As Nigeria’s population grows and average incomes rise, there is a significant upside to being based in the country. However, as any business that has been based there knows, Nigeria has endured periods of instability and may experience further disruption. Volatility is just another challenge to deal with.

Following Nigeria’s independence in the 1960s, Guinness opened its first local brewery to serve the domestic market. Today, Guinness Nigeria plc is a locally quoted company and is 53% owned by Diageo plc. Over the years, significant amounts of money have been invested in the brand and the market, usually from funds that are generated locally. Guinness Nigeria employs 1400 people, including 15 expatriates, and has a turnover of about N47bn ($335m). The bulk of the company’s business is in the predominantly Christian east and west of the country, although a small percentage of beer and non-alcoholic, malt-based drink is sold in the mainly Muslim north.

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Adaptable

During its time in Nigeria, Guinness has had to adapt to the challenges of operating in the country. “Instability has been an issue for us: we have gone through military dictatorships, open elections and civil unrest,” says Ron Plumridge, commercial director at Guinness Nigeria. “But you have to look at the market differently from the European and North American ones. You must expect volatility and know that you can go from 20% market growth one year to 15% market decline the next – and you have to deal with this.”

Supply lines have also been challenging. “A number of years ago, we faced a ban on imported cereals and had to switch production to a local sorghum crop,” says Mr Plumridge. “This sort of imposed change has not been uncommon, but a lot of good organisations that have been around for some time have developed the skills and resourcefulness to deal with such eventualities.”

The company works with local suppliers to help improve supplies. For example, Diageo provides resources to help quality control, and proactively works to address reliability and quality issues with lead suppliers. “In certain circumstances, Guinness Nigeria will also look to support mutual business development initiatives with certain suppliers,” says Mr Plumridge. “A current example is a loan of £1m to allow investment in state-of-the-art printing equipment for our lead label supplier.”

Watchful

Fraud continues to be a challenge, as Mr Plumridge acknowledges. “Nigeria remains a very poor country at the individual level and we are constantly watchful to ensure the integrity of the company’s assets. We have had issues involving staff and suppliers but these are very much the exception. It is just that the risk in Nigeria is greater – we try to compensate with rigorous internal controls. We always take punitive action and involve the police in such eventualities in an attempt to discourage future wrongdoing.”

Although Nigeria’s roads and power supply still represent a test for many businesses, improvements in infrastructure are gaining momentum. “Telecoms are much better and with the development of GSM, companies can be in contact with most places in Nigeria and beyond now,” says Mr Plumridge.

Positive trend

In spite of the problems, Mr Plumridge thinks that, in the long term, the overall trend will be positive. “The past year has seen enormous changes,” he says. “For example, there has been reform of the banking sector and a greater focus on fraud – particularly from the finance ministry.

“Political reforms have been more problematic because there is divided opinion on how the country should determine the next president, so the forthcoming election will be a real test for the nation. If the country can get through the election in a calm and agreed way with democracy continuing, Nigeria will be in a very strong position to continue to prosper.”