Black stuff goes down well in Nigeria

One of the curious feature about wars, famines and other disasters is that, no matter how bad things get, supplies of beer never seem to run out.

Perhaps this explains the success of Guinness stout throughout Africa, one of the most difficult trading environments anywhere. After celebrating the fiftieth anniversary of its involvement on the continent last year, the brewer is planning for further growth in Nigeria and elsewhere.

A teeming, hot, humid country like Nigeria mightn't seem the most obvious market for the dark stout. The aroma outside the company's brewery at Ikeja near Lagos is that of acrid petrol fumes rather than the roasted hops that fill the air around St James's Gate.

The involvement of Guinness is the most visible sign of growing Irish involvement in Nigeria, which is Africa's most populous country. The potential for further growth in trade is very good, according to the Irish ambassador in the Nigerian capital Abuja, Joe Lynch.

Nigeria is now Guinness's third largest market, after Ireland and the UK. After a period in the doldrums, business is on the up and the company is installing new bottling lines in Ikeja and at its other brewery at Benin City, three hours east of Lagos.

The brands have familiar names - Guinness, Harp, Satzenbrau - but they differ somewhat from the products sold at home. Guinness came to Nigeria over a century ago, hot on the heels of the British colonists. Guinness foreign extra stout was brewed with a higher alcohol content to keep it fresh on the five-month sea journey to West Africa.

The Nigerian subsidiary was founded in 1950 and the Earl of Iveagh opened the company's first brewery outside Britain or Ireland at Ikeja 12 years later. African Guinness is still stronger than the original brew, with an alcohol content of 7.3 per cent compared to 4.3 per cent in Ireland.

It also differs in that it is brewed from a combination of locally-grown sorghum and maize. This resulted from a 1990 government decree that banned the import of malted barley. "It changed the taste and caused some difficulty at the time, but we've recovered well since," says Guinness Nigeria's technical head, Dubliner Brian Carson, who, with managing director Matt Murphy from Cork, is one of two Irish expatriates with the company.

The company has a total workforce in Nigeria of about 1,400. As in Dublin, it has a reputation for paying above the going rate and Guinness jobs are especially coveted in a country of massive unemployment.

Sales run at 5.5 million hectalitres a year, an increase over previous years but only half the levels attained 20 years ago. Guinness is a premium product that sells at twice the price of any other beer.

With up to one million Nigerians living in Britain, the Ikeja brewery has begun to sell the African product back into Europe. And with Ireland's Nigerian community growing quickly, it's likely that this "coals to Newcastle" circle will shortly be completed.

The decline in sales over a 20year period can be largely attributed to the collapse of the Nigerian economy over this time. The local currency, the naira, has gone from parity with the dollar to a current exchange of about 120 naira to one dollar.

After-tax profits last year amounted to 3.1 billion naira, on a turnover of 14.8 billion naira.

With corruption, fraud, nepotism and a collapsing infrastructure, Nigeria rates as one of the most difficult places in which to do business. Government decisions can be erratic and unpredictable; last year, for example, it re-introduced excise duty of 40 per cent on alcoholic beverages. Guinness says this places the company at great disadvantage against imported products.

Commercial director Ian Melrose says Nigeria deserves the reputation. "It's a difficult environment. The phones don't work, the roads are bad and the power can be erratic."

His advice to companies thinking of investing in Nigeria is to have a clear idea of what they want to achieve and a timescale in which they want to achieve it." It's no different from anywhere else. You just can't expect quick solutions."

Guinness has lately been joined by a number of other Irish companies in Africa's most populous state. Civil engineering contractors PW Consulting has operations in Lagos and the capital, Abuja, and MF Kent is also active in this business.

Cardbase Technologies from Dun Laoghaire is developing a smartcard that may just provide the solution to Nigeria's chronic problem with credit card fraud. Kindle and other banking software companies are working here, and AIB has links with Marina bank in Lagos.

Ireland runs a healthy balance of trade surplus with Nigeria. Last year, Irish exports amounted to almost £70 million, while imports came to only £1.7 million. Our main exports are food preparations (60 per cent of exports), dairy products (Kerrygold is prominently advertised in Nigeria) and fish. We don't import Nigerian crude oil, which accounts for 98 per cent of its total exports. Feedstuff for animals is the main import.