Nigeria: Butera - Stability, Key for Attracting Foreign Investors

28 November 2019
interview

Gino Butera, who is the Vice President, Power Generation, Cummins Incorporated, in this interview, advises individuals and organisations to always invest for the long-term in Nigeria and other African countries. He, however, stresses the need for economic and political stability in the continent in order to attract foreign investments. Excerpts:

What can you say about investment and risk in Africa?

Well, there is risk in Africa and ideally businesses like Cummins Incorporated would like to have stability. Stability in the political environment, stability in the economic environment, etc, but the reality is that doing business in Africa, one needs to realise that it is for the long-term and Cummins is not investing in Africa for the short-term, but for the long-term. We made a decision in 2010, that we will expand our footprint in Africa and look at our key regions for key markets and West Africa is certainly one of those regions. And when you look in particular, one of our key market segments, being power generation, Nigeria is relevant to that. So we are investing for the long-term, taking into account risk, we are very strategic in where we invest and how we invest, but ideally we like to see more stability. As a business, stability gives us more assurance that we get a return on that investment over a period of time.

Earlier, you said some years back, Cummins decided that if it wants to win in Africa, it has to win in Nigeria, what informed that decision?

One of the 12 capabilities to win in Africa is that you have to decide where you are going to play. Where to play, how to play and then organise to win. And in terms of where to play, we first had to identify our key markets. Power generation is a key requirement for communities in the continent of Africa and Nigeria is one of the largest economies and also one of the greatest disparities with regards to supply and demand. So, for us to decide and priorities where we are going to invest, we have to invest where power generation is a significant market and Nigeria is one of the top three in the market. So for us to win in Africa, we have to win in power generation, which means we have to win in Nigeria. And that is how we make our choices.

So what role is Cummins playing in the power sector in Nigeria today?

We are investing in key operations and we are looking to grow not only in diesel generation space, but also gas, identifying local partners through our own company and distribution channels and also through independent dealers. Local partners where we can grow in segment like independent power producers etcetera, where they can provide power to captive customers or power to the grid. For example, to support the grid from a capacity perspective. So the power generation market here is huge and we are relatively new player, but we are making investments for the long term. So, what we are working for is growth and market share growth over time. Now power generation is only one of the market segments, we are also investing to grow in marine and support customers in other segments as well. On highway tracking, industrial mining, our future here looks good, but we have to be here, we have to have a presence, we have to invest in local leadership, local talent, we have to have inventory on the ground, we have to make sure that we are doing all the rights.

Are you seeking any form of partnership with the government to achieve some of your plans?

Well partnership with the government comes in form of ensuring that we meet the local regulation and local standards. We do business with the government, we do it in a way which meet ethical standards with the values that have been placed in the business environment. So we are always talking to the government in terms of how best to do business here. What we are looking for here is an even playing field or a chance to participate and be able to get a return on our investment.

What benefit do you think stakeholder will derive from moving from your former office to the new location in Lagos?

We identified that our previous facility was lacking in two or three areas. One, it was an area of Lagos which we didn't feel that it was conducive for us to grow and perhaps and did not necessarily give us the ability to create a safe work environment. So we wanted to find a facility that will give our employees the best chance to feel safe and also the best chance to attract the best talent in a work place. You know, if we have a location that is in a location where people want to work, that would attract talent to us. That is the primary reason. The second reason is that we wanted to invest. We had a facility that we were leasing and we wanted to put our own capital into buildings and into infrastructure to help to support the community and the environment here. And really, to give a message to the local business that we are here to stay. And also to our customer base that we are here to stay here for the long term. We have put $35 million of our own money into infrastructure in Nigeria, so we are here to stay for the long term. It is also to make sure that the customers feel that we will be a valued and prefer supplier to them and giving them superior customer support by investing in facilities like we have here.

Can you take us through some of the various units at this new facility and what do you intend to achieve with the training centre?

First of all, the training center really has two objectives - the first is to be able to train our own technicians. You know we are hiring technicians and developing technicians on almost every day. And we have a variety of products that we serve into the market across multiple segments. Power generation, mining, marine, etc. So, we have to train our technicians. But we also offer training to independent distributors, independent dealers and even customers who have their own technicians that work on our products and do various levels of service works. The power generation kitting facility is where we assemble generators here, that is, generators come into the country in kit form from India. So, what we have implemented here is a state-of-the-art assembly operation.

What are some of the corporate social responsibilities you have embarked on in Nigeria?

One of Cummins core value is caring and under caring, is our efforts in corporate social responsibility. So, it has been one of our company's values in 100 years to give back to communities in the countries or the cities in which we live and work. So here in Nigeria, we had two or three major initiatives, one being technical education for the community where we partner with the industry and educational institutions to provide vocational training for young people who want to enter the diesel industry or the engine industry. So, we partner with them and we invest in terms of providing equipment. We invest in providing assistance with the curriculum and we give children the opportunity to get skilled to be able to get into the workforce and apprenticeship programmes with the industry. That is one thing we do. We also have initiative to support girls and women in Nigeria. One of our major initiatives currently is called 'Peering Women, Women in Power,' which means just working with communities, schools in particular to ensure that girls are getting their education, they are finishing schools. You know there is a lot of issues in Africa, in Nigeria and girls not finishing their education for a number of different reasons. And we develop initiatives, we are working with the school will keep girls there, finishing their school years and giving them the opportunity to then develop.

What is your medium term target in terms of expanding your market share?

We are always looking to grow our market share. We feel that our entitlement is to continue to grow. But we also need to be humble, there is competition out there which is just as hungry as we are. So, we don't have specific goals or targets to increase from X to Y, what we want to see every year is continuous improvement or continuous growth in our market share. Our ultimate objective is to be number one or two in the segments in which we choose to play.

So, what message do you have for your customers and other stakeholders?

The message is that Cummins is the largest diesel engine manufacturer in the world and we now have a significant presence in Nigeria, not only in Nigeria but the continent of Africa. And when you purchase Cummins products you are purchasing 100 years of Cummins investment in technology and coupled with that, investment in product is our ability to support the customer through investment in our distribution channels like this facility here. So you are not only buying the product, you are buying a life time of customer support and 100 years of technology innovation.

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