Last year, the United States announced a new strategy toward sub-Saharan Africa that emphasizes increased trade and investment, including intra-African trade. Officials acknowledge that more work needs to be done, especially now that China has become Africa's largest trading partner.
While some companies see Africa as a 'new frontier' with a potential market of one billion consumers, others have been investing for decades but are no less aiming to boost market opportunities. Procter & Gamble is one of them. To find out more about the U.S. company's plans and how they might benefit Africa, AllAfrica interviewed Manoj Kumar, vice president for P & G West Africa, and Temitope Iluyemi, government relations director for sub-Saharan Africa. Excerpts:
Why is your company expanding operations in Africa?
Kumar: We have been in Africa for nearly 50 years and in Nigeria for about 20 years. Our brands are very popular - Pampers is the market leader in Nigeria. We've got Ariel, Always sanitary pads, and we sell Gillette, Duracell and Oral-B. And, of course, we are adding new products. In Nigeria we have put up a new plant, which is going to be starting this year, a U.S.$250 million investment. We've just announced another plant in South Africa.
Africa is one of the top growing regions in the world. By 2050, one out of four human beings on this planet is going to be from Africa. There's a growing middle-class, which basically drives consumption. By 2060, we expect about a billion middle-class consumers in Africa. These are huge numbers. And there's a young population. It's the right place to be and we are investing in a big way.
Where in Africa does P & G operate?
Kumar: We are in 41 countries in sub-Saharan Africa. About 15 of those countries account for about 70 percent of the population and 90 percent of the GDP. So there are big countries, but small countries as well.
How can a consumer goods company do well on a continent where poverty is still such a major challenge?
Kumar: Africa is a land of paradoxes. You've got extreme poverty, and then you've got a lot of optimism with a middle-class rising very fast. Over the years if you look at the percentage of people who are below the poverty benchmark, that number keeps declining. And it's declining also because there's been improved governance.
Iluyemi: In Nigeria specifically, there has been an improvement in the political and economic situation in the country. Democracy has been entrenched now for over a decade, and we see the spiral effect on development and the economy, and the desire for quality products. The African consumer is quite aspirational. There's little disposable income, and they can also be very choosy how to spend that little bit of money. They cannot afford to make a mistake.
How does P & G approach the markets you serve in Africa?
Kumar: With one billion consumers in Africa, you have to have manufacturing facilities close to the big markets. It's very important to have a supply chain that can deliver world-class products at affordable cost and also designed to the needs of the consumers. That's what Procter & Gamble stands for. African consumers have a different type of requirement, and we try to study that. And there are people with different incomes, so we need to design products for them as well.
We find that quality products, which are assumed only to be for rich consumers, when sold in small sachets that other consumers can afford, make a big difference. Ariel detergent is available in small sachets, as well, and we find a good penetration of this product across all income groups.
There are lots of small stores, mom-and-pop stores, and to reach our consumers, you have got to get products to these stores. We have a huge network of sales people who take vans every day, go store to store, introduce our products and display them well. In Nigeria itself there were 600,000 stores to cover - a huge number. These distributors employ people - [creating] secondary employment - a cascading effect on the economy. That's why we are very excited about investment: the right products, the right cost, more jobs. A virtual cycle of positive investment that helps economies grow.
Everyone wants their children and their brothers and sisters to be educated. In Nigeria, 96 percent of our employees are Nigerians. It's not like we have to import talent - they're very talented people. Procter & Gamble has this policy of identifying talent at a very young stage or when they come out of college. We take the brightest students, and we train them. We send managers outside to get trained and then they come back again to work in the country. We also have people who come to Nigeria to work and then go back home. It's a fantastic learning experience.
What is very important in Africa is for a company like us to invest in human capital and to be able to develop talent, and talent that can take leadership positions as they grow in the organization.
What do you say to critics who argue that you shouldn't be encouraging people to spend the little amount of money they have on a product like Pampers?
Kumar: Our answer is very simple - when you spend money on Pampers, you grow a healthy baby. Pampers provides a baby 12 hours of uninterrupted sleep, and that's proven to be very good for the healthy development of the baby as well as the mother. And there is the amount of money you might have to spend if children are not sleeping properly and they get sick and they're not happy, they're not strong.
We try to make our products more affordable and easier to buy. In the United States we sell large packs of Pampers, but in Nigeria we sell small packs. I don't think it's a question of whether people can afford them or not. People want the best products for their children. If you sell small packs, then people can buy them more frequently, as they don't have money to buy large quantities. They should also be easily available to them so that they don't have to spend money on transportation. They need to be available next door.
Our products help make people healthy - Safeguard to wash your hands - 30 percent of the diseases children get actually happen during breastfeeding if the mother doesn't wash her hands. Would you rather have an unhealthy child and pay a doctor or buy something of quality and invest in the health of your family?
We find that consumers demand good quality. The less money you have the less risk you want to take on any product. We have seen African consumers pay bit of a premium for good quality. It's actually up to us as marketers to explain the benefit of our products, to deliver a product that is also based on quality, in a shape and size which is affordable, and distributed at a place which is very easy to get to.
When we look at any investment, we always link it with social investments. In Nigeria, we reach about four million people every year, and we're trying to increase this as much as we can. We go to about two million moms every year, explaining to them the benefits of diapers. Imagine this: a Pampers van comes to your village, and everyone gets a free sample of diapers, but they also get a free check-up. We have a doctor and a nurse in the vans who examine the baby. If there's anything small that the baby needs, the mother is advised then and there. Otherwise, they are referred to a hospital if there's something more to be done. This is very important, because in Nigeria and other African countries, women don't stay in the hospitals after giving birth. They go back to their villages.
Similarly, we do a program for about one million schoolgirls where we teach them about Always, the sanitary napkin, and also about puberty. These types of things are not part of the education system, so a lot of girls don't know what the changes are during puberty and how to deal with them.
Can you tell us about the link between your sanitary pad products and keeping girls in school? Studies show that if girls stay in schools longer, they're likely to delay marriage until they are more prepared. Is that something that your company considers when rolling out these products?
Iluyemi: With all of our products, we innovate with the consumer in mind. The Always sanitary pad products deliver eight hours of protection to these girls. We know there's a link between girls having their periods and attendance at school. Always sanitary pads provide the excellent protection that allows girls to go to school during their periods and have confidence to go about their daily activities. P&G provides puberty education to girls in school, thereby empowering them to live their lives and also to be the best that they can be.
How do girls react to having this kind of access to information?
Iluyemi: They find it very empowering. Recently, women icons, the tennis players Venus and Serena Williams, visited Nigeria and spoke to girls in disadvantaged schools about being who they can be, letting nothing stop them and basically encouraging them to feel empowered. And we all know that when you educate girls, there's a spiral effect. They educate the community. We work with local governments and NGOs in the country to ensure that even in the hard-to-reach parts of the country we're able to take this message of education and empowerment to the girls.
Tell us about some of the challenges you face.
Kumar: The opportunities for growth in Africa are huge, and the challenge for any business is to choose the opportunities you want to go after and execute well. Execution is a big challenge in Africa. There are lots of things that still need to be improved, such as infrastructure and government policies.
Iluyemi: Infrastructure is a well-known issue across Africa and in the rest of the developing world. It's one of the things that we would like to see improved to enable more intra-African trade, for instance.
One of the reasons for poor infrastructure between countries is because there's very little trade between the countries. Intra-African trade is only about 12 percent. For example, if I have to send something from Nigeria to Senegal, the shipping lines would be not going regularly and the items would go to Spain and then come to Senegal.
In terms of corruption, if you look at Transparency International, there's corruption in a wide range of places. P&G operates with a set of principles across the world. Irrespective of which part of the world we are, we apply these very strictly.
Although African countries trade more with the West than they do with themselves, there is a push towards to regionalization and intra-Africa trade. Does that have benefits for big players like P&G?
Iluyemi: Governments in Africa do have a number of good policies that encourage companies like P&G to set up shop. The kind of changes I would like to see is improved execution of the existing policies. We need to improve the level of integration amongst the countries. We would like to see infrastructure improved amongst all the countries to increase intra-African trade and also improve the degree of integration across Africa.
How has cell phone usage affected the success of your business in reaching people?
Kumar: About 65 percent of adults in Nigeria have a mobile phone. The Internet revolution happened from the big screen to the small screen, but in Nigeria there's no big screen: it's all small screen. Today, the largest number of people accessing Facebook from a mobile device is from Nigeria.
These types of things excite us because they create a new way to communicate with consumers. I was in Ivory Coast recently and I went to a consumer family's home - a husband and wife and their daughter, who is about 14 years old. She had a Tablet with her and she was accessing Facebook, and she was chatting just like any other teenager would do.
African consumers are moving much faster than how people have moved in developed countries. And they are going to be able to use things that are much more advanced than what people had used through a linear progression.