BAT cash round reaches Nigeria

Olusegun Obasanjo: His reforms have "greatly encouraged" BAT

British American Tobacco (BAT) has spread a global investment round to Nigeria, hitting prospects for factories in the UK, where the firm has come under increasing political pressure.

BAT is to invest $150m in Nigeria building a factory making internationally-recognised cigarette brands, and developing the country's tobacco farms.

The cash injection, which BAT said represented a show of faith in Nigeria's transformation, will create more than 1,000 jobs in the country, a statement on Monday said.

But the move, by reducing Nigeria's reliance on imports, raises a question mark over future production levels at UK plants, a BAT spokesman said.

"When this factory is completed, the requirement for supplies from the UK will be lost," the spokesman told BBC News Online.

EU clampdown

The investment follows expansion by BAT in Turkey, South Korea Vietnam and China, and warnings by chairman Martin Broughton that tighter regulations in Europe risked driving the continent's cigarette makers abroad.

Martin Broughton: Concerned over new rules

But the company denied that it had been forced to expand into Nigeria because of European clampdowns.

"We certainly have expressed reservations about new regulations," the spokesman said.

"But historically we have operated in many places around the world, and this investment is part of that."

Transformation

Monday's announcement reflected a growing faith in BAT in reforms introduced by Nigerian president Olusegun Obasanjo since his election two years ago, the company said.

Mr Obasanjo has sought to distance Nigeria from the corruption and oppression associated with the rule of the country's former leader, Sani Abacha.

BAT itself had, during Mr Abacha's time, scaled back its investment in Nigeria, where the firm has operated for 90 years, making cigarettes sold under local brand names.

But the firm now believes that "fundamental market, social and economic conditions have improved to the extent that a large scale manufacturing and distribution investment is viable", Monday's briefing said.

Mr Broughton said: "'We have long recognised Nigeria's crucial role in the future development of the African continent, and have been greatly encouraged by the progress made by President Obasanjo's administration."

The Nigerian factory, set to open in 2003, may eventually be geared up to produce cigarettes for export, the company spokesman said.

Campaigners disappointed

The investment was welcomed by Nigerian Industry Minister Kola Jamodu as a signal that Nigeria was "on track".

"Substantial flows of investment are returning once more to Nigeria," he said.

But campaign group Action on Smoking Health said it was "disappointed" by the news.

"When a country gains investment from a tobacco giant, that tends to reduce its interest in public health initiatives," an Ash spokesman told BBC News Online.