We Were Never Driven By Profit Margins Alone - Africa’s Tobacco Mogul Rujugiro
January 29, 2019: In 1978, Tribert Rujugiro Ayabatwa entered the world of cigarette-manufacturing. He is now the biggest indigenous manufacturer in Africa with footprints in nine African countries.
For the last 40 years, Ayabatwa, has run a highly successful business operation in an industry dominated by a handful of multinational corporations.
Prosper Magazine’s Risdel Kasasira interviewed him about the tobacco industry and his sour relations with Rwanda that saw the Kigali government confiscate his properties.
Why did you choose Tobacco business?
At the time of entering the tobacco manufacturing business, there was a shortage of most commodities in eastern and central Africa. Uganda which used to supply these two regions was at war. So we could not get supplies for trading. That is when I decided to experiment with manufacturing with technical help from experienced colleagues next door in Tanzania. I, therefore, saw an opportunity and seized it. After a few years of learning and mastering the industry, we became good at it.
What has been the reason for your success in the last 40 years and how many Africans have been employed by your business?
I think the reasons for our success is the uniquely homegrown African approach we have always used to build our companies. We were never driven by making profit margins alone. We were a stakeholder-centred organisation that involved our employees, farmers, communities, as well as public authorities under whose jurisdiction we worked. We have always been a people-centered business. Regarding the numbers of Africans Pan African Tobacco Group (PTG) has employed over forty years. That is very difficult to measure because that is a long time indeed. I would say, however, that traders and distributors of our products are in thousands, as are our farmers, as well as permanent and seasonal employees. Our work also directly stimulates other sectors, most notably, transportation that delivers tobacco to the factories after harvesting. We must not forget that in Africa, each person that holds a job supports at least six people. We have therefore made a modest but crucial contribution to providing jobs on our continent.
What has been your biggest obstacle?
Earlier on in manufacturing business, the main obstacle was the technical side in our work. Manufacturing processes involve technology and skilled personnel. But with time, we developed a professional workforce that has sustained PTG over the past four decades. We are able to keep up with technology and the latest innovations in our industry with ease.
You are running the business in Sub-Saharan Africa, a region that is conflict-stricken. Have conflicts in Sub-Saharan African affected your business?
As you say, parts of our continent are often affected by conflict. However, the opposite is also true. Sub-Saharan Africa is home to the fastest growing economies in the world. People these days talk of “Africa Rising.” This is because countries such as Angola that had a long-standing conflict are at peace. This is true of Ethiopia, Ivory Coast, and many others. The efforts to secure peace in South Sudan are paying off. In DR Congo, our manufacturing facility continued to operate even at the height of the conflict there. Let us hope that there is less and less conflict on our continent.
How has your business impacted the lives of communities where your businesses are established?
It is our business culture to work with communities in each and every country where we operate. We seek to assist them so that they can uplift themselves from poverty. PTG companies have worked with communities in improving food security, accessing to clean water and tree-planting to protect the environment. This is part of our business culture - we don’t believe that profit is the single motivating factor for success. Healthier communities and good relationships with non-business stakeholders are fundamental to what we do.
Tobacco is associated with diseases like cancer. How do you feel when you hear people dying of ailments that are associated with cigarettes?
PTG strictly adheres to the World Health Organisation’s Framework Convention on Tobacco Control. WHO’s framework provides a comprehensive direction for tobacco control policy at all levels. PTG labels all its products with the required warning signs according to WHO tobacco control instruments and national governments’ control mechanisms.
How big is your business in Uganda? How it trickled down to economic growth and well-being of Ugandans?
Uganda became home to PTG in 1996 - that is 23 years of a successful and productive partnership. In Uganda, PTG has 269 permanent employees, 593 seasonal workers, 8,900 farmers, six distributors and thousands of traders who sell our brands. Transporters make over 500 trips during the harvest season thereby creating spinoff employment opportunities. These Ugandans become taxpayers in the process. So we consider ourselves a good taxpaying corporate citizen who, together with our stakeholders, contribute to the strengthening of the Ugandan economy. As exporters, we also contribute to the vital task of modestly assisting Uganda to earn foreign currencies. We highly value our work in Uganda.
What do you say about recent allegations in social media accusing you of being involved in subversive against Rwanda government? Have such allegations affected your business operations in Africa?
These allegations are false. PTG has no issue whatsoever, with any African government, or in the United Arab Emirates where we work. On the contrary, PTG has excellent relations with nearly a dozen countries in which we manufacture our products.
Is your business threatened by the Kigali government that has been hunting you and how do you feel as a Rwandan businessman being hunted by your own government?
PTG has nothing to do with Rwanda because PTG does not have any operations in Rwanda. PTG, therefore, cannot be threatened by a government that does not have jurisdiction over our company. In any event, we have always been a Pan-African group as opposed to being a Rwandan company. My issues with Rwanda involve other businesses that are not in any way associated with PTG.
We have seen many African businesses dying with the owner. What safeguards have you put in place to have your business outlive you?
It is true that converting a family entity into a corporate business is always a challenge not only in Africa but worldwide. This is because in a family-owned business, family members are often given jobs merely because they are related to the owner. For those who inherit ownership of the business after a relative retires, employees may have difficulty accepting the new owner. Further, a rivalry between siblings may emerge and destroy the business. In PTG’s case, there was never a culture of entitlement. Even family members had to compete for positions on the basis of their competence and merit.
We have seen many tobacco farmers accusing manufacturers of exploitation when it comes to pricing. Have you faced such accusations?
We have not experienced such problems because of our approach. Our farmers are our partners. Neither of us can succeed without the other. We are always proactively seeking to build a mutually rewarding relationship. Because of this mindset, we have sought to eliminate the importation of tobacco raw materials from outside Africa. We want our farmers to benefit fully from supplying our factories.
What is the Future of tobacco?
The cigarette industry is experiencing an accelerated rate of adopting innovative products. This shift is driven by the changing consumer preferences. In response, tobacco companies are investing heavily in product development in efforts to develop next-generation tobacco products. The next 50 years will most likely see greater movement away from the conventional products we see on the market today.