For the tobacco firms, it is their second baptism of fire in peculiar Nigerian style. The first assault on their business was in the late 1980s and early 1990s and it came in the form of smugglers and their official accomplices. Buffeted by inclement and man-made policies that increasingly made local manufacturing untenable in many sub-sectors of the economy, the tobacco firms lost heart.
In succession, the three tobacco manufacturers operating in the country packed their bags and left, leaving the smugglers in control of the cigarette market.
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The second war on tobacco has shifted to the law courts and seeks to pulverise the tobacco firms by claims that, if successful, may send them scurrying out of the country a second time, possibly never to return.
Last week, the Attorney-General of the Federation, the increasingly controversial Michael Aondoakaa, slammed a N5.3 trillion suit against the British American Tobacco and two other tobacco producers, ostensibly in the overriding public interest. Earlier, a number of states, including Kano, Gombe and Lagos, had initiated similar suits against the tobacco firms claiming damages to the health of active and passive smokers, high health bills as a result of smoking-related ailments and unethical marketing targeted at youths to get them hooked to the tobacco habit.
For BAT and its sister companies especially, the federal suit represents the unkindest cut of all. To understand their sense of betrayal no matter where you stand on the tobacco issue, look at the background to BAT's re-entry into Nigeria.
On his assumption of office as President in 1999, Olusegun Obasanjo made the promotion of Foreign Direct Investment a major plank of his administration and the arrowhead of his economic reform programme. Before the lure of power and the travel bug overcame his patriotic mission, he had invited respected industrialist and entrepreneur, Chief Kola Daisi, to head the rejuvenated Nigerian Investment Promotion Commission to reassure local and foreign investors of the government's commitment.
Obasanjo had also appointed Chief Kola Jamodu, veteran industrial sector manager, as Industry Minister. After almost two years of contacts, the Federal Government in September 2001, signed a Memorandum of Understanding with the BAT Group to restructure the domestic tobacco industry.
At its inception, the MoU was hailed as the government's major breakthrough in its economic diplomacy and confidence-building efforts. The pact was billed as an integrative arrangement impacting on all aspects of the domestic industry from leaf growing and processing to the manufacture and distribution of tobacco products in Nigeria. Probably more important for government was the envisaged partnership between BAT and the Nigerian Customs Service for the combating of smuggling. Instructively, a mere two days after the AG's suit, BAT and the NCS signed a MoU to tackle smuggling. At that event, both parties asserted that the entry of BAT had decimated the ranks of tobacco smugglers to the extent that 80 per cent of cigarettes sold in Nigeria today come from formal sources paying duties and taxes to the government. Before 2001/2002, they said, almost 90 per cent of cigarettes consumed in Nigeria were smuggled!
In Ibadan, Oyo State, the BAT built a $150 million factory, partnered with farmers and went on merrily with its business. It says it has since invested another $50million, contributed N60billion to government's coffers and attracted a further N7billion in FDI. It says it employs 1,000 farmers and 15,000 persons in leaf operations.
Now, what does one make of the belligerence of the Federal Government against an investment partner? Was it not the same government that wooed the firm and Philip Morris back to Nigeria?
No matter the rightness or ethical issues being canvassed by the authorities, the reality is that Nigeria is sending a negative message to the international investment community. The federal action will appear to outsiders as a return to the bad old days when successive Nigerian governments routinely dumped the policies and contracts of their predecessors. Secondly, some will consider it foolhardy to respond to Nigeria's call for Foreign Direct Investment when policy somersaults are seen as the norm.
Note that BAT and other global tobacco firms are under pressure everywhere in the world, not least in their home countries where national and local governments have successfully sued them for mind-boggling sums of money as penalties and compensation for the health hazards associated with tobacco marketing and use. This is apart from numerous 'class-action' suits by groups and individuals claiming (and winning) compensation from the tobacco firms for ill health and deaths from tobacco use.
In this light, and given the corpus of evidence of the damage to health arising from the use of tobacco and advertising, it is in order for state governments and non-governmental organisations to besiege the tobacco firms and take them for as much as they can.
For the central government that lured them into the country, encouraged them to invest heavily and collected taxes, duties and rates from them only to turn round to join their tormentors, it is inimical to the continued campaign to significantly raise the flow of FDI in the economy.
Add this latest move to earlier faux pas and you will understand why some major investors, especially from the West, give Nigeria a wide berth. Take the mess over the refineries: After a few years of murky manoeuvring by public officials, the last administration, a few days to the end of its tenure, sold majority equity to its favourites in the private sector who had zero knowledge and experience in running refineries.
Recall also the debacle with NITEL, the state-owned telecoms firm and how officials discouraged every serious international operator for seven years until it was eventually handed over to the new investment firm that has been unable to secure a reputable foreign partner to run what it evidently has no expertise to run. How about the Lagos International Trade Fair complex, which concession is mired in controversy?
A committee is currently probing this and the concessions to run Ajaokuta Steel and Delta Steel to an Indian firm and there are ominous hints of reversal and termination of the agreements.
Everywhere in government activities, due process is mouthed loudly in public but hardly in evidence in the important business of privatisation and promoting investment. Not even the celebrated ports concessions have been free of government ineptitude, opaqueness and policy shifts as witnessed in the reversal of the changes to the structure of the Nigerian Ports Authority made by Obasanjo (again) on his way out of office.
The tobacco firms are on the ropes; the victims of their own addictive product, hypocrisy in private and public places, hustlers and smart lawyers and of an international anti-tobacco movement.
But in Nigeria, the chicanery and fickleness of the central government may have future implications for foreign investment beyond the misery of the tobacco producers. Enditem
