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Vanishing conglomerates reflecting the new economy



Vanishing conglomerates reflecting the new economy

-How business dynamics altered the fortunes of UAC, John Holt, AG Leventis, CFAO, other MNCs

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 Nigerians.

From electronics to food items, clothing and foot wears, to drugs, vehicles and machinery, they were the kings of the market.

Beginning from early 1920s till late 1980s, their dominance was supreme and largely unchallenged. From trading activities, many of these foreign firms, which dominated the Nigerian economy grew into manufacturing and industrial giants.

The corporations were so attractive that a lot of Nigerian graduates were recruited as management trainees. Many Nigerians grew in ranks, with some attaining the highest positions of chief executive officers and board members.

Some of the iconic firms include United Trading Company (UTC), CFAO, AG Leventis, John Holt, United African Company (UAC), Patterson Zochonis (PZ), Lever Brothers, (Unilever), Cadbury, Chellarams, Bata Shoe Company and GB Olivant, etc.

Starting from the early 1950s, they were joined by newly established Western European and American Multinational Companies (MNCs) giants like Procter & Gamble, Equinor, Sanofi-Aventis, Bolt Food and GlaxoSmithKline. Once dominant on the stock exchange, they are all penny stocks now.

UAC Nigeria Plc

One of the companies, UAC Nigeria Plc, was set up by UK-based holding company, UAC International, a conglomeration of trading interests.

The dramatic change in Nigeria’s economic fortunes in the pre and post- independence oil boom era sparked the company’s major successes.

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

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.

Apart from the company’s strength in the real estate business, the other area the firm still has a semblance of presence is in the food sector. Its sausage roll, Gala, however, is facing stiff competition from competitors, such as Rite, Bigi and the rest, while its eat-in restaurant, Mr. Biggs, is barely trying to hang on.

The impoverishment of the Nigerian people through a combination of decreasing earnings from oil and other commodity exports and high debt-service commitments shook the UAC Empire to its foundation. In its heyday, UAC Nigeria contributed two thirds of UAC International’s earnings. Today, the company has lost its grip on the Nigerian economy and virtually a shadow of its old self..


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 be 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 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.

The group later 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 a player in the foods sector, it rarely commands the type of patronage it was once known for these days.

Union Trading Company

UTC Nigeria Plc set up the once popular department stores, UTC Stores. A subsidiary of Union Trading Company, Basel, Switzerland, 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, several years after, their dominance has ended and their share of the country’s economy has fallen.

While many have closed shops and exited the country, those still in business are no longer economic super powers with enough capacity to influence the nation’s economy.

They have become forgotten brides, with many many of their striking edifices either taken over by smaller and aggressive firms, or reduced to pock marked carcasses.

Business dynamics

According to Business Hallmark’s findings, the current sorry state of the once iconic businesses can be traced to several factors. They include the sustained economic downturn in Nigeria, rising cost of production, the wiping out of Nigeria’s middle class (the conglomerates major clientele and major lifeline), as well as the conglomerates failure and refusal to foresee the future and adapt to changes, amongst others reasons.

While the affected companies have continually blamed lingering economic issues such as poor power supply, multiple taxation and foreign exchange scarcity for their woes, BH findings revealed that there is more to the reasons given.

BH findings showed that while the reasons given by the multinational companies are contributory factors, their already bad situation is aggravated by the continued influx of Chinese, Asians and Middle East companies, which daily churn out cheaper goods as alternatives to the much more expensive goods produced by the Europe and American headquartered MNCs.

According to a consumer expert, the collapse of the older conglomerates like John Holt, UAC, UTC and Unilever, which started manifesting in the middle 80s, and the much recent exodus of MNCs with headquarters in Europe and America would have been negligible had it been there were no alternative products to challenge their dominance.

“Yes, the harsh economic climate is a contributory factor to the continued winding up of MNCs doing business in Nigeria, however, you cannot remove their stubborn insistence on sticking to old and outdated business models that worked in the 70s, 80s and 90s.


“They (MNCs) are currently being side blinded by the new sharks in the business world from China, Middle East and the rest of Asia, who are not ready to play by old rules”, said Jumoke Akosile, an economist based in Lagos.

One of the un-doings of the MNCs, it was learnt, is their usually over-bloated and top heavy workforce. Unlike Chinese, Asians and Middle East companies, which operate in Nigeria with relatively smaller but very efficient workforce, MNCs are usually saddled with massive workforce, whose wages and living allowances gulp billions of dollars annually.

According to Jumoke Akosile, who is the Senior Partner at Brednard & Co., a South African marketing firm with presence in Lagos, the MNCs are being pushed out of the African market because they have refused to adapt.

“I will like you to go to the head offices of the Nigerian Bottling Company (NBC) and Seven-Up Bottling Company in Lagos to fully understand what am trying to explain.

“At NBC, the workforce is massive and top heavy. Based on the firm’s own data, it has approximately 4,800 workers in its employment. As if that is not enough, the top management are almost all Europeans or Americans.

“Its current Managing Director/Chief Executive Officer, Matthieu Seguin, is a French citizen transfered to Nigeria by its parent company, Coca Cola HBC from its headquarters in Atlanta Georgia, U.S.

“It will interest you to know that Matthieu Seguin and other top guns at NBC earn the same salary as their colleagues in Europe and America, which is in U.S dollars. NBC is also one of the best paying firms in Nigeria”, Akosile explained.

She, however, said the situation is different at Seven-Up Bottling Company Nigeria, founded by a Lebanese businessman, Mohammed El-Khalil in 1926.

“Lebanese businessman are known for their shrewdness. They hardly throw money away except when they want to be philanthropic.

“You can see it in the way Faysal El-Khalil, who took over from his late father, Mohammed, is managing Seven-Up.

“One, the salary structure at Seven-Up is modest, with the highest salary band ranging from N33.6 million to N57.6million (excluding bonuses), unlike at Coca-Cola, where it is between $137,000 to $235,007 per annum.

“The highest-paying position at Coca Cola HBC is held by the Group CEO based in Atlanta with a salary of $373,007 per year. Salaries of Coca Cola country CEOs are close to this figure because it is usually from this pool of CEOs that the group CEO is chosen.

“You can now see why Coca Cola products are struggling to compete with Seven-Up produces in a price war”, the marketing expert declared.

BH findings also revealed that MNCs cannot favourably compete with the new companies from Asia and the Middle East due to their massive offices and factories that require humongous resources to maintain.

Compared with companies set up by Asian and Middle East businessmen and conglomerates, which operate from relatively smaller sites, European and American-owned MNCs are normally built on sprawling expanse of lands running into hundreds of hectares.

It was also observed that the offices built by the MNCs are massive edifices with modern and state of the art facilities that can compare with other branches around the world.


“If you see any British, American, French, Italian, German or Dutch company in Nigeria, you will immediately notice the difference in size and grandeur.

“Examples are the Nestle plant at Agbara in Ogun State, Procter & Gamble plant in Ibadan and the British American Tobacco Company in Ibadan, as well as the Nigerian Breweries Plc. plant in Abia in Abia State.

“Unfortunately, it takes huge resources to maintain these edifices, which before now were passed to the final consumers.

“On the other hand, Asian and Middle East businessmen rarely enter into this same trap. They only build smaller but efficient places, where they work and churn out their products from.

“In most instances, the Asians build living quarters in their plants, where even the top management often reside, unlike top U.S, European MNCs, which have the unsustainable habit of lodging their top echelons in 5-star hotels for months, even years before they finally secure living apartments in upscale locations like Lekki, Ikoyi, Victoria Island, Banana Island and Ikeja GRA, Lagos.

“Also, while American and European companies usually send their workers abroad for training, thereby incurring huge training, traveling and living expenses, which they then pass on to the consumers, Chinese, Middle East and other Asian owned businesses prefer bringing experts into Nigeria to train their workers on the necessary skills.

“They only send their workers, who needed to be trained abroad, when the needed skills can’t be acquired locally.

“So tell me, how can they favourably compete with Chinese and other investors with this kind of operational set-up?

“Trouble often start with their (MNCs) prices of goods, which are always on the high side. For instance, compare the prices of Honda and Yamaha power generators marketed by UTC and John Holt to Chinese made SUMEC-FIRMAN preferred by many Nigerians; Omo and Ariel detergents by Unilever and P&G to either Good Mama, Viva, My My or Waw detergents produced mostly by Indian, Chinese and Lebanese owned companies operating in the country, and you will see the huge difference in prices.

“Unfortunately for the MNCs, the middle class, which used to patronise their products has been wiped out.

“Therefore, it is not a surprise to me that some of these MNCs have either closed shops or struggling to survive”, says brand analyst, Dr. Bright Nweje.

Home Support

Apart from these factors, new businesses, particularly Chinese firms, are edging out their American and European counterpart in the battle for the Nigerian market due largely to the support they are getting from their home governments. According to available data, Chinese businesses operating in Nigeria usually get huge support from the Chinese government in form of loans and subsidies to be able to compete with Western companies.

With the almost interest free loans from government-owned financial institutions like the China Export-Import Bank and the China Development Bank (CDB), MNCc from Europe and America, experts argue, do not stand a chance, unless they change tactics or also get help from their home governments.

BH findings also revealed that the indigenized conglomerates also ran into troubled waters because of the opening up of the nation’s borders to imported goods by successive administrations.

Many Nigerian manufactured products like tires, detergents and toothpaste, could not compete with cheaper foreign goods owing to several factors like cost of funds, high energy and transportation costs, multiple taxation and rundown infrastructure, such as storage facilities and bad roads.


As a result, the products churned out by these conglomerates remained largely unsold or stayed longer on the shelves, leaving the managers of the conglomerates with no other option than to close up shops and exit the country for countries that are more business friendly.

To worsen the conglomerates dire situation, Asian and Middle Eastern businesses are daily setting up shops in the country.

Another factor that contributed to the collapse or near demise of colonial days conglomerates in Nigeria is the vexed issue of corporate governance.

Corporate governance

When European heads of the conglomerates started exiting Nigeria for their home countries in the 70s as a result of the indigenization policy enacted by the Yakubu Gowon/Olusegun Obasanjo regime in 1972 and 1977 under the Nigerian Enterprises Promotion Decrees, and were replaced by locals, many Nigerians applauded the development.

The indigenization, it would be recalled, was a deliberate policy of the then military government to increase the participation of indigenes in the ownership and management of commercial and industrial activities of the country.

In other words, indigenization is the transfer of ownership of foreign investment to citizens. It practically eliminated foreigners from certain economic fields and positions, which were transfered to Nigerian citizens.

For instance, the United Africa Company of Nigeria Ltd changed to UAC of Nigeria Ltd in 1973 in compliance with the Nigerian Enterprises Promotion Decree of 1972, with 40 percent of the company’s share capital acquired by Nigerian.

An additional 20 percent of the UAC’s share capital was publicly offered in 1977 in accordance to the provisions of the Nigerian Enterprises Promotion Act 1977, further increasing Nigerian equity participation in the firm to 60 percent.

As expected, the change in ownership structure in UAC and other firms saw to the emergence of notable Nigerian business managers and technocrats like Christopher Kolade, Bunmi Oni and Rufus Giwa emerge later as MDs/CEOs of Cadbury Nigeria and Lever Brothers Plc (now Unilever).

Other Nigerians, including Christopher Abebe and Dr. Micheal Omolayole also benefited from the indigenization policy, emerging as chairmen/CEOs of UAC Nigeria and Lever Brothers Plc respectively.

Unfortunately, the era of Nigerian CEOs didn’t last, with many of the inherited conglomerates experiencing debilitating crisis and challenges, which forced them to run back to their parent companies. The tenure of many Nigerian CEOs was plagued by allegations of corruption, padding of books and other corporate governance infractions.

Two of the celebrated boardroom gurus, Bunmi Oni and Rufus Giwa of Cadbury and Unilever Plcs were both sacked after an independent review of their financial books revealed entrenched abuses.

Speaking on the development, a lecturer in the Department of Economics, University of Lagos, Prof. Bright Eregba, said most Nigerians are not ready to pay the price of integrity.

“If a man gets to that top and he’s still found to be corrupt, then he is a foolish person, which is based on the value system we have.

“Christopher Kolade, Festus Ohiwerei, late Gamaliel Onasode, Micheal Omolayole and Ernest Shonekan are still celebrated today because they upheld values and shunned avarice”.


The university don added that most Nigerian businessmen are also not good managers as their businesses lack structures.

“Unlike local firms, the structures of these multinational companies are institutionalised. The founders set up structures that with or without them, thrived.

“For us, we see business as a way of ensuring that our families are brought in to take over, even when they are not knowledgeable in the field.

“In the principle of micro economic, there is what is called short and long run of business. While the short run is, where you have some variables fixed that cannot be expanded, the long run allows you to expand a business.

“The investors or promoters of the multinational companies plan for the future, while Nigerians have this labour mindset, where the man that is coming on board wants to reap from where he did not sow, even when he does not have the entrepreneurial mindset.

“He sees income as a source, not a resource. A resource in the sense that he doesn’t see it as a source of making money for the future, but to spend and to move money out from the system, which is a mindset of a labourer”, Prof. Eregba noted.

Also speaking on the matter, a lecturer of Economic at the Olabisi Onabanjo University, Abiodun Tella, while agreeing that the business environment in the country is not friendly, advised MNCs to change their economic models.

“While MNCs are complaining about how difficult and frustrating it is to do business in Nigeria, some foreigners, especially the Lebanese, Indians, Chinese and even South Africans are rushing into Nigeria to do business and they’ve been extremely successful at it.

“Many of our most successful companies are owned and operated by them. Even the few successful Nigerian owned companies are managed by foreigners, especially Indians. Globacom and Dangote Group are examples of successful companies managed by Indians.

“The question we should be asking is: what is their secret? They arrive the country in bathroom slippers, barely able to speak English, and then they turn to dollar millionaires in a few years

“Is there something they are doing that MNCs and Nigerian businesses are not doing? Why are businesses run by Indians, Chinese, Koreans and Lebanese now doing better than those run by European and American businesses?

“This is a question that the MNCs still operating in Nigeria must ask themselves if they want to avoid the fate of the others before them”, Tella advised.

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