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Nigeria is richly endowed with natural resources ranging from crude oil and natural gas to an array of solid minerals such as tin, gold, coal, columbite, iron ore, and limestone.
The country is also blessed with vast agricultural produce including maize, cocoa, yams, and groundnuts, as well as industrial minerals like kaolin and barite.
Despite this wealth, Nigeria continues to grapple with a long-standing challenge. The bulk of these resources are exported in raw form with little or no value addition, limiting their impact on industrial growth and job creation.
The Federal Government recently expressed concern over the country’s weak returns from agricultural exports. According to the Minister of Agriculture and Food Security, Abubakar Kyari, the sector contributes about 35% of Nigeria’s Gross Domestic Product (GDP) and employs roughly the same proportion of the workforce.
Yet, agricultural exports generate less than $400 million in foreign exchange earnings annually. Against this backdrop, food and beverage giant PepsiCo says it is working to strengthen Nigeria’s agricultural value chain by sourcing almost all of its raw materials locally.
According to Felix Enwemadu, General Manager of PepsiCo Nigeria, the company relies heavily on Nigerian farmers to sustain its operations, with key supplies coming through partnerships with Flour Mills of Nigeria and Presco Plc.
In this interview with Nairametrics, he explained the broader benefits of this strategy across agricultural value chain.
Nairametrics: How long has PepsiCo been operating in Nigeria and what impact has it made?
Felix Enwemadu: I think the starting point is the PepsiCo’s commitment to Nigeria. I think that’s the very starting point.
We’ve been investing in Nigeria significantly over the past three decades, and our intention is also to continue.
But also, we’ve built a partnership in terms of how we impact the communities in which we work and play. And I think that, for me, is the more critical piece, rather than looking at business growth opportunities.
Nairametrics: How have you unlocked more job opportunities, and build a thriving ecosystem of local suppliers?
Felix Enwemadu: We source our raw materials predominantly from Nigeria, and that also helps to create jobs.
But also, from an impact standpoint, we’re collaborating on a number of fronts, not just from a manufacturing distribution standpoint, but from a social impact standpoint as well.
Nairametrics: What percentage of PepsiCo’s raw materials are sourced locally here in Nigeria? And how is the company working with local farmers and suppliers to strengthen the value chain?
Felix Enwemadu: Okay. So, if you look across our categories, we play in three different categories.
We play in oats category, the quaker oats that everybody knows. Very solid brand with a lot of health benefits. We also have a sausage roll brand, which is called Yum Yum.
And now we’re just looking to introduce Cheetos into the market. So for each of them, our sourcing capabilities are slightly different. For Cheetos, we’re sourcing close to 100% of the raw materials from Nigeria.
The core ingredient you see or raw materials you see there is corn. Corn grits. And our corn grits are sourced today from a partnership with Flour Mills, which everybody also knows.
It’s a household name. They have a backward integrated program with Nigerian farmers. So, they have an outgrower scheme, thousands of farmers who grow these products, and then Flour Mills offtakes from them, and then converts it into what we make.
Nairametrics: What about the vegetable oil you use?
Felix Enwemadu: We do 100% sourcing of our oils, our vegetable oils from a Nigerian company called Presco, which is quoted on the stock exchange(NGX). We have a very solid partnership with them, and they provide us all the specs of our oils that we use for Cheetos and also for our sausage roll. Flavors are also sourced locally, in-country. So, we’re close to 100%. Sausage rolls as well.
Our wheat flour, which is the main component of that category, is also sourced locally from Flour Mills as well. So we have a fully integrated local sourcing program, working with local suppliers.
The only area where we have an import sort of model is Quaker oats, because the climate in Nigeria does not allow anyone to grow oats.
So that’s why it’s solely imported. But for the rest of the portfolio, and for future launches as well, we’re looking to source locally, because that is key for the development of this country.
Nairametrics: How are you maintaining quality and consistency while also supporting the Nigerian farmers?
Felix Enwemadu: So, I think the starting point is who we are as PepsiCo.
We’ve been around for so many years globally, and we’ve built a very solid foundation when it comes to the manufacturing process of all our brands. And we ensure that the standards are right at every point in time. But also, we will always do things the right way.
Nairametrics: What is PepsiCo’s relationship with the likes of NAFDAC and SON, and how has their regulations driven quality?
Felix Enwemadu: We’re governed by a lot of regulatory bodies, NAFDAC, SON, and all of that. So for every product we launch into the market, before we launch the product into the market, if people are conversant with the NAFDAC or SON processes, they have to come to the factory, see the process run, do a lot of the quality checks, before they then give you an approval to then launch the product in the market.
And I think the relationship we have with the regulatory authorities is second to none, because they know that we always uphold our standards across our manufacturing processes.
The global standards, like environmental health and safety standards.
Nairametrics: What is the figure of employees in your company?
Felix Enwemadu: Today we’re employing directly and indirectly over a thousand people. And it cuts across our entire value chain, from manufacturing to getting the product to the last mile, to the consumer.
As we scale the business, the PepsiCo footprint in Nigeria will create more job opportunities, both at the back end, which is our manufacturing, and also at the front end.
To be honest, I can’t wait to fill the capacity for this line. Because once I’m able to fill that capacity, there will be another investment that will be made, and that will create more jobs.
We would love to see our country grow. We would love to see a lot of the youths have jobs, to be able to look after themselves and the household that they basically feed.
Nairametrics: What specific investment and innovation plans does PepsiCo have to create a long-term brand in Nigeria?
Felix Enwemadu: We have an exciting innovation footprint.
I can’t say for now. I think you should watch the space. We’ve started out with three flavors.
Two in the market, by next month you have the third one. We have cheese, sour cream, and also the coconut flavors that we’ll be introducing into the market. We’re a global brand.
When you look across the globe, we have a lot of brands. I’m sure a number of you have heard Doritos. You’ve heard Lays, which basically champions the European Champions League for the men who follow football.
Cheetos as well is a household brand. You’ve heard Simba.
You’ve heard Knickknacks. We are the biggest snacks business in the world. This is just the starting point for Nigeria in terms of what we’re able to expand into.
The opportunities are limitless. As long as we have the right enabling environment, as long as we have the right operating environment in Nigeria, we will be willing to invest. We’ve been investing for 33 years.
We see Nigeria as a strategic market to expand into the rest of West Africa. We are planning on expanding our product portfolio beyond the sausage and the one that has not been introduced. We see Nigeria as a hot market.
There is a lot of opportunity, but I think we’re always going with trying to get one country right and then looking at opportunities as we do that to make this a hub for West Africa.
Nairametrics: With your 33 years of experience doing business in Nigeria, what do you see as the biggest challenge for manufacturers and what do you recommend to fix this problem?
Felix Enwemadu: I think the biggest challenge for any manufacturer is inconsistency in government policies. That’s the starting point.
If you look at the current regime we have now under the current president, it’s taking a bold step in terms of correcting some of the policies that we’re making. Making it a more level playing field for everyone who is into manufacturing. For me, that is one.
The second big piece I think a lot of people overlook is the fact that we need to see a scale-up in our infrastructure. Because if I take for instance to ship a product from here to Maiduguri for instance, it would take me almost within two weeks. If I had a fantastic rail system it should be done in two days.
And that reduces my cost of doing business. So I’ll put it in those two buckets.
Nairametrics: How will the partnership with DP World improve export opportunities for Nigeria?
Felix Enwemadu: So, I think the partnership will unlock a lot of potentials for our business and also in terms of the export capabilities for Nigeria.
The partnership centers on how DP World will help in manufacturing and also to help in distribution of the products across all the regions in Nigeria.
You know today there is an African Continent Free Trade (AfCFTA) policy that is in place across all the West African countries and Africa as a whole. Which allows for trade across various geographies. I think if that is unlocked in the right sort of way, because there is a bit of tension as you ship across markets.
If that is unlocked, it helps our agenda to make Nigeria a hub to service the rest of West Africa.
Because we have the capacity sitting in Nigeria. With the population we have, every business will look to invest more in Nigeria and then use Nigeria as a sort of footprint, as a hub or launchpad into the rest of Africa.
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