Remarks in Response to
Mr. Peter Mandelson,
Commissioner for Trade, European Union

BBC Africa 2015
Guild Hall London

Thank you very much, ladies and gentlemen, for the opportunity to share with you today some thoughts about business and Africa, and respond to the excellent comments of Peter Mandelson.

I would like to touch on 3 points:

First, how do we see Africa today from a business point of view?

Second, what conditions will encourage further business investment there?

And three, how have we at Nestlé attempted to build our business in Africa?

We are fortunate to have had a long and broad experience in Africa.  Nestlé built its first factory in Africa in 1927, and we now have 27 factories on the continent, employ over 11,000 people, and had sales of about 2.4 billion Swiss francs in 2004.

In Africa we sell primarily milk and culinary products, but also a wide range of other beverages and food products that respond to the specific consumer needs and tastes in each country.  We also transform locally available raw materials, especially coffee, into high value-added products, such as Nescafé, primarily for export to Europe.

How do we view Africa?  Contrary to many, we are optimistic about the future of business in Africa.  Every night, the evening news reports about the problems in Africa, but no one mentions that the African economy is growing faster than that of Europe, about 4-5 percent per year.

But we are also very realistic about Africa.  Of our 11,500 employees, all but about 130 are Africans.  Our people understand Africa,  because they are  Africans or have spent many years there.   Understanding the many cultures, ethnic divisions, and local practices is necessary to have business success and avoid the pitfalls when doing business on the African continent.

At this point in time, I believe the most important thing for Africa is to give the African people a chance to compete in the world economy on a level playing field. 

I thus agree very much with Peter Mandelson’s comments about trade.

The African  economy  would grow much faster   than  4-5% per year if we removed the trade barriers in Europe and North America which penalise the African people, and particularly its farmers.

It is a noble gesture to forgive the African debt, but why not let them first compete freely so that they can earn the money and won't go into debt in the future?  I am sure that this would be better both for the European consumer and the people of Africa.

I therefore believe that trade, not aid, is the primary and much preferred solution for Africa.  This is the major contribution that business can make.

Trade within Africa also needs to be much freer.  And moving goods across borders is still hampered by a suffocating bureaucracy in many African countries.

We also need local businesses to be successful.  It is estimated that for every Nestlé job we create, another 4 to 5 jobs are created in the local economy (in this way  foreign direct investment complements, but can’t and shouldn't replace, a strong local private sector).

We, like most stakeholders, also need both physical and macroeconomic security.  Unstable economies and regional conflicts in places like the Ivory Coast and Democratic Republic of Congo destroy  both lives and the climate for building businesses. 

Through our investments, we make large long-term commitments to local infrastructrure in factories, food safety and environmental systems, and the like.  But farmers also need roads to get their produce to market.  Only about 30% of African farmers have access to a road to bring their goods to the cash economy.  Investment in infrastructure, particularly transportation, is fundamental.

And, as Mr. Mandelson stated, good governance and elimination of corruption is essential.  We in Nestlé have zero tolerance for corruption and take strong measures when we find it.  We have a very extensive set of corporate business principles that we use and audit our companies on their relations with consumers, suppliers, distributors, government, and the environment.

But Africa, as we know, is a place where nation states are still being built, and family, tribal, or ethnic loyalties can take precedence over adherence to national law or company policies. 

So you can see that from the points I have mentioned, there is a great deal of convergence between Mr. Mandelson’s perspectives and our own.

Having said that, what have been the key factors to building the Nestlé business in Africa?

A detailed account of our business in Africa is contained in a report which I am announcing here today entitled “the Nestlé commitment to Africa", which describes our engagement with the people of Africa.

We feel that the fundamental key to our business in general, but in Africa especially, is making long term commitments.  We have invested massively in training of workers and managers over decades. About two-thirds of our associates receive formal education every year, ranging from basic literacy training to apprenticeship programs for skilled workers, to international business management training in Europe.  We have developed our 11,500 people over many years.

We also make long-term commitments to economies in terms of factories and facilities.  We build companies over decades - which are designed to last for centuries.

Second, we invest massively in improving the quality of local raw materials.  This is through free technical assistance to milk farmers, coffee farmers, and other suppliers.  They learn how to produce higher quality goods, which give them more income and us better raw materials.

The latest of these projects is in Ethiopia, where we have started a new program which pays farmers an income supplement, if necessary, while they learn to produce higher quality coffee. 

We also buy milk and coffee directly from farmers to supply our local factories, which allows us to give technical advice and gives the farmers more of the value of their crop.   Globally, we buy about 15% of our coffee directly from farmers.

Fourth, understanding local tastes and buying patterns is essential for a food company.  We develop products specific to the local taste and in package sizes they can afford.

And fifth, we attempt to engage with the community in a way that creates bonds of trust.

One of the ways we do this is by supporting health and education programs across Africa. We support over 40 programs which contribute to the United Nations Millennium goals.  For instance, we are a founding corporate sponsor of the International Federation of the Red Cross/Red Crescent Africa Health Initiative.  Over 800,000 young people in Nigeria and Kenya have been taught how to avoid HIV/AIDS.  As a member of the International Red Cross Foundation Board, I recently visited one of the education centers in Nigeria, and was very gratified to see how lives were being saved through this national education program for teenagers.

In our business, consumer trust and confidence is everything, and to assess public trust we subscribe to a 20-country survey conducted annually by Globescan, the world’s principal survey firm dealing with corporate social responsibility. 

Last year, Ghana, Nigeria, and South Africa were included in the Globescan social responsibility survey. Nestlé was rated positively on corporate social responsibility by 85% of consumers in Ghana, 73% in Nigeria, and 65% in South Africa.  Less than 2% of the public rated Nestlé negatively on corporate social responsibility in any of these countries.   

So in closing, I would just like to say that we have confidence in the African people, just as they have expressed confidence in us. 

I believe that the problems of Africa will be solved by the people of Africa themselves, not by European powers.  But we can and should help them. 

By making wise, long term investments, in people, productivity, and purchasing power, we can build a future for Africa based not on charity, but on sustainable businesses which benefit all stakeholders.

Thank you