Saturday, 7 January 2012

‘Despite Poor Infrastructure, Nigeria Remains a Great Market’

Mr. H.K Leventis, a trustee of the AG Leventis Foundation and a director of the Nigerian Bottling Company, in this interview with Festus Akanbi says in spite of the poor state of infrastructure in the country, Nigeria remains one of the best markets in the world. He also speaks on the family business and other issues
How will you rate the investments of Leventis family in Nigeria's economy?
It is very important because investing in Nigeria and Ghana has created the Leventis fortune. The business we had here led to everything else. If we hadn't been in Nigeria, I don't know where we would be, somewhere else probably. Nigeria especially is very important for the Leventis family and everything that followed on. From the time when AG Leventis, the founder of the business died, we have expanded into bottling operations abroad, manufacturing of glass bottles and all that after he died because I think Coca Cola trusted us to be able to manage larger businesses. And then we expanded into Eastern Europe when the Soviet Empire collapsed and became a franchise bottler that has now reached 28 countries. I think in volume, we are the second largest bottler in the world.
In the early 70s and 80s, we had the Leventis Stores and the Technical Division, what led to the closure of these businesses?
I think businesses have to change depending on their situations and the Nigerian economy went through a very difficult path during that time and we decided that a number of our businesses that were not profitable should be closed down. Leventis Stores and Leventis Technical were some of them. Basically, we reduced the trading businesses that were not making profit and went into new businesses like making and selling generators and AG Leventis is now doing very well. We have gone into different types of businesses just to survive; we could not just continue to do business as usual. We used to sell three or four hundred vehicles every month and more sometimes, now we sell the same number in a year. That drop meant we had to go into other lines to survive and we had to create new businesses.
What lessons should other entrepreneurs learn from the Leventis family?
I think because we have been here as a family from the early twenties and it's nearly been a hundred years in Nigeria, I think you just have to persevere and you have to be very flexible in what you do. You have to be able to decide on what you are best at and if it doesn't work, you try something else. Things were probably easier at that time because there weren't that many possibilities but now there are so many other possibilities and we have to survive by deciding on what we are going to go into and if it doesn't work, we go into something else.
How do you think the government can assist manufacturers?
I think the area of infrastructure is the most important thing. When you are deciding where to go to, or want to manufacture something, you want to find somewhere which provides you with electricity, water, and other infrastructure, which generally don't exist in Nigeria. However, because we have always been in Nigeria, this is the place we want to do business. So we have to survive by generating our own electricity, providing our own roads and water. The idea is that roads should be provided by the states for businesses to grow and to expand. It is relatively high doing business in Nigeria when you generate your own electricity and have to use diesel. Diesel is very expensive, so basically the cost of doing business in Nigeria is very high. So that really has got to be improved. I can see the government is trying to improve it and I hope it succeeds because that's the only way Nigeria can move forward.
Do you think Leventis' investments in Nigeria have been worth it?
It's a large population and educated to a large extent and I think the future of Nigeria is very good as long as it can sort out the problem of infrastructure. And I think there will be more investments if everything is done well. If you can be certain you are going to be treated the same way as everybody else, then you could be more secure in investing. If I was coming here for the first time and I came on my own and saw the infrastructure and heard about the problems of corruption and all that, I will be very skeptical about moving here. But we are not because we know the country. However, I think it is necessary for Nigeria to really do something to provide anybody who wants to invest here with the certainty that they will be treated properly and they will be treated the same way as everybody else will be treated which is the most important thing.
What led AG Leventis to seek the Coca Cola franchise?
He first wanted to set up a big business empire basically. So he started the small way and very quickly it expanded. AG and my father very much understood the system because they came from an island also under the British colonial rule; they were very much in tune with the indigenous people, wherever they went including Nigeria and Ghana. AG was very close to the natives of Ghana and my father was very close to many of the original fighters for freedom in Nigeria and from all parts of the country: north, east, west and mid-west, everywhere. He knew everybody who later on became the first batch of politicians in Nigeria. Basically, they wanted to set up a large business which included eventually motor vehicle distribution, manufacturing and of course the soft drinks business which came about ten years after the initial business was set up. The philosophy was to do things for the good of the local people, grow a successful business which would expand, employ the local people, and be good for the country where they were set up.
Tell us what led to the introduction of Coca Cola franchise?
I think AG decided that because there were no soft drinks apart from two small producers, he wanted to see it happen in a big way and he went and got the franchise. I think he was given the option of either Coke or Pepsi, either one would have supported him, but he decided that Coke was the best one to begin with. He got the franchise for both Ghana and Nigeria beginning in the 1950s. We set up the first bottling plant where the main first plant is now and it was the first bottling plant we set up in Nigeria.
What were the steps taken to expand the company?
The expansion took place from the profits that we made. We borrowed funds as well from banks but at that time the business was booming, so we could build one or two new bottling plants every year for a number of years during the seventies. And in some places, we had more than one bottling plants; if the one we had was too small we then built another one. Now, we have rationalised the number of plants because the competition in the soft drinks market and the economy hasn't been so good recently.
How did the company deal with the reluctance by banks to finance manufacturers?
The banks have different guidelines. I think they still believe in reliable companies which have been here for a long time and which they trust to repay. We normally don't fund the financing of these new plants alone; we receive funds from our sister companies that are in other parts of the world in the group. Nigeria is one of 28 companies in the group that was set up by the Leventis family. Leventis is a very big family and the brothers themselves are shareholders in the group which is based in Greece and they help a lot in providing financing for our expansion. Nigeria is a very important part of that group. We now have a situation where we are able to build at the expense of 28 countries and to get help whenever we need help.
What has Coca Cola benefited from NBC?
I think it is very important that Coke has the concentrate. I mean in the past, they would supply the concentrate and help us with the marketing but they weren't involved with the rapid expansion of the company and of the bottling group of which Nigeria is a major part. They were able to ask Coke to become shareholders in the global group, which means that we are in a better position to achieve the answers that we both want which is the expansion of the business.
What are the factors that work against family businesses?
When my generation came in - we were the second generation and we were actually running all the various companies as directors. So when we relinquished direct control, we installed professional management in all our companies. As such, we are not directly involved in the day to day management but we maintain oversight over the companies. None of us or our children is involved in the day to day running of our businesses and so the next generation is maintaining oversight over the company. However, we visit all the time, we go round and we talk to the managers and to some Nigerians because they are part of our businesses. So we advise and we try to make sure they do the right thing. But the day to day running of the business is done by other people.

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