A major component of the reform of the advertising industry which the Advertising Practitioners Council of Nigeria (APCON) has proposed is to limit foreign stake in every advert firm in Nigeria to 25 percent. This is an extreme proposal, and is bound to be greeted with opprobrium across the nation and in the international community. What this proposal seeks to achieve is an end to wholly-owned subsidiaries of international advertising firms in Nigeria. In other words, it provides that multinationals can have mere branch or representative offices or form joint ventures with local businesses in which the international firms must be minority partners. For a multinational to have a wholly-owned subsidiary in Nigeria or elsewhere, it must have at least a 51-percent stake in the business.
Leading companies like Shell, ExxonMobil, ChevronTexaco, TotalElfina, Agip, United African Company (UAC), Nigerian Breweries, Guinness, MTN, Etisalat, Airtel, Petrobras, Schlumberger and Statoil are wholly-owned subsidiaries. A perfect example of foreign direct investment (FDI), subsidiaries are a compelling manifestation of international investor confidence in a national economy. This explains why erstwhile President Olusegun Obasanjo spent much of his first term in office (1999-2003) on international trips in search of FDI. Obasanjo personally went to Christopher Ghent, the then chairman of Vodafone of the United Kingdom, the world’s largest mobile telephone operator, to convince his firm to invest in Nigeria’s telephony market when GSM licences were about to be granted in 2000. It is a different matter that Ghent turned down the offer – an action he was to regret deeply. But this is a story for another day.
With APCON now proposing to limit foreign ownership in an advertising firm to a mere 25 percent, Nigerians are being told that wholly-owned subsidiaries are not wanted in the country. This is a dangerous signal to the international business community. Could the Nigerian economy have done better without such international firms as Cadbury, Nestle, Unilever and other international wholly-owned subsidiaries? Certainly not. Every economy in the world needs FDI. International investor confidence in the Nigerian economy will be eroded dramatically should Shell and other multinationals decide to reduce their investments in the country to the level of mere branch or representative offices or junior partnerships with local firms. Why, then, does the APCON leadership want international advertising agencies practically out of the country?
Various professional, intellectual and academic studies have demonstrated eloquently that the substantial presence of foreign firms in an emerging economy helps the local economy in terms of not just employment or technology transfer or creation of goods and services but also in terms of lifting standards. Multinationals compel local firms to raise their standards by engendering competition. We have seen how the quality of service by advertising agencies has improved remarkably in the last two decades as a result of the globalisation of the Nigerian economy. For instance, Prima Garnet, led by APCON chairman Laolu Akinwunmi, has benefitted enormously from its affiliation to one or two globally reputable advertising agencies.
APCON’s seeming anti-international business stance is curiously coming at a time when Nigerian businesses are becoming more and more international, operating as wholly-owned businesses in Africa and elsewhere. The United Bank of Africa, for instance, has 17 subsidiaries across Africa and in New York. Guarantee Trust Bank has subsidiaries in Ghana and The Gambia, among other places. Dangote Cement is opening subsidiaries in West, Central and East Africa. Would APCON be delighted if the political authorities in the countries where Nigerian firms operate as subsidiaries decided to make the subsidiaries mere branch or representative offices or junior partnerships? Wouldn’t they be denounced for autarky or economic protectionism? Most Nigerians have already expressed displeasure with the Zambian authorities for raising the capital base of foreign banks from $5m to $100m since this year, a step which is forcing UBA to seek to become a minority stakeholder in the local banking sector.
Nigeria has since the 1980s been carrying out far-reaching economic reforms. One of the first to be greeted with aplomb by the global community was the liberalisation of business ownership. Foreigners are now allowed to own businesses 100 percent. The entry of international advert agencies, as a result of this policy, has produced salutary effects. So, why does the current APCON leadership want the advertising industry to return to the pre-national economic reform days? Why does it want Nigeria to remain a country notorious for policy somersault? As a body deeply rooted in reputation management, APCON ought to know that very few things hurt a nation’s reputation in the eyes of investors as much as policy inconsistency or flip flop.
APCON, a government organ created by law, should be concerned with how to protect national interests, and not those of one or two businesses. True, the advertising industry generally is passing through challenging times, despite the increasing campaign budgets of many firms. But it is unrealistic to blame foreign agencies for the situation. An instance of a genuine major threat to advert agencies in Nigeria is the new tendency by businesses with heavy advertising budgets to set up in-house advertising departments and man them with staff poached from advertising agencies. This is a clear and present danger. Businesses have traditionally outsourced their advertising campaigns.
Akinwunmi’s APCON needs to address itself to genuine threats to the industry. The planned reforms are wrong-headed. The public is thus constrained to wonder, in the words made famous by the late sage, Obafemi Awolowo, qui bono, in whose interest are the reforms being proposed?
Akinsanya is a marketing communication consultant in Abuja.
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