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India Beckons Globacom, Nigeria’s First Global Brand

Uche Nworah - 5/7/2006

This must be interesting times for Otunba Michael Adenuga and his scions that run the Michael Adenuga Business Empire. They are gradually painting Nigeria’s business landscape green, the colour of their cash cow brand (Globacom).

Though a late entrant into Nigeria’s hugely lucrative telecommunication sector after a scandalous failed bid with their Communications Investments Limited (CIL) brand, the Adenugas have within a short time grown Globacom to become Nigeria’s second national operator behind MTN, and with over 6 million subscribers and market reputation as Nigeria’s fastest growing mobile service provider, there seems to be no end in sight to the group’s phenomenal growth.

The Michael Adenuga (MA) Group consists of Conoil, a downstream oil operations outfit, Consolidated Oil, an oil exploration and exploitation firm and Equitorial Trust Bank, in addition to stakes and interests in construction and real estate firms. Obviously there are several other Nigerian companies and entrepreneurs that have interests in key sectors in the Nigerian economy, some of which may have been there long before the Adenugas burst on to the scene, notably Chief Wahab Folawiyo, Late Chief M.K.O Abiola, Chief Augustine Ilodibe (Ekene Dili Chukwu), Chief Emmanuel Iwuanyanwu, Alhaji Aminu Dantata, Alhaji Aliko Dangote, Chief Razaq Okoya (Eleganza), Chief Michael Otedola, Alhaji Isyaku Rabiu, Chief Deinde Fernandez, Chief Harry Akande and many more.

The difference between the MA Group and some of these entrepreneurs and their businesses may be that whereas these entrepreneurs have remained inward looking, concentrating their operations within Nigeria, the MA Group now seems to be foraying abroad in search of other financial conquests and may in so doing have emerged as Nigeria’s first global corporation. A format that the Ndi Okereke-Onyiuke led group (Transcorp) is bent on replicating and even eclipse.

The issue of the names of Nigerian firms and brands missing on the global scene have always fascinated business school academics, some of whom have attributed the absence to lack of vision and management skills especially on a global level on the part of the entrepreneurs, another reason may be the fact that some of these enterprises are run as sole proprietorships (one man businesses) with their success relying solely on the life or death of the original owners, it is such that even with a Harvard or Ivy league business education, the children of some of these old-school entrepreneurs are still not able to carry on with the family business tradition when the sage passes on, thus creating a ‘here today gone tomorrow’ business legacy.

However in the MA Group, Nigeria may have found a potential multinational conglomerate it can be proud of, along the lines of such other businesses owned by ‘ethnic minorities’ from other countries but which have strong brand and global recognition, notably the Semler Group and the Mittal Group.

Recently MA Group announced that it plans to invest $700 million from a war chest of $1 billion in the lucrative Indian economy. A first for a Nigerian company in terms of outward investment. By so doing MA group will soon be mixing it with the Microsofts, HSBCs, Nikes and other global giants who have since berthed on the Indian subcontinent.

While this move may be good news to the Indian people and government as regards job creation, it may not be such a good news to the Nigerian government who would really wish that The Adenugas invested their money in other sectors in the Nigerian economy, in line with the government’s current efforts to attract foreign direct investments (FDIs), which has not really picked up as hoped by the government, despite the economic reforms already in place.

According to Mustapha Bello, the Chief executive of the Nigerian Investment Promotion Commission (NIPC), FDI inflows into Nigeria between June 1999 and July 2005 sadly stands at $35 billion, “the FDI inflows were not only in the oil and gas sector but also in the telecoms, ICT, manufacturing and services sectors”, he said.

One can not really blame the MA Group for seeking greener pastures in India, businesses are out there to make a profit and maximise investors’ returns, and since every other business is now going to India, then there must be a gold mine out there to be harvested. India shares similar business environment and customer characteristics with Nigeria and is reputed for its cheap skill availability and MA Group already has said that of the 400 people it plans to recruit this year, 150 will be Indians. Another reason also for Nigerian IT professionals to feel concerned, because not only are their jobs being off-shored but there is also the ever likely threat of an Indian onslaught in Nigeria’s labour market, which at the moment is still in the doldrums.

In an official statement, MA Group said that “initially, the group plans to focus its investments in the telecom sector in India and then move on to other sunrise sectors over a period of time. We are a cash-rich company keen on foraying into India, as the telecom market there is booming”, the statement said. The MA group also said that it is not averse to investing in call centres, banking and petroleum sectors in India. Investing in these sectors will allow it leverage on its experiences from operating in similar sectors in Nigeria. The group also plans to make India the Asian hub of their manpower needs for telecom.

This thinking within the MA Group is worrisome, Nigerian professionals excel all over the world, and for an indigenous corporation such as MA Group to be planning to fill its recruitment needs from another country may seem like a slap in the face for these skilled Nigerians, who would have loved to be given a fair chance and opportunity in MA Group’s recruitment plans to prove themselves.

Although the MA Group through its Globacom brand have kept faith with the Nigerian economy despite their not-so-pleasant experiences in 2001, investing over $2.5 billion in Nigeria and creating thousands of jobs for Nigerians, they should not forget their roots even as they plan their global expansion.

They should also realise that Nigerians have also kept faith with them, it is the Nigerian customers that have helped them eclipse Econet/V-Mobile in terms of subscription, and even continue to patronise them as they keep hot on the heels of MTN in the quest to become Nigeria’s leading mobile telephony provider.

The Nigerian customers have been drawn towards the Globacom brand by their sense of patriotism, and have adopted Globacom as their own (our own brand). MA Group should always bear this in mind, it is important that Glocalisation should be their guiding principle – thinking global but acting local.

Even the chief operating officer of Globacom, Mohamed Jameel quite realises that the Glo brand has been the major cash cow for the other brands; according to him “each of the other arms has a long-term investment plan for India, which is currently being spearheaded by Globacom”.

Are there lessons for other entrepreneurs who have been in the Nigerian business scene longer than MA Group here? Well, it would have to be vision, drive and ambition. Three things that ooze out of every action of the MA Group.

There are no doubts that if the Globacom brand replicates some of its business and marketing models which it has already tested in Nigeria in the Indian market, then the brand will have a fighting chance of breaking into the already crowded Indian telecom market. The Globacom brand has a culture of aggressive marketing competing mainly on price. Part of its market entry strategy in Nigeria was to slash the price of SIM cards by over 50 -60 percent, thus making it affordable, this was at a time when MTN, Nitel and Econet (earlier market entrants) were still exploiting the customers by charging exorbitant prices for SIM cards, which were also not readily available in the market, due to an exploitative tactics of artificial scarcity aimed at driving up prices.

Also Globacom went for the battle of hearts and minds of Nigerian customers, and adopted sports as the main thrust of its sponsorship campaigns, knowing that Nigeria is a football loving country and quickly negotiated a multi-million Naira sponsorship deal with the Nigeria Football Association (NFA) as the major sponsor of the football league now re-branded Globacom Football League, the deal is worth $2.3 million over a 4 year period. In Africa Globacom also sponsors the Confederation of African Football (CAF) Awards. All part of its general marketing campaign which has a budget of over a N1.2 billion naira ($5 million) annually.

Interestingly, Globacom is not yet quoted on the Nigerian Stock Exchange; it is still a private limited enterprise, firmly in the hands of the Adenuga family, especially Otunba Michael Adenuga and his protégés including son, Paddy Adenuga. Ethel Okeke, a stockbroker said that “Globacom will be the stock that will turn the market on its head eventually when they float”.