Growing the Economy through Investment

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INDUSTRY ANALYSIS

Jonathan Eze writes on the need for a deliberate sustainable economic plan that will further boost investors’ confidence

Nestlé’s conscious expansion of its business in Nigeria is a demonstration of its unwavering faith in her economy. It also serves as an international beckon on prospective investors to think Nigeria as a fertile ground for industrial relocation and expansion.

The benefits of this bold step is not just for the profit it would generate for the company but to a large extent, creation of jobs for unemployed Nigerians, increased business partnerships with local farmers that supplies them with raw materials and revenues accruable to government at the state, local and federal levels in form of taxation and other levies.

Hence, government must ensure that it creates continuously favourable and enabling environment to encourage investments coupled with economic policies that will ease the doing of business in the country.

While inaugurating its Milo Ready-To-Drink (RTD) beverage production plant, the company made it clear that it is aimed at meeting the growing consumer demand and that it is an investment that would help create over direct 100 additional jobs.
The new plant is part of the existing Agbara factory, which has been successfully operating for 37 years.
The Vice President, Professor Yemi Osinbajo inaugurated the plant, which is equipped with the latest state of the art technology and adopts high safety and environmental standards.

“This new plant is a reflection of the continued confidence the industry has in the robustness of our economy. We are grateful to Nestlé for these significant investments, particularly for locating its factories in rural communities and sourcing its raw materials from local farmers contributing to the sustainable development of Nigeria,” said the Vice President.
The new plant produces Nestlé Milo Ready-To-Drink (RTD) beverage in 180ml cartons and has a yearly production capacity above 8,000 tonnes.
Launched in October 2017, Milo RTD is made from the natural goodness of milk, malt and cocoa. Milo provides essential nutrients and is fortified with Nestlé’s unique blend of vitamins, ACTIV- GO (Vitamins B3, B2, B6, B12, vitamin C, and vitamin D) and minerals including Calcium and Iron.

“The new Nestlé Milo RTD is complementing the existing range of offerings of the iconic Milo brand. It is conveniently packaged to offer the unique Milo taste and meet the nutrition needs of active children on the go. This is in line with the company’s commitments to enable healthier and happier lives,” said Mauricio Alarcon, Managing Director and CEO Nestlé Nigeria.
“This new production plant is a true reflection of how Nestlé creates shared value for all, by providing good jobs, sourcing 80% of our inputs with local farmers and investing in the development of rural communities,” he added

Nestlé has been present in Nigeria since 1961. With staff strength of over 2,300 direct employees, three manufacturing sites, 8 branch offices and a head office located in Lagos, Nestlé is a strong pillar of growth in the Nigerian economy. It produces a range of high quality iconic brands including Maggi, Milo, Golden Morn, Nescafé and Nestlé Pure Life.
Alarcon in his address restated why the company is boldly reinvesting in the economy. “I would like to speak briefly on our continued commitment to Nigeria and why since Nestlé started trading in the country 57 years ago, we have not looked back. We continue to invest in the development of our people, in the innovation of new products to meet consumer needs and preferences and in new facilities to help us achieve our growth objectives for the country.

“This new manufacturing facility reflects our confidence in the resilience of Nigeria’s economy and our long-term perspective which looks beyond today. It will please you to know that in the past 5 years, Nestlé Nigeria Plc has spent N74.1 billion on productive investment in our manufacturing operations.

“Leveraging our strong R&D capabilities, we continue to develop a relevant wide range of high quality nutritional offerings adapted to local tastes. I mentioned to you earlier that we are committed to developing our people. This commitment goes beyond the staff of Nestlé to include everyone who is a part of our value chain from farm to fork. We work with partners to touch millions of lives every day and to improve livelihoods within the communities where we operate. We call this principle Creating Shared Value and it is embedded in the way we do business.

“For example, the malt used in MILO® is made from sorghum supplied by the smallholder farmers who are part of the Sorghum and Millet in the Sahel program (SMS) which Nestlé runs in partnership with the International Fertilizer Development Corporation (IFDC). Under this project, we train farmers on good farming and business practices. The farmers are taught how to improve the quality of their grains while increasing the yield from their farms. The availability of higher quality grains ensures that we have the input needed for Nestlé’s strict quality standards and that the farmers have a steady source of income.

“We are constantly inspired by the stories of the 30,000 farmers we have reached through the SMS program in the last 2 years. One of such success stories is Saadatu from Kano who says that, now, nothing is impossible for her family. By purchasing directly from small-scale suppliers and aggregators, we not only seek to protect the supply and quality of our raw materials, but also to have a positive, long-term impact on the local economy and standards of living of rural communities.”

The MD also delved into the company’s corporate social responsibilities. “Another example of how we create shared value is the Nestlé MILO® Basketball Championship. MILO® has built a rich heritage in Nigeria as the food drink of champions, inspiring early participation in grassroots sports through various programmes including the Basketball Championship, which is in its 20th year. In 2017 alone, 100,000 students from the 36 states of the federation participated in the Milo Basketball Championship.

“Over the years, the championship has trained professionals who currently play in various leagues around the world as well as in the National league. Nkechi is one of such players who are not only doing well for themselves but are also giving back to others.
“Motivated by these outcomes, the MILO® brand is committed to continue to inspire youth participation in sports. We believe that this is a platform for learning valuable life lessons such as respect, teamwork, perseverance and resilience for success, not only on the field but also in other aspects of life.”

Food fortification is yet another area where the company is standing tall. This has helped in addressing micronutrient deficiencies in iron, zinc, iodine and vitamin A.
“Nestlé invests in the fortification of its food and beverages with essential micronutrients as appropriate. A ready example is MILO® RTD. Made from the natural goodness of milk, malt and cocoa, MILO® is fortified with ACTIV-GO, a unique blend of vitamins and minerals including calcium and Iron. This combination helps improve bone health and proper functioning of the muscles and red blood cells.”

Alarcon expressed gratitude to the federal government, the Government of Ogun State, partners, shareholders and staff who share their vision for the future.
“By continuing to make wise, long term investments in people, in improving productivity and in increasing purchasing power, we will build a future for Nigeria, based on sustainable business practices which benefit all stakeholders, he said.
Osinbajo who was visibly excited after the tour of the plant, said that the President Muhammadu Buhari’s led government is also a “ready-to-serve” government, ensuring that it implement the Economic Recovery and Growth Plan (ERGP) to keep the economy on the path of sustainable economic growth and global competitiveness.”

“One important component of the Plan is the provision of critical infrastructure, such as roads, rail and power, which this administration is fully committed to. We’re fully committed to supporting companies such as Nestle as we spur growth and create jobs within the economy.”
“I am sure we all agree that Nestlé MILO holds a special place in the heart of every Nigerian – since as children, we all aspired to be future champions. Indeed, Nestlé’s commitment to doing business in Nigeria has been unwavering over the past 57 years, since the company’s establishment in Nigeria in 1961. This is truly worth commending – particularly when you consider the socio-economic benefits achieved for Nigeria by the location of its factories in rural areas and sourcing its raw materials from local farmers.

“I recall inaugurating the Abaji water factory in May 2016 and, today, the Ready-to-Drink Factory is another testimonial of the company’s commitment and success in Nigeria. I am told that this factory was built at a cost of N4.1 billion, and it will create 150 direct jobs in addition to local sourcing of raw materials from Nestle’s network of over 30,000 farmers.
“Another is the creation of an enabling business environment, and making Nigeria a progressively easier place to do business. To actualise this goal, in July 2016, Mr. President inaugurated the Presidential Enabling Business Environment Council (PEBEC), which he asked me to Chair, and he gave us the task of implementing this mandate.

“The business climate reforms undertaken under PEBEC have already begun to bear some fruit and reflects that Nigeria is committed to creating an enabling environment to facilitate private sector-led growth and development. Many, of course, will recall that in October, 2017, the World Bank released its flagship “Doing Business” report for 2018. In that report, Nigeria moved up by an unprecedented 24 places, and for the first time the country was also recognised as one of the top 10 most improved economies in the world.

“This result shows the power of collaboration across various levels of government, especially in the reform areas such as getting credit, where we are now ranked 6th out of 190 countries due to our enhanced legal framework, with the potential to unlock credit to small and medium-scale enterprises by giving added comfort to lenders.”, Osinbajo concluded.
Traditional leaders and other stakeholders were at the grand event that signifies a new era in the industrial capacity of Nestle Nigeria.