependence on the oil and gas sector and stimulate a broader economic base. How do you think Nigeria can reduce its dependence on oil and gas?
Adesanya: Put it this way. It has to come from discipline. Prior to 1973, the mainstay of the Nigerian economy was agriculture, as we all know. Then with the discovery of oil, everybody rushed out to the field to become contractors and began to look for white-collar jobs and so on. We now know that one day the oil will dry. However, the lands, if well looked after, will not. Even in the Sahara, in the desert region, people still practise agriculture, then why not in Nigeria? We have the wide land; good climate and we have the right people to do it. So I think it is a matter of discipline, then people will go back into the farm.
The government is well focused on this. It only needs the support of the people. As an organisation we are playing our own role to give the government support by investing in agricultural sectors like the fruit juice industry.
Loucas: I think Nigeria has to go back to create some primary industries. One area I can think of in terms of Leventis, is in the glass factories, where we turn Nigerians' broken glass and sand into new glass using natural gas. We need to see more of those industries instead of having industries with very low added value
Cement is perhaps another primary industry. This is one area that Nigeria should focus on because they have a lot of materials like iron ore and other metals. That would create employment and added value. Nigeria has been involved in the assembly of motor vehicles. That does not made sense in the modern world again because motor vehicles are assembled in the developed world by robots. In the past, Nigeria has supported vehicle-assembling factories that are no longer functioning. Some of these are still producing at a very small percentage of the capacity. The government should start thinking of giving incentives to the manufacturing industry and remove a number of taxations that are now in place to broaden the private sector. For example, companies to be allowed to treat all the VAT they pay to their suppliers as VAT input and thus offset it against their VAT output. Presently, this is restricted only to VAT on raw materials. Also, the practice of deducting withholding tax from most business transactions should be stopped because it creates a lot of bureaucracy and increase the cost of doing business.
Having said that the present government is accessible to the ideas from the private sectors and we have made some presentations to the government, and they are looking into it. We channel this through the Manufacturers Association of Nigeria (MAN) and we are hoping to get some positive response.
There is still a belief out there that Nigeria is still a risky place to invest in. Why should International Investors feel confident that Nigeria is no more a "risk market" than, say, Thailand or China?
Adesanya: I think much depends on the individual, who is entitled to his or her opinions on the matter. If I go to China myself, I could tell you it is a risky market. I think what people really need to do is rather than reading adverse publications about Nigeria: they should really come to this country and see what Nigeria is really like. Nigeria will continue to be Nigeria. We will be a developing country for some time to come and along that line, there are bound to be hitches here and there.
If people are interested in Nigeria, they should come over here and let us work together to be able to remove the risk, if there is any at all. It is not just enough to stay there and say it is high risk area, after all we have been investing here and we are still re-investing, and some people from abroad are still coming to join us to invest in the country.
I think for those who are saying out there that the country is risky are just saying that on a matter of convenience because they can go to say Greece or Thailand, where electricity is readily available and the road networks are good and telephone lines work. It is a matter of convenience. For example if I had to choose, I would say I would go to those places based on the convenience of the place, but if they are really serious about investment and if you must make money from the rocks you should not look at the face of your axe. All over the world there are risks, it only depends on the level. But for here the risk is not as high as one would compare with some parts of the so-called developed world.
Loucas: I agree with Bashorun because most of the companies that have been here over the last 20 years have seen handsome growth.
Bashorun: After all, we have UAC that was once almost the same as the Government of Nigeria. They have been here and they are still here. I have not heard of any company who came a long time ago and want to go home because of risk. That means it depends on what people call risk.
What do you see as the attractions for foreign investors in Nigeria's manufacturing sector?
Adesanya: The human resources, the richness of natural resources, which are here in abundance. It is just for people to come and direct their attention to what they want to do. It depends on what you come to do in Nigeria. If you come to do business you do not look at other distractions.
Just like I said, in our own industry most of those things we would be looking for government to provide, we manage to get them on our own. For instance, electricity is not good enough, but we would not stop business because of that. We hope one day it will be good.
Loucas: One of the factors that put investors off is the lack of infrastructure, including electricity. But with the Power Act coming up, which will enable private companies to actually participate in electricity generation and distribution, together with the fact that there is abundant gas availability.
The gas is also more efficient and more environmental-friendly. So there is the room for the companies to overcome the lack of power in the country. Also, you have to provide your own water. We have our own boreholes. On the security side, from my experience, the situation has been much better in the last four years. There is certainly less armed robberies and attacks on individuals. Especially on expatriates: I have not heard a single case of attack in the last four years.
What has been the attitude of the government towards making the environment conducive to foreign investors?
Adesanya: The sum case of it all is that investors in Nigeria should be prepared to take a level of risk. There is nowhere in the world that is risk free. But then the degree varies from country to country. But here I see the risk in Nigeria is one that has to do with input. You do not just go and get a contract from Shell and take it. You have to struggle for it. Like the electricity, let people come and invest in power generation. The government allows it.
The government has thrown it back to the people who complain that these infrastructures are lacking, to come and invest in anything you want to invest in. That is the big success of the government programme of privatisation that is now yielding fruitful result. For example in the telecommunication sector: here we can pick a phone and call anywhere in the world. Until recently, it was difficult to reach Ghana and even some parts of Lagos on telephone. Now I can get out of here and go to Abuja and back the same day, which was impossible about ten years ago.
Loucas: One area that I think the government has to improve in the future is the implementation of law: commercial law, company law. The laws surely exist, but sometimes it takes you years to have a case resolved in court. If they can do something to expedite the resolution of court cases that will help the confidence of investors when disputes arise they will know that the dispute would not need years to resolve.
Another area where I think the government should help is on the education side. The quality of graduates coming out of the universities is not as good as it used to be in the early 1990s. I am glad to hear today that private universities are being allowed to operate. We look forward to seeing good quality graduates come out of these private universities.
What role is Leventis Group, as a success story in Nigeria, playing to attract foreign investment into the country?
Adesanya: Well we are doing it every day. Towards the end of this month I will be out of this country in Greece talking to new investors on sugar, on fruit juice industries. Even though Coca Cola had been here, along the line we were able to get them to set up a business here. In recent years, we got Coca Cola to support us to set up the Benin plant, which is a state-of-the-art, first of its kind plant in Sub -Sahara Africa. We continue to do this day in, day out and of course we expect our foreign friends to help us in dispelling rumours and paint us in good light in the outside world. The press has a lot to do in that regard. Let the world know that things are not as bad as they are portrayed.
As you know the focus of our report is on Nigeria at a time when the Development of Africa is taking centre-stage both internationally, through Blair's Commission for Africa, and internally through NEPAD. What is your opinion on NEPAD, on Pan-African cooperation and the role that non-African countries are playing in the development of Africa?
Adesanya: If the policy is properly followed, the NEPAD programme is the best thing that could happen to Africa. For instance, and I have said this a number of times, in Nigeria we follow the example of South Africa as far as the issue of NEPAD is concerned. We stand to benefit a lot more. NEPAD for Africa dovetails into so many things. In Nigeria we have the National Economic Empowerment Development Scheme (NEEDS) and then it goes deeper than that. It goes into the States Economic Empowerment Development Scheme (SEEDS). From there is the route into the Local Governments. Unfortunately it should have been coming from that level upward, but now it is going from up down. We are having problems along the line telling the stories, telling the people what it is and what form it should take.
By and large we are seeing
success stories. I was one of the advocates of the fact that NEPAD should
not just be a presidential initiative; it has to be an Act of Parliament.
This means when one government comes in and goes, NEPAD will remain.
I think it is a welcome development and that it is something that should
be quickly followed because it is going to be very helpful to both Africa
and its partners who are outside. It helps to put the countries in Africa
in proper footing and to enable them to fit into the world at large.
Lastly, Bashorun what would you like your legacy from your time as Chairman of NBC?
Adesanya: That is one question that I do not like to answer: one because I do not like to talk about myself. For thirty-nine years, I have been around and I think I want other people around to make up their minds as to what they want to remember me for. All I can tell you is that if I had to come again, I would do it exactly the same way. I have no cause for regret. I believe that in my place of work what I would want to be remembered for is that if everybody believes and agrees that his or her right stops where the freedom of other begins, then the world would be a better place for all of us. That is my philosophy. Every body has a chance.
What of Mr Loucas?
Loucas: I would like to be remembered as somebody who was involved in training Nigerians and empowering my Nigerian colleagues. In fact, since I came here, I have changed about five jobs and for every job I changed a Nigerian has taken over from me. I feel like I have done what expatriates are supposed to be doing in Nigeria. Also I would like to be known as someone that brought innovation into the companies I was involved and helping to take hard decisions and moving over to business opportunities.
What is your final message to potential investors in the UK?
Adesanya: I will from time to time say that the old beliefs about Nigerians are not true. The truth is that it takes two to tango. If there are no receivers, there would be no takers. So my message across to prospective investors in the UK is to let them know that there are more men of honour in this country. There are men of integrity. I have been behind the desk here for thirty-nine years. Let them come and make proper research and see who is getting involved in the country.
Loucas: Today I saw in one of the papers that Richard Branson came into Nigeria accompanied by his parents, wanting to invest in the country. This is because he believes in the country. It goes to say that if Richard Branson is to invest in Nigeria then that means the country is right to invest in.
Gentlemen, thank you for your time.
Loucas, Adesanya: Thank you.
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