CREATIVITY AND THE RISE OF AFRICA
SPEECH BY MR LARRY E ETTAH, GROUP MANAGING
DIRECTOR/CEO, UAC OF NIGERIA PLC, AT THE
TBWA\CONCEPT AFRICA CONFERENCE HOLDING
10-12 SEPTEMBER 2008
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Opening
It is my pleasure and privilege to be invited to address this
opening session of the TBWA\Concept Africa Conference
holding here in Lagos. On behalf of UACN, Nigeria’s oldest
and largest conglomerate, may I welcome you to Lagos, the
commercial capital and nerve centre of Nigeria. The city that
is evolving into a mega-city and probably the largest and
most populated in Africa. The fact that this gathering, which
I observe is an Africa-wide one; is holding here in Nigeria, a
sign of the increasing engagement of businesses across the
African continent, a trend which your organization typifies
and I must commend your efforts to build profitable
alliances of forward looking businesses, organizations and
individuals within Africa and across the globe.
UAC has also been a pioneer and leader in this regard.
From history, UAC has always had a pan-African and global
vision as our very name, United African Company suggests.
More recently as I will discuss later, we have built alliances
with entities from other parts of Africa and we have
recognized these alliances as a core part of our growth
strategy.
We have as well begun a cautious foray into
Africa, with operations now in Ghana as a strategic rather
than a profitable investment at the moment, which will serve
the purpose of a learning incubator to equip our organization
with competencies and needed capabilities to operate
offshore; as our intent goes well beyond. I can therefore
easily identify with the thinking behind your gathering and
indeed the essence of project Africa.
The theme of your conference, “THE RISE OF AFRICA” is
topical and important.
In the globalizing or indeed
globalized world, it is imperative that Africa must rise.
Europe is history, America the past, Asia the present,
and Africa is the future. For Global Capital firms today, it
is often said if you do not have an emerging market strategy
then you don’t have a good strategy and if you do not have
an African strategy then you have no strategy. There are
positive signs here and there (and I suggest that this very
meeting is a possible positive sign of African renaissance, or
at least the will so to do) but I am sure we will all agree that
it will amount to convenient fiction if we fail to recognize
that Africa is still a continent of a thousand mutinies and
senseless wars, carnage of the innocent, a record of
lamentable slow growth, high poverty, unemployment,
preventable death and diseases, and yes, corruption.
Unhelpful national politicians, who often adopt ethnic,
religious and of late xenophobic platforms.
A continent
where the inconvenient truth remains that we are yet to
have a suffice of competitive democracy with rival parties,
alternating in power.
Democracy without democrats and
default mode of so called government of national unity
which is a polite negotiated arrangement more interested in
distributing largesse and power than reforming the socioeconomic environment. A continent with undeserving rich,
and undeserving poor.
If Africa will not recede into
irrelevance or at best marginalization in the new global
economy, we must challenge these orthodoxies and some of
those things which are painfully familiar than accept them.
Africa is a continent where we have the conditions needed to
create wealth and innovate but at the same time protect
those who started so far behind to benefit from the
possibilities we now have.
As we seek to emerge from our difficult history to build a
continent of political stability, economic stability, social
cohesion, and justice, business people like you must be
prepared to play a role of leadership in shaping debate on
issues such as economy, education, health and create work
environments that have supportive values and culture as
enablers for you to exercise such leadership and advocacy.
In saying this we must recognize of course that Africa is not
a homogenous entity.
The more appropriate context will
have to be Africa south of Sahara, which excludes Northern
and Mediterranean Africa. Even in looking at South Africa
for instance, we must recognize that inherent in that nation
are third world levels of poverty, crime and standards of
living as well as aspects of infrastructure, per capita income
levels, economic institutions and development that are
similar to first world and OECD levels. In talking about the
challenges and prospects of Africa rising, we must be clear
which Africa we are talking about.
I have titled my speech, “CREATIVITY AND THE RISE OF
AFRICA” which given the businesses you are engaged in,
Marketing Communication, Advertising, Branding, Publicity
etc. may not be surprising especially given the number of
references to creativity. I noticed as I visited TBWA Concept
Africa’s website and read through information about your
businesses. But beyond that, my choice of that topic affirms
my belief that the rise of Africa will have to do with a new
thinking, a new approach, a new commitment and new
ideas. In short, creative and proactive thinking rather than
just physical and tangible resources and commodities, would
be the platform for the rise of the continent. This will apply
not just to the marketing communication practitioners such
as
yourselves,
businesses
like
but
to
UACN,
manufacturing
financial
and
services
production
industry,
professionals, IT and communication service providers,
educational institutions, indeed the entire range of public
and private sector players across the African continent. As it
is often said, ideas are capital, the rest is just money. Ideas
and its execution will be the currency of the New Africa. It
is also instructive we remember that it is said; “Best way
to hide something from a black man is to put it in a
book”. So how will we discover the ideas we need, share
them, use them, adapt them and recreate them. How do we
prevent ourselves from being too secure in our own insights
and unimpressed by the accumulated wisdom of other
continents?
How do we avoid the merry disregard and
sometimes seductive but dangerous argument; this is Africa,
it will not work here! How do we in recognizing that even
though our culture, our languages, politics and sometimes
our religion divide us, we all share a kindred spirit more than
we
share
a
common
geography.
Our
values
are
fundamental to our future as it is to our past. Do we have a
culture that may hinder Africa’s rise?
Why Creativity?
In an article titled, “Creating Corporate Creativity”,
Edward de Bono made the following main points:
 Creativity is the most important ingredient in business
 Creativity is not a mystical talent or something solely
dependent on inspiration, but a skill that can be learnt
 In any organization, if creativity is not an expectation, it
will be seen as a risk.
creativity,
Management
By creating a culture of
turns
creativity
into
an
expectation rather than a risk.
He said, “Creativity is used to solve problems, design ways
forward, resolve conflicts, simplify procedures, cut costs,
improve motivation, design new products and services, and
fashion strategies.
demands creativity.
Any situation that requires thinking
Without it we are condemned to
repeating the standard routines”.
When de Bono talks
about organizations requiring a culture of creativity in order
to encourage fresh, problem solving approaches and
insightful thinking, we could also elevate the same notion to
societies.
Societies in which new ideas are constantly
nourished and created will have a steady supply of
innovation and growth. The reverse is also true. That is the
challenge of Africa. Africa is not restrained by capital such
that it has to depend on donations, grants and foreign aid.
That would assume our problem is budget deficits. We have
a deficit yes but of a different kind. Ideas deficit, creativity
deficit, innovation deficit and confidence deficit. We are
resource rich but innovation deficient. Africa is too big to
rely on food import and should be too proud to depend on
food aid indefinitely. As a continent, we will need to run
faster just to stay in the same place.
I believe the evidence of recent history suggests that this
innovative human spirit is fostered (not surprisingly) more
readily
in
free
enterprise
democracies,
in
societies
characterized by freedom and entrepreneurship, in open
societies and cultures that respect individual talent and
uniqueness.
As with companies, so with nations and
continents and Africa will have to strengthen its democracies
and free up the entrepreneurial spaces so that individual
genius can be liberated. A continent with open economy,
eschews
protectionism,
welcomes
foreign
investment
(declaration of ignorance) run flexible labour markets.
Theresa Amabile in a Harvard Business Review article titled,
“How to Kill Creativity” argues that many companies
unwittingly kill creativity by crushing their employees’
intrinsic motivation (the strong internal desire to do
something based on interests and passions) in the pursuit of
productivity, efficiency and control which in themselves are
worthy business imperatives.
She argues that businesses
can realize these imperatives without sacrificing creativity by
providing employees challenge, freedom, flexible work group
design, encouragement and organizational support. Again I
say, like companies, like countries and continents!
Africa
must look for fuel that grows rather than fuel that is dug up.
Agriculture and education are critical to our future.
Agriculture because we cannot enjoy industrial revolution
without agric revolution and food is good for the poor as
growing it accounts for a big part of their employment and
buying it accounts for a big part of their share of
expenditure. With Agriculture, we can then build industries
that provide the channel for the productivity envisaged in
the sector through sophisticated food processing industries
and stronger brands instead of exporting bulk commodities.
Education is required so that we can have a can do, will do
and able to do generation that understands how to access
funds, overcome ignorance of use of technology and timidity
of accepting low returns for their labour.
Moreso an
education system that equips people with general skills to
make them mobile, as a mobile society is better than an
equal one.
The old guru of management, Peter Drucker makes a similar
point while some creativity and innovation spring from a
flash of genius, most result from a purposeful search for
opportunities and engagement in disciplined work.
He
suggests that such opportunities can be found in contexts in
which there are unexpected occurrences and incongruities,
process needs or changes in industries or markets.
The
point of this all is that Africa will have to purposefully search
for new ideas and new ways of doing things as we seek
African renaissance and growth.
Creativity In African Businesses
I will suggest upfront that the main problem with African
businesses is precisely the absence of creativity and
innovation. We do not bring our brains to work. We do not
design our own machines, we buy machines from other
manufacturers in Europe, America and Asia who more often
than not are our competitors in the global market place.
Our Financial Institutions are reluctant to explore financial
products and solutions suitable to the needs and contexts of
the African market place. They stick to products created for
more developed markets.
African banks for instance will
insist on property collateral in a continent which title to land
is by and large not documented.
African pharmaceutical
companies do not engage in original research probably into
herbal medicines, peculiar African ailments etc.
They are
satisfied with manufacturing generic drugs after the patents
of the ethical manufacturers expire. We do not make cars,
engines of any sorts, even mobile phones.
We import
textiles and clothes, food, pens, books virtually most of our
needs. We do not process our primary commodities. We
export cocoa and import chocolates and chocolate drinks
and export crude oil and import petrol.
In short we are
reluctant to engage in creative work and prefer to focus on
the routine and physical activity. As we all know, the market
place does not reward such behaviour and it has not
rewarded African businesses save a few who have dared to
act differently.
UAC is trying to act differently. We have changed our focus
from
being
merely
a
representative
of
overseas
manufacturers and now manufacture most of what we sell.
We are creating our own brands, even as we selectively
leverage some of our partners’ brands in some markets.
“Mr Bigg’s” for instance is 100 percent UAC and it will one
day become a strong and recognized brand all over Africa
and the world.
Already it is the dominant food brand in
Nigeria and is already being exported into other markets.
But we still have far to go as we believe creativity requires
an “extended enterprise view”, the ability to leverage value
network and extend the envelope of opportunity. We are
moving from thinking products to solutions, experience
differentiation instead of product differentiation, share of
opportunity instead of market share, relationship instead of
transaction. Resourcefulness (alliances and collaboration;
resource attraction), instead of resources and resource
allocation. Functionality rather than format. We are moving
to stand tall by standing on the shoulder of others.
What Must Africa Do
Africa has challenges but so does it have opportunities, in
reality it is a challenging opportunity. There is clearly some
progress. New private sector players in Nigeria and the rest
of Africa are also following UAC’s example. Nigerian Banks
are expanding into Africa and even into Europe and the rest
of the world. Our telecommunications industry is expanding
in Africa leveraging the domestic success in Nigeria’s
growing market.
Nigerian and African markets are more
investor friendly and entrepreneurial action is growing.
Women and youth interest in business is stronger and microfinance is taking roots in Nigeria. Media and communication
related enterprises are flourishing, as well as entertainment music, video, publishing and sports entrepreneurship. But
more needs to be done.
At the root of competitiveness in Africa must lie our
education system which across the continent suffers from
poor funding, insufficient and poorly trained teachers and
decrepit infrastructure.
Beyond that, the philosophy of
education must change in favour of encouraging students to
question and probe rather than routine memorizing and note
learning.
Our social structure has to improve.
Societies
have to be less intolerant of mavericks and intellectuals, and
this applies to businesses as well. Science and technology
investment
is
required
in
internet
and
broadband
connectivity, science and laboratory equipment and the like;
we need venture capital in more pervasive volumes so that
risk capital will be available for those who want to venture
and
who
have
sensible
(or
even
insensible)
ideas;
businesses and government must invest in research and
development and support universities and research institutes
to return to their core function of seeking new knowledge
and solutions rather than becoming part of the government
bureaucracy.
Business must then link up with research
institutions with funding, partnership and mutual knowledge
sharing and ensure that research output is useful and used
by business. African governments must consciously seek to
recreate a middle class that can purchase the goods and
services produced by African businesses. As income gets to
a threshold, mass consumption of consumer goods such as
consumer electronics, household and financial service will
take off.
Women must work; have few children and less
dependency thus leading to growth.
We must apply creativity in manufacturing, banking and
finance, services, agriculture, ICT, governance and policy
making, education, healthcare etc. and of course in selling
Africa and African enterprises which I think TBWA/Concept
and its colleagues in the marketing communication field are
very well placed to do.
African businesses must produce
formidable range of products and have local knowledge of
its markets. Africa must exploit its size and geography as
we lack scale in a world where scale and size is becoming
very important. May I ask today, who is the Afro consumer?
Do we have identical consumer segment across different
countries in Africa (DSTV generation).
Do markets exist
horizontally in Africa as a continent as not just vertically in
countries. When we do segmentation are we looking only
for need similarities or should we also not be looking at need
differences.
To do all this, we need talent, well-educated and exposed
African and expatriate minds who can bring knowledge and
skills to bear on African business and governance. We also
need investment and capital as it is clear that Africa south of
the Sahara, excluding South Africa is lacking in the levels of
investment capital required to deliver power, transport and
communication
infrastructure,
services
and
utilities,
education and healthcare and modern technology that is
needed for Africa to truly rise to the challenge of the 21st
century global economy. Thus we need collaboration
between
African
nations
and
businesses,
particularly
between South African firms and the rest of the continent.
To do this successfully however we need a partnership and
collaboration mindset rather than a paradigm of conquest or
exploitation (No new colonization). We have to review the
New Partnership for Africa’s Development (NEPAD) initiative
and the Business Roundtable platform therein to ensure it is
more private-sector driven and government supported
initiative rather than the other way round. As things stand,
it is failing if not failed. We need to balance our products
and services with the context and wallet of the markets in
which we seek to play; and we must build viable, sustainable
long term alliances between businesses across Africa. Even
if we are not global companies we must realize that we will
face global standards and therefore avoid thinking local and
acting parochial. We must develop global mindset. Even as
local players, African businesses must understand global
market dynamics to enhance value creation.
As African
Executives, you must have intellectual energy; energy to
challenge yourself, to take on new minds, to execute ideas.
We must strive for analytical rigor to break complex things
down to simpler models but retain the ability to synthesize;
that is take unrelated things and make connections is
equally important.
UAC is trying to do this. We have very strong relationships
with South African and Zimbabwean businesses and brands
– Nandos, Pizza Inn, Chicken Inn, Creamy Inn, are very
good examples.
We have attracted private equity capital
from ACTIS and we are expanding our own brands into
Africa. We have an alliance arrangement with ExxonMobil in
retail in Nigeria. We believe others can benefit from our
experience in these relationships.
Concluding Thoughts
As I close, let me say that I see an Africa with a future so
bright that we all will need sun glasses. A tomorrow which
will be more glorious than today, sons happier than their
fathers.
But friends, aspiration with no logic is
hallucination. Logic with no aspiration is soulless.
I must once again commend you for this important
gathering which as I have previously mentioned is a sign of
the possibilities that an Africa in which institutions,
businesses, and governments are collaborating across our
artificial boundaries, can unleash.
The theme of your
meeting, The Rise of Africa is appropriate and relevant
and hopefully your meeting will help in pointing the way
forward.
My colleagues and I in UAC will be happy to
benefit from your views and conclusions, just as I have
shared my thoughts with you.
I wish you very successful deliberations.
LARRY E ETTAH
Group Managing Director/CEO
UAC of Nigeria PLC
September 11, 2008
“My Educational Journey”
Speech Delivered by Larry Ephraim Ettah
Group Managing Director/Chief Executive Officer
Uac of Nigeria PLC
All Protocols observed.
Let me begin by saying it is indeed a great privilege
and a high honour to be here today and moreso to be
the Guest Speaker at this maiden Annual Teachers’
Award for Excellence in Akwa Ibom State Public
Schools.
I salute and applaud the vision of the founders of the
Inoyo Toro Foundation; my good friend, Udom and
his delectable wife, Ntekpe for not just putting their
will in supporting education in Akwa Ibom State but
also their wallet.
For me this occasion and this neighbourhood have
special meaning for another reason but yet connected
in some way to why we are here.
In this
neighbourhood in 1963, a young Branch Manager
working with PZ Industries at Nwaniba Beach now
part of the Golf Course of this hotel, met a young lady
then starting her teaching career at Uruan County
Council School, Nwaniba, Mbiakong only few minutes
from here, and fell in love. I am a product of their
liaison and subsequent brief marriage as my father
soon became one of those unfortunate statistics of
the civil war. I possibly was a toddler when I began
my educational journey as my mother took me to
school and her class since she could not quite
possibly afford a baby sitter. I may have been the
youngest child in that school’s history.
So today my friends, I stand here as a modest
testimony of what a son of a teacher and a
beneficiary of public school education can become
given the opportunity I believe every child in Akwa
Ibom State should have. This Award is timely as it is
coming when our public educational system has fallen
into a lamentable state of distress from decades of
under investment both in terms of the infrastructure
and the psyche of the teachers who work in the
sector. It is coming in an era where it has now
become fashionable to send our children to private
nursery schools, secondary schools and even
universities while those not so blessed are consigned
to public school system.
What obtains today in the public school arena in
Nigeria is a tragedy born of neglect where the
government has overtime become a disinterested
guardian of the public good. Permit me to say it does
not have to be so and it wasn’t always this way.
Teaching was not always that profession where it was
a continuous struggle trying to make ends meet at
the end of the month, where the rewards was in
heaven and life on earth was purgatory. It was a
respected, noble and celebrated profession. Teachers
were the icons of our society, bastions of reputation,
role models and custodians of values and virtues of
integrity, candor and hope.
Teachers were the
leading lights, and shapers of future destinies of the
wards in their care and under their watch. Teachers
were those shouldering the responsibility for
preserving the vitality of the society through
educational nourishment of its youth.
That was my experience and possibly yours, as I was
privileged to be brought up by a teacher at home and
taught by several others in school. In my life’s
journey it has become apparent to me that only
education provides the ability to climb the ladder of
opportunity. Our society will never be an equal one
but we must seek to have equality of opportunity so
that we can have a mobile society through an
education system that equips Akwa Ibom indigenes
with general skills to make them mobile and
competitive in the Nigerian job market. This award
seeks to encourage such an endeavour.
As has been my experience from a village primary
school in this neighbourhood to another in Mbiaya
Uruan, to yet another at Ndukpo Ise and
subsequently to Nuhu Primary School Kankia in
Katsina State, before going to Government College,
Kaduna and the University of Benin. Our young
people will succeed if they have a strong CV that
reflects the various schools they attended, the grades
they earned, the subjects they studied, languages
they speak and the experience they have been
through. A good CV allows you to sell yourself in the
job market and rely less on luck or a boss who likes
you. Advancement becomes a consequence of effort
and talent not luck or patronage. Good teachers as
we are celebrating today make those good CVs
possible.
It is often said that the best way to hide information
from a black man is in a book, that must not be the
fate of Akwa Ibom children in modern day Nigeria. It
is a sad waste of talent in my mind, when we fail to
give the teaching job the esteem it requires and allow
qualified people to think becoming “Okada riders”
makes more economic sense than taking up teaching
in our public schools. It is equally of concern when
we do not strive to encourage more of our children to
seek numeracy over literacy by encouraging them to
take to the sciences and related professional courses
as this award seeks to do.
The inconvenient truth is that today, we do have
significant number of our people who are educated
but unqualified for the new job opportunities of our
new economy as we are largely science shy and take
too easily to the road of the liberal subjects. As we
seek to become a competitive player in the Nigerian
landscape, our education must have a qualitative
approach as an essential complement to the
quantitative one which the current government’s free
education scheme offers. Our problem in public
school education is sometimes not a problem of
insufficient resource, it is a problem of insufficient
resource allocation and our government must
recognize that it has a stewardship obligation as any
transformation must have a content dimension and
this much is true of the upliftment it seeks in the
educational sector.
Permit me to add my voice to the social dialogue that
seeks to create a new Akwa Ibom State of results, as
we have had promises in abundance for 8 years since
1999.
It may be early days yet but one is
encouraged that the current government seeks to
achieve delivery over pronouncements at least as it
relates to educational opportunity in our society
through the free education programme it recently
enacted.
We must seek to banish the painfully familiar
stereotype, perception and profiling of Akwa Ibom
people as Stewards/Cooks, “Okada riders” and other
low self esteem job seekers and holders. We must
resist the temptation in government to buy social
peace by doling out handouts, benefits and donations
in the name of “empowerment” as such is
distortionary and a disincentive to creating a society
of people with a spirit of “can do” and the experience
of “know how”, A “Do how” Akwa Ibom populace.
Government must see education as seeking to
provide help and citizens to use that help to help
themselves.
Inoyo Toro Foundation in instituting this Annual
Awards represent a new set of social entrepreneurs in
Akwa Ibom State, who believe that it is not the reach
of a man’s fame nor the depth of his fortune but his
ability to make a difference to humanity is what
matters. By their action they show that success of
others in Akwa Ibom State does not diminish theirs
but adds to the common wealth. I sincerely hope
that their effort, serves as an appeal to other people
of optimism and goodwill to join hands to build a
coalition of the socially responsible and a network of
peers with interest in public issues and public good in
Akwa Ibom State.
“A single swallow does not make a summer” as the
saying goes, equally “a single gunshot does not
constitute a revolution”, but my friends it can start
one.
I see a tomorrow for Akwa Ibom State, which will be
more glorious than today, sons happier than their
fathers. We must however make the right choices,
empower our people through education and celebrate
our teachers.
In ending this I am reminded of Robert Frost in his
poem “The Road Not Taken”, which you kindly
permit me to recite.
Two Roads diverge in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth
Then took the other, as just as fair
And having perhaps the better claim
Because it was grassy and wanted wear,
Though as for that the passing there
Had worn them really about the same
And both that morning equally lay
In leaves as step had trodden black
Oh, I marked the first for another day!
Yet knowing how way leads on to way
I doubted if I should ever come back.
I shall be telling this with a sigh
Somewhere ages and ages hence
Two roads diverged into a wood, and I,
I took the one less traveled by,
And that has made all the difference
Thank you all for listening, God bless our teachers,
and God bless Akwa Ibom State.
Larry E Ettah
Group Managing Director
Uac of Nigeria PLC
28th November 2008
Opening Remarks at the Occasion of the dinner
in honour of Tunji Oyebanji
Acknowledge Chief Executives present.
Friends, Family, Colleagues, Distinguished Guests, I
welcome you to this dinner in honour of a friend, a
brother and a Nigerian patriot. Kindly see this evening
as one to mix, mingle, fraternize and felicitate with
the Oyebanji’s on ‘Tunji’s elevation to the exalted
position of one of our nation’s blue chip companies,
mobil Oil Nigeria PLC.
As a fellow Chief Executive Officer, sometimes when I
see a new member of the club, I wonder whether to
congratulate him or her or more appropriately
sympathize given the brutal economics of running a
big organization in Nigeria. It is good that Tunji got
this job for several reasons. One, he is a Nigerian, in
an increasingly corporate landscape where the
Nigerian Chief Executive of a blue chip non financial
institution is an endangered specie.
As you look today at Unilever, Guinness, NB Plc, PZ,
Cadbury, NBC, and Nestle, you will increasingly see
that what we gained as Nigerian Management from
the corner of indigenization in the 1970s, we have
lost in the roundabout of liberalization in the late
1990s and today. The consequence is that today we
have fewer Nigerian CEOs as public leaders in our real
economy who are prepared to play a role in shaping
the debate on sociopolitical issues in our nation as in
other countries. Some of our colleagues will gladly
pursue other interests in yatching and boating taking
comfort in obscurity, after all why have a passion for
a country which is not yours and where most likely
your tour of duty won’t be more than 4 years. So
Tunji is a welcome member to the network of peers
of similar interest in advancing Project Nigeria.
In my interaction with him and particularly given the
pivotal role he played in enacting and fostering the
XMO/UAC Alliance on Fast Food (On the Run), he
clearly came across as someone with the intellectual
temperament, integrity, drive to provide Mobil with
the inspired leadership into its future.
Very
approachable, collegial, selfless and in an
environment where we are used to seeing so many
people building fences for themselves and
organizations. Tunji is a builder of bridges. A true
Nigerian who believes as that old anthem of this
country “though our tribes and tongues may
differ in brotherhood we stand”
I can say certainly that in an environment of big egos
and self-promoted personalities this is one man of
great humility. From him I have certainly learnt that
sometimes humility is a more important quality than
courage. In an environment of great evidence of
hubris, this is someone who believes in humanity and
seeks to use his position to do good for his society
and country.
In an environment where we
sometimes take our self too seriously this is a man
who enjoys honour and is fun to be with.
In an environment where values have been eroded by
corruption, nepotism and cronyism, this is a man, a
professional, a personification of integrity, candour, a
profile in service which gives hope that ours can be a
better society. Tunji and I share memories of our
days and nights of negotiations and meetings in
Harare Sheraton in Zimbabwe, where we polished off
a bottle of brandy at night (can’t do that today), and
in the morning engaged back in hard negotiations,
took bone steak challenge (explain). In all this his
sense of humility, humanity, humour and hope shone
thing. I am certain where we sometimes see CEO’s
making their organization to work for them, this is
one CEO who will work for his organization.
It is a privilege and honour to know this gentleman
whose promotion is well deserved and we celebrate.
So, welcome and let me also wish you all, never too
late I guess, personally and professionally a Happy
New Year.
“LEADING WITH HR IN A CHALLENGING TIMES”
SPEECH BY MR LARRY E ETTAH, GROUP MANAGING
DIRECTOR/CEO, UAC OF NIGERIA PLC, AT THE OCCASION OF
THE 2010 HR MANAGEMENT CONFERENCE
--------------------------------------------------------------------------------
The ED, Corporate Services, UACN Plc
Head of Human Resources
HR Managers and Personnel here present
Ladies and Gentlemen
I am delighted to be here on the occasion of the opening of
2010 edition of your annual conference as Human Resource
Managers. I noted that the theme for the conference is
“Leading with HR in Challenging Times”. This theme is apt
as it implies, a recognition of the leading and strategic role
HR can play in view of the current state of the Nigerian
economy and particularly as it affects our businesses.
As I am sure you will get to hear during this conference,
successful businesses are so because of the collective talent
of its people and its ability to effectively leverage that ability
as a source of competitive advantage even in these difficult
times. For it to succeed, UACN Plc must seek to attract,
retain and leverage such resource within the group. So at
this conference, we must ask how more we can intensely
focus and seek to align human capital with corporate
strategy and objectives, by your department and the
leadership team. How do we ensure there is adequate talent
with necessary knowledge and competencies across the
entire workforce. As skill sets and job requirements change
because of the challenging times, how do we ensure right
“Talent DNA” exist in the business.
The ability to identify, develop, manage and retain talent as
an integrated set of processes across the organization
(rather than in functional silos) allows organizations to drive
new levels of value from its pool of good human resources
which has become a strategic imperative in the current
business environment. How then do we get this done?
As HR managers, you have a responsibility, a duty and also
an opportunity to find proper ways, by which the business
could effectively compete for talent in the labour market,
create a good working environment, and help the workforce
develop new skills, formalize rewards systems, and comply
with applicable regulations. You must also collectively work
on how we, as a company, can sustain a high-performance
culture as a competitive advantage and its close linkage to
the contribution from the employees.
Our cultural
transformation to become a performance driven organization
implies that we need to work to ensure that all our
structures and every system and process reinforces the
desired performance-driven culture. I know that this goes
beyond HR and will require the efforts and contributions of
everyone in the organization. But you must champion it.
Let me emphasize that our commitment to maintaining
integrity as the major fabric of our company is not
negotiable. This must permeate all that we do. Our claim of
meritocracy in recruitment and reward must be seen by all
to be so with our own personal credibility demonstrating
same. We must dispense discipline and other judgmental
issues by following due process which enables all employees
to come to terms with the company’s rules and procedures.
As custodians of these issues, I urge you to assist
management in effecting necessary review as you align your
experience on the job with the letter and content of all our
policies, rules and procedures.
Permit me to remind you that despite the sad instances of
religion and ethnicity in our country today, our position as a
company has been to offer equal opportunities to all citizens
of Nigeria irrespective of gender, ethnicity or religion. Our
focus had always been skill and ability to performance rather
than any other consideration. We pride ourselves in being
unbiased and always leaning on merit in all our recruitment
processes. I asked that you all work to sustain this company
posturing as management will not tolerate any act that
might portray it in bad light.
I am equally sure that you have all been briefed about the
position of management on observance of religious rites in
the work place. We acknowledge the freedom of our people
to worship but we will not be involved in promoting any
religion. We, therefore, ask that all religious assembly of
any kind in the workplace be authorized appropriately. Such
should take place at such times as are reasonable outside
official working hours. We also hold that those religious
activities, whether prayer session or lecture is done in such a
way as not to constitute nuisance to other employees and in
particular our neighbours in our various locations. On no
account should any employee be penalized for not willingly
participating at such assembly as that is not the primary
purpose of employment of anyone. Kindly discuss and
fashion out ways of curbing any untoward religious or ethnic
activity that may affect team spirit and cohesion among our
people.
On a final note, I urge all you to make the best use of the
opportunity provided by this conference to learn from the
resource persons and even from yourselves and be armed
with the requisite skills and knowledge to cope with the
challenges ahead.
I wish you all useful and successful deliberations.
LARRY E ETTAH
Group Managing Director/CEO
Friday 26th March 2010
AFRICA EQUITY RESEARCH EXOTIX LIMITED
The bulk of the liabilities in UACN Properties (UPDC) relates
to the Hotel which just commenced operations in January
2010. Definitely, as activities pick up in the hotel, it will
generate the necessary cash flow to pay off the
corresponding liabilities.
1. UACN Properties Development company (UPDC)
i. Nigeria’s real estate sector remains undeveloped
accounting for less than 5% of GDP. The sector has
seen strong growth over the past decade averaging
10%. There exists a huge demand – supply gap in all
segments – total housing deficit is about 17.18 million
units. Severe lack of quality accommodation in the
residential segments has led to very low vacancy rates
and high rental yields, especially in urban areas.
The bulk of development is concentrated in urban areas with
particular emphasis on Lagos, Abuja and Port Harcourt. The
sector generally is characterized by strong returns. Large
projects continually launched to address the supply gap are
proof of the viability of the sector.
 Modest Recovery achieved – especially in the key cities.
 Market relatively stable and prices generally firm.
Lower than global growth due to:
 Non availability of credit for retail financing
 “Wait and See” attitude of the major buyers in the
industry.
 Price adjustment – in the premium segment of the
market – especially in Ikoyi and Banana Islands.
 Regulatory Issues
 Multiplicity of Regulators
 Ambiguous, Uncertain Regulations – “Shifting Goal Post”
 New planning Law in Lagos State may ease some of the
problems.
 Investment Disincentive
 Due to legal/title issues: Uncertainty of title Recertification, Double Registration, Stamp Duties, etc.
 Huge housing deficit – about 17-18 million units. High
growth potential: Estimated population by 2050 is 289
million (Encarta) and 264 million (United States
Census Bureau).
 Estimated Current untapped market of over N13
trillion – housing units, commercial properties and
associated infrastructural facilities.
 Notable opportunities
 Commercial properties – shopping malls, market stalls
warehouses, etc.
 Classic and premium residential properties – targeted
at first time home buyers.
ii. UPDC is likely to sell about 54 units of residential units
this year. It is not constrained by finance in any form.
The company has just issued a N15 billion bond.
However, buyers of residential properties are
experiencing difficulties in getting mortgage loans due
to various reforms in the Nigerian banking sector. PMI
Reforms will help. N5b new capital base. No LPO
financing. No direct property development. Alliance
possibility now exists for retail financing with PMIs.
UPDC is watching the market price to determine when to sell
the residential units in stock.
 Resume Building of land stock for future
developments.
 Recreate projects pipeline.
 Conclude JVs with third parties for future
developments.
 Build Strategic Alliance(s) on Retail Financing.
 Union Homes, Abbey Building Society, Aso Savings
and Loans.
iii. The company is currently acquiring new sites for
residential property to build up its land bank. This is
because land prices are reasonable now, and prices
relatively stable and firming in the middle market.
iv. UPDC Hotel - Owns the hotel and engages an operator
to run it. The operator is being paid for its Franchise.
UPDC is pursuing the development of a Mall near the
hotel to enhance the yield on the property.
v. 1004 Estates - Is going in line with plan. Buyers are
already beginning to take occupation. What is being
done now is rectification of snags.
2. Foods/Drinks
The business has a lot of growth potentials. Disposable
income has affected foods business but not to a great
extent, depending on the price threshold, snacks strong
especially N50 products where purchase is considered as
impulse.
Principal competitors include Rite food, Chi foods and
Leventis food.
3. Grand Cereal & Oil Mills
Minority interest in the company remains 36%. No change
in position is expected for now or in the nearest future.
Strong Dividends payout and profitability.
4. Mr Bigg’s
We have about 170 Restaurants and average spend per day
per customer is N750 (US$5).
Others
GM Nigeria Ltd. UACN’s long-term view is to keep GM
Nigeria as a going concern. We intend to work with our JV
Partner to grow the business at the appropriate time.
Largely a country dealership fixed asset less than N50
million. Not a distraction to management and profitable.
CAP Plc UACN will work with the Technical Partner, Akzo
Nobel, to grow the business. Current equity price
significantly undervalues the business we think P/E would
suggest a N50 stock. Enterprise value N14 billion, Uacn
should get N7 billion.
Achieving the Golden
Age of Management
Professionalism - Speech by Larry E Ettah, Group
Managing Director/CEO, UAC of Nigeria PLC, At the
2010 Summit of the National Institute of Marketing
of Nigeria At the Presidential Hotel, Port Harcourt,
Rivers State
Introduction
The theme of this annual conference of the National
Institute of Marketing of Nigeria (NIMN), “Creative Strategies
for Achieving Nigeria’s Golden Dream” is obviously an
allusion to Nigeria’s 50th Independence Anniversary which
comes up on October 1, 2010 - just a few days away. An
anniversary, which as the low intensity debate currently
raging depicts, is whether to celebrate it or to apologise for
it. The jury is out as to whether Nigeria has achieved its
immense potentials since it attained nationhood or whether
we could have done better as an independent country. Most
Nigerians will agree that our report card should have been
significantly better if we reviewed our performance relative
to countries like Singapore, Malaysia, Brazil, India, China or
increasingly even Ghana. Your theme is, therefore,
appropriate as we try to improve the national outlook and
development performance.
I have been requested to speak specifically on the topic,
“Achieving the Golden Age of Management Professionalism”,
a topic which is also quite relevant since it suggests that the
management profession may indeed have a role in ensuring
the attainment of our national goals and objectives. In a
sense, it is an admission that if we agree that Nigeria has
not fulfilled its potential and destiny, that may indeed
amount to a failure of management whether public sector
and/or private sector management. Our experience does
seem to suggest that we are increasingly being afflicted with
an epidemic of leadership failure at different stratum of
society.
Management and Professionalism
Classical definitions of management describe it as getting
people together to accomplish desired goals and objectives,
comprising planning, organising, staffing, leading or
directing, and controlling an organisation (a group of one or
more people or entities) or effort for the purpose of
accomplishing a goal. Some other definitions include
organisation and coordination of the activities of an
enterprise in accordance with certain policies and in
achievement of clearly defined objectives. Peter Drucker
viewed management’s basic task as twofold marketing and
innovation. In acknowledgment of the vital role of
management in the modern economy, management is often
included, along with machines, materials and money. Surely
the concept of entrepreneurship and the corporation is
inconceivable in modern times without a notion of a
professional management team, structure, policies and other
appurtenances of modern management.
The Encyclopaedia of Professional Management proclaims
that “there may be no more important kind of human
activity than managing” identifying the basic task of
managers as “to design and maintain an environment in
which individuals, working together in groups, can
accomplish pre-selected missions and objectives” with the
goal being both logically and morally “productivity” i.e. “to
manage in such a way as (1) to accomplish objectives with a
minimum input of money, materials, effort, time, or human
dissatisfactions or (2) to accomplish as much of a mission or
objective as possible with the available resources” while
being responsive to their entire external environmenteconomic, technological, political, social and ethical. Taking
all these together, we may say that the objective of
management is to accomplish pre-determined objectives
through people or groups while achieving optimal
productivity.
Professionalism, on the other hand, requires some expertise
and skill that are unique to an activity or vocation. A
profession is a vocation founded upon specialised
educational training. The purpose is to supply disinterested
counsel and services to others. Wikipedia describes a
professional as “a member of a vocation founded upon
specialised educational training”. The New Webster’s
Dictionary of The English Language (International Edition)
defines a profession as “one of a limited number of
occupations or vocations involving special learning and
carrying a certain social prestige” and a professional as “of
or relating to a profession”; “engaging in some activity as a
remunerated occupation”. The Golden Age comes from the
Greek myth and legend and refers to a period of primordial
peace, harmony stability and prosperity.” It should be noted
that this “idealised and nostalgic vision of the simple life,
however, was sometimes contested and even ridiculed both
in antiquity and later on”. Management professionalism, the
golden age of which we are discussing therefore recognises
the fact that management has evolved into a body of
knowledge, concepts, skills and approaches that can be
learnt and is now a professional activity much like law,
medicine, engineering or other professions and implies the
existence of certain standards of professional behaviour or
“best practice” that members of the management profession
must imbibe and adhere to. David Maister says that
professionalism is “believing passionately in what you do,
never compromising your standards and values, and caring
about your clients, your people, and your own career.”
The State of Nigeria at 50
Before I launch into a review of how we might achieve the
“golden age of management professionalism” in Nigeria,
perhaps, we can agree on the current state of things in our
country to provide a backdrop for conclusions we shall reach
later. Nigeria has two major debilitating conditions. One is
corruption which may be deemed to have originated from
our public sector which has access and control of immense
oil resources while having limited accountability to the
citizens. Corruption may be regarded as by-and-large the
root cause of many of our other problems manifest
infrastructure decay, power shortage, poor state of public
services, crime, poverty and insecurity, elections which are
not credible etc. The result is that in spite of the huge
resources generated in Nigeria since independence, the vast
majority of our people have little to show for it.
One consequence of the unchecked corruption in our society
is that it has also permeated all sectors of society including
the private sector. Revelations about sharp practices in the
capital market, the financial sector and some quoted
companies are confirmation that the private sector may be
as corrupt as the government sector, if not in some cases,
more so. What we then have developing, is poor corporate
governance in our private sector institutions combined with
absence of transparency and accountability in government.
This combination is surely a recipe for disaster and can
hardly be the route to our nation’s achievement of its
“golden dream”. We do have at the moment a “golden
nightmare”. Surely this does not suggest the existence of
high standards of management, professionalism or
management professionalism in our public and private
sectors! If this state of affairs is unchecked, our country
may be bound for another fifty years of underdevelopment
and perpetuation of poverty. We either therefore reform
and grow or we decay and decline.
State of the Management Profession in Nigeria
In looking at the state of our profession today, we are
forced to be both reflective and prescriptive. To also ask
what our past means for our future. The Manager in Nigeria
is forced to operate in the context I have just described
above, in which infrastructure is decrepit, public funds are
applied largely for private benefit, power supply is
intermittent, and companies are forced to operate as others
have pointed out as mayoralties self-providing a wide array
of municipal and social services including water, security,
postal and delivery, alternative power generation etc in spite
of multiple taxes, rates and charges paid to the three tiers of
government. Given this operating environment, we might
commend the Nigerian manager for exceptional ingenuity
and creativity in surmounting the various man-made and
environment inflicted obstacles erected in the path of
corporate success. However, in this scenario, corporate
success comes at a cost. The ingenuity and creativity which
ought to be directed towards innovation, reading
competition, new product development, strategy and
visioning etc is largely dissipated on survival strategies in a
hostile and inclement business environment.
There are also some social factors constraining management
performance in Nigeria. The state of the educational system
is one such factor. Anyone familiar with management in
Nigeria must be familiar with the grave erosion in the quality
and commitment of persons entering the labour market as a
result of the destruction of our educational system. Beyond
quality, low societal values means the average worker is as
I’ve mentioned previously less committed, less motivated,
less loyal and probably in a hurry to get rich and therefore
less amenable to delayed gratification.
The consequence is lower employee fidelity, higher job
mobility and higher rates of frauds and such improper
employee behaviour. We must also observe that in general,
standards of corporate governance in our business
environment are not as high as one would like to see. UACN
prides itself as preserving and maintaining global standards
of governance in its operations and conduct and this may be
true for several other organisations, but clearly exceptional
standards of governance are not the norm in our
environment today. It is also of great concern and very
unsettling that those of us who claim membership of various
professional bodies cannot edify the ethos and value of such
bodies through one’s conduct and character.
Nevertheless, the management profession in Nigeria has
witnessed a lot of improvements. There is, for instance, a
greater supply of MBAs from both local universities and
foreign business schools available in the corporate sector.
The average manager today is more technologically-enabled
today than his equivalent in the previous decade or earlier.
Management of corporate organisations is more driven by
information systems and technology than used to be the
norm, and most organisations today are focused not just on
administration which used to be prevalent, but on managing
for greater productivity and performance. Employee and
Human Capital Management systems have been significantly
updated in line with global best practices and most
organisations invest in training and human resources
development, certainly more than used to be the practice.
True professional bodies such as the National Institute of
Marketing of Nigeria must look beyond membership
subscription and sundry charges. They must seek to create
a platform to encourage continuous learning and personal
development of members to enhance their professionalism
and competencies in a way that such bodies will be relevant
and contribute to create that future which we not only aspire
for but also deserve as a nation.
Currently, the result is a mixed report card in which the
management profession has made some clear advances, but
in which the business, social and ethical environment
constrain managerial performance and effectiveness.
Achieving the
Professionalism
Golden
Age
of
Management
Given the background provided above, it is now relatively
easy to prescribe a path way to achieving enhanced
standards of management professionalism in Nigeria. I
would suggest that the baseline would have to be improving
the quality of education generally, and, specifically,
management and business education, including economics
available in Nigeria. This is the bedrock or foundation of the
people and competencies brought into the market place and
if standards are not enhanced in the educational system, the
business community will be receiving deficient raw materials
with predictable results.
The next point relates to corporate governance. Merit,
professionalism and competence thrive and are enhanced in
an environment of best practices in relation to corporate
governance. A professionally-oriented worker may find
himself derailed if the incentives in his organisation are
skewed towards rewarding inappropriate behaviour. If
negative social practices corruption, nepotism, tribalism,
cronyism, mediocrity etc permeate into any organisation, it
is impossible for management excellence or professionalism
or both to take root in that organisation. We have to
improve corporate culture and governance if the profession
of management in Nigeria must develop to its true potential
and, hopefully, help in dragging the nation out of suboptimal economic and social development.
Other required measures are more technical sustained
investment in training and human capital development;
investment in management information and reporting
systems that will improve the quality of information (and its
timeliness) available to managers and executives; increased
provision of on-the-job training to improve practical learning;
seeking international job placement and exchange
programmes for Nigerian managers to improve the global
relevance and update their skills and know-how; improving
performance management systems to reward performance
rather
than
attendance
and
political
behaviour;
strengthening HR management systems including employee
engagement, motivation, career path management, job
rotation, appraisal and promotion, recruitment and
resourcing etc to improve the work environment for
managers and potential managers.
Conclusion
Management professionals must be exemplars of good
corporate conduct, arrowheads of national ethical rebirth.
Management professional bodies such as the National
Institute of Marketing of Nigeria must be that oasis of
excellence and catalyst for change in best practices in
leadership both at private and public sector level. We need
to encourage social change in an age where public faith in
politics is at all time low. That is a call of duty if we are to
achieve the Golden Age of Management Professionalism.
We must provide the inspired leadership through our
professional groups and in our work/life endeavours. Talk,
they say, is cheap; we must not just talk the talk at this
conference, but be prepared to walk the walk.
Benjamin Disraeli pointed out years ago: “The secret of
success in life is for a man to be ready for his time when it
comes”.
The time for achieving the Golden Age of
Management professionalism is now!
LARRY E ETTAH
Wednesday 15th September 2010
QUANTUM BUT UNLEVERAGED GROWTH
Welcome to 2011. Glad we have put behind what was a
clearly challenging year: But will the challenges go away?
Congratulate team for milestones in 2010 within a difficult
set of circumstance. Hotel opening, N15 billion Corporate
Bond at 10%; unprecedented and a first, also
oversubscribed’
-Completion of Abuja Phase 3, VMP1 Residential, 1004
Estates.
-Strategic actions of rebuilding land bank and putting a
stake in the future.
Challenges and constraints that were and are.
Sales constraints: difficult market condition characterised
by price crash and credit absence at retail, lack of mid-tier
income products, legacy issues of litigation and delinquent
contractors.
-Strategic
Imperatives:
Projectized
organisational
structure (each project as a mini business/entrepreneur’s
mindset).
-Better relationship with Customers and Government.
-Pipeline of products for business sustainability.
-Growth, Growth Growth; How to do best to do so?
It is important that the growth we seek is sustainable.
Therefore, we must seek to balance capital with opportunity,
strategy with risks.
UPDC for quite a while has been an overextended business;
we betted the company on difficult projects and problematic
lands/hotel projects. We indulged in some speculative
excesses and trophy assets. Anyone who could fog a mirror
could make money in real estate then. Your business is
about staying power, ability to come out of the next cycle
alive (not updating your resume). Banks with institutional
capital were doing crazy things, out biding in the market.
Risk should be sized to the return and earning, it is not
acceptable to have a position that can wipe out the firm.
Your current balance sheet by reasonable standard leaves
no margin for error. (Bomb proof capital structure not
suggested). It is important we are aggressive in growth but
cautious in capital structure because when you put too much
leverage in real estate you can get caught when push comes
to shove. Every investment you make has a downside; keep
an eye on that. Real estate is cash hungry animal but when
the shit hits the fan there are always casualties. (Bankers
don’t want to go out on a limb of recession). We must
therefore not worship at the altar of leverage. Home
ownership is important in the Nigerian culture as many first
time buyers exist, and remain hesitant to enter the market.
But we got strong trust equity going for UPDC and coupled
with desire by Nigerians to own their own homes. We
certainly are better placed than most to sell homes while still
building them.
“50 single family homes” then develop the area and build
infrastructure around those homes, then there is a little
community where you can add 400 or so apartments, some
swimming pools, club houses, gardens and more people are
attracted to the area!!
We managed earnings before; it is now time to manage the
business.
Accounting does not generate cash, managing
the business does. Step change is required in the operations.
Be loss averse not Risk averse, but avoid asset heavy margin
lean projects.
Collaborative Platforms and Innovation:
Joint Ventures: must ensure allocation of profits and
investments are clear to avoid endless squabbling. For a JV
to be successful, you have to plan for it to die.
Location:
Avoid poor location; low quality tenants, are rental yields
well above those of government bonds (target such areas).
Since the Pension fund market is in play.
Move to focussing on difference between rental income and
borrowing cost rather than capital gains because such gains
may not come in short terms.
Capital heavy model of growth: Project financing or
profit share basis, JVs with land owners, off plan
sales/necessary customer knowledge.
Retail financing
structure to create effective demand/partnership with PMIs.
Caveat: Property empires rarely lack debt. The issue is to
achieve growth while minimising exposure.
Oracle Buffet: It is in times of adversity that the truly long
term investor (well run business) earns its status, by keeping
his head while everyone else is losing theirs.
To that extent the price correction of the market is good
because otherwise, opportunists and cowboys would keep
coming in and increasing rates. It is a good place to be in
now.
Remember: A bank is a place where they lend you an
umbrella in fair weather and ask for it back when it rains.
Welcome Remarks By Group Managing Director/CEO,
UAC of Nigeria PLC, Mr Larry E Ettah at the 2011
Business Retreat
Colleagues, I welcome you to our 2011 Business Retreat
themed “Leveraging Change for Growth”. As is usual, this
event affords us an inclusive and interactive opportunity, a fit
of retrospection to evaluate our business performance in 2010.
(which indeed was a rather challenging year for our group
businesses) and also introspection to see the areas we came
short and learn therefrom, how we could do better. It will also
afford us the opportunity to understand, commit and align to
the strategic ambition, direction, and execution required in the
current year. Especially for the leadership team members who
you all are, so as to provide your organizations with the
enabling leadership to enact and direct change and execute
strategy in 2011. So, basically, this retreat seeks to answer
two questions; 1. How did we do? 2. What should we be
doing?
Today and part of tomorrow, we have invited corporate peers
and partners to speak to us on aspects that speak to the
theme of this year’s retreat. So as people shouldering the
responsibility of preserving the vitality of our company, let us
use this forum to listen and learn, develop the essential
mindset and intellectual temperament to act and keep our
people motivated, engaged and combat complacency as we
seek to find new direction and engines for growth in our
organization. We must resist the temptation of finding too
much security in our own insights, so be prepared to hear and
share from accumulated wisdom of others.
May I at this juncture particularly on your behalf welcome the
Chairman of our Company, Senator Udoma U. Udoma to this
retreat and of course thank him for graciously accepting our
invitation to declare it open. His acceptance and presence is
symbolic and substantial as well as reassuring. It reflects
indeed that management and the Board are in lock step on the
mutual desire to discharge our stewardship obligation in
transforming UACN and delivering strong results thereby
creating value for our shareholders.
It is difficult to transform a Company in some instances, if you
do not also transform its Board. That process as you do know
has been given necessary fillip by the Board under our
Chairman’s leadership in ensuring our significant subsidiary
Boards and indeed the Group supervisory Board are
increasingly populated with knowledgeable and highly
motivated directors with requisite experience, diversity,
competence and good standing in the society to support the
transformational agenda of the Company.
Before I invite the Chairman to give his keynote Remarks, may
I remind you that the measure of success of this retreat is
whether we leave here with the fierce competitive mentality
needed to ensure UACN continues its audacious advance in
our transformation agenda. So, I urge you all to engage and
participate.
In so doing, I am reminded and wish to share with you what I
heard Richard Quest say on CNN Business Programme the
other day about Strategic Bravery “If you are not prepared to
change a Company, you may soon not have a company to
change” So colleagues, let us prepare to “Leverage Change
for Growth” in UACN. This will take time but we must start
now!
LARRY E ETTAH
CHAIRMAN’S STATEMENT
Dear Shareholders,
I am pleased to welcome you to the 46th Annual General
Meeting of our company, Chemical and Allied Products Plc.
The meeting affords us an opportunity to review the
company’s audited Annual Report and Financial Statements
for the accounting year ended December 31, 2010, which I
hereby present to you.
In 2010, the economy experienced the full impact of an
unprecedented Capital and Money markets challenges which
had commenced in the previous year. The strict regulatory
stance of the Central Bank of Nigeria at the onset of the
reforms initially, led to an inertia in the sector evidenced by
a near zero lending with serious impact on operations,
especially for small and medium scale businesses, some of
which are our customers. To ameliorate the situation, the
Federal Government took steps in the right direction by
introducing different sectoral intervention funds to enable
companies reschedule their existing facilities, and have
additional working capital. However, things are really yet to
improve significantly.
The Federal Legislature also enacted the law that
established Asset Management Corporation of Nigeria
(AMCON), to manage the toxic assets of banks. By these
measures, investors’ confidence in both the Financial and
Capital markets improved, and activities in the markets
expected to pick up.
Business operational challenges are yet to abate, as the
decay in infrastructure, bad roads and dwindling power
generation and insecurity persisted. Alongside these, there
was global shortage of some key raw materials such as
Titanium Dioxide due to the closure of the major
manufacturing Plants on account of the global financial
crisis.
Some other raw materials were diverted for
alternative uses thereby creating global scarcity, while there
were hikes in other petrochemical based inputs due to the
increasing price of oil in the global market. The issue of
multiple taxes in the country remained unresolved with a
crippling effect on industrial growth. The aggregate of these
challenges further put pressure on cost of operations.
On the political scene, there were events in the course of
the year that also took their toll on the economy and
business prospects.
Particularly, the absence and
subsequent demise of the President and ensuing transition
politics affected both policy and economy.
Financial Results
Despite the challenges of 2010, your company performed
quite well. Turnover of N3.64 billion was recorded against
N3.03 billion of the previous years, a growth of 20%. We
continue to offer high quality products and services to
discerning consumers. We expanded our operations by
opening three additional Dulux Colour Centers in Lekki, Port
Harcourt and Kaduna. We also introduced the Dulux Mobile
Colour Centre, the first of its kind in Africa, to bring colour to
the doorstep of the consumer.
Profit before taxation was N1.14 billion, an increase of 84%
over 2009 and profit after taxation of N760 million, a growth
of 123% over previous year. The Back duty assessment of
N179m provided for in the accounts of 2009 was
satisfactorily resolved in December 2010 with the sum of
N81m written back to profit.
Dividend and Bonus to Shareholders
The Board is delighted to propose for your approval a
dividend of N560million, representing 200 kobo for every
ordinary share of 50 kobo. Of this amount, an interim
dividend of 100 kobo was paid on November 22, 2010.
Furthermore, the Board seeks the approval of Members to
raise the authorized share capital of the company to
840,000,000 shares of 50 kobo each thereby creating an
additional 540,000,000 shares of 50 kobo each which will
rank par’i-pass’u with the existing 300,000,000 shares of 50
kobo each. If approved, the Board proposes to issue a scrip
issue of 1 for every 1 ordinary share of 50 kobo each.
Directorate
In accordance with the Articles of Association, Mr. Opeyemi
Agbaje and Dr. Umar Alka are retiring by rotation at this
meeting and being eligible, offer themselves for re-election.
Appreciation
I wish to thank the management and staff of this great
company for their dedication, commitment and loyalty,
which have consistently produced admirable results over the
years. To you our shareholders, I thank you for the
confidence reposed in us and look forward to your continued
support and cooperation.
May I also express my appreciation to my colleagues on the
Board, for their contributions, our business associates and
technical partners, AKZONOBEL, for their continued support
as we look forward to greater support in 2011 and beyond.
Outlook
We will continue to grow the business through innovation
and excellent customer service delivery. We shall leverage
on the strength of our technical partners in colour mastery
and offer differentiated colour solution to our consumers.
The business shall lead the drive in ensuring sustainability of
its products and the environment. We are confident that
we will continue to enact steady growth in company sales
volume but however remain cautious hoping the associated
risk of an election year on polity, politics and economy will
be managed without disruption to business.
LARRY E ETTAH
Chairman
GM NIGERIA LIMITED
CHAIRMAN’S STATEMENT
Distinguished shareholders, ladies and gentlemen,
It gives me great pleasure to welcome you to this Annual
General Meeting of our Company. I hereby present to you
the Annual Report and Financial Statements for the year
ended December 31, 2010. Before I delve into the Report,
kindly permit me to give a brief overview of the economic
and business environment under which the business
operated in the year under review.
ECONOMIC AND BUSINESS ENVIRONMENT
The fall-outs of the global financial crisis continued well into
the year 2010, thereby creating the setting for a very
challenging year for businesses in country. Even though oil
prices hovered around $100 pb at some points during the
year, consumer demand was generally weak, especially in
the automobile industry. The Central Bank of Nigeria’s
(CBN) intervention in the banking sector threw up a lot of
irrecoverable debts in the system, which subsequently
impeded further advances to the real sector. This
development invariably affected the fortunes of genuine
borrowers with dire consequences for our business and its
customers. Although aggregate credit grew at 6%, (with
those to the various governments growing at an average of
46%), credit to the private sector declined by 4% over the
previous year.
Gross Domestic Product (GDP) grew by 7.85% as inflation
hovered around 11.8% while external reserves closed at
$33.2b by end of the year. The exchange rate of the Naira
to US Dollar was kept at N149 as at December 2010 while
the Japanese Yen recorded the lowest rate ever of JPY76 to
the USD during the year. The rate combination translated to
high input cost of imported vehicle components (SKDs) and
fully-built units (FBUs) from our source - Japan, with the
expected losses for companies that are heavily dependent
on imports for their operations. However, the reforms
carried out by the CBN in the Banking sector, which led to a
review of lending policies and borrowing rates, had some
positive effects on our operations.
The market remained highly competitive during the year
with new entrants from low cost producers forcing traditional
operators to adopt new marketing strategies for survival.
Operating margins were under serious pressure as the cutthroat competition created difficulties in making adjustments
in prices to compensate for the high cost of products arising
from the exchange rate differentials.
RESULTS
The effect of the difficulties in the operating environment led
to a Turnover of N1.7 billion which was a decrease of 28%
over last year’s performance. The Operating Profit decreased
significantly by 56% to N68.6 million compared to N156.7
million in 2010. Margins on all our product categories also
decreased considerably. The company is highly leveraged,
resulting in high interest expenses with negative effects on
the bottom line.
DIVIDEND
The Board remains committed to the delivery of value to our
shareholders. Despite the difficult operating results, the
Directors are recommending for your approval, a Dividend of
25k (gross) on every share held.
BOARD CHANGES
Since the last Annual General Meeting, Dr. Ed. L Moorman
has resigned from the Board following his retirement from
General Motors Company. On behalf of your company, we
express our profound thanks to Dr. Moorman for his
immense contributions and his unwavering support and
commitment to the company, especially during the difficult
period in its history. We wish him well in his future
endeavours.
FUTURE OUTLOOK
Following the successful conclusion of the various elections
in Nigeria and the election of a new President, political risks
seem to have receded, especially after the abatement of the
post-election violence experienced in parts of the country.
The Federal Government has also made a pronouncement
on boosting the patronage of the local industries, including
locally-assembled vehicles. We hope this noble intention will
be backed up by the political will to walk the talk and
translate the lofty idea into action. Incentives for the local
industries will go a long way in creating jobs and reviving
the comatose automobile industry in Nigeria. The efforts of
the CBN to stabilize the economy through better macroeconomic management of fiscal and monetary policies are
also expected to rebuild investors’ confidence and boost the
demand for trucks.
It is pertinent to note that our company has commenced a
painstaking evaluation of its internal processes and
competitiveness to enhance sustainable growth. These
reviews are expected to give birth to fundamental changes
that will put us in a stronger position to face the emerging
challenges in the economy. We will continue to work closely
with our partners - General Motors and Isuzu - for business
sustainability in order to create a stronger presence in the
commercial vehicle market through the introduction of
newer models and the enhancement of our After Sales
Support network.
CONCLUSION
I would like to express my appreciation to the Management
and Staff of the Company, who have remained resilient in
the face of peculiar business challenges. Let me also thank
my colleagues on the Board for their interest and support in
providing the required vision and leadership needed to guide
the Company in these difficult times.
Thank you.
LARRY E ETTAH
Chairman
COMMENTS BY MR LARRY E ETTAH
GROUP MANAGING DIRECTOR/CEO, UAC OF NIGERIA PLC
AT THE NIGERIAN-BRITISH CHAMBER OF COMMERCE
JULY BREAKFAST FORUM, THURSDAY 7TH JULY 2011
The President/Chairman of Council and other Executives of the
Nigerian-British Chamber of Commerce, the distinguished guest
speaker, Mr. Keith Richards Managing Director/CEO of Promasidor
Nigeria Limited, the Divisional Managing Director of MDS Logistics,
Division of UAC Plc, other invited guests, ladies and gentlemen.
All Protocols Observed.
It is my pleasure to be with you this morning as we enjoy breakfast
and the privilege of listening to Keith discuss the landscape of
logistics services in Nigeria. UAC of Nigeria plc is a major stakeholder
in the Nigerian logistics sector. Indeed we are a pioneer in the sector
through our legacy GBO/MDS business through which we have
provided warehousing
and logistics
support
to
the
Nigerian
Manufacturing Industrial and Commercial sectors. Over the years,
that business has evolved into the current MDS logistics division of
our group: MDS logistics is a market leader and is committed to
global standards of logistics practice and remains a key element in
the UAC Group strategy.
I have noted with interest and some curiosity that Keith’s speech
talks about “Chaos in the Logistics Landscape: A call to order.” I am
somewhat intrigued at how he intends to navigate this topic given
the chaos in other “landscapes” of our National life. I suspect that he
may be worried (amongst others) by continuing problems with
importation of goods through our ports; custom and excise
bottlenecks; operators with poor Health and Safety Standards and no
asset care programs, the deplorable state of transportation within the
country; continuing (or indeed worsening) state of crime and
insecurity; exchange rates which are under pressure introducing
uncertainty into procurement decisions etc. I will be happy, as I am
sure the rest of us are, to listen to his diagnosis and prescription and
assure us all that MDS logistics, and indeed the UACN Group will
remain your partners as you seek order out of all the uncertainty,
complexity and chaos that Keith seeks to bring order to.
MDS logistics is currently taking major strategic steps to upgrade its
competences and capabilities, relationships; technology and people in
order to provide world-class logistics support to current and
prospective clients. You will be hearing more about some of these
actions and developments in the weeks to come.
I wish you all a good morning, a thought-provoking speech and a
pleasant breakfast.
OPENING ADDRESS BY THE GROUP MANAGING
DIRECTOR/CEO, UAC OF NIGERIA PLC, MR LARRY
ETTAH AT THE 2012 STRATEGY WORKSHOP HELD
AT GOLDEN TULIP, FESTAC LAGOS ON WEDNESDAY
14TH SEPTEMBER 2011
Dear Colleagues
I welcome you to this Strategy Workshop, scheduled to
kick-start the 2012 Annual Estimate (AE) Exercise. The
AE sessions usually provide opportunity for each
Business Unit leadership teams to have deep reflection
and productive conversations that ensure fresh
perspectives on the way forward for the business.
However, our experience from the recent past
underscores the need to refine the AE process in order to
deliver greater results and avoid familiar pitfalls that
comes with routines. Moreso as we increasingly realize
we now live in more interesting times.
We must collectively recognize the unprecedented nature
of the downturn in our economy. The depth and
potential
duration
of
the
challenging
circumstances/economic and sociopolitical means we
must review our plans, shift our goals and adopt a new
mindset to survive and thrive so as we brace up for the
challenge. We must think of doing everything to ensure
we are not just making sensible tactical decisions but do
so without losing sight of over what our mid and long
term strategy should be. So as business leaders we face
extreme short term and long term challenges. It means
in some instances, our strategies must stress liquidity
and cost control, while in some instances we must stress
profitable growth and business health for the long term.
Therefore, how can we position our businesses to be
much stronger, more viable and increase shareholders
value as we move through these difficult times. So,
while we must manage our expense base as well as our
working capital, we must concurrently stay focused on
the long term fundamentals of the business.
Four things are important:1. We must stay externally focused: stay customer
focused! So much bad news out out there that
temptations exist to turn inward. Newspapers and
stock prices could make us too obsessed with our
situation. But this is the time to stay customer
focused because we have to scratch and claw for
every customer’s Naira and competitors’ market
share.
2. Realistic about our cost and get them in line early so
that we do not get reactive and surprised down the
road.
3. We can’t stop investing but must invest selectively
and in those activities and plants which are mission
critical.
4. Teamwork and execution is critical. It is easy to get
distracted when we are buffeted by such much flux
and challenge. But good execution and teamwork
during turbulence provides a company with a degree
of competitive advantage. We must provide an
environment foster such to happen in our
organizations.
This year, we intend to deepen the process by sharing
from the Tiger Brands’ perspective on planning and
budgeting. We have therefore, not invited them to come
and draw up strategy for us. No. We are asking that
through their facilitation, we have new ways of looking at
our business, new conversations about our potentials,
new mirror to look at ourselves and new lens to gaze
into the future.
TBL has been gracious enough to send two of their very
senior managers and seasoned strategy campaigners to
ensure we will keep on the straight and narrow during
this workshop and that the most vocal or most senior
people among us do not take over the discussion.
It is expected that this workshop will:1. Help align everybody’s understanding of the markets
we serve;
2. Identify our unique and relative strengths and
weaknesses in those markets;
3. Enable us come to a realization as to where our
focus should be, going forward; and
4. Ultimately help us to simplify what appears a very
complex operating environment we found ourselves
in.
You are therefore, privileged to be among the people
assembled to be part of this group to go through the
process. It is expected that the cross-fertilization of
ideas here will lead to lively candid debate, meaningful
conversation with new perspectives emerging. We may
not agree on everything here, but surely we will have
broad consensus on business direction.
Let us not be surprised at rediscovering ourselves, as this
workshop might engender. But stand ready to take the
necessary lessons for our businesses to adopt, adapt and
grow.
I therefore encourage you all to give all your attention to
the workshop and wish you a fulfilling experience.
LARRY E ETTAH
Wednesday 14 September 2011