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Guinness' success highlights opportunity in Nigeria, Africa

  • Story Highlights
  • Guinness beer plant in Nigeria expanding facilities as business thrives
  • Guinness success story highlights potential for foreign investment in Africa
  • But other foreign companies have pulled out of Nigeria, citing rising production costs
  • Problems with infrastructure, government make some hesitate to invest in Nigeria
By Christian Purefoy
CNN
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LAGOS, Nigeria (CNN) -- Kashi Shodeinde turned the ignition and his battered truck convulsed as black fumes poured from the exhaust. His precious cargo of bottled Guinness beer rattled as he set off into the gauntlet of Lagos' potholed roads and traffic.

Kashi Shodeinde uses the money he earns by delivering Guinness to send his three children to school.

Nigeria consumes more Guinness beer than Ireland, the company says.

Working for a foreign company to send his three children to school, Shodeinde is on the frontline of private investors' struggle to gain a foothold in Nigeria.

"In the whole of Nigeria, Guinness is No. 1!" he exclaimed.

Brewed in Nigeria since 1962, the country's thicker-tasting "Foreign Extra" is not just supporting Shodeinde and his family, but helped Guinness Nigeria defy the global recession with 6 percent annual growth this year, according to the company.

Nigeria now drinks more Guinness than Ireland -- making it the second-biggest consumer in the world, after Britain, according to Guinness Nigeria.

A success story like Guinness in Nigeria highlights the potential for trade and foreign investment in Africa that U.S. Secretary of State Hillary Clinton spoke about last week when she addressed an African trade convention in Kenya.

"Africa is capable, and is making economic progress. In fact, one doesn't have to look far to see that Africa is ripe with opportunities, some already realized, and others waiting to be seized together if we determine to do so," Clinton said.

She is on a tour of Africa to promote development and good governance, and to underscore the Obama administration's commitment to Africa. Nigeria is one of several countries on her itinerary.

But many challenges keep foreign businesses from coming to Nigeria.

Regarded as a frontier market, Nigeria is ranked 118 out of 187 in the World Bank's "Doing Business" rankings. Failing infrastructure, irregular electricity and erratic government policies have caused foreign investors to shy from Nigeria's relatively untapped market of 150 million people.

"Nigeria remains an information dark spot and therefore does itself no advantage in terms of trying to attract foreign investment," said Doyin Salami, an economist at Lagos Business School.

The Dunlop and Michelin tire companies have in recent years closed their factories in Nigeria, because of the rising cost of production.

Yet, Nigeria Guinness is expanding its facilities to increase production.

"Business is really growing," said Afebuameh Cephas, the plant manager for Guinness' Benin factory, saying production was up almost 30 percent in a year.

All the ingredients are produced locally -- except for Guinness extract, a secret ingredient added to Guinness brewed anywhere in the world.

But there's no secret to Guinness' Nigeria success, said Chairman Tunde Savage.

"The most important thing here is you have to be very transparent in what you do. Your governing principle must be very clear here. You must ensure you do things correctly and rightly."

Fortunately for competitors, Guinness is not to everyone's taste.

Bottles of all shapes and flavors rattled on a bar table in Lagos one recent night as a band struck a deep bass note in the humidity of the night.

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"It's too harsh! It's too harsh!" one regular exclaimed.

"It tastes good for an African man!" argued another.

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