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Why We Are Not Doing Rights Issue – MD/CEO, Nestle Nigeria



Managing director/chief executive officer of Nestle Nigeria Plc, Mr Mauricio Alarcon, explains why the company has no plans for a rights issue despite the foreign exchange challenges confronting most manufacturing companies. He spoke to SAM DIALA.

You have achieved 82 per cent local content in your products; how soon can we expect 100 per cent input?

We are doing that; the whole idea is to contribute to the growth of the Nigerian economy.  We realise that as long as the Nigerian economy is healthy, our company is healthy. Our ultimate objective is to achieve 100 per cent local sourcing so that we will continue to impact positively on the economy of this country. That is our goal as a company. And we are fully committed to that goal, that is why we are celebrating the new product we are now launching.  We will continue to push towards 100 per cent. Once that is achieved, everybody will be happy. Nigerians will be happy, Nestle will be happy. Our ultimate objective is to have 100 per cent locally-sourced raw materials. That will be a great relief on the foreign exchange burden that many companies are presently passing through.


Eighty-two per cent local sourcing is quite significant. Is this on a particular item or across Nestle products generally?

It is not on a particular item. It is generally spread across Nestle Nigeria products. It is spread across our variety of products which are in high demand in this environment. We are very happy and we keep on working to attain our goal of 100 per cent so that the Nigerian economy will be buoyant consistently.  It is possible as long as we are focused and everybody is doing his bit. To achieve 82 per cent across our products is quite significant as you said; but we want to go beyond that and, at the same time, sustain it. We have variety of products which are well received in the market; you can imagine the impact that will make on the economy because that is the way to go. We are very happy and we keep working hard.

To what extent has this relieved you of the foreign exchange challenges being experienced among companies of your type?

As a matter of fact, we are not pursuing 100 per cent local sourcing because of the foreign exchange relief it offers. We are committed to the development of the Nigerian economy. Our objective is to contribute to the development of this economy in a significant way. Foreign exchange relief is good; but that is not our priority in our aggressive pursuit of 100 per cent local content. We have not been doing this because of the foreign exchange issue; it is important to state this, as I have said. I must tell you that we have been working on this for more than five years – focusing on adding value to our products through huge local content. That is good for the economy. The efforts and resources devoted towards achieving this are aimed at sustaining our commitment to the development of the Nigerian economy. We believe in the future of Nigeria; we believe we are part of that future and we should do all we can to advance that commitment.

Are you saying that foreign exchange scarcity as we noticed it in recent times did not play any role in your choice to look inwards?

No. We have been doing that – looking inwards.

It compelled you to intensify your efforts?

I would not say so, because we are big and solid. What we intensified was the discussion around us – to grow our local content in terms of looking inwards. In fact, it is this commitment that led to the acceleration of our move – one way or  the other. We are focused as far as this issue is concerned and we are not wavering about it. I would say that the discussion we intensified was how to make life better for Nigerians who are involved in what we do, either as workers, suppliers or in other ways. So, we intensify discussions as to how we set up new business modules for the processes in-between and how to make Nigerians happy with our products. We will remain committed to this.

Can we estimate the number of jobs your company has created through this accelerated commitment to local sourcing?

It is difficult to say; but I can tell you that we have a study. In general, besides over 2,300 employees in Nestle Nigeria, we impact around 40,000 families in Nigeria indirectly. You can only achieve this if you are truly committed to the development of the economy and contributing to the standard of living of the people. It takes a lot of planning, a lot of resources and a lot of commitment to get to that level. I would say that, the motivation to drive local content to an advanced level has sustained our effort and we are getting results.

Tell us more about your newest product, Maggi Naija Pot, that has just been launched. You said it was the most difficult in terms of process, research and effort. What are the key challenges you incurred in coming up with the product?

Our challenge was really not about the environment; it is not because we are in Nigeria. It is about meeting the needs of our consumers. You know consumers have many choices to make and you must meet their needs and expectations. This is natural. Sometimes, customer’s needs and expectations are complex in nature and you must find a way of first, identifying them, then understand how to meet such needs and expectations in the most satisfactory way. That is the focus of every company offering product or service to its customers. The process of achieving these combinations takes time and effort. Consumers have so many needs and they want to have products that are natural. Sometimes it involves identifying or changing one or more ingredients or recipes. To come up with appropriate ingredients of recipes is not done overnight. It is done with a lot of care and commitment and a lot of checking. The process must be constantly checked to guarantee the desired level of quality assurance.

What other consumer needs are you going to target after Maggi Naija Pot?

That is not the focus for now. We just tackle one consumer need at a time. We ensure we get it right and that it remains the right product all the time. We must constantly check the process to ensure there is quality in all we do and that the consumer is happy. This gives us joy because we are happy when the consumer is happy. Another thing that gives us joy is that we keep investing despite the foreign exchange challenges. We are happy when we see our products meet the needs and expectations of our target consumers. Another point to consider is whether Nestle is responding to consumer needs. Is Nestle responding to Nigerians’ needs? Are we doing that constantly? Are we improving in any identified shortcomings? Are we building on the strength achieved? These are issues that matter most to us. We ensure that the consumer is able to have something with nutrition value. We are committed to meeting the nutritional needs of the people.

Are you saying Nestle Nigeria has no need to approach the capital market for rights issues like we are presently seeing among many multinational companies of your size?

Definitely, we have no need for any rights issue. We are big and solid; our shareholders can testify to that. We have no need for rights issue because we are not saddled with foreign exchange challenges like it’s the case among many companies. We have built a company that has existed in Nigeria for many years and has adapted to the economic climate of the country. We know what our consumers need and we go to any length to achieve that. I would not say we are not affected by what happens at the foreign exchange market; when you have local raw material to the extent of 82 per cent, you do not bother about what is happening in the foreign exchange market. We sell one million Maggi cubes every day; produced with 82 per cent local raw material. That will tell you we are solid.  I am not saying we are insulated from the outside world; No. The point I am making is that we have invested so much in Nigeria and have been consistent with our commitment towards developing the local economy; we are not so affected by the problems of foreign exchange scarcity.

Aside Nigeria, in which other African country are you making similar impact?

At this stage, I can only talk about Nestle Nigeria because this is where I am in charge of.  A lot of what is happening in Nigeria is seen by other countries both in and outside Africa. We are committed to being the largest Nestle Company in Africa and that is why, whatever we do, is looked upon as a benchmark – something to emulate.




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