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INSIDE AFRICA

Nigeria Confronts Corruption; Kenyan Cooking-Oil Giant Cashing In

Aired June 5, 2005 - 12:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
TUMI MAKGABO, CNN INTERNATIONAL HOST (voice-over): African governments reach out to the international community looking for more investment. We'll look at how the world is responding, beginning with a multimillion- dollar project in Nigeria, the first of its kind in West Africa.

And the Nigerian government battles corruption, an obstacle to business development in the country.

Plus, the family enterprise that's become a leader in the cooking-oil industry in East Africa.

These stories and more coming up on this edition of INSIDE AFRICA.

(END VIDEOTAPE)

MAKGABO: Hello and welcome to the program. I'm Tumi Makgabo.

Well, there's no denying that Africa is suffering from an image problem. Well, that's what Tanzanian President Benjamin Mkapa told the World Economic Forum in Cape Town this week. "We are not angels, but we can't be devils all the time," he lamented.

The Cape Town forum convened under the theme "Doing Business in Africa." The message? Africa is changing, but the world continues emphasize the negative, thus discouraging foreign investment.

Well, delegates agreed that one of the issues responsible for Africa's negative image is what they call "seething corruption." Some say in order to improve the business climate, the battle against corruption must be intensified.

And long before this week's gathering, one country - Nigeria - appeared to be doing just that: cracking down on alleged corrupt officials.

More from Richard Quest in Abuja.

(BEGIN VIDEOTAPE)

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT (voice-over): In Lagos, it was the local way of doing business, where getting deal often involved paying off officials, offering bribes - practices which shamed the country.

For businessmen like Morten Hald, a Danish telecoms executive with offices in Nigeria, it was part of the country's business culture.

MORTEN HALD, VP, DANISH TELECOM: You can call it a bribe or you can call or a tip or you can call it a commission. Of course it exists, but it's a way - it's a culture. It's a culture that needs to change and I think that it is changing.

QUEST: That change began six years ago, when President Obasanjo was elected. And his priority was to put a stop to business as usual.

The country introduced an anti-corruption commission. Investigations were launched, prosecutions were brought. Even the chief of police has been charged.

The newspapers here bristle with anti-corruption stories. Everyone's obsessed by the subject, especially top politicians, like the governor of Lagos.

(on camera): Do you get the feeling that that ship of perception has changed yet? Or not?

ASIWAJU BOLA TINUBU, LAGOS GOVERNOR: It just started to change, started to change gradually. It has not changed in (INAUDIBLE). It is not at the degree that one would want it. But it's changing. It's changing at least the perception that we are (INAUDIBLE) doing something about it. It's enough to attract attention.

QUEST (voice-over): That attention has also been targeted now at the companies doing business, who are seen as part of the problem. After all, it takes two to make a bribe.

Which is why the finance minister in Abuja believes business is also to blame.

DR. NGOZI OKONOJO IWEALA, NIGERIAN FINANCE MINISTER: Fighting this takes time. It's not that overnight, you know, you're going to have everybody behaving properly. But you have to send a strong signal.

Secondly, those people who are paying those bribes are part and parcel of the problem. And, you know, that is what we are saying: businesspeople should not engage in that, because there's a supply and a demand side of corruption.

You know, if someone demands, say no. Report them to the minister of finance.

QUEST (on camera): Are you saying that anyone who's been the victim of corruption or who has been asked for a bribe can write to you?

IWEALA: Absolutely. As a matter of fact, we have a hotline; we have an e-mail.

You know, part of the problem we face is that the business community, many of them don't want to change. They find it far easier to pay little bribe and get their way than to fill out the proper forms or do the proper thing. They won't even report.

Let me tell you, I asked these nice people, Report to me.

QUEST (voice-over): The critics say this is all just noise, that only political opponents have actually been targeted, and that in reality nothing has changed.

You just have to be cleverer about how you offer the cash.

(on camera): Whatever the difference is between reality and perception, one thing is abundantly clear: the word corruption is now firmly on the lips of everyone in government, and decision makers are on notice. There may be more work to be done, but progress is being made.

Richard Quest for INSIDE AFRICA in Abuja, Nigeria.

(END VIDEOTAPE)

MAKGABO: Nigeria's former police chief, who was mentioned in that report, has denied the charges against him.

Well, Nigeria remains one of sub Saharan Africa's largest recipients of foreign direct investment, or FDI. And as the government's war on corruption improves the business climate slowly but surely, investments keep coming in.

As Jeff Koinange reports, one of the latest seems set to change the way Nigerians shop.

(BEGIN VIDEOTAPE)

JEFF KOINANGE, CNN INTERNATIONAL CORRESPONDENT (voice-over): A typical market scene in a typical Nigerian city. Hot, muggy, and guaranteed to drive even the most avid shopper insane.

Africans in general have long been used to buying everything, from household goods to food to clothing, in separate, open-air markets.

(on camera): But all that may be about to change. This giant, imposing structure behind me, when completed, according to developers, will not only be the first of its kind, but will boast the largest shopping mall in all of West Africa - where the only thing shoppers will be required to do is park and do all of their shopping under one room.

(voice-over): The multi-million dollar project is called The Palms, and it sits on 25,000 square meters of real estate.

From supermarket to hardware stores, from electronic shops to retail clothing outlets. There'll be restaurants and coffee shops, boutiques and fast-food counters. And like malls anywhere in the world, an entertainment center, complete with a multi-screen cineplex showing the latest blockbuster movies.

It's the brainchild of 48-year-old millionaire real estate developer Tayo Amusan, known around here simply as "the chairman."

Amusan says his dream of building a mall began six years ago. He says it's been an uphill battle from the start.

TAYO AMUSAN, CEO, "THE PALMS": To a lot of people, I guess I was slightly mad. You know, what is he doing? Getting the funding itself also was a struggle. A struggle also internationally in selling the brand name Nigeria.

KOINANGE: What's no laughing matter, though, is that Amusan was turned down by just about every investor he approached.

Then, just as he was about to give up and abandon his dream, he got a lifeline. ACTIS is a fund manager borne out of the Commonwealth Development Corporation, or CDC, a British government initiative that normally lends money directly to other governments.

Despite the risks involved in investing in an individual project, ACTIS agreed to finance the $34 million venture.

DOMINIC ADU, ACTIS: We invested in Nigeria, specifically in this project, because we have a lot of confidence in the (INAUDIBLE) economic direction of Nigeria.

We also saw a fantastic opportunity to introduce something new: the first and the largest shopping and entertainment mall in West Africa. We wanted to be part of it.

Well, what we provided is the platform for people to shop. What is inevitable is that as people get richer, they shop more. And they need a decent place to shop.

KOINANGE: The mall isn't expected to be ready for another six months. But each day, a bevy of construction workers are trying to meet the December deadline. The project developers too hope this will be the beginning of good things to come for Nigeria.

VAUGHN DAVIES, PROJECT MANAGER, "THE PALMS": The feedback has been very positive. But it's been very difficult to - it's taken a long time to convince people to invest here. And this project will hopefully be the catalyst for better things in the future.

Amusan sees himself as a pioneer of sorts, and says it's time for investors started taking Nigeria and Africa seriously.

AMUSAN: I keep on saying it, and I can't say it loud enough: there are 150 million people, for Christ's sake, you know? I mean, it's - everybody has to eat. Everybody has to be entertained. Everybody has to be clothed.

KOINANGE: And everybody, he hopes, will get a chance to experience a first-of-its-kind mall in West Africa.

Jeff Koinange, CNN, Lagos.

(END VIDEOTAPE)

MAKGABO: And when INSIDE AFRICA continues, a South African company wins a lucrative deal from the United States.

And the Kenyan company that's taking over the cooking-oil market in East Africa.

Stay with us for that and more.

(COMMERCIAL BREAK)

MAKGABO: Welcome back.

The World Economic Forum sitting in Cape Town this week urged African companies to be more aggressive in marketing themselves. One South African business, Land Systems OMC, appears to be getting right. It's developed an armored personnel carrier that's led to big contacts from the United States and some European country.

Paul Tilsley has that.

(BEGIN VIDEOTAPE)

PAUL TILSLEY, CNN INTERNATIONAL CORRESPONDENT (voice-over): The RG-31 has entered the armored personnel carrier market with a bang. Its manufacturers claim the vehicle's passengers can survive land mines, small- arms fire, even car bombs.

Staff Sergeant Owen Rice (ph) and Specialist 4th class Mark Ficus (ph) and three other U.S. Army combat engineers escaped with only minor injuries when their RG-31 directly hit a land mine while on patrol in Afghanistan late last year.

At the time, the U.S. Army in Afghanistan reportedly only had a handful of RG-31s. Now, the U.S. has placed a $78 million U.S. rush order for an additional 148. And although the U.S. officially is not saying where these vehicles are going, workers here believe the sand color the Pentagon's told them to spray on, means they're destined for a desert battleground.

(on camera): The RG-31 carries up to 12 through the worst of war zones in air-conditioned comfort. We've joined this particular vehicle on its final test drive before it's handed over to the U.S. Army.

(voice-over): Even before Washington's big buy, the company's order book was already full. In recent months, the Italian Caribineri has ordered 30 sister RG-12 police vehicles in a deal worth $10 million U.S. The Swedish defense force has asked for over 100 more RG-32s to be supplied in yet another export contract worth $28 million U.S.

But it's the U.S. order which guarantees jobs here.

UNIDENTIFIED MALE: Getting such an order is a major boost to the people of this country. It's a major boost in work; it's a major boost (INAUDIBLE), especially for the most disadvantaged. Now they have an opportunity to come up and do something for their families.

TILSLEY: Indeed, this year alone, Land Systems has hired 150 new staff so far. And management are thinking of taking on more, as they believe there is potential for more U.S. orders, as well as yet untapped markets here at home in Africa.

TONY SAVIDES, OMC INTL. MARKETING DIR.: I hope that we will soon have more successes in Africa as well, where the vehicle could be our deal in the African (INAUDIBLE) environment. We - Africa is going to look after its own problems and resolve its own problems, and we certainly hope that we can contribute in some way to that as well.

TILSLEY: U.S. troops have already given the RG-31 a nickname, based on the survival record for those who drive in it: Blastrider.

Paul Tilsley, CNN, Benoni, South Africa.

(END VIDEOTAPE)

MAKGABO: Well from the armored-car market to a growing manufacturer of vegetable products in East Africa, Bidco Oil Refineries began as a small business three decades ago. But today, it dominates the cooking-oil industry in the region, as Gladys Njoroge reports from Nairobi.

(BEGIN VIDEOTAPE)

GLADYS NJOROGE, CNN INTERNATIONAL CORRESPODENT (voice-over): Packing tons of cooking oil into plastic tubs (INAUDIBLE). Bidco Oil Refineries is not only cashing in on vegetable oil, their (INUADIBLE) bar soaps are becoming increasingly popular in the East Africa market.

It's a business empire that was started in Kenya as a textile farm by Vimal Shah's father 35 years ago. Now, they say about 40 million people use their products.

VIMAL SHAH, CEO, BIDCO Oil REFINERIES: When we started off - I mean, we started off with a small turnover brand of - what? -- $2 million. And today it's already grown to about $160 million. By the end of this year, we should be hitting the $200 million mark.

NJOROGE: However, the profit margins are not easy to come by. A dilapidated network of roads escalate transport costs, and also make the trucks and transit easy prey for thieves. That's just one of the headaches that most businesses here have to deal with.

SHAH: In Africa, you've got to take all those things - you've got to have a Plan A and a Plan B. If your water fails, your power fails, if things go wrong, the roads don't work, if the railways don't work, you've got to be able to be - to sort out at the time. That's failed, so we have an alternative, which in the West you don't even talk about.

NJOROGE: The demand for raw materials is high. Bidco Oil imports 87 percent of the palm oil it needs from Asia.

So to remain competitive, they've invested $130 million in a palm plantation in neighboring Uganda. A critical move, because come 2008, Kenya will have to open up its market to international competition.

SHAH: If you look at it, you'd say it's doing fine (ph). I mean, there's nothing happening in Africa. But what we see is - we see there's opportunities here. You've just got to be here to feel it.

NJOROGE: One of the places you can buy Bidco's vegetable oil or salt is here at this Nairobi supermarket. (INAUDIBLE) technology is revolutionized the way business is done here.

CHARLES THUKU, IT MAN, UCHUMI SUPERMARKETS: For a long time, (INAUDIBLE) has been ordering stock (INAUDIBLE) whereby, the moment (ph) I walk in a shop, based on you are noting (ph) the product movement. Then you order. So you are (INAUDIBLE) the most activity.

NJOROGE: Not anymore. It used to take an average of four days to order and replenish their stock. Now, it's usually delivered the next day.

(on camera): Here is how it works: once a consumer busy laundry soap or cooking oil, data is collected at a point-of-sale terminal. And the same is relayed to suppliers before sunrise tomorrow.

(voice-over): So there's been some success in lobbying governments to make it easier for business to thrive. Vimal says that for the most part, companies have to push for it.

SHAH: We're globally using best practices, but working locally and making sure things happen. And sometimes, if the rules are not applicable, you need to be able to lobby to get the rules changed. That's Africa for us.

NJOROGE: An investor's dream and sometimes nightmare.

Gladys Njoroge, for CNN, Nairobi, Kenya.

(END VIDEOTAPE)

MAKGABO: And coming up after the break, Africans marketing their culture in Europe. We'll stroll down the catwalks in London at the Afro Hair and Beauty show.

Then, selling South African films at the Cannes Film Festival.

That (INAUDIBLE) in a moment.

(COMMERCIAL BREAK)

MAKGABO: Hello again.

Turning now to an ever-growing area of business, the annual Afro Hair and Beauty Show in London. It's Europe's largest event of its kind, proving that big hair does mean big business.

Sylvia Smith brings us the latest styles and trends.

(BEGIN VIDEOTAPE)

SYLVIA SMITH, CNN INTERNATIONAL CORRESPONDENT (voice-over): The idea of black beauty has involved over the last four decades.

Once, a hairstyle was a radical statement. During the era of civil rights, the Afro was a rejection of the white man's norm. But today, the African hair market is up for grabs.

SHARLEEN HUNTER, AFRO HAIR SHOW: It's not just black companies now that are coming to the show. It's people that specialize in Europe - the European markets are now seeing the growth in the Afro market and they want to be a part of it, so they're joining into the show. So it's a really, really positive thing.

SMITH: Today, it's profits that are setting the trend. And large, mainstream companies predominate.

VENETTA COLEY, VP OF MARKETING, NAMASTER LARS: There will be fewer people of African descent working on the actual research and development of new products, as more and more multinational companies take over and have a major - become major players in the marketplace.

SMITH: Spending on Afro hair far exceeds that in the general market.

But that demand isn't necessarily well served by the big mainstream companies.

COLEY: And a lot of the companies that are being marketed to people of African descent, but the formulas are pretty similar to the products that are marketed to the general market, the general population.

SMITH: With the market in the developed world increasingly saturated, the new-growth area is Africa itself.

UNIDENTIFIED FEMALE: You have about 20 percent that has been manufactured in Nigeria itself. And what (ph) they are at par with the American products because they are also of equal quality.

SMITH: But experts here say one major problem in Africa is the duplication of American hair products, undermining American marketing efforts in Africa.

COLEY: And many of the counterfeit products do not perform. So therefore when consumers purchase products that are counterfeit, they - and the product does not perform, then they may think that the original product does not perform. So overall, you have a negative impact.

SMITH: A further blow to American dominance in the market: the increasing popularity of extensions and weaves, using straight imported from Asia.

With America seeking to maintain its grip on the Afro hair market, consumers in the more populous African countries are beginning to seek more inward investment and to demand that they are not just seen as a profitable and easy-to-target niche market.

For CNN's INSIDE AFRICA, I'm Sylvia Smith in London.

(END VIDEOTAPE)

MAKGABO: That might look good on me.

Well finally this week, South African filmmakers stormed the Cannes Film Festival this year with an aggressive marketing strategy - one that could soon take some of the country's best films to big screens in Europe and also in the Middle East.

Camille Wrightfelten has that.

(BEGIN VIDEOTAPE)

CAMILLE WRIGHTFELTEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): A new event at the Cannes Film Festival called "Tous les Cinemas du Monde," or "All the Cinemas of the World," features several films from Morocco and South Africa.

The cast and crew of one of the 11 South African entries, "U-Carmen eKhalyelitsha," were still reveling in their win at the Berlin Film Festival.

While Cannes is considered an international playground, it's also a place where serious business is conducted. In order for these movies to reach a wider audience, they've got to secure distribution deals. "U- Carmen" picked up several.

ROSS GARLAND, PRODUCER, "U-CARMEN": After Berlin, where we won the Golden Bear, we went to the sales agent (INAUDIBLE), who are now selling the film internationally, for the international rights. And so far, we've sold six territories, kind of all over Europe and including Syria, which apparently is very rare for Syria to buy a film.

WRIGHTFELTEN: Many who love creating and watching African films are combining their efforts to make sure more of the work sees that kind of success.

The Agora Lumiere series, which has been held at Cannes each year since 1996, works to move Africa into a leadership role in the film industry. Agora also works with the organization that helped fund several of the South African films screened at Cannes, "U-Carmen," "Drum," and "Boy Called Twist."

The National Film & Video Foundation is a relatively new, government- mandated body that oversees the development of the South African film and video industry.

UNIDENTIFIED MALE: The NFVF has been very instrumental in getting the film industry coordinated as well as supporting it financially. It's not the - financially it's not the major contributor, but it is the incentive money, the - you know, the expertise that actually makes it valuable far beyond its mean.

WRIGHTFELTEN: Eddie Mbalo is the NFVF's chief executive officer. The foundation has established co-production treaties with other countries to help make sure there is money to support the talent.

EDDIE MBALO, NATL. FILM & VIDEO FOUNDATION: What it really means is that South African filmmakers who go and work in Canada or who co-produce with Canadians do have access to financial instruments that are available in that country. And same for Canadians who come to South Africa.

WRIGHTEFELTEN: Several film producers credit Mbalo's organization with sparking the success South African films have seen over the last year. But if you ask Mbalo why South African films have done so well recently, his answer is simple.

MBALO: They're making good films.

WRIGHTFELTEN: Camille Wrightfelten for INSIDE AFRICA.

(END VIDEOTAPE)

MAKGABO: Now as always, we do want to hear from you, your thoughts on the reports you see on the program. So send us an e-mail at insideafrica@cnn.com. That's insideafrica@cnn.com.

And that ends our look inside the continent for this week. I'm Tumi Makgabo. Thanks for watching.

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