Published On: Mon, Apr 30th, 2018

Blue Chips lose competitive edge to smaller companies


They were once Nigeria’s most flourishing business enterprises. They built tentacles all over the country busy providing one service or the other to millions of eager Nigerians. From electronics to food items, clothing and foot wears, to drugs, vehicles and machinery, they were the kings of the market. Their dominance was supreme and largely unchallenged.

From commercial activities, many of these foreign firms which dominated the Nigerian economy grew into manufacturing concern, and became the major industrial entities. The corporations were so attractive that a lot of Nigerian graduates were recruited as management trainees.

Some of the firms include United Trading Company (UTC),CFAO AG Leventis, John Holts,United African Company (UAC),Chellarams, Bata Shoe Company, G B Olivant, Peugeot, Volkswagen and Kingsway Stores.

However, several years after, their dominance has ended and their share of the country’s economy has fallen. They areno longer economic super powers with enough capacity to influence the nation’s economy. They are largely forgotten brides. While many of the striking edifices have been taken over by smaller and aggressive firms, some are now reduced to pock marked carcasses.

United Africa Company (UAC)

UAC was set up by the UK-based holding company, UAC International, a conglomeration of trading interests. Following its takeover by Unilever in 1929, however, it developed into a multinational within a multinational.

The backbone of UAC has been its operations in Nigeria, and it was the dramatic change in Nigeria’s economic fortunes in the pre and post-independence era that sparked the company’s major successes.

In Nigeria and Ghana and, UAC was easily the biggest employer in the private sector. In the 1970s, UAC’s operation in Nigeria had a turnover greater than the gross domestic product in several of the smaller African states.

In the 1960s and 1970s, UAC invested in breweries, assembly and distribution of consumer and industrial electrical goods, medical equipment and pharmaceuticals, construction equipment, marketing support services, department stores, office equipment, insurance companies, building materials, production and processing of foods and textiles, warehousing services and a shipping line.

UAC Headquarters, Lagos

UAC’s deft move of selecting its senior Nigerian staff, especially those with close links to government, as chief executive officers, considerably helped the company.

For example, a former managing director and chairman of UAC Nigeria, Chief Ernest Shonekan, had a wide range of contacts in the political and military circle. The firm, it was confirmed, was involved in most policy making in the military days.

According to many economic and political analysts, UAC’s executives closeness to the military regime of Babangida benefited the firm.

Its turnover increased to N 977 million for the year ending September 30, 1988 compared with turnover of Naira 720 million in 1983. But more remarkable is the increase in operating profits to N133 million in 1988 from N37 million in 1983.

In its heyday, UAC Nigeria contributed two thirds of UAC International’s earnings. Reduced

import capacity however, and the impoverishment of the Nigerian people through a combination of decreasing earnings from oil and other commodity exports and high debt-service commitments started to have a generalized effect across the UAC Empire. The depressed conditions in several of the company’s other African markets reinforced the effect.

According to sources, UAC’s major difficulties with Nigeria started back in the 1970s in the aftermath of the civil war when nationalist leaders demanded more indigenous control over the economy. The government passed a series of indigenization decrees initially dictating that 40 percent of all foreign businesses in Nigeria must be owned by Nigerians, and subsequently raising the figure to 60 percent during former President OlusegunObasanjo’s regime in 1976.

This dramatically changed the outlook for UAC International and Unilever in their biggest market in Africa. By 1976 some 60 percent of the equity of UAC Nigeria had been sold to private Nigerian stockholders and to state governments. UAC International held a 40 percent equity stake in UAC Nigeria and set up a technical services agreement between Unilever and UAC Nigeria.

Today, UAC has lost its grip on the Nigerian economy.  Its Kingsway Stores was one of the largest department stores in the country during its run of nationwide existence. Many Nigerians over 40 years will still remember the existence of Kingsway Departmental Stores with its modern shops. Established in 1948, the store which was incorporated with an equity capital of about £4m imported and sold general consumer goods and fabrics that were mostly common to western consumers. The company also created coffee outlet, which later evolved into quick service restaurants named Mr. Bigg’s.

The stores used to sell general consumer goods, fabrics and items appealing to a wide section of the populace.  Kingsway became the toast of many across the country especially with the introduction of its quick service restaurants known as Kingsway Rendezvous.

During the mid-1980s, it began to sell many of its outlets to Nigerian specialists interested in using it for furniture, drugs and other related goods and services.

Apart from the company’s strength in the real estate business, the other area the firm still has a semblance of control is in the food sector. While its sausage roll, Gala, is still strong in the market, though with stiff opposition from competitors such as Rite, Bigi and the rest, its eat-in restaurant s, Mr. Biggs, are not doing well.

Kingsway building, Marina

AG Leventis

Leventis Group is another firm that used to dominate the nation’s economic landscape. The firm core markets consist of real estate, hotel accommodation, food and snack production, commercial truck and buses distribution and agriculture.

One of its popular arms, Leventis Stores, used to another popular name and brand many Nigerians born before and shortly after the country’s independence cannot forget in a hurry. Established in 1937 by Cypriot business merchant, Anastasios George Leventis, the new firm, with its wide array of consumer goods, expanded steadily, becoming one of the biggest of its kind in West Africa by 1978 when its founder passed on.

Following the successes enjoyed over this period, the group branched to other sectors of the economy, introducing Leventis Motors Limited and Leventis Technical Limited soon afterwards. The firm later founded Leventis Foods Ltd in 1999 and is one of the largest bakeries in Nigeria producing variety of baked products and snacks, with a strong brand presence in Lagos, Nigeria.  It produces the popular Val-U brand.

Though the company is still very vibrant in the foods sector, it rarely commands the type of patronage it was once known for these days.

United Trading Company

Nigeria Plcset up the once popular department stores, UTC Stores. Asubsidiary of Union Trading Company, Basel, Switzerland, and Domino Stores respectively, UTC provided a great opportunity for many Nigerians to have a taste of good life, expanding rapidly to other parts of the country in the process.

However, different economic policies adopted by successive administrations in Nigeria affected these brands in no small measure, hampering their growth and grip on market share.

Bata Shoe Company

Bata is another name that cannot be easily forgotten by any Nigerian born in the 70s, 80s and early 90s. The firm is renowned for its school footwears known as Bata Ready for School.

Established in 1932 as a trading company called British Bata Shoe Company Limited before transforming into a manufacturing outfit in 1964 at the Ojota, the companycontrolled a large shunk of the shoe market until the flooding of the nation with  Chinese products in the 90s.

It was learnt the firm’s fortune changed in 1997 when Bata Overseas Trading Company left after a disagreement with some of the indigenous directors with all efforts to revive the ailing fortunes of the company proving abortive.

Peugeot Automobile Nigeria (PAN)

Peugeot Automobile Nigeria (PAN)

After riding the nation’s automobile scene like a colossus, the company fizzle out owing largely to the craze for Mercedes Benz and Toyota brands by successive military regimes,

PAN was incorporated on December 15, 1972 as a limited liability company with an authorized share capital of N3 million. It commenced full operations on March 2, 1975, while the erstwhile Head of State, General Yakubu Gowon, commissioned the assembly plant on March 14, 1975.

After about two decades of smooth operations, during which the Peugeot brand was a favourite buy by consumers and was highly patronised especially by government agencies, the company ran into stormy waters due to government’s policy somersaults and inadequate tariff protection for local assembly plants. Federal and state governments began to shun PAN’s Peugeot products and began opting for imported alternatives.

By the turn of the decade, the company’s fortune had begun to slide. By 2013, PAN’s revenue generation profile had dropped to a meagre N2 billion per annum from about N30 billion a decade ago. Its market share dropped drastically from 20% to only 2%, with car sales figure declining from N31.7bn in 2007 to N1.96bn in 2003. From selling up to 11,768 vehicles in 2007, it was able to muster only about 1000 vehicle in 2013.

At the height of its glory, the automobile company could boast of not less than direct 4000 workers. By 2013, the number had been reduced to less than 300, as its financial health worsened over those years and job security became increasingly uncertain.

With its strategic management getting poorer, its dealers, service centres and about 70 local auto component manufacturers severed their relationship with it and shifted their support to other brands. Only a few dealers remained loyal.

It wasn’t from government agencies alone that PAN suffered from patronage; even private car consumers shifted their brand loyalty to competitive brands like Toyota and Honda.

Things worsened in 2010 when PAN Nigeria’s parent company, Automobile Peugeot France also, in 2010, suspended the relationship and agreement the two shared. The consequence was that PAN Nigeria stopped getting supply of parts and the benefit of staff training from Peugeot France.

With a crippling debt overhang of N30 billion by 2011 and no prospect of a private investor willing to risk his money in turning it around, PAN Nigeria’s fare seemed doomed. But there is a ray of hope as Africa’s richest man, AlahajialikoDangote and some investors have taken over the company.


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