The Nestlé commitment to Africa · economic and social progress of the African consuming public as...

I

The Nestlé commitment to Africa

Over a century of commitment and a vision of future growth and development by Nestlé CEO Peter Brabeck-Letmathe

1 Africa’s challenges and opportunities

2 Nestlé in Africa: products, places and people

3 Nestlé and the United Nations Millennium Development Goals

Catalysing the shift from poverty to prosperity

1

Contents

Front cover:Omowunmi Shittu,owner of this MaggiRestaurant in Lagos,Nigeria, welcomeshungry diners to hercanteen, where shesells traditional fareflavoured exclusivelywith Nestlé’s Maggibouillon cubes and

seasonings. Fortifiedwith iodised salt tohelp prevent thyroiddisease (goitres),Maggi bouillon cubeshave been for decadesone of the mostfrequently recognisedand purchased foodproducts throughoutAfrica.

2

4

18

48

54

Over a century ofcommitment and a vision of futuregrowth anddevelopment

short-term returns, we have becomea source of stability and economicgrowth in Africa.

In this century, we expect Africanmarkets to offer additional economicopportunities, as we expandoperations, introduce new productsand increase market share. Thiscontinued success translates togrowth and opportunity for peopleand communities across thecontinent.

Today, we are witness tounprecedented growth in someAfrican countries, with increasinglyrobust stock exchanges andstrengthening currencies. Newmodels of political and economicleadership, such as the NewPartnership for Africa’s Development(NEPAD), are emerging. We are right to be optimistic about thesedevelopments.

But in some countries, thechallenges of poverty, HIV/AIDS andconflict jeopardise progress. As aprominent player in the Africanbusiness community, Nestlé is partof the substantial effort needed tofind both short-term and long-termsolutions.

Our corporate mission – to createlong-term shareholder value –assures the long-term availability ofnatural and human resources andvibrant, profitable markets. As such,

Since the 1880s, when Nestlécondensed milk travelled the Africancontinent in miner’s rucksacks andcontinuing today, with hundreds ofproducts available from Cairo toCape Town, African consumers havecome to see Nestlé as part of theirdaily lives.

Starting with our first factory in1927 (in South Africa), we now havetwenty-seven factories, plusnumerous distribution andmanagement centres. In Africa, wedirectly employ more than 11500people; and tens of thousands ofadditional people are employed asour suppliers and distributors.

To succeed in Africa requirespatience, perseverance and adedication to long-term economicdevelopment that will withstandshifting social circumstances.Through a very long-term businessstrategy, developing regional andnational companies over decades,placing long-term businessdevelopment over temporary

2

sustainability is a mandatory elementof our operations.

Nestlé has learned a great dealfrom its experience in Africa. In the1970s, when the infant formulaindustry was accused of marketingpractices that contributed to childmalnutrition, we recognised ourresponsibility to market based oninternationally accepted norms andunilaterally took steps to implementthe World Health Organisation’sInternational Code of Marketing ofBreast-milk Substitutes a year after its passage in 1981. On pages 44-45,we cover an independent audit ofcurrent marketing practices in threeAfrican countries. I invite you tojudge for yourself the progress thathas been made.

The future success of our Companyis linked to the success of Africanfarmers gaining access to developedcountry markets and to the

economic and social progress of the African consuming public as awhole. As a responsible globalcorporation, Nestlé seeks financialreturns, while also working towardsocial and environmental gains. As you turn the pages of this report,you will see this strategy in practicethrough the entire value chain.

This is the way to unlock economicopportunity, promote sustainablegrowth and improve the quality of lifefor all Africans.

Peter Brabeck-LetmatheVice Chairman of the Board and Chief Executive Officer

3

Nestlé CEO PeterBrabeck-Letmathevisits Agbara HighSchool in Nigeria,together withcommunity healthworkers from theNigerian Red Cross. As part of a range ofactivities to fightHIV/AIDS in Africa,Nestlé supports RedCross education and awarenessprogrammes in bothNigeria and Kenya.

4

Kebede Endie growsArabica coffee on aone-half hectare farmhe inherited from hisfather in Yirga Cheffe,Ethiopia. A father of

eight, Kebede workshalf days in the localcoffee washing stationduring the harvestseason to supplementhis income. Helping

Kebede and otherfarmers raise theproductivity of theircrop and earn moreincome is the key toimproving their quality

of life. Here, Kebedeturns pulp removedfrom the coffeecherries, which will be dried and re-usedas fertiliser.

5

1

Africa’schallengesand opportunities

The images of Africa we see on the nightly news reflectthe huge problems facing the African people – armedconflict, HIV/AIDS, poverty, drought and famine. Africaand its 832 million people and hundreds of ethnicgroups account for 13% of the global population, butbear a disproportionate burden of the world’s problems.More than 320 million Africans live on less than USD 1a day and at least twenty-four nations faced foodshortages in 2004. In terms of per capita incomes,eighteen out of the twenty bottom-ranking nations areAfrican. More than 25 million people in Africa haveHIV/AIDS and by 2010, the workforce in sub-SaharanAfrica will shrink by 9% as a result of the pandemic. On top of that, 3000 people die every day of malaria.

Despite the problems, Africa shows steady economicgrowth and business opportunity for those able to havea long-term vision and solid business practices.

Largely unrecognised by peopleoutside Africa, countries such asAngola, moving from decades ofconflict to stability, show hopefulsigns. Indeed, most Africancountries are experiencingmacroeconomic stability andfavourable fundamentals, includingincreasing rates of gross domesticproduct (GDP), increasing foreigndirect investment (FDI), controllednational budget deficits, stableinflation rates, rising commodityprices and strengthening capitalmarkets.

And in spite of the difficulties,the African economy is showinghealthy and increasing growth. In 2003, the economy across thecontinent, measured in terms ofGDP, grew by 3.8%, up from 3.2%in 2002, with estimates of 4.4% for 2004.

Africa produces 26% of theworld’s gold,1 more than half of itsdiamonds2 and is a key world oilproducer. But growth and FDI tendto be clustered around economiesthat are commodity-based, suchas Chad and Angola, or those thatare highly developed, such asSouth Africa. Countries with fewer natural resources do notnecessarily share in the economicprogress.

Africa’s access to the globaleconomy led to increased tradewith China, which reached USD 15 billion in the first ten monthsof 2003 – a more than 54% gainover the same period in 2002. The number of tourists to Africadoubled in the last decade, alongwith in-country revenues, whichreached USD 12 billion in 2004.

Income levels and consumerspending power are increasing;the World Bank estimates that per

capita income across Africa couldgrow to an average USD 3000 by 2015.

The Bank also estimates that bythat same year, more than 80% ofAfrican consumers will be able toread – a critical factor in buildingthe skills and earning potential ofthe workforce.3

Global economists say Africancountries can only grow if theyintegrate into the world economy.But they need much to compete:better-educated and healthierworkers, improved economic andpolitical governance and better-quality infrastructure.

In recent years, a host ofgovernments, UN agencies andothers have put poverty alleviationand economic growth in Africa at

the top of the developmentagenda. The private sector, rangingfrom global companies to localentrepreneurs, is vital to success.

Nestlé supports a number ofmajor projects in Africa, aimed atreducing diseases such asHIV/AIDS, also at reducingmalnutrition and poverty. ButNestlé’s greatest contribution toAfrica is through the impact of ourcore business, with responsible,sustainable operations that create jobs and catalyseentrepreneurship. We make majorinvestments in infrastructure,industrialisation, job creation andhuman capacity building.

1 The Gold Institute2 Business Day3 Figures are taken from theWorld Bank’s 2004 WorldDevelopment Indicators, the UN Economic Commission forAfrica, the UN Food andAgriculture Organisation and the UN World TourismOrganisation

6

Africa: hidden economic growth

1: Africa’s challenges and opportunities

Real GDP growth rates in Africa, 2003

Chad

Equatorial Guinea

Mozambique

Angola

Burkina Faso

Algeria

Sierra Leone

Botswana

Senegal

Sudan

Benin

Africa

South Africa

Comoros

Gabon

Congo

Kenya

Burundi

Central African Republic

Guinea-Bissau

Côte d´Ivoire

Seychelles

Ethiopia

Zimbabwe

-12 -9 -6 -3 0 3 6 9 12 15

Source: ECA

%

7

“Continued progress in poverty reduction depends on economic growth and the distribution of income.”World Bank

Creating an.environment for growth.and development.

Despite an abundance of naturalresources and a large, vibrantworkforce, development in manycountries in Africa is held back byframework conditions. Butprogress in key areas will createbetter conditions for economic andsocial development, leading tomeasurable improvements in thequality of life for people in Africa.

In this section, we asked expertsin health, governance, trade andinvestment to share their views onwhat is needed to spur growth andintegrate poorer African countriesinto the world economy.

Small businesses playa vital role by creatingjobs and generatinggrowth in thecommunities wherethey operate.

Industry as percentage of GDP

Source: African Institute/Business Books International, 2004

0% - 20%

21% - 35%

36% - 60%

Health advances over the lastcentury have produced numerousvaccines, cures and treatments formany common infectious diseases.It is therefore no surprise that newstrategies, global declarations,partnerships and donors are part ofthe development agenda for thenew millennium.

Despite the impressive efforts ofthe past, infectious diseases,malnutrition and poor maternaland child health account for onethird of the entire disease burdenin the world today. Millionscontinue to die needlessly eachyear and millions more are withoutaccess to safe water or sanitation.

The links between health,poverty reduction and long-termeconomic growth are powerful –much stronger than is generally

By Mr. Richard Hunlédé Head of Africa Desk International Federation of Red Cross and Red Crescent Societies

understood. The burden of diseasein some regions, especially sub-Saharan Africa, stands as a starkbarrier to economic growth.

Malaria alone is estimated toslow economic growth in Africa by 1.3% each year. Africa’s GDPwould probably be about USD 100 billion higher if malariahad been tackled 30 years ago.Today, half a billion cases ofmalaria each year lead to the lossof several billion days of productivework4. The HIV/AIDS pandemic ishaving a similar effect.

Many of these deaths and theirconsequent economic and socialills are preventable. Healthypractices and health-seekingbehaviours at the community levelcan make a difference.

More community membersneed to want and seekvaccinations, clean water,

improved nutrition, hygiene andbed nets. While governments aremaking available vaccines,micronutrient supplementation,bed nets and other tools to combatdisease, many people are notaccessing them. More focused“marketing” of these products isrequired to increase communityparticipation and “consumption”of these life-saving interventions.

8

Investing in health in the new millennium


4 WHO, Health in the Contextof Sustainable Development,Johannesburg, 2002

People estimated to be living withHIV as of end 2004

North Africa and Middle EastBetween 230000and 1500000

Sub-Saharan AfricaBetween 23400000and 28400000

Source: UNAIDS / WHO

Governments are increasinglylooking to civil society and theprivate sector to help address these“marketing” gaps. As an auxiliaryto governments and as a broadcommunity-based organisation,Red Cross/Red Crescent nationalsocieties are active players incommunity marketing.

With support from Nestlé andother private sector donors,national societies are combiningNGO and business expertise toreach vulnerable communities.Working side-by-side, Red Crosssocieties and Nestlé staff trained1300 Nigerian youth educators,who provided HIV/AIDSinformation to 800000 youngpeople, and 3000 counsellors andcaregivers, to provide voluntarycounselling and testing and otherservices to thousands of Kenyans.

At the core of the collaborationis a real desire to scale-upcommunity involvement bymobilising energy andvoluntarism. As WHO has noted,people cannot simply wait forgovernments to do things forthem. And health ministries needto encourage more private sectorpartners to help them reach theunserved.

9

“Working side-by-side, Red Cross societies and Nestlé staff trained 1300 Nigerian youth educators, who provided HIV/AIDS information to 800000 young people; and 3000 counsellors and caregivers, to providevoluntary counselling and testing and other services to thousands of Kenyans.”Richard Hunlédé, Head of Africa Desk, IFRC

Left: ZakiaMohammed, a RedCross volunteerCommunity HealthWorker in Mombasa,Kenya, visits HadijaSaid nearly every day.Zakia helped her learnhow to cope with thevirus and fourchildren. Nestlé isactively working tofight HIV/AIDS withinits own workforce and by supportingagencies working inthe community atlarge. (Read more onpage 53.)

Above: More than800000 young people in Nigerialearned aboutHIV/AIDS in 2004,thanks to apartnership betweenthe Nigerian RedCross and Nestlé.Cooperation withlocal organisations, to address pressingsocial needs, is oneway Nestlé addsvalue to thecommunities inwhich it operates.

Good governance includesrespect for property rights,ensuring accountability andtransparency and controllingcorruption and the abuse of publicand private resources. In short,good governance is about

ensuring quality public, privateand social institutions.

The adoption of the NewPartnership for Africa’sDevelopment (NEPAD) is a clearrecognition that poor governancein Africa has hindered sustainablegrowth and broad-based socio-economic development. This hasbeen particularly so in conflict-stricken societies where the

collapse of government has takena toll on the poor andcompounded the challenges ofunderdevelopment.

Poor governance in Africa playsa role in the ongoing brain drainand capital flight from thecontinent: nearly half of Africa’smost skilled human resources

10

The importance of goodgovernance in Africa


By Dr. Iraj AbedianChief Executive, Pan-African Advisory Services and former Group Economist, Standard Bank

reside outside the continent. And over 45% of the continent’ssavings is invested in Europe andNorth America. Actual andexpected political and socialinstability play a major role in thecontinued outflow of resourcesfrom Africa. Recurrent eruption ofcivil conflicts in Liberia, theDemocratic Republic of Congo,Côte d’Ivoire, Sudan andZimbabwe keep diverting politicalattention from reform to crisismanagement. Socio-economicdevelopment is thus hindered.

However, quantifiable growth in some countries is sending a strong message to others.Mauritius, for example, hasdeveloped a tradition of goodgovernance underpinning itscontinued financial stability andimpressive economic performance.Consequently, social developmenthas followed. Botswana andNamibia have continued to adhereto the rule of law and prudentfiscal regimes. Economicdevelopment has followed.

Tunisia, Morocco and Ghanacontinue the modernisation oftheir governance framework.South Africa, in ten short years ofdemocratic rule, has transformedits governance institutions tounderscore accountability andtransparency, enhanced by a well-regulated public and privatecorporate governance frameworkon par with the best in the world.These positive experiences,

promulgated by strong leaders,are raising the standard ofgovernance across the continent.

Currently, Africa is at the turningpoint. Within the continent twoparallel processes of governancemodernisation are under way. Insome countries, democratisationhas given rise to a nationalmomentum towards goodgovernance. In such societies,private sector enterprise tends tothrive, broadening the participationwithin the economy. In otherplaces, reform is taking place on amultilateral basis, with peernations working together towardimproved governance. NEPADand its key governance pillar, theAfrican Peer Review Mechanism,is one example.

Much remains to be done tooverhaul governance institutionsin parts of Africa. Yet, thecontinent has never had a betterchance to tackle the challenges ofgovernance as a precondition forbroad-based economicdevelopment.

11

“Nowadays, the link between good governance and economic development is nolonger in dispute: most African governments are actively engaged in improvinggovernance as a means to sustainable growth and socio-economic advancement.”Dr. Iraj Abedian, Economist

Nestlé has a “zerotolerance” policy oncorruption. “Nestléinsists on honesty,integrity and fairnessin all aspects of itsbusiness and weexpect the same in ourrelationships with allbusiness partners andsuppliers of materials,goods and services,”says Maya Makanjee,Communication and Public AffairsDirector for Nestlé’sSouthern and EasternAfrica Region. “Our commitment tothese principles isevident both throughour people and theway in which theyconduct Nestlébusiness.

“We apply the NestléCorporate Business

Principles and areguided by theInternational Chamberof Commerce Rules onExtortion and Briberyin internationalbusiness transactions(1996); the OECDRecommendations onBribery andInternational BusinessTransactions (1994);and the OECDConvention tocounteract corruption(1997). As aparticipant in the UNGlobal Compact, weare advocates of itsnewest 10th principleon corruption, whichstates that: ‘Businessshould work againstcorruption in all itsforms, includingextortion and bribery.’”

As an institutional investor withshareholdings in multinationalcorporations such as Nestlé, webelieve that governance, social,environmental and ethical factorspresent real business risks, whichmust be managed effectively.

Investment in Africa providessignificant opportunities forgrowth, but it also presents diverseoperational challenges forcompanies. In developingcountries particularly, governance,social, environmental and ethicalissues can impact companyperformance and value. Forexample, in Africa today, twolabour issues are having a majoreffect on business: the rise inHIV/AIDS infection rates in sub-Saharan Africa and significantincidences of child labour.

12

Long-term sustainable business practices


By Kirsty JenkinsonSenior Analyst, Governance and Socially Responsible Investment, F&C Asset Management

FDI inflows into Africa

Source: UNCTAD, World Investment Report 2004

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

0

5

10

15

20

25

Billions of USD

We believe that companies withclear policies addressing theseissues – implemented effectivelyacross their operations – will bewell placed to capitalise on thecontinent’s enormous potential.

This principle is driven by ourbelief that responsible behaviour isclosely related to practical riskmanagement: companies will, forexample, be more likely to avoidcostly legal action and restrictiveregulations and therefore, bepositioned better to deliver value to shareholders.

We analyse companyperformance through ourresponsible engagement overlay(reo®) approach. In the Africancontext, we focus on four criticalissues: (1) The responsible conductof sales and marketing activities; (2) Labour standards in line withcore International LabourOrganisation (ILO) conventionsextended, as far as possible, acrosssupply chains; (3) Operatingenvironments where corruptionundermines stability, transparency,good governance and respect for

the rule of law; (4) The sustainablesourcing of raw materials in amanner that is compatible with the conservation of biodiversity.

Our investment strategyencourages companies tomaximise profits while acting in a responsible manner. We believethat this approach not only meetsthe demands of our clients but alsoencourages sustainable businessoperations. This is one of severalimportant steps to catalysingeconomic growth across Africa.

F&C Asset Management is a pan-European asset manager witha long-term shareholding in Nestlé. In October 2004, ISIS AssetManagement merged with F&CAsset Management, bringing their combined portfolios toapproximately GBP 125 billion.

13

“We believe that companies with clear policies addressing these issues –implemented effectively across their operations – will be well placed tocapitalise on the continent’s enormous potential.” Kirsty Jenkinson, Senior Analyst, F&C Asset Management

Nestlé adopted its firstinternal HIV/AIDSprevention policy in1986. This policy hasevolved to includeguarantees ofconfidentiality andequal treatment in theworkplace. For morethan a decade, Nestléhas sponsored majorHIV/AIDS educationand awarenessprogrammes both foremployees and thelarger community.

As a continent-wideemployer, Nestlé hashad to consider itsown vulnerability inthe face of thepandemic.

Nestlé is among asmall but growinggroup of companiesthat have movedaggressively to curbthe impact ofHIV/AIDS on theiremployees. In SouthAfrica, the companyhas introduced aManaged InterventionProgramme, whichincludes voluntary

counselling andtesting, education andawareness, capacitytraining, nutrition andlifestyle management,as well as access toanti-retroviraltreatment.

“From both a moraland practicalstandpoint, werealised that we had tobe much more pro-active in addressingHIV, and that it madethe most sense toaddress ouremployees’ needsalongside the workdone withincommunities,” saidMaya Makanjee,Communication andPublic Affairs Directorfor Nestlé’s Southernand Eastern AfricaRegion.

While all full-timeNestlé employeesreceive health carebenefits that includeHIV/AIDS treatment,the new initiative isspecially attuned tothe needs of thosewith the virus.

210000 people in Eastern Ethiopia got access to cleandrinking water as part of the Nestlé partnership with the Office of the United Nations HighCommissioner for Refugees(UNHCR). “Before, we used towalk a long way to get water and often there were fights. Now, no more – we all benefit,”said Rukia Abdi Ahmed, a refugeein the area.

Rukia is one of 30000 who fledwar at home a decade ago. Sheand many others have been living

in Ethiopia, displaced, ever since.The Geneva-based UNHCR,established in 1951, has beenhelping them for ten years withfood, water, health care andeducation.

In 2003, UNHCR and Nestléteamed up to address the waterneeds of the refugees and thelocal communities around them.Nestlé contributed more than USD 700000, along with ongoingtechnical expertise. The result: amulti-faceted water systemconsisting of rehabilitated wells,an improved pumping andpurification station connected to a

14

Helping vulnerable populations: the role ofbusiness


Linda MerieauSenior Corporate Relations Officer for the United Nations High Commissioner for Refugees

Nestlé Waters expertsViolaine Lamy andJean-Louis Crovillehelp UNHCR check thepumps at the JererValley station.

22-kilometre pipeline, new watertaps in adjacent villages and a newdam to capture rainfall.

“Rather than just writingcheques, companies like Nestléare becoming more involved inhelping deliver on the goals of theprojects themselves, withtechnical expertise,” said LindaMerieau, Senior CorporateRelations Officer for the UnitedNations High Commissioner forRefugees. “We need their financialcontributions, but we can alsoprofit from their expertise.”

The Nestlé Waters technicalteam includes a hydrogeologistand a water resources manager,who have been working with bothUNHCR and the local Ethiopianwater authority to design systemsfor managing the water supply,maintaining the pipeline andpumping station, rehabilitating oldwells and testing the water. Localauthorities will take over the long-term operation and maintenanceof the system in mid 2005.

15

“Rather than just writing cheques, companies like Nestlé are becoming more involvedin helping deliver on the goals of the projects themselves, with technical expertise.”Linda Merieau, UNHCR

These Somali refugeesare among the 210000people in EasternEthiopia who benefitfrom a UNHCR-Nestlépartnership to provideclean drinking water.“Before, we used towalk a long way to getwater, and often therewere fights. Now, nomore – we all benefit,”said Rukia Abdi Ahmed,a refugee in the area.(More on page 53.)

even though their prices arecompetitive and their products areof high quality. Protectionism bythe US and Europe affects thelivelihoods of a large part of themore than 3 billion people living inrural areas of the developing world.

Free and fair trade would helpthem make a better living, whilealso providing consumers withcheaper products. As governmentsengage in trade negotiations thisyear and beyond, they mustpursue a constructive free tradeagenda that will help lift emergingeconomies out of poverty. This

Free trade is one of the mostpowerful guarantors of fair trade,offering opportunities to thosewho were excluded fromparticipating in the marketeconomy and a pathway toprogress for developing countries.

At the moment, we are livingwith a global trading system withmany forms of open and hiddenprotectionism, including unduetariff barriers, cumbersomecustoms procedures and tradedistorting subsidies of all kinds.This creates an environment that isneither free nor fair.

African producers, such ascotton farmers, currently find itdifficult to enter new markets,

16

African farmers need free trade


South Africa

Egypt

Nigeria

Morocco

Algeria

Tunisia

Libya

Angola

Ghana

Kenya0

Billions of USD

5 10 15 20 25

Source: WTO

Leading exporters, 2001

By Herbert OberhänsliHead of Economics and International Relations at Nestlé

agenda should also include theliberalisation of trade betweendeveloping countries.

Just as free trade helpedSwitzerland in the 19th century, itcan help the developing world inthe 21st century. Reduced tradebarriers will increase the efficiencyof global economic structures andsystems and promote theeconomic development of some ofthe world’s poorest countries.

In October 2002, RubensRicupero, former Secretary Generalof the United Nations Conferenceon Trade and Development, wentso far as to tell internationalbusiness leaders that their mostimportant corporate socialresponsibility was to advocate free trade and capacity-building in developing countries. Only when governments lower tradebarriers can local and internationalcompanies invest in new capacities,thus attracting investment andimproving living standards.

It is certainly right that businessescan gain from globalisation, but socan emerging economies. The twoare not mutually exclusive.

The unambiguous message atthe heart of all campaigns for freeand fair trade is that it will increaseprosperity in both the developingand developed world. This holdsthe key to the eventual success offuture trade talks.

17

In October 2002, Rubens Ricupero, former Secretary General of the United Nations Conference on Trade and Development, went so far as to tell internationalbusiness leaders that their most important corporate social responsibility was to advocate free trade and capacity-building in developing countries.

“The people who are Nestlé’s suppliers – like our Tin CanManufacturerscompany, have thesame interests asNestlé: to gain freeaccess to the world’sdeveloped markets,”said James MugiriMwaura who leads ateam of inspectors atTin Can Manufacturers,which providespackaging materialsand labels to Nestlé’sNairobi factory.

18

Temitayo Adejoke Konuruns a distributionbusiness, whichsupplies Nestléproducts to the stores

in the Oke-Armmarket, one of thelargest markets inLagos, Nigeria.

Nestlé in Africa: products, places and people

Since the late 19th century, Nestlé has steadily builta commercial and manufacturing presence inAfrica that, in 2004, included twenty-sevenfactories and dozens of other warehouse and officefacilities serving all fifty-four African nations. Weemploy approximately 11500 people in Africa, ofwhom only 120 are non-Africans. We also create an estimated 50000 additional jobs through thesupply chain.

Nestlé continues to invest significantly in Africa; it paid on average about one third of pre-tax profitsin corporate taxes. Our total sales in Africa for 2004were just under CHF 2.4 billion. Nestlé has built this business by following its primary businessprinciple: favour long-term sustainable growth overshort-term transitory profit, building national andregional companies through consistentinvestments over many decades.

19

2

powdered and condensed milks;and culinary, which includesbouillon, sauces and seasonings.Infant formula sales account forless than 4% of total sales in Africa.

Ice cream and powderedbeverages, such as Milo, areamong the leading categories. In fact, continuous improvementsin technology and transportationhave helped Nestlé ice cream andyoghurts dominate in Egypt. In2003, they grew in value by 12%and 30.5% respectively.

Above: As it doeselsewhere, Nestlétailors its products tolocal culture and taste.Opposite: In Africa,Nestlé productsinclude powderedbeverages, solublecoffees; bottled water;breakfast cereals;shelf stable dairy,chilled dairy and icecream; chocolate andconfectionery;prepared foods andculinary; infantnutrition; healthnutrition; performancenutrition and pet food.

20

Products2: Nestlé in Africa: products, places and people

Nestlé sales in Africa*

* The consolidated sales figures for Africa shown hereshow sales for all Nestlé Group businesses in Africa.Source: Nestlé

2000

2100

2200

2300

2400

Millions of CHF

2002 2003 2004

Shelf stable milk products.and culinary/bouillon.categories lead sales.

A traveller to Africa wouldrecognise Nestlé products for thesame nutritional quality and valuefound at home, but products aremade to match local culture andtaste.

Southern and Eastern Africa is our largest market on thecontinent, offering the mostdiverse product range. Over thelast three years, the Central andWest Africa and Maghreb regionshave been growing steadily. Thetop selling product categories areshelf stable dairy, which includes

Our business in Africa:.Nigeria, a case study.

In 2004, University of Ibadanresearchers studied the socio-economic impact of Nestléoperations.

In Nigeria since 1961, Nestlé hasa factory in Agbara and a distributioncentre in Ota, located in the coastalstate of Ogun.

Led by Doyin Soyibo, aneconomist and dean of theUniversity’s Faculty of SocialSciences, the team found thatNestlé employees earn more thanthe average in manufacturing andthat their salaries increase fasterthan the industry norm. More than75% said that if given the choice to change jobs, they would decline.

The study found that:• Some 40% of distributors

have worked with Nestlé for 21to 35 years, while another 32%worked with the Company for 11to 20 years.

• About 84% of natural rawmaterials are procured locallythrough farmers and othersuppliers.

• Local suppliers are engines ofjob creation: between 2002 and2003, most added jobs, and onecompany had grown by 67%.

• About 50% of Nestlé workersreside in neighbouring communitiesand spend more than 20% of theirincomes locally on food, education,rent and clothing.

• Nestlé is one of the three “mostvalued” stocks on Nigeria’s stockexchange.

• Agbara and Ota residents saidthat Nestlé positively affects theircommunity through:– commitment to environmentalprotection (90%)– employment generation (82%)– infrastructure improvements(67.7%) and– increased income (57.5%).

“Nestlé is a healthy businessthat supports an ever-increasingstandard of living throughproviding varied employmentopportunities and a growingconcern for the interest of thecommunity members,” ProfessorSoyibo concluded.

22

Places2: Nestlé in Africa: products, places and people

Professor DoyinSoyibo, Professor ofHealth Economics andDean of the Faculty ofSocial Sciences,University of Ibadan,Nigeria.

23

“Nestlé is a healthy business that supports an ever-increasing standard of livingthrough providing varied employment opportunities and a growing concernfor the interest of the community members.”Doyin Soyibo, University of Ibadan, Nigeria

Egypt

Chad

Niger

Libya

SudanEritrea

Ethiopia

Uganda

Djibouti

Comoros

Seychelles

Mauritius

Kenya

Tanzania

Malawi

Mozambique

Madagascar

Zimbabwe

Zambia

SwazilandLesotho

South Africa

Botswana

Namibia

Angola

DemocraticRepublic of Congo

Congo

GabonEquatorial Guinea

Central AfricanRepublic

RwandaBurundi

Somalia

São Tomé & Príncipe

Cameroon

Nigeria

BeninTogo

GhanaCôte

d’IvoireLiberia

Sierra Leone

Guinea

Senegal

Cape Verde

Mauritania

Western Sahara

Mali

Morocco

Algeria

Tunisia

Guinea-Bissau

The Gambia

Burkina Faso

Maghreb Region

Egypt, Libya and Horn of Africa Region

Central and West Africa Region

Southern and Eastern Africa Region

Regional head office

Factory

Nestlé country office

Nestlé representative office

24

People: development throughout the value chain

2: Nestlé in Africa: products, places and people

Nestlé: a positive impact all along the value chain

Agricultural raw materials Manufacturing and management Products and consumers

Sustainable agriculture

Coffee farmers

Cocoa farmers

Milk farmers

Technology transfer

Employee literacy

Technical training

Market training

Environmental stewardship

Local sourcing (e.g. packaging)

Building nutritional value

Consumer education

Nutrition research

Responsible marketing

Nestlé’s impact on economic andsocial development takes placewithin the three major stages ofthe value chain: Agricultural RawMaterial Acquisition;Manufacturing and Management;and Consumer Products andEducation.

While we do not own any farmland,we use our influence to helpsuppliers meet better standards in agriculture – improving theirincome in many cases – while alsoseeking change at industry level.

Working directly in our supplychain, we provide technicalassistance to farmers. We alsowork with farmers of cassava andcowpeas in Côte d’Ivoire, andmaize farmers in Ghana, to helpthem reduce pesticide levels in linewith Nestlé quality standards, aswell as those of the globalmarketplace.

The following describes wayswe make a positive impact onagriculture in Africa.

Direct buying and local.

job creation.

Nestlé is the world’s largest directbuyer of coffee; we source about14% of our green coffee supplydirectly from farmers. This helpsensure farmers get a better pricefor their produce. It also createsjobs at the buying centres, such as the Gagnoa buying centre inCôte d’Ivoire.

Nestlé’s buying centres alsooffer opportunities to both thefarmers selling their coffee there;and to other locals. During thebuying season, which usuallybegins in December and finishesin May, up to 250 women cleancoffee outside the buying centre.The atmosphere is lively and busy,with each woman cleaning aboutten 90 kg bags of coffee in a day,depending on the condition of the

Quality assurance:.helping farmers.gain a competitive edge.

Enhancing quality is one of thebest ways to guarantee betterprices paid to farmers, so thequality control function at theNescafé factory in Abidjan iscritical. Providing coffee samplespass the moisture test, 100 g is setaside for a defect count. Thisestablishes the proportion of thesample that is foreign matter –stones, etc. – or bad beans. If thedefect count is too high, coffeecan be rejected for further sorting.Similarly, if the moisture content is too high, the coffee can bereturned to the farmers for furtherdrying. In addition to coffees thatwill be used in the factory, checksare carried out on green coffeesthat will be exported by traders toNescafé factories in France.

25

Nestlé impact: agricultural raw materials

coffee. The coffee is sifted with awicker pan to separate any stones,dust and dirt from the greencoffee beans. Workers earnbetween CFA 200-300 for eachbag of coffee they clean. In Côted’Ivoire, farm workers earn CFA90000-120000 per year plus foodand housing.

At the time this report went topress, Gagnoa buying station wasstill operational, albeit at a reducedrate of activity, despite the troublesin Côte d’Ivoire.

Creating local jobs:Women outside theNestlé buying centrein Gagnoa, Côted’Ivoire, cleaningcoffee.

26


Ethiopia: an experiment.in improving coffee.farmers’ income.

Nestlé has recently begun aprogramme aimed at improvingcoffee farmers’ incomes on a long-term sustainable basis in thebroad scale coffee market. Theprogramme is based on giving thefarmer the tools to competesuccessfully in the open market,rather than paying the farmer aminimum price, which will notnecessarily help him to improve histechnique. The farmer is also given an income supplement for three years while he also receivesassistance to make improvementsin his farm.

The programme is underway inEthiopia and El Salvador, whereagricultural experts work withfarmers to find a way to competesuccessfully in the open coffeemarket, through improving coffeetree management, harvest, postharvest treatment and quality,supporting diversification intoother crops and selling directly or through a local representative to capture more of the sale price.The community also benefitsthrough investments ininfrastructure such as clean water.

This is a pilot partnershipbetween Nestlé and coffee farmers,but its success may set the stagefor new approaches in the globalcoffee market.

27

Left: Gerardo JaraPascuas, a Columbiancoffee expert, workswith Ethiopian farmersto improve theirefficiency.Below: Nestlé’sprogramme to improvecoffee farmers’ incomeson a sustainable basisin the broad scalecoffee marketunderway at YirgaCheffe, Ethiopia.Opposite: DemekechWondumu, sortingcoffee at a processingstation in Yirga Cheffe.

Support provided to farmersranges from technical assistanceon income generation to newstrategies to deal with cropinfestation, to specific interventionsdesigned to address issues of child labour.

Specific programmes directedat farmers in West Africa include

field schools to help farmers withsupply chain issues, as well as agrassroots “training of trainers”programme to help eliminate theworst forms of child labour.

These programmes andpartnerships have been undertakenjointly by a dozen companies in thecocoa industry; governments inthe producer countries of WestAfrica; donor agencies in the US,Canada and Europe; labourunions; cocoa traders andprocessors and a range of localand international NGOs.

While Nestlé does not buycocoa directly from farmers, nordo we employ any cocoa farmers,we are committed to responsiblecocoa growing.

As a measure of ourcommitment Nestlé has and willcontinue to play a lead role in thedesign and implementation of acertification system, which willensure that continuous progress is made towards eliminating childlabour in cocoa production whileembedding responsible,sustainable practices in the supply chain.

Cocoa farmersattending a “FarmerField School” inKumasi, Ghana. Theseschools help farmersimprove their incomewhile encouragingresponsible labourpractices.

28


Improving labour.standards in cocoa.farming.

More than two-thirds of the world’scocoa supply comes from WestAfrica. Of that, some 85% is grownon farms of less than one hectare.Some 1.5 million farmers in Côted’Ivoire, Ghana, Cameroon andNigeria depend on cocoa for theirlivelihoods.

Sustainable cocoa programmesNestlé has played a lead role inhelping to put into place a series of global industry partnerships toimprove both labour standards incocoa farming and the livingstandard for farmers and theirfamilies. These include theSustainable Tree CropsProgramme (a joint industry-USAID programme which drawstogether a number of internationaldonor agencies like the WorldBank and CIDA (CanadianInternational Development Agency)in efforts to improve cocoaproduction techniques, yields etc.);the West African CommercialAgriculture Programme(implemented by the InternationalLabour Organisation which isfocused on educating communitiesand farmers about the worst forms of child labour and helpingcountries and communities to take action to eliminate theseproblems); and the InternationalCocoa Initiative which is working to promote best practices and helpsensitise communities towardschild labour issues and developcapacity to address them. Nestlé is represented on the board of the ICI.

29

The result for Nestléwas a dependable,high quality supply of raw materials. For farmers and thecommunity as awhole, thecooperation led togreater prosperity andmore sophisticateddairy production. Stilltoday, agronomistsand field techniciansfrom NestléAgricultural Servicesprovide technicalassistance to farmers.Here, farmers inMorocco bring theirmilk to a collectionstation near Nestlé’s El Jadida factory.

Generating growththrough dairy:Historically, Nestléentered many newmarkets with dairyproducts, seeking toboth produce and selllocally. But thisrequired a reliable,high quality supply offresh milk. To achievethis, we providedassistance to farmers,such as low-interestloans to expand their herds or buyequipment and adviceon good feeding andbreeding practices.

Promoting a local product.with great promise.

Not too often are tuberous rootschristened with the title “povertyfighter”. But cassava, the lankybrown root grown and consumedthroughout West Africa, hasbecome just that.

Known in Latin America asyucca or mandioca, cassava ishoped to be the key to employingmillions of African farmers andfeeding additional millions acrossthe continent.

Over the last decade, govern-ments, UN agencies and agricultureexperts have devoted resources to increasing the quantity andquality of cassava production,while also seeking to develop newmarkets beyond West Africa. In2004, NEPAD launched initiativesto promote cassava farming,processing and consumption.

The cassava root is used to makelocal staples such as the much-loved Nigerian dish foufou and itsleaves are an excellent source ofprotein and iron. Because cassavacan grow in very poor soil, withlittle water, it can be planted whereit is impossible to grow other crops.And because cassava is also usedfor animal feed and in someindustrial compounds, its fullmarket potential has not yet been reached.

Nestlé, which buys on average7500 tonnes of cassava annually,supports sustainable productionefforts and works with governmentto promote consumption.

One example of these efforts isthe Sustainable Cassava Project atMoyen Comoe, Côte d’Ivoire,which began in 2002, when Nestléjoined a partnership led by theIvorian and German governments.

The Nestlé project involves 800farmers – 700 of them women –from twenty villages. It seeks tohelp these small-scale farmersincrease and improve the quality oftheir crops, while also reducingpesticide and water use.

Over the long term, thisinvestment will ensure that thefarmers have a stable, sustainableincome, while the local Nestléfactory can rely on a high qualitysource of raw material for Maggibouillon and other products.

30

“Cassava, predominantly grown by small scale farmers,plays a vital role in food security of the rural economy.”Mrs. Iquo Ukoh, Marketing Manager, Nestlé Nigeria


Governments andbusiness believe thatincreased cassavaproduction will createfarming jobs and feedAfrica’s growingpopulation.

Throughout our manufacturingand management operations inAfrica, we place a premium onassuring the quality and the safetyof our products, investing in ourpeople and protecting theenvironment and natural resources.

Consumers consistently saythey buy Nestlé products forquality and superior taste. As wedo elsewhere around the world,Nestlé in Africa gives top priority tothe quality and safety ofingredients and the integrity of the manufacturing process. Foodsafety is paramount.

Another distinguishing aspect of the Nestlé approach is ourinvestment in our own people, atall levels. In a recent magazineinterview, Nestlé CEO PeterBrabeck stated that it is the singlemost important reason theCompany outperformscompetitors globally.

Nestlé adds tremendous valuein the context of environmentalperformance. We set rigorousstandards at all stages, fromproduction to packaging, lookingfor constant improvements.Between 2000 and 2003, acrossour Africa factories, we improvedkey performance indicatorsbetween 20% and 57% in areasranging from water consumptionto CO

2and ozone depleting

emissions.The following stories give a

sense of how Nestlé’s investmentin manufacturing andmanagement contribute tosustainable growth in Africa.

31

Nestlé impact:manufacturing and management

Above: Rigorousstandards are appliedat every stage of theproduction process.Right: Here, workersat the Nestlé factory inEstcourt, South Africa,assemble packaging.

Protecting and.saving water across.the continent.

As a converter of raw agriculturalmaterials to high quality, safe andwholesome food and drink,Nestlé uses water throughout itsmanufacturing processes.

Along with water for bottling,Nestlé uses water to wash, cookand cool fresh, raw materials, as well as for processes such as extraction or reconstitution of dried materials.

In Nestlé’s Africa factories, as in others around the world,specific measures are taken topreserve water and reduce wastewater in each stage of themanufacturing process, in linewith the Nestlé water policy. They include efforts to reduceconsumption, expand andimprove waste water treatmentand recycle water whereverpossible.

In keeping with the NestléEnvironmental ManagementSystem, progress is trackedthrough regular factoryenvironmental surveys. Theresults show the measures areworking: water consumption inour factories dropped 21%between 2000 and 2003.

Ensuring appropriate treatmentof waste water is a top priority.When local waste water treatmentis not available, Nestlé builds itsown on-site waste water treatmentfacilities, or works with localofficials to help finance facilities.Nestlé’s El Jadida factory inMorocco is an example of theCompany’s leadership on wastewater treatment.

32


“Nestlé can play a rolein raising awarenesson what needs to bedone to raiseenvironmentalstandards, particularlyaround industrialwater use”, saidBernard Boinot,Nestlé’s industrialdirector for theMaghreb region,which includesMorocco.

A port city and agriculturalexport centre of 120000 peoplelocated 90 kilometres fromCasablanca, El Jadida becamehome to a Nestlé factory in 1994.The factory is the onlymanufacturing facility in theprovince with its own waste watertreatment plant, even though theyare required by Moroccan law.

Local authorities bring othercorporate leaders to the El Jadidafactory to see what can and shouldbe done. In fact, the Governor of El Jadida himself led visits to the waste water treatment plant in 2004.

Progress in minimisingenvironmental impact in Africa*,2000 - 2003

-20

-10

-30

-40

-50

-60

%

Wat

erco

nsum

ptio

nEn

ergy

cons

umpt

ion

Was

te w

ater

gene

ratio

nG

reen

hous

e

gase

sA

ir ac

idifi

catio

n

pote

ntia

l

Ozo

ne d

eple

ting

subs

tanc

es

*Per tonne of productSource: Nestlé

Recognition for saving.water andreducing waste.

In June 2004, Nestlé Nigeriareceived the Most EnvironmentallyProactive Industry Award from theGovernor of Ogun State, OtunbaGbenga Daniel, in commemorationof World Environment Day. Nestléwas singled out for initiatives to reduce waste, including waste water. The Governordescribed a new waste watertreatment plant under constructionat the Agbara factory as “a giantstride in the company’s effort toreduce both the volume and load of the waste water from its manufacturing operations before its discharge into theenvironment”.

Nestlé in Africa:.the sum of its people.

Of our 11500 employees in Africa,fewer than 120 are not African. By building the skills of our localworkforce, we make a significantcontribution to strengthening thebusiness environment.

Because Nestlé relies heavily on strong, regional operations, acompetent local workforce isessential. In Africa, particularly incountries where the quality ofeducation varies, investment inemployees is critically important.

Nestlé is known for identifying,cultivating and promoting leaderswithin our own ranks. We have fiveglobal training centres including aninternational centre in Switzerland,where African managers receivetraining. The result is a highlycompetent global leadership team,embracing common Nestlé valuesand business principles, butequipped with experience andlocal cultures and environments.

We provide continuouseducational opportunities at alllevels, from basic education andtraining, to specific business skillssuch as sales and marketing,accounting; and leadership andmanagement. We offer on-the-jobtraining, support tertiaryeducation, send managers to visitother countries and offer anextensive series of online “E-learning” programmes. We also reach out to students with

apprenticeship programmes andother educational support.

One example is the NestléApprenticeship Programme. In 2004, Nestlé South Africaenrolled twelve people fromdisadvantaged communities intoits Apprentice School, which issituated within the company’s EastLondon factory in the EasternCape. The apprentices werepreviously employed as artisanassistants and had not had theopportunity to develop into fully-fledged artisans. Four of the twelveapprentices received theirqualification, two of which werewomen. Nestlé has invested over 1million Rand into this programme.

33

“... a giant stride in the company’s effort to reduce both the volume and load of the waste water from its manufacturing operations before its discharge into the environment.”Otunba Gbenga Daniel, Governor of Ogun State, Nigeria

Nestlé employees in Africa by region, 2004

Egypt, Libya and Hornof Africa Region2769

Southern and EasternAfrica Region4480

Central and WestAfrica Region3539

Africa total11551

Maghreb Region763

Source: Nestlé

34


In South Africa, under theapartheid regime, many peoplewere seriously deprived ofelementary education. Theseinclude a significant percentage ofthe older employees at Nestléfactories today. A special remedialprogramme has been designedand put in place for them: ABET(Adult Based Education Training).

One of these factories is theBabelegi non-dairy creamer plantthat Nestlé acquired in 1999. Itsprevious owners had made nosignificant investment in training,essentially maintaining a low

skill-basis, limiting employmentmobility since the factory is theonly significant employer in thecommunity. At the time, over 65%of the workforce was illiterate.

Nestlé now spendsapproximately 6% of total payrollexpenses on training at Babelegi,and in just two years, the illiteracyrate decreased by 15%.

Investmentin people

Workers at NestléSouth Africa’sBabelegi factory,taking part in thecompany’s AdultBased EducationTraining (ABET)scheme, which hasbrought newopportunities for thosewho have taken part.

Home: Durban, South AfricaCurrently works in: EstcourtFactory, South AfricaYears with the company: 19Current position: Team Leader,Industrial Services. “I work in what’s called ‘utilities’,looking after both the engineeringand mechanical sides ofproduction. It’s my job to see weare operating efficiently andmeeting all the key performanceindicators related to environmentalimpacts like electricity and waterconsumption.”

Career path at Nestlé: ConstructionWorker. Assistant in MechanicalWorkshop. Foreman in coffeefactory. Human Resources StaffDeveloper. Human ResourcesOfficer. Team Leader.Nestlé investments in training:Continuous courses, includingcomputer skills, management, E-learning curricula. Nestlé-sponsored diploma from theInstitute of PersonnelManagement at Natal Technikon.Greatest professionalaccomplishment, so far: “This is avery productive factory, but theutilities department has had a hardtime keeping up with production.When I started, we were looking at10% downtime. As the new teamleader, I took on the challenge and

within six months, we reduceddowntime to 2%. The key was toreally work with the people andmotivate them. Everything wasdone based on a team assessment– not just a repair job, but a teameffort to improve and modify.”Favourite thing about job: “Beingpart of the constant challenge toimprove what we do. We arealways looking to improve thebenchmarks on energy monitoring,water management and Nestlé’soverall environmental performance.That drive to do better is reallyexciting.”

35

“I had a big problem understanding how fractions and measurements work,which were a key factor in my working environment. Now that I am attendingABET classes, my maths skills have improved a lot and I can cope well with myjob and its demands because calculation is no longer a problem for me.”Emily Mosabeni Maluleka, Packing Supervisor and ABET participant

From constructionworker to industrial services team leaderBalen Naicker

From laboratory analyst to factory managerQueen Zuma

Home: Durban, South AfricaCurrently works in: Nairobi, Kenya Years with the company: 14 Current position: Factory ManagerBackground: National HigherDiploma in Microbiology – ML Sultan Technikon.Career path at Nestlé: LaboratoryAnalyst (Pietermaritzburg Factory,South Africa), Microbiologist.Senior Analyst in QualityAssurance. Factory Hygienist.Production Manager for Beverages (Estcourt, South Africa). Project Business Analyst(CT/IP Switzerland). FactoryManager (Kenya).

Nestlé investments in training:Multiple courses: BusinessExcellence. Milo ExpertWorkshops. Production College,Extended Management Course in Switzerland. Market visits toMalaysia, Thailand, Philippines,Singapore and Australia.Key to success as a manager: “It’s very important to give creditwhere it’s due and help peopletake ownership of their work. Andit’s important to encourage peopleto talk to you and remain open tocriticism. Once you get peopletalking and show them you respect them, they immediatelyrespect you and everyone’s workimproves.” Next challenge: “With a populationof 31million, Kenya is full ofpotential as a market. We have a

lot to do in terms of improvingdistribution and getting ourbrands well known. We can’t takefor granted the fact that manypeople here are very poor, but wehave many products that are rightfor them. One example is theMaggi bouillon cubes, which adda lot to the meals. They are cheapand provide a good basis for tastyand nutritious meals.”

36

“It’s very important to give credit where it’s due and helppeople take ownership of their work.” Queen Zuma, Factory Manager, Nestlé Kenya


Home: Cairo, EgyptCurrently works in: Rive-Reine,Nestlé’s International TrainingCentre in Switzerland.Years with the company: 12 Current position: ProgrammeDirector for Marketing & SalesSeminars.

Nestlé investments in training:At least one course every year:Finance, Marketing,Management. Visits to Indonesia,France, Hungary, Turkey, andMiddle East.Favourite thing about job: “One ofthe Swiss values we inherited istolerance and acceptance of othercultures. Look at me: I’m anEgyptian from Cairo working inSwitzerland. I love the fact that I get to meet up and shareknowledge with so many peoplefrom so many countries.” Advice to new employee: “I wouldhand over the Nestlé Leadershipand Management Principles andask him/her to read it carefullyand decide in a moment of truthwhether he/she can live it or not.These are the values and beliefsthat Nestlé holds. If you don’tbelieve in these values, you won’tbe happy working here.” Greatest professionalaccomplishment, so far: “At onepoint when the chilled dairybusiness in Egypt was not doingwell, we started a new initiative to maximise sales and decreasecosts. We needed somethingunusual. So we opened newchannels by exporting, andpartially outsourced our directdistribution. We let part of ourown sales force go, but set themup with a truck and helped themestablish small companies. Westarted with two guys and soonneeded ten – and they earned a lot more money. These guys got a chance to be entrepreneurs, andour results improved.”

37

From accounting to management developmentBassem Philip

Background: Bachelor ofCommerce and BusinessAdministration from Ain ShamsUniversity in Cairo, Major inAccounting.Career path at Nestlé: FinancialAccountant. ManagementAccountant. Brand Manager,Group Brand Manager. ProgrammeDirector for Marketing & SalesSeminars.

Understanding the African.marketplace and its.consumers.

A typical African consumer? There is no such thing.

With vastly varying incomes,dozens of ethnic groups andcultural food preferences, Africanconsumers make for a diversemarket.

As it does elsewhere, Nestlétailors its products to the localculture and taste. We conductextensive consumer testing andmarket research to understandtheir needs and vary products tocater to local food preferences.We also continuously improve ourproducts at our many researchand development centres.

On a continent with specialnutritional needs and hugeincome disparities – a high of USD2700 per person in South Africaand low of USD 100 per person inEthiopia – we pay special attentionto making products bothnutritious and affordable.

A majority of African consumershave the potential and want to participate in the marketeconomy even at a modest leveland the key is to tailor products to their specific needs andspending power.

For example, Maggi bouillon,made with iodised salt, is thefastest growing Nestlé product inGuinea, Cameroon, Côte d’Ivoire –countries that have per capitaincomes of USD 350 to USD 600.A key factor is the ability to buysmall quantities on an almost daily

basis. Another example is Milo,the vitamin and mineral fortifiedenergy drink, which is popular inGhana and Nigeria, countries with per capita incomes aroundUSD 280.

Nestlé also caters to thegrowing middle-class and otherswith greater spending power. For example, South Africanconsumers, who tend to havehigher income levels, buy morebreakfast cereals. They can alsoafford more specialised products,such as those in health nutrition,for hospital patients and otherswith specific dietary needs.

Nutrition at the core of our.leading product lines.

Nestlé makes its greatestcontribution in Africa through itscore business, both in terms ofeconomic development andimproved nutrition. Our majorproduct lines, consisting of ourshelf stable dairy products, such aspowdered or condensed milks; andour culinary range, such as MaggiSoups, deliver sound nutrition at an affordable price.

Given prevailing temperaturesand logistical considerations inmany areas, milk preservationplays an important role inimproving access to protein,calcium and other importantnutrients contained in milk. It isthus hardly surprising that Nestlépowdered or condensed milkbrands, such as Nido or Carnation,are top Nestlé products in at leastfourteen African countries.

While the percentage of middleclass population is relatively low,collectively the middle class marketacross the continent is sizeable,and in South Africa alone,represents a large market. Forthese consumers, Nestlé’sexcellence in science andinnovation is bringing new, morenutritious products to Africanconsumers. For example, we areintroducing specific health benefitsinto our products based on Nestléresearch. One such health benefitis improved energy release,provided by Actigen-E TM in theenergy drink Milo. Actigen-Eoptimises the release of energyfrom the three main food groups:carbohydrates, fats and proteins.

Nutrition is the cornerstone ofour business, just as it was whenHenri Nestlé founded the Companyin 1867.

38

Nestlé impact: products and consumers


Bongi Mavuka, a consumer activistand chairperson of theAfrican HousewivesLeague in SouthAfrica, said foodcompanies mustinclude the poor intheir targetedconsumer base.“Poverty is rife, thereis lot of unemploymentand the infrastructure is still limited in manyareas. But goodnutrition is critical. So we need bigcompanies to use their influence tomake good, qualityfood cheaper andmore available,” shesaid. “The biggestchallenge is to keepprices down.”

promoting awareness of nutritionamong other women. Just fouryears old, the club providednutrition education workshops to5000 women in Lagos State andKaduna State during 2004, most of them mothers or homemakers.In 2003, they began providingworkshops to women who sellfood in open markets, focusing on nutrition and food safety. In 2005, they plan to expand toEdo State.

In late 2004, the club expandedinto Ghana with a seed group of

750 women, including Ghana’sMinister of Women and ChildrenAffairs, Gladys Ashma.

“What we are saying is thatpeople could be setting theirpriorities better in terms of eating.We are focusing on Nigeriansmaking good nutrition a part of

39

Duchess Clubmembers on a visit to Godu Market,Lagos.

“Little by little, people are beginning to know the importance not just of abalanced meal, but also of the ingredients that help you get a balanced meal at a relatively cheap cost. Nestlé and the Duchess Club have done a lot of good.”Esther Nenadi Usman, Nigeria’s Minister of Finance

Nutrition education in.Nigeria and Ghana:.coming from the top.

While the affairs of state are thetop priority for Nigeria’s Minister of Finance Esther Nenadi Usman,she still finds time to work in thecommunity with other women topromote nutrition education.

Minister Usman is a member ofthe Nestlé Nutrition Duchess Club,a group of women devoted to

nutritionists and health professionalsat Nestlé’s International NutritionWorkshops.

The Institute has been involvedin several academic meetings heldin seven Southern and EasternAfrican countries that includedmore than 1200 health careprofessionals. NNIA representativesparticipated in the Information

40


Technology for the Advancementof Nutrition in Africa (ITANA)Congress, resulting in apartnership with a crucialinformation technology role playerin the continent of Africa.

their lifestyles,” said Mrs. IquohUkoh, Marketing Manager ofNestlé Nigeria and a member ofthe Duchess Club.

While the Duchess Club’smission is nutrition education, ithas also grown to be an important networking opportunityto Nigerian professional women.Along with the Minister, itsmembers are doctors, lawyers andprofessionals from a range ofindustries.

“Our membership has explodedso that we can’t even contain allthe members in one hall now,”Minister Usman said. “WithNestlé’s help, we are coming toknow what the problems are, andhow to overcome them.”

Nestlé Nutrition.

Institute Africa.

Nestlé South Africa created theNestlé Nutrition Institute Africa(NNIA) in 2001 to further developAfrican expertise on nutrition. The Institute fosters research andpromotes understanding ofnutrition at all stages of life inAfrica’s diverse population. Key areas of interest includemalnutrition, obesity, safe infantand young child feeding practicesand breast-feeding promotion. The Institute provides scholarshipsand sponsors the participation of

Nigeria’s Minister ofFinance, Esther NenadiUsman, is a foundingmember of the NestléNutrition DuchessClub, a grassrootsnetwork of womeneducating women on the importance of nutrition.

Advancing nutrition.science in Africa.

The Nestlé Foundation for theStudy of Problems of Nutrition inthe World was founded on theoccasion of the centenary of theNestlé Company in 1966. TheFoundation operates completelyindependently of Nestlé, with itsown endowment and internationalCouncil of leading scientists. Themain office is based in Lausanne(Switzerland).

One of the Foundation’s mainaims is the transfer of scientific and technological knowledge toInternational DevelopmentAssociation (IDA) eligible countries.Most Foundation-sponsoredresearch projects are carried out in collaboration with scientists atuniversities and research institutesin such countries. Over the last fewyears, a large number of studiessuch as energy requirements ofpregnant women, nutritionalissues in women and children orthe role of nutrition in immunefunction have been carried out indifferent research institutes anduniversities in various Africancountries. Basically the Foundationadvances nutritional science byvarious key strategies: 1) supportingresearch in established institutesand universities, 2) the enLINKinitiative (described later in thissection) and 3) selectiveinstitutional support to existingAfrican postgraduate nutritioneducation programmes.

Sustainability and public healthrelevance is a key issue for allactivities of the Foundation. Allresearch projects need to result inshort and long-term public healthimplementation.

Nutrition research in developingcountries is not a luxury. Itcontributes to solving nutritionalproblems that require specificsolutions. For example, in Côted’Ivoire and Morocco, childrenwith goitres were not getting the fullbenefits of iodine supplementation.Many of these children also had an iron deficiency anaemia.Through research, we learned thatiron supplementation improvedthe effectiveness of iodine given tothese children.

A basic strategy to reducemalnutrition is education innutrition, health and hygiene.Information technology (IT) is aprimary source of information. Ascompared to other regions of theworld, the African continent haslower access to IT.

To address this problem, theFoundation created the enLINKinitiative in 2004, which centres oninformation transfer in the areas ofnutrition and malnutrition. The first

enLINK project is the enLINK digitallibrary, an Internet based electroniclibrary offering full text access toregistered users to more than 10 of the most important nutritionjournals. Non-registered users havefree access to the abstracts as wellas important nutrition relatedInternet links. The Foundation isalso supporting the African Journalof Food, Agriculture, Nutrition andDevelopment (AJFAND), a leadingnutrition journal.

The Foundation also supportspostgraduate nutritionprogrammes at the UniversityCheikh Anta Diop (Dakar, Senegal),the University of Abomey-Calavi(Cotonou, Benin) and the MakerereUniversity in Kampala (Uganda).

41

“Nutrition research in developing countries is not a luxury. It contributes to solving nutritional problems that require specific solutions.”Dr. Paolo Suter, Director of the Nestlé Foundation for the Study of Problems of Nutrition in the World

Dr. Paolo Suter,Director of the NestléFoundation for theStudy of Problems ofNutrition in the World.Many Foundation-sponsored researchprojects are carried out in African researchinstitutes anduniversities.

Operating with integrity:.infant food marketing.

Within a year of the passage of theInternational Code of Marketing ofBreast-milk Substitutes by theWorld Health Organisation in 1981,Nestlé committed to voluntarilyapplying the WHO Code in thedeveloping world, even wheregovernments did not. In 1982,Nestlé issued concrete Instructionsto Implementation of the WHOCode, and has since progressivelyrefined and strengthened itsInstructions and monitoring of itsapplication of the WHO Code. Thisincludes such key provisions as:

• Nestlé does not promote infantmilks (infant and follow-onformula) to the public in Africa inany way, meaning that there is noadvertising or communication withthe public, nor free samples inAfrica. (Nestlé is the only Companypledged not to market follow-onformula to the public).

• Nestlé markets cereals andother “complementary” foods inAfrica only at 6 months of age andbeyond (the only infant foodmanufacturer to make such acommitment).

• Nestlé infant food marketingpersonnel have no contact withmothers.

• No infant milk samples tohealth professionals, except a 2-tinsample of formula to be given tohealth professionals forexamination only when a newproduct is launched.

• Nestlé donates infant milk tohealth facilities only in specialsocial cases (death in childbirth,multiple births, etc.).

42


Aerobics classes areone way that Nestlépromotes good healthalongside its productmarketing efforts.

sponsorship in most West Africancountries is a nationwidepartnership for youth, such as thatin Nigeria that supports physicalactivity through exercise classes for students and after-schoolprogrammes with tennis clinicsand basketball leagues.

Teaching young kids that goodnutrition and physical activity gohand-in-hand sets them up for alifetime of healthy habits and areduced risk of chronic diseases,such as diabetes and heart disease.

“Our approach appeals to mumsas well as kids,” said NestléRegional Business DevelopmentManager Akin Osewa. “Above all,they want their children to behealthy and successful. To do thatthey need to acquire skills and bephysically fit.”

Milo in motion.

Nestlé’s Milo energy drink brand isthe number one malted chocolateenergy drink in Africa. In SouthAfrica, Ghana and above all,Nigeria, it is especially popularamong 7 to 12-year-old consumers.

And Nestlé promotes more thanjust the product; it also teachesyoung people about nutrition andphysical activity.

Milo is fortified with fifteenvitamins and minerals and providesthree grammes of protein perserving when reconstituted withtable water. The brand’s corevalues centre on taste, energy and success through nutrition,illustrated through marketingcampaigns on improved learningand athletic achievement.

Nestlé sponsors high-profileevents promoting physical activity,such as the Nestlé Milo Marathonin Ghana. However, the major

• Nestlé gives no financialincentives to health professionalsto promote infant formula.

Nestlé implements the Codethrough systems of training andinternal monitoring, an internalOmbudsman system forwhistleblowers and regular internalaudits. These practices are guidedby the Nestlé Instructions for theImplementation of the WHOInternational Code of Marketing of Breast-milk Substitutes, or in-country legislation, whichever is more stringent.

In 2004, Nestlé commissionedBureau Veritas, a major globalauditing company with substantialsocial auditing experience, toreview Nestlé infant food

marketing in three Africancountries of their choice (SouthAfrica, Nigeria and Mozambique).

In October 2004 and February2005, Bureau Veritas spent a totalof five weeks auditing Nestlépractices in the three countries.The auditors interviewed Nestlépersonnel in nutrition, regulatoryaffairs, sales, business development,training and other departments toassess levels of awareness;implementation and compliancewith the Nestlé Instructions and in-country legislation; and internalsystems, controls, policies andprocedures. Externally, they

interviewed mothers, healthprofessionals and retailers.

Along with interviews, theyverified information by reviewingtraining materials, job descriptions,budget records, audit reports, staffschedules and sales records. Theyalso surveyed Nestlé products andposters, billboards and otheradvertising; educational andmarketing material and productson shelf and in storerooms. Pages44-45 contain the Bureau VeritasAudit Opinion.

43

ScholasticaIlechukwu, a 25-yearNestlé employee, isregional businessdevelopment managerin Central and WestAfrica. As part of herwork, she inspectssupermarkets toensure that Nestléproducts are marketedin keeping with theaims of theInternational Code ofMarketing of Breast-milk Substitutes.

“Based on a total of five weeks ofobservation and interview withinSouth Africa, Mozambique, andNigeria, we found no systematicshortfalls in terms of Nestlé’simplementation of its Instructionon the Marketing of Breast-milkSubstitutes.

Three breaches of theInstructions were identified duringthe audit, two of which weredirectly attributable to Nestlé’sconduct. These were not directlyrelated to any marketing activity,but to the implementation ofNestlé’s internal procedures. Thethird breach related to the activitiesof a pharmacist that had breachedthe Instructions through the special display of infant formula.

Despite evidence of the threebreaches of the Instructions beingidentified, it is considered thatthose breaches by Nestlé are notsystematic and it is our opinionthat Nestlé South Africa, Nigeria,and Mozambique are notsystematically or deliberatelyviolating the Nestlé Instructionor in-country legislation (whereapplicable).This includes:(a) No use of baby pictures on itsinfant formula packs (4.2).(b) Materials intended for pregnantwomen and mothers related tomaternal and child health such aseducational posters, educationalcharts, height measurement chartsetc., did not contain illustrations ofinfant formula or mention thenames of individual infant formulabrands (4.3).(c) No information relating to infantformula was communicateddirectly to mothers or the generalpublic either through public media

Bureau Veritas audit opinion

or by personal contact betweenCompany representatives and thepublic (5.1).(d) No free samples of infantformula given to mothers (5.2).(e) No contact with mothers orpregnant women other than incases of consumer complaint (5.5, 6.4, 6.5).(f) No free or low price donationsof infant formula were made toinstitutions outside of the specificrequirements of the Instructionsexcept in one minor incidentdetailed below (6.6, 6.7).(g) Equipment and materials inaddition to those referred to inArticle 4.3, donated to a healthcare system complied with theInstructions (6.8).(h) Culturally appropriateeducational material provided tothe health care professioncomplied with the Instructions (7.1).(i) Company personnel wereemphasising the importance ofbreast milk to health professionals(7.2).(j) No financial or materialincentives to health professionalsfor the purpose of promoting infantformula were reported/observed(7.3).(k) No samples were provided tohealth professionals outside of theremit of Article 7.4.

(l) No bonuses or incentives basedon infant formula sales were paidto sales staff, medical delegatesand other marketing personnel (8.1).(m) Company personnel whoseresponsibilities include theprovision of information aboutinfant formula to the healthprofession did not performeducational functions in relation topregnant women or mothers (8.2).(n) Individual countryrequirements with regard tolabelling were adhered to (9.1).(o) Labels of products purchasedby traders from Nestlé anddistributed in-country for thatmarket complied with the labellingrequirements (9.2).(p) Nestlé sweetened condensedmilk and powdered milk productspurchased by traders direct fromNestlé for use in country compliedwith the Instructions (9.3).(q) Product labels contained thenecessary information (9.4).(r) Efforts were made by Nestlé to encourage governments todevelop national codes where theydid not exist (11.1).(s) Internal monitoring of Codecompliance was carried out byNestlé except in Mozambique (see below) (11.3).(t) The Instructions appeared to becommunicated to all Companypersonnel employed by companiesof the Nestlé Group engaged in themarketing of infant formula (11.5).

44


Breaches of the Instructions wereobserved in Mozambique, thesewere as follows:(a) A pharmacy was observed ashaving a special window display ofinfant formula. This pharmacy had adirect relationship with Nestlé andwas in breach of the Instructionsunder Article 5.3.(b) Internal monitoring of theimplementation of the Instructionswas not carried out in Mozambique:this is a breach under Article 11.3.(c) Some marketing personnel inMozambique had not receivedformal communication on theInstructions, this is considered abreach under Article 11.5.

Audit of Nestlé S.A., Vevey, SwitzerlandThe audit of Nestlé S.A. coveredsenior personnel within Nutrition,Sales and Marketing, Public Affairs,Internal Audit, Consumer Servicesand Investor Relations.

The development, modification,monitoring and communication ofthe Nestlé Instructions to eachcountry is the responsibility of theNutrition Division and the PublicAffairs Department based at Nestlé S.A. in Vevey. The practicalimplementation of and compliancewith the Instructions and reportingof in-country violations is theresponsibility of each country.

Nestlé S.A. acts as the centralinformation hub where policies and procedures (including theNestlé Instructions) are developedand communicated to the wider

business. Templates for InfantFormula product information,nutritional content and labellingrequirements are developed byNestlé S.A. and communicated to the end market for adaptation to national standards andrequirements. Where adaptationsto labels are made in country, these are reviewed and signed offby Nestlé S.A. as well as in-countrypersonnel.

Bureau Veritas findingsThe Nestlé Instructions appeared to be well embedded throughoutNestlé S.A. There was aconsistently high level of awarenessand commitment to the Code andall personnel interviewed hadreceived training on theInstructions. Personnel had clearresponsibilities with regard to theimplementation of the Instructionsand there appeared to be strictcontrol and a firewall between theSales Team and the NutritionDivision (all staff involved in directrelations with health careprofessionals and infant formulamatters sit within the NutritionDivision).

There appeared to be goodcontrols in place for monitoringcompliance with the Instructionsthrough Internal Audits, which arecarried out by Nestlé Group Auditon a rolling programme of audits.Regardless of the audit subject, allaudits contain specific criteriarelating to the implementation ofthe Instructions.

Nestlé has already takenappropriate steps to correct thethree violations identified in the Bureau Veritas audit, as it doeswith any allegations of noncompliance which can be verified.

“The InternationalFederation of Red Cross and Red CrescentSocieties notes thefindings of the BureauVeritas audit, whichhighlights Nestlé’s effortsto ensure that its infantfood marketing practicesin Africa are in conformitywith the WHOInternational Code ofMarketing of Breast-milkSubstitutes. We arepleased that the BureauVeritas audit corroboratesthe findings of a similaraudit that the Federationcommissioned in Nigeriain 2003. Nestlé is a majorcorporate supporter ofour African HealthInitiatives, the positiveresults of such auditsprovide assurance for ourcontinued collaborationin addressing some of the pressing health andcommunity careproblems in Africa. All strategic corporatepartnerships aremonitored on an on-goingbasis.”International Federationof Red Cross and Red Crescent Societies

45

“We are pleased that the Bureau Veritas audit corroborates the findings of a similar audit that the Federation commissioned in Nigeria in 2003.”International Federation of Red Cross and Red Crescent Societies

Implementing the.WHO Code.

Adherence to the WHO Code ismanaged through training andtesting, self-monitoring reports,internal auditing within thenational company, auditing fromthe global headquarters, an ISO’-like WHO Code Quality AssuranceSystem and an internalombudsman system forconfidential reporting of possibleviolations by “whistleblowers”.

Nestlé also investigates in detailall allegations of non-compliancewith the WHO Code, whereadequate information is madeavailable and takes correctiveaction when violations areconfirmed.

Nestlé indeed also welcomesimmediate and detailed informationabout perceived non-compliancewith the WHO Code from anyconcerned party outside the

company, like health professionalsor non-governmental organisations,in order to investigate and to take prompt action if foundsubstantiated.

Across country operations, Nestléstaff from fourteen departmentsare part of the compliance system.They participate in yearly or twice-yearly training and must provideself-monitoring reports.

Employees must sign a personalletter of commitment to the Code.In the rare case of a violation, theCompany investigates and takesnecessary action. In recent years,any violations that occurred wereby new, inexperienced employees.But in one case, an employee’scontract was terminated for whatwas deemed a significant violation.

In Southern and Eastern Africa,one of the people involved inmanaging the Nestlé’s system forcompliance with the WHO Codeon the Marketing of Breast-milkSubstitutes is Nutrition ManagerNick Partington.

“Nestlé is very serious aboutthis,” Nick said. “I feel very goodabout the progress we have made

as a company, in our efforts tomanage and monitor Codecompliance.”

An important Nestlé principle is to maintain dialogue withgovernment and health nutritionexperts, both to hear concerns andshare nutritional advances. In late2004, Kenyan parliamentariansasked Nestlé for input on how thefood industry can support thegovernment’s fight againstmalnutrition.

The Bureau Veritasteam, including CEOOlivier Guize (centre),audited Nestlé’scompliance with theWHO Code in threeAfrican countries.

46


Consumers views of.Nestlé and corporate.social responsiblity.

Our business is based onconsumer trust in the Companyand the quality and safety of ourproducts.

In the 2004 GlobeScan twenty-two-country public opinion survey,Nestlé was one of the threecompanies with highest scoreswhen consumers were asked toname a company that bestrepresents social responsibility.Scores were particularly high inthree African countries: SouthAfrica, Ghana and Nigeria. Over73% of the Africans surveyed ratedNestlé as “among the very best” or “above average”, while lessthan 5% gave Nestlé negative

marks. The reasons given for apositive rating were: quality andsafety of products; nutritionalvalue; and communityprogrammes. According toGlobeScan’s Chris Coulter, “Nestlécontinues to be viewed as one ofthe leading companies in corporatesocial responsibility. Compared to other regions, African consumersare among the most likely to rateNestlé social responsibilityperformance positively.”

47

“Nestlé continues to be viewed as one of the leading companies in corporatesocial responsibility, particularly in the developing world. Compared to otherregions, African consumers are among the most likely to rate Nestlé socialresponsibility performance positively.”Chris Coulter, GlobeScan

Social responsibility ratings for Nestlé, 2004

Among the very best /Above average Average Among the very worst / Below average

Ghana

84

Nigeria

71

South Africa

65

512

20

1 2 20

20

40

60

80

100

%

Chris Coulter, Vice President,GlobeScan.

48

Retunde Odut Afotakes part in afterschool programmesthat teach teenagersabout good nutritionand physical activity,

organised by the NestléNutrition DuchessClub in Nigeria. Thisknowledge willprepare Retunde andher classmates for

a lifetime of healthyhabits and a reducedrisk of health problems(more details aboutthe Duchess Club canbe found on page 39).

3

Nestlé and the UnitedNationsMillenniumDevelopment Goals

For decades, on a global basis, Nestlé has supportednutrition, health and other social initiatives so that wemay become an integral part of the social fabric of thecountries where we operate and contribute todevelopment above and beyond our business impact.

These efforts contribute to the United NationsMillennium Development Goals (MDGs), an eight-pointblueprint that aims to reduce poverty and improvehealth, education and environmental sustainabilityglobally.

While difficult to quantify the Nestlé’s total impact onthe MDGs, some contributions are clear. In this section,we provide an overview of Nestlé programmes relatedto each Millennium Development Goal and somespecific examples (for further details consult Nestlé in the Community, www.community.nestle.com).

49

Goal 2: Achieve universal.primary education.

Nestlé provides its employees withbasic education and trainingprogrammes, and works with its“future work force” by supportingschools in surroundingcommunities.Social and communitycontributions:• Egypt: Give a Kid a Hand initiative• Egypt: Adopted Dolce School,providing support for infrastructureimprovements, education andschool lunches for 580 children• Morocco: Zakoura EducationFoundation, a literacy initiative thathas educated 1700 rural children,particularly girls• Mozambique: Kids Go Furtherprogramme, to promote positiveprofessional role models• South Africa: Project Head Start,preschool education to previouslydisadvantaged children intownships surrounding Pretoria• South Africa: PROTEC, scienceand mathematics education andtechnical skills training programmein the Pietermaritzburg area

Goal 3: Promote gender.

equality and empower.

women.

Nestlé promotes gender equalityand empowerment in its hiring,training and promotion practicesand supports a number of projectsaimed at empowering women,including the following:Social and communitycontributions• Nigeria: Duchess Club, nutritioneducation for women• Cameroon: Support for nationalcelebration of InternationalWomen’s Day

Goal 1: Eradicate extreme.poverty and hunger.

Nestlé makes its greatest contributionby providing nutritious, affordablefood, providing employment andcreating economic opportunitiesfor entrepreneurs. We directlyemploy 11500 people in Africa andsupport an additional 50000 jobsin the supply chain. As discussedin this report, our SustainableCassava Project and coffeeinitiatives are examples of Nestléusing its technical and marketingexpertise, along with localknowledge, to create new,forward-thinking businessopportunities. We also providedover 80 tonnes of free food inAfrica in 2004 for disaster relief.Social and communitycontributions:• Ghana: Financial support to theCollege of Health Science of theUniversity of Ghana• Guinea: Nutrition educationthrough the ECOWAS NutritionForum• Madagascar: Cyclone GafiloRelief aid• Nigeria: Support for NutritionResearch Library at the Universityof Agriculture, Abeokuta• Nigeria: Research with Nigerianuniversities to improve soy beanand cowpea production• South Africa: WARMTH, WarAgainst Malnutrition TB andHunger• South Africa: Nestlé CommunityNutrition Award, honouring localsolutions to malnutrition• South Africa: Cooperation withShukuma Primary School andSANTA on community gardens

• South Africa: ThusanangDevelopment and Training,promotes cottage industries forwomen• South Africa: South African-Swiss Women’s Dialogue, aninternational gathering of womenfrom both countries in honour ofthe 10th anniversary of freedom inSouth Africa in 2004

Goal 4: Reduce child.

mortality.

Child mortality is primarily a resultof poverty, lack of food, lowmaternal education and poorsanitary conditions, as covered by goals 1, 2, 3, 5, 6 and 7. BesidesNestlé’s contribution in theseareas, we support the followingspecific projects:Social and communitycontributions• Ethiopia: UNHCR waterpartnership brought clean water to 210000 people• Cameroon: Food donations totwenty-five orphanages andchildren’s homes• Cameroon: Support for ChildWatch

With twenty years of Nestlé support,EcoLink in SouthAfrica has helped105000 families plantgardens to increasetheir food supply.

50

Nestlé contributions to the UN Millennium Development Goals; by Goal

3: Nestlé and the United Nations Millennium Development Goals

• Cameroon: Funds for a children’shospital through the Chantal BiyaFoundation• Côte d’Ivoire: Les Amis desEnfants du SIDA, a guesthouse forHIV positive women and children• Côte d’Ivoire: Support forAssociation Espoir, a free healthcare centre in one of Abidjan’sslums• Kenya: Street ChildrenAssistance Network Nakuru(SCANN)• Zimbabwe: Harare Shelter forDestitutes, schooling for orphans

Goal 5: Improve.

maternal health.

In line with its contribution to Goal 1, Nestlé makes acontribution to this goal byfostering economic developmentand helping improve health caresystems and access to cleandrinking water and sanitation.• South Africa: The Valley TrustCommunity Health WorkerProgramme, which helpedthousands of people in KwaZuluNatal province, particularly women• South Africa: EcoLink HomeGarden and Clean Waterprogrammes, reaching over105000 women and their families• Nestlé Foundation studies onmaternal health

Goal 6: Combat.

HIV/AIDS, malaria.

and other diseases.

We provide access to health careand health education to our 11500 Nestlé employees and theirfamilies. This includes provision ofhealth care coverage to all full timeemployees, as well as specialisedinterventions on HIV/AIDS, such asour Managed Intervention

Programme in South Africa.Nestlé’s initial involvement withthe International Federation of RedCross and Red Crescent Societies’ARCHI 2010 programmecontributed CHF 3 million overthree years.Other social and communitycontributions• Nigeria: Partnership withNigerian Red Cross Society onHIV/AIDS Education, reachingover 800000 young people• Cameroon: HIV/AIDS education• Kenya: Red Cross CommunityHealth Worker Programme forHIV/AIDS• Kenya: Funds for home care forthe needy, particularly at Christmas• Senegal: Support for conferenceto draft national HIV/AIDS strategy• South Africa: HIV/AIDS activitiesin seven cities, ranging fromeducation to product donations• Zambia: International MedicalServices for Health (INMED),health education projects via radio

Goal 7: Ensure.

environmental.

sustainability.

Our most important contribution isthrough the management of oursupply chain and productionactivities. Our key environmentalperformance indicators arecontinuously improving. Oursustainable cocoa, coffee,cassava, soybean and cowpeainitiatives are also importantefforts.Social and communitycontributions:• Ethiopia: UNHCR waterpartnership brought clean water to210000 people

• Ghana: Raleigh International, tosupport improved sanitation inrural communities• Kenya: World Wide Fund ForNature, for reforestation and waterconservation in the Mau forest• Nigeria: Greening the SupplyChain Project• South Africa: LEAP, improvedhygiene and access to clean waterfor 120000 people in rural areas• South Africa: DeltaEnvironmental Centre, forenvironmental education in ruralschools• South Africa: EndangeredWildlife Trust, to protect theendangered wattled crane• South Africa: World Wide Fundfor Nature sustainable agricultureand water conservationprogramme in rural Eastern Capecommunities

Goal 8: Develop a.

global partnership.

for development.

Nestlé actively participates inforums that unite diversestakeholders – from business,governments, NGOs, the UNcommunity and many others –together in support of shareddevelopment goals and freer trade.These are a few examples:• Participant, UN Global Compact• Board Member, InternationalCocoa Initiative• Board Member, InternationalFederation of Red Cross and RedCrescent Societies Foundation• Global partner, UN HighCommissioner for Refugees• Founding Member, SustainableAgriculture Initiative

51

Giving girls a chance to.study in Morocco.

Goal 2: Achieve universal primary education

Imane Marzak, 15, loveslanguages. French is her favouriteclass, but she is also the toplearner in Spanish. Someday, shehopes to go on to university tostudy Spanish literature.

“And why not in Spain even?”Imane said. “School has totallychanged my life. Without theinformal school, education wouldhave been an impossible missionfor me.”

Imane is one of a few hundredstudents who attend the Lahdaidschool established by the ZakouraEducation Foundation, a non-governmental organisation thatworks to bring education to ruralareas not served by thegovernment’s formal schools.Since 1997, Zakoura has helpedmore than 1700 children in thearea of Doukkala, Morocco.

Nestlé has helped fund Zakourasince it was created. The Companyis interested in the wellbeing ofthese families, because they arethe dairy farmers who provide milk for the Nestlé plant in nearby El Jadida.

Zakoura was started by a groupof Moroccan businessmen whooriginally intended to improveconditions for Morocco’s ruralpoor by providing micro-creditloans for small cottage industries,primarily managed by women.

Soon, the need for the EducationFoundation became clear.

About 56% of the people in thearea are illiterate and schools areoften too far away, or the schoolfees are too expensive for parents.So the Foundation brings school tothem, with books and other schoolmaterials provided free.

Most of the teachers are younggraduates from the area, whomight otherwise remainunemployed, but they return totheir villages to teach. Theirsalaries are paid by theFoundation.

The programme lasts threeyears and includes reading andwriting, civic education and anintroduction to art and science.There are thirty pupils per class,aged from 8-11and from 12-16.

During the second year, Frenchlanguage teaching is introduced.The curriculum uses the officialsystem textbooks, themselvesbased on the French programme,but uses a teaching method thatencourages maximum personalexpression by the children.

Is Zakoura making a difference?Judging by its attendance rate,which is near perfect in someschools, Zakoura is doing verywell.

“I wish that all children inMorocco could have the sameexperience as me,” Imane said.

52

A few examples of how we are helping

3: Nestlé and the United Nations Millennium Development Goals

Imane Marzak, one ofsome 1700 childrenwho received basiceducation through the Zakoura EducationFoundation, wouldlove to study in Spainsomeday. Whenchildren in the area go to the Zakouraschools, it is usuallythe first time they have been in a formalschool.

Supporting education. in Estcourt.

Goal 2: Achieve universal primary education

Nestlé people development effortsin and around our Estcourt coffeeand beverage factory in SouthAfrica are a good example of ourimpact. While Nestlé has operateda factory in Estcourt since 1927,the area was a hotbed of violenceduring the apartheid era. Many ofits social service systems, schoolsin particular, were weak. In the ten years since apartheid ended,the quality of life has improveddramatically both in and aroundthe Nestlé factory. The company’sbasic education and trainingprogrammes – conducted for fourhours weekly, with Nestlé payingwages for two hours andemployees contributing two hours– resulted in double-digit increasesin literacy. Another importantdevelopment is taking place withinthe community. Since 1998, Nestlé

has supported a competition inthirty-two Estcourt schools, inwhich students compete againsteach other – via their matriculationexams – to win computer andsports equipment for their schools.According to Mishack Mhlanga, a school superintendent, thecompetition has helped raise theexam school pass rate from 0% in the early 1990s to 69% in 2003.“The students are finding newmotivation – they want to be thebest they can be,” Mr. Mhlangasaid.

Water flows for 210000.

people in Eastern Ethiopia.

Goals 4 and 7: Reduce child mortality/Ensure environmental sustainability

Key indicator: By 2015, reduce byhalf the number of people withoutaccess to drinking water.

“People often think refugees area problem for governments only,when in fact they are important tous all, including the private sector.”– Linda Merieau, UNHCR

The refugee and displacementproblem in Africa today remainsone of the greatest challenges forthe humanitarian community. In2004, UNHCR sought to helpnearly 4.3 million people in Africaalone. Through Nestlé support inrecent years, 210000 people inEastern Ethiopia got access toclean drinking water.

Eastern Ethiopia is an area ofextreme poverty, where much ofthe population is nomadic anddependent on herds of sheep andgoats for food and income. Infantmortality in the region is very high,with more than 100 deaths per

1000 births, according to the World Health Organisation. Manyhope the clean water supply willhelp prevent those deaths, manyof which result from drinking dirty water.

The Nestlé-UNHCR partnershipis typical of the way in whichleading companies are movingfrom philanthropy to collaborativeengagement in development andpoverty alleviation.

The Nestlé Waters technicalteam includes a hydrogeologistand a water resources manager,who have been working with bothUNHCR and the local Ethiopianwater authority to design systemsfor managing the water supply,maintaining the pipeline andpumping station, rehabilitating oldwells and testing the water. Localauthorities will take over the long-term operation and maintenanceof the system in mid 2005.5

Fighting HIV/AIDS:.a corporate commitment.to action.

Goal 6: Combat HIV/AIDS,malaria and other diseases

Nestlé is supporting community-based HIV/AIDS programmes inseveral countries. Among them is a partnership with nationalchapters of the InternationalFederation of Red Cross and RedCrescent Societies on large-scaleeducation programmes.

In 2004, more than 800000Nigerians received HIV/AIDSeducation as a result of a USD 2million initiative with the NigerianRed Cross. The initiative involves2600 peer educators reachingyouth in twelve states with a high HIV/AIDS prevalence. In addition,Red Cross is providing home caresupport for 7000 people withHIV/AIDS, and counselling in government health clinics.

Nestlé is supporting a similarinitiative in Kenya.

Nestlé also works to set anexample of leadership andpartnership in the businesscommunity, through, for example,Nigeria’s HIV/AIDS Private SectorCouncil.

(More details of Nestlé’s HIVprojects in Africa can be found onpages 8, 9,12 and 13.)

53

“The students are finding new motivation - they want to be the best they can be.” Mishack Mhlanga, School Superintendent, Estcourt, South Africa

These Somali refugeesare among the 210000 people inEastern Ethiopia who benefit from a UNHCR-Nestlépartnership to provideclean drinking water.

5 Editor’s Note: The water supplyproject was undertaken following a court settlement over the illegalseizure of Nestlé assets in Ethiopiain the 1970s. Nestlé put allpayments from the settlement into the water project.

danger and disrupted the cocoaindustry, which is vital to our globalbusiness. The loss of life was aterrible tragedy, as was the economicdamage. The impact of the conflicton the country’s economy willcontinue to be felt for some time.Nonetheless, because Côte d’Ivoireis an indispensable source forpremium cocoa, we will remaincommitted to helping improvestandards in the cocoa industry.

Even with episodes of conflict andextreme poverty in Africa, thisremains a positive moment,endowed with hope and expectation

Catalysing theshift from povertyto prosperity

As I prepare to retire after 44 years atNestlé, I can measure in decades thedevelopment of Nestlé’s business inAfrica and our contribution toimproving nutrition and catalysingeconomic development and growth.

Through our daily operations andour participation in cooperativeefforts with entities such as theInternational Federation of Red Crossand Red Crescent Societies, theUnited Nations High Commissionerfor Refugees and the InternationalCocoa Initiative, we demonstrate ourcommitment to helping Africaaddress barriers to sustainableeconomic development and growth,even when conditions are verychallenging.

The recent political instability inCôte d’Ivoire is an example. At timesit put our employees and suppliers in

54

Michael Garrett on a visit to NestléNigeria. Here, he isvisiting a local marketwith members of theNestlé Nigeria team.

in the continent’s economic andsocial potential.

Over the last four decades, theprevailing expectations of businessengagement in Africa have shifted. A consensus of leaders inmultinational companies,governments, internationaldevelopment agencies and localcommunities believe that private

enterprise is critical to povertyalleviation, so long as it is conductedresponsibly and not at the expense ofpeople or the environment.

We at Nestlé share in this view. We are committed to long-termsustainable business development inAfrica and join our aspirations to themany organisations working in theirown way to create social andeconomic progress on the continent.

Michael GarrettExecutive Vice President and ZoneHead for Asia, Oceania and Africa

55

Writing and editingNestlé S.A., Public Affairs

DesignNestec Ltd, Corporate Identity andDesign, with Esterson Associates,London, United Kingdom

PhotographyJodi Bieber/nb pictures, Johannesburg, South Africa;Harmen Hoogland/Nestec Ltd,Corporate Identity and Design;Markus Bühler-Rasom, Zurich,Switzerland;Marc Latzel, Zurich, Switzerland;apg image, Vevey, Switzerland;Nigel Dickson, Toronto, Canada;Nitsan Shorer, Binyamina, Israel;CPL photographers, Lagos, Nigeria

PrintingEntreprise d’arts graphiquesJean Genoud S.A.,Le Mont-sur-Lausanne, Switzerland

PaperMunken Lynx, totally chlorine free (TCF)

© March 2005, Nestlé S.A.,Public Affairs

Nestlé S.A.Avenue Nestlé 551800 VeveySwitzerland

www.nestle.com

56

The Nestlé commitment to Africa · economic and social progress of the African consuming public as...

Documents

Transcript of The Nestlé commitment to Africa · economic and social progress of the African consuming public as...