Why Nigeria is PZ’s Largest Base – Batagarawa

By August 29, 2019 Investment News

Alhaji Lawal Batagarawa is a Director (non-executive) of PZ International. He was appointed into the board of the company in 2008. He shares the experiences of the company in the over 131 years it has been in business and the prospects it holds for Nigeria.

PZ is celebrating 125 years of service to Nigerians, how has the journey been?

More than that, PZ was established in 1888 in Serra Leone but it came into Nigeria in 1899. The journey has been good, because from that beginning it is now a multi-national company with headquarters in Manchester, United Kingdom with operations in Africa, Asia, India, Australia and Europe. It is operating in about four continents now.

You have over the years ventured into other areas like electronics, food etc, are you thinking of further diversifying from your core line of business?

PZ has to some extent always been involved in food and beverages right from the word go, so it is not really diversifying into new areas, it is coming back into areas that it has operated in before, but what PZ has done is to look for opportunities for growth especially in Nigeria because even though it is a multi-national company, the largest operation of the company is in Nigeria. At one point, Nigeria was contributing to more than 50 per cent of the growth income of company and equivalent amount of profit. Up till now, Nigeria is the largest chunk of the entire international business of PZ.

What PZ has done is whenever they see an opportunity to have a joint venture with other companies; they go into it. The electronics you are talking about is called Haier Patterson Zochonis (HPZ). It is a joint venture between Haier of China and PZ International. That’s what we have in Nigeria and that is what is producing electronics including air conditioners, television sets, fridges and freezers; that’s the electronics component.

How have you fared in the face of competition and increase in the importation of household products?

Well, competition affects each company, but it is how you respond to the competition that matters. So as more people import certain specific goods, it translates into a competition with you; it puts pressure on your value of profit and so to that extent this has affected us. But PZ is a very dynamic company, for every challenge that comes we sit down and look at ourselves and ask how we cope with it so that we continue to survive at the highest level. So the competition is always there.

Your plants have remained only in the southern part of Nigeria, that is Aba and Lagos. With the huge market you have in the North, are you thinking of establishing one here?

We are always looking at how to expand so we have processing and manufacturing plants not just in Lagos and Aba, we are now operating out of Cross River as part of the growth strategy, and we have gone into a joint venture with the largest producer of vegetable oil in the world in the name of Wilma International. Wilma is an International company operating out of Singapore; we have gone into joint venture with them for a company called PZ Wilma.

We have a refinery in Lagos but we have a huge plantation that we are developing in Cross River – 60,000 hectares of palm kernel plantation. We are going to expand beyond that and we are in the process of hiring additional land but we are also developing what we call Out-grower Scheme where people with 10 to 15 hectares will be brought in and given seedlings and technical support so that they could expand the production of palm kernel so that the Nigerian farmers get to benefit from this.

What I am saying is that, you have only mentioned two places where we are doing industrial production, but we are in Lagos, in the southeast and we are now in the southwest so the question of coming to the North is all about opportunity, we hope that very soon we will have some plans coming up in the North.

What has been the experience of PZ since it got listed at the Nigerian Stock Exchange?

PZ went into the Nigerian Stock Exchange not as a portfolio manager but seeking to diversify its investors. There are Nigerians who are seeing this company growing and going to the stock exchange was an opportunity for these Nigerian’s to invest and share in the growth and profitability of the company. Essentially that is why we are in the stock exchange not as a portfolio management, at one point we went into the NSE, raised capital for expansion rather than borrowing.

How do you view the reaction of the average northerner towards investment and entrepreneurship?

The chairman of PZ is Kola Jamodu, he is from Kogi State so he is a northerner and don’t forget at one time, Malam Adamu Ciroma was the chairman of the company, at another time it was Shehu Malami. Alhaji Dahiru Mohammed who was the Managing Director of African Merchant is on the board. I am not the only northerner on the board.

PZ is a national company, we try to have a representation both in terms of our board right through from all across the country. We are looking for the best talent especially in the management and on the board to be there so we have a fair representation from across the country.

On northerners investing and entrepreneurship is a whole different ball game. Let’s not tie it up with PZ. If we are going to talk about investment in northern Nigerian that is a topic on its own and I would not like to deal with such an important and huge topic as an appendage to PZ, it should be something that stands alone on its own.

How have you coped with changes in government and in policies?

You see, as I keep saying companies are dynamic, government policies are also dynamic. So what that means is that every single time there is a policy you have to sit down and look at it, analyze it, and in some cases even anticipate it and work out strategies that will make the negative impact of such policies in your operations to be minimal. If the policy has positive effect on you it is a welcome thing but if it has any negative consequence on you; you have to sit down and look at it and work out strategy that will make those effects very minimal.

That is what PZ has been doing from its inception which is why it is able to survive all these changes that you are talking about in the last 120 years. It has been dynamic, it has always looked at the policies and worked out a new strategy to be able to survive despite whatever negative consequences that may arrive as a result of the policies.

It is not all policies that are of negative consequences on you because quite a number of policies are of positive effect on you as a business. So it is just a matter of changing your strategy depending on the policies

Why are businesses failing in the North and what can be done to change that narrative?

There are a number of things, one of them is our attitude to business and joint ventures. Whatever the strength as an individual, it is better to cooperate with others than doing it alone. Strength can come in any form, it could be managerial skills, through resources, money etc.. So if one has money the other has managerial skills and the other has possibly other skills and we put them together we are stronger. This issue of joint venture is an extremely important thing to consider.

One of the biggest problems we have is that when you are going into a joint venture generally you consider it as a matter of friendship but if you are going into joint venture proper, legal agreement must be put in place irrespective of whether it’s father and son or father, husband and wife or between a friend and a friend or a brother and a brother; proper legal agreement should be put in placeý. If there is a conflict how can you resolve it? This is extremely important. But one of the important things is pooling of resources. Without resources it cannot take us far.

If you look at northern Nigeria, and l believe Nigeria generally, you will find out that usually businesses terminate with the person that starts them; more often than not and this I will say ý80 to 90 percent of businesses. The question is how do we transit businesses after the demise of the person who starts them. It is a very complex issue because it touches on our culture, religion, on a lot of other things. It is not something you can give a one line answer, it’s requires a lot of consultation with people who are extremely knowledgeable in inheritance, in Islamic jurisprudence. How do we manage the inheritance not to disintegrate the businesses so that those who are going to inherit will enjoy the benefit of what their great grand parents have built.

If you take PZ from 1888 when it started, the chief executive comes from the family but of course the last one, Anthony Green, was executive chairman, the current International Chief Executive, Alex his own grand parents have been part of PZ even though he is not directly from that lineage but they are same family friends, associates over generations before.

We are able to manage and keep the business alive, grow and expand. That is a lesson for us to learn because we need to keep growing businesses in spite of death of the people who started then.

But some of the businesses in the North have been hugely successful. Right now we have Aliko Dangote, Abdulsamad Rabi’u, Usman Dantata who ýis an extremely successful business man, Aminu Dantata, another extremely successful businessman and there are other people that we may not know.

So it is not that there haven’t being successful businesses in the region, there have been. The issue is transiting from the first generation of the business owners to their successor-generations.

 

Source: Dailytrust