We're Working in Africa

SAB MILLER AFRICA COVER 10/10/05 10:08 pm Page 1

SABMiller plc SABMiller plc (Registration No. 3528416)

Registered office SABMiller House, Church Street West, We’re working in Africa Woking, Surrey GU21 6HS

Head office One Stanhope Gate, London, England W1K 1AF

For further information please go to www.sabmiller.com SAB MILLER AFRICA COVER 11/10/05 1:44 pm Page 2

Business and development: Future challenges 21

We’re working in Africa

gains being realised are real and not just in weak economies as the thin end of a wedge We have a large part of our business, our history beautifully presented self-promotion – and are that is making the world safe for a ‘big and our pride invested in the African continent. Castle, trusted as such by an interested public. company’ model of the market, and which will What is genuinely interesting about the leave weak economies and small businesses Kilimanjaro, Mosi, 2M, Eagle, St Louis, Chairman’s ESB, selection of examples that SABMiller have struggling in their wake. Castle Milk Stout, Rhino and Nile Special are just some covered in this report is the diversity of issues This just does not have to be so. It is in and approaches that are described. the private sector’s interest to have diverse of our brands which have become household names Some, like HIV/Aids, combine the humanity and robust economies that operate within a and necessity of dealing sensitively and framework of good governance, well managed throughout Africa. effectively with Africa’s greatest scourge with a risks and a fair social environment. Economies Today, over 100 years after the South African Breweries clear business case. Others are less obvious. that grow in sustainable ways both support Helping the establishment of small businesses people and are good for business. Ltd, our original brewing company, was founded in to form part of the retail chain, developing new There are increasing signs that Africa Johannesburg, we are a thriving African-originated multi- products using locally sourced materials is at a stage in its own development where thoughtfully purchased from small farmers; there are genuine opportunities for thoughtful national with a brewing presence in almost 50 countries these go to the heart of what African investment which will, in turn, unlock real economies are going to need if they are to opportunities for companies and for people. across five continents and a portfolio of strong brands grow stronger. It is heartening to think that some large and leading market shares in many of the countries in The beating heart of any economy is companies recognise that fact, and want to be its SME sector. SABMiller’s support and both a driver for change and a part of a new which we have brewing operations. encouragement for this sector is, we would shared prosperity. argue, one of the best long-term investments In no small way, the existence of such it can make. companies will be a vital, if not the best, way From the farmers who grow the barley, to overcome poverty – provided they invest wheat and hops, to the breweries and bottling wisely with people in mind, openly account for plants, the wine bars and beer cellars in the what they do and explain what they cannot do richest cities in the world, the dusty and without the help of others. isolated communities of rural Africa, SABMiller Our best wishes to SABMiller in continuing touches the lives of tens of millions through its to deliver on this challenging agenda. business activities. Its impact can be felt at a national, regional and local level through the generation of economic activity, the taxes it pays, and the employment it creates. It does not take too long to work out that the group supports thousands of livelihoods and thereby tens of thousands of lives. Richard Sandbrook and Will Day The proof of course will be in the doing October 2005 rather than the talking (again something that applies equally to governments, NGOs and Sandbrook and Day are independent sustainable companies). The challenge will therefore be development advisers specialising in private- to deliver on the fine words and ambitions in sector initiatives. They act as special advisers to such a way that silences the sceptics, many of the United Nation’s Development Programme’s whom see multinational corporate involvement Growing Sustainable Business Initiative.

Contents “Private-sector involvement in development will only be 2 Our African operations effective and sustainable if it is based on a hard business 4 The private sector’s role in African development 6 A day in the life of our African businesses case and good business practices.” 20 Business and development: future challenges Graham Mackay, 2005 SAB MILLER AFRICA TEXT 10/10/05 10:08 pm Page 1

We’re working in Africa 1

2005 has become a critical year for development. The New Partnership for Africa’s Development (NEPAD), the Commission for Africa, the G8 Summit at Gleneagles and the United Nations’ review of the Millennium Development Goals have combined to make Africa, along with climate change, one of the top issues on the global agenda. This has caused many multinational companies, ourselves included, to look more closely at how we can most effectively contribute to development.

This report is based on a day in the life distribution chains, some work in businesses of our company’s operations in Africa. that have grown through our corporate social We have chosen 19 May 2005, the day investment projects, and still others are people our preliminary results were announced. who have benefited from our HIV/Aids We show how – by virtue of our day-to-day programmes. business activities, profitability, corporate But none of these people would have social investment, and responsible and benefited unless our business had performed accountable behaviour – the company has well. It is our performance that has enabled contributed to economic growth, created jobs us to make a sustained contribution to the and provided some life-changing opportunities health and prosperity of African people, for people living in the countries in which we their local communities and the economies operate. Some of these people are our in which they work. employees, others are in our supply and SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 2

2 Our African operations

Our African operations

We have financial and beverage interests in 29 African countries, including those in which our strategic partner, Castel, operates. Our South African beer and soft drinks business is run by the South African Breweries (SAB) Ltd. The rest of our African operations are managed by SABMiller Africa and Asia. Both companies are headquartered in Johannesburg. Our main products in Africa include lager, carbonated soft drinks, water, wine, spirits and traditional beer made from sorghum.

Group turnover (US$14,543m)

North America 36%

Central America 4%

Europe 20%

Africa & Asia 12% Company development in Africa

South Africa 28% • South African Breweries Limited 1895 Group EBITA breakdown* (US$2,409m) • Delta Corporation (Zimbabwe) 1910 • Swaziland Breweries Limited 1976 North America 22% • Kgalagadi Breweries Limited (Botswana)1980 Central America 4% • Botswana Breweries Limited 1980 • Lesotho Brewing Company 1981 Europe 19% • Tanzania Breweries Limited 1994 Africa & Asia 16% • Zambia Breweries Limited 1994 • Cervejas de Moçambique 1995 South Africa 39% • Nile Breweries Limited (Uganda) 1997 * Pre-goodwill amortisation, excluding central administration • Accra Brewery Limited (Ghana) 1997 and exceptional items. • Chibuku Products Limited (Malawi) 2000 Group lager sales volume** (148m hectolitres) • Coca-Cola Bottling Luanda SARL (Equity stake) 2000 North America 33% • Coca-Cola Bottling Central America 1% Sud de Angola SARL 2001 Europe 23% • Castel Group (Strategic alliance) 2001 • East African Breweries Limited (Kenya) 2003 Africa & Asia 25% • JV with Castel Group South Africa 18% (Morocco & Algeria) 2004

** Excludes contract brewing.

Creating local wealth: listing on local stock exchanges Although SABMiller plc’s primary listing is on the London Stock Exchange, with a secondary listing on the Johannesburg Stock Exchange, five of the company’s African businesses are also listed on local stock exchanges. SAB MILLER AFRICA TEXT 11/10/05 8:21 pm Page 3

Our African operations 3

Tunisia Morocco

Algeria

Mali Niger Chad Senegal Burkina Faso Benin Togo Cote Ethiopia d’lvoire Central Ghana African Republic Cameroon

Uganda Gabon Democratic Kenya Republic of Congo Key facts Tanzania South African Breweries Ltd: • injected US$1.6 billion into the South African economy in taxes and salaries during 2004 Angola • employs 8,232 people, including those Malawi working in the soft drinks division Zambia • is investing US$900 million in improved Mozambique facilities and operations for the period 2005 to 2009 Zimbabwe

SABMiller Africa and Asia: Botswana • injected US$266 million into African economies in taxes and salaries during 2004 • employs 6,061 people in Africa • has invested in excess of US$750 million Swaziland in African economies (includes actual South African Breweries Ltd Lesotho investment and capital expenditure) since 1994 Castel (14 countries)

South Africa SABMiller (9 countries)

Castel & SABMiller (3 countries)

SABMiller Associates (2 countries)

These are Accra Brewery Limited, Cervejas de Moçambique, Kgalagadi Breweries Limited, Tanzania Breweries Limited and Zambia Breweries Limited SAB MILLER AFRICA TEXT 10/10/05 10:42 pm Page 4

4 The private sector’s role in African development

The private sector’s role in African development: the critical importance of the business case

Graham Mackay, Chairman, Africa World Economic Forum, Cape Town, June 2005.

As a multinational with African origins and These basic business functions have an even interests in 29 African countries, SABMiller is greater and more positive impact than Corporate increasingly asked about the role of business Social Investment (CSI) programmes, which aim in the continent’s development. What should explicitly to meet developmental challenges. In business be doing, and how can SABMiller help? fact, without profits no company can even By far the greatest contribution business can engage in CSI programmes. make (and it is a very great contribution Simply put, private sector involvement indeed) is to run successful, profitable in development will only be effective and companies – contributing to tax revenues, sustainable if it is based on a hard business investing in local economies, and paying case and good business practices. Companies suppliers, distributors and employees. are best placed to contribute to development SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 5

The private sector’s role in African development 5

when they are making healthy profits, allowing have been the key to some of our biggest them to invest further in local economies and successes in Africa, most recently in Uganda. communities, and creating a virtuous circle. There, SABMiller’s subsidiary, Nile Breweries, How these profits are made is, of course, has successfully collaborated with the important. They will only be sustainable if government and the Serere Animal and companies are seen by all stakeholders to Agricultural Research Institute to create Eagle be operating in a responsible and accountable Lager – a project that has resulted in the manner. creation of 8,000 jobs for Ugandan farmers Fundamentally though, there is no and the production of high-quality, low-cost contradiction between what is good for sorghum beer that now enjoys a market share business and what is good for development. of over 20%. The project is featured on pages Indeed, the two are inextricably linked. When 8-10 of this report. development indicators are deteriorating, This is just one example of the many people get poorer and businesses suffer. And successful projects involving both public and when businesses suffer, they are less able to private sectors throughout Africa, and indeed afford a contribution to meeting development the world. Like any good joint venture between challenges. business partners, those that are most likely That’s why business is so important in to succeed are based on a genuine business development, and it’s why we’re publishing this case with the potential to meet the needs report. We don’t claim to have all the answers, and expectations of all parties. and we’re not suggesting that we have done enough. There is still much to be achieved by all stakeholders from both the public and private sectors if Africa is to have any chance of reaching the development targets set by the United Nations in its Millennium Development Goals. We, as much as any company, are in a Graham Mackay continuous learning process – trying out new Chief Executive ideas, collaborating with other organisations October 2005 and building on successes where we can. But in the long term, the success and sustainability of the private sector’s investments in Africa are critically dependent on the investment climate. And governments increasingly recognise that private-sector investment in Africa is a part of the solution to the continent’s challenges – as much as the complex issues of debt, trade and aid. So governments and private-sector bodies need to collaborate in creating policies that will encourage such private investment. The importance of partnership cannot be overstated. Indeed, effective partnerships

“By far the greatest contribution business can make (and it is a very great contribution indeed) is to run successful, profitable companies.” Graham Mackay, 2005 SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 6

6 A day in the life of our African businesses

8am,London Africa’s contribution to the 2005 preliminary results

SABMiller Africa and Asia showed strong growth in volume, turnover and EBITA (earnings before interest, tax and amortisation). As a result, since 2002 the business has almost doubled reported volumes and more than doubled turnover and EBITA. South African Breweries Ltd delivered strong comparable volume growth of 4%, and full year EBITA growth of 20%.

SABMiller’s preliminary results presentation for 2004/5 is under way. Earnings per share have increased by 33%, the volume of beer has grown organically by 4% to 148 million hectolitres, turnover is up by 15% and EBITA has improved by 27%. Chief executive Graham Mackay presents the group’s near-term outlook drivers. He discusses the performance of the company’s two African businesses and highlights the fact that improved economic stability in some African countries is positively impacting on the company’s financial performance. “SABMiller Africa and Asia is performing extremely well, and seems well set to continue. It’s clear that even in an area of the world which is seen as high risk, the net effect of the portfolio has been steady growth. Economic stability, which is on the increase, is playing an important role: incomes are rising and investment in infrastructure is improving. That’s driving demand and, in turn, the volume of beer we sell. “South Africa Breweries Limited’s performance has been exceptional. The painful period of industrial and employment restructuring in South Africa over the past 10 years has more or less worked its way out of the system. And the key indicators are all moving in the right direction. Headline inflation is at historically low levels. This has resulted in the cost of borrowing being reduced. Consumer spending has recently begun to respond and GDP growth is becoming more stable. There’s robust consumer expenditure which, of course, is a benefit to us. All of this creates a virtuous circle which gives us confidence that the positive economic environment in South Africa is set fair to continue in this vein for some time.”

Brewery log: Tanzania Breweries Ltd (TBL) Behind the projects and initiatives described in the pages which follow, our breweries throughout Africa keep up a steady routine of production, delivery and sales. This is SABMiller’s business: producing beer. We include this running log of events from TBL as a reminder of the ongoing processes that take place daily in our breweries, depots and bottling plants all over the continent. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 7

A day in the life of our African businesses 7 9am,Lusaka Fighting HIV/Aids in the community

Zambia Breweries runs community events to promote awareness and understanding of HIV/Aids. These events are beginning to change attitudes, leading to a large increase in the proportion of people being tested outside of the workplace.

Chimango Chikwanda is giving a presentation on effective HIV/Aids strategies to business leaders. She is Zambia Breweries’ (ZB’s) HR Director, and has been invited to speak because 80% of ZB’s employees have been tested for HIV – a remarkably high proportion. But for Chimango the focus is not just on testing employees, but testing everyone in the community. No company, she says, can be healthy when the community in which it is based is sick. What’s more, a good HIV/Aids policy – one that reduces the human cost of the condition – need not be expensive. She illustrates this by telling her audience about a community event that she organised in partnership with the Centre for Infectious Diseases in Zambia and a support group called Living Positive. The event was held in Lusaka’s George Compound, an unplanned high-density residential area, and involved giving free voluntary counselling and testing (VCT) to anyone who attended. It was publicised with door-to-door calls, radio advertising, free T-shirts and visits to churches and schools in the area. It was a great success. Over 1,000 people were tested, with 55 trained ZB employees providing counselling. The event changed attitudes and awareness enough to push employee testing rates up to 80% in Lusaka, and testing in the community as whole also improved considerably. Shortly afterwards, one of ZB’s employees took the momentous decision to disclose his HIV status, confident that his wife, children and employer would support him. However, as 130,000 people are estimated to live in George Compound, there is much more to be done. Chimango has plans for another event next year – and many of ZB’s corporate neighbours, including BP, Marlboro and Parmalat, have expressed an interest in co-operating.

6:00am 6:35am Packaging workers clock in for the Preloaded delivery vehicles depart. morning shift. On average, the The longest journey will be to brewery will package 48,000 cases Songea, which is 990 kilometres of beer during the course of the day. away from Dar es Salaam. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 8

8 A day in the life of our African businesses

10am,Kampala Securing government partnership

Nile Breweries has qualified for low excise rates from the Ugandan government because it uses locally grown sorghum for its Eagle Lager. This highly successful public-private sector partnership has resulted in tangible benefits for the Ugandan economy, local farming communities and Nile Breweries.

Peter Stuttard, Nile Breweries’ finance director, is meeting representatives from Uganda’s Ministry of Finance. Peter is part of a delegation from Uganda’s beer industry. They discuss the impact on the economy – and on Uganda’s informal alcohol market – of the government’s decision to reduce excise on beers made with locally produced primary raw materials. Efforts to turn people away from the informal and unhealthy alcohol market have proved difficult because of the relatively high price of regular beer. Because barley is difficult to grow in Uganda, brewers have typically imported it, pushing up costs. As a result, attempts to include more Ugandans in the formal alcohol market have proved difficult. Four years ago, Nile made a business decision to explore the possibility of introducing a high-quality affordable beer into this market. The result is Eagle Lager. Its development provides a good illustration of how businesses can work in partnership with governments to boost the economy and to improve people’s lives. Nile approached the Ugandan government and put forward a case for collaboration. The government saw the project’s potential for job and wealth creation, thus contributing to its Poverty Eradication Action Plan, which is closely linked to the UN’s Millennium Development Goals. So it agreed to subject the beer to a reduced excise rate of 20%, rather than the 60% charged on those made from imported ingredients. This meant that Eagle could retail at a third less than the price of lagers that use imported barley. In addition, the government contributed the expertise of the Serere Animal and Agricultural Research Institute (SAARI), with which Nile collaborated in a seed multiplication exercise. In 10 weeks they had developed a new variety of sorghum – dubbed Epuripur or Special Sorghum. As a result, in just four years Eagle Lager has achieved a 20% market share. In the next financial year Nile plans to spend US$1 million on sorghum – 60% of which will go to the farmers, with the other 40% going on transport, procurement and processing. The company has now recouped its initial investments. Much remains to be done because illicit alcohol still accounts for 68% of the Ugandan beer market, losing the government substantial potential revenue. So Nile will continue to look for efficiencies in Eagle’s production in order to bring the price down further. But the project has already been a major success, and the government now uses the Eagle project as an example of best practice in its partnerships with the private sector.

9:01am After going through their paperwork, production supervisors and departmental heads meet to agree the day’s schedule. Sales representatives head out to meet their customers. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 9

A day in the life of our African businesses 9

Country Uganda Beer type Sorghum beer Alcohol content by volume 5.5% ABV

Made from a locally grown variety of Ugandan sorghum called Epuripur, Eagle Lager is a high-quality affordable lager that is ‘proudly Ugandan’.

10:00am The Corporate Affairs Director meets with representatives from the Tanzanian government. TBL is involved in a new campaign to reduce drink-driving. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 10

10 A day in the life of our African businesses

11am,Kachumbala Working with farmers

As a result of using locally grown sorghum for its Eagle Lager, Nile Breweries has enabled 8,000 Ugandan farmers to earn a better living for themselves and their families.

Alex Isiagi has been in the fields since 7am, alongside two members of his family and two local men. By the end of the day, they will have cut down five acres of sorghum and laid it out to dry. This is Alex’s first sorghum crop, and he will get 900,000 Ugandan shillings (US$480) for it. He is making plans for the most efficient ways of using his land, calculating how often to rotate crops in order to maximise their yield. He estimates that he can increase his income to three million shillings (US$1,600) – four and a half times more than the income of most Ugandans, which stands at less than US$1 per day. This means he can educate his children and build a brick house. His sorghum is bought by Nile Breweries for its Eagle Lager, a product that has had a significant impact on the formal alcohol market in Uganda because it is a high-quality and affordable lager. It was no easy task for Nile to persuade farmers to grow sorghum. For subsistence farmers any mistake means going hungry, so they are naturally extremely cautious about what they grow – especially as even the relatively small amounts of cash required to open up new land are difficult to come by. But by guaranteeing prices of 280,000 shillings (US$150) per tonne, with purchase agreements signed in advance, Nile has managed to go from 350 farmers growing this new strain of sorghum four years ago to 8,000 today. This year those farmers produced 3,000 tonnes of sorghum, up from just 240 tonnes in the first year, and sold it for 840 million shillings (US$450,000). They have helped make Eagle a top-selling brand, giving Nile Breweries a 60% share of Uganda’s beer market in total.

11:05am Performance-management training begins. Today’s session will focus on setting goals and measuring performance. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 11

A day in the life of our African businesses 11

Building up local suppliers 12pm,Accra

When Accra Brewery (AB) decided to produce a beer using local Ghanaian ingredients, it invested in a company called General Mills Company Ltd (GMCL). AB now has a reliable local source of maize grits, saving US$2.8 million in foreign exchange, and GMCL has become one of Ghana’s leading companies.

Bert Grobbelaar, technical director at Accra Brewery, is doing an inspection of the Grits Milling Plant, owned by its supplier, GMCL. He pays attention to the size and moisture content of the maize grits, and discusses them with Daniel Dampson, GMCL’s production manager. GMCL is one of Ghana’s leading companies, but five years ago it was much less developed. Its dramatic growth came about because AB needed to bring costs down and reduce its dependency on imported barley. AB determined that maize would be a viable substitute, but it needed a dependable source of high-quality maize grits. It selected GMCL because of its ability to commit to a long-term relationship and to develop the infrastructure to meet demand. AB gave GMCL the working capital to upgrade its facilities and to purchase the maize up front. Because it was entering into a long-term partnership, AB guaranteed that it would initially buy the maize for more than the cost of importing it. If the agreement worked then the longer-term gains would far outweigh the set-up costs. To fulfil its side of the bargain, GMCL worked hard to develop a network of farmers and silos that would ensure a consistent supply of maize. It provided training to the farmers, helping them to grow the quantity and quality of maize required. And it guaranteed to buy the crop from them, which allowed the farmers to plan for the future. As a result, the amount of maize GMCL delivers has increased from 1,000 tonnes in the first year to 5,200 tonnes this year. What’s more, GMCL has expanded and now supplies maize to feed-millers for feeding poultry. It now exports 20,000 tonnes of maize grits to other breweries in West Africa. Because of their collaboration, AB has a reliable local source of brewing ingredients, saving US$2.8 million in foreign exchange, and GMCL has become a pan-African company. At the same time, almost 4,000 farmers have a reliable market for their maize, providing work for some 20,000 workers. And Ghana has a new export industry. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 12

12 A day in the life of our African businesses

1pm,Soweto Kick-starting small businesses

SABMiller’s Kickstart programme provides training, grants and mentorship for young South African entrepreneurs from disadvantaged backgrounds. In its 10 years it has trained 22,000 people and helped to start 3,000 businesses.

Tebogo Modibane is calling her family to tell them about her new job at Roots Health and Beauty Spa in Soweto. For this beautician, a job at Roots is a major opportunity – and all the more welcome after six months of unemployment. But she is not the only new employee: Roots is expanding its workforce from six to 13 people this year. Roots was set up by Thabang Kubheka-Molefi, who has increased her business’s turnover by 2,600% since winning an entrepreneurship award from SABMiller’s Kickstart programme in 2003. She applied for a place on the programme because she found, six months after setting it up, that her business was struggling. Accepted for one of the 15 to 20 places available in each of South Africa’s nine regions, Thabang found the initial two-week business skills training course immensely valuable: “I learned about marketing and how to develop a market strategy. I had never thought about it before, but I realised I could actually select my customers and really get to know them, who they are, where they live, where they eat, what radio stations they listen to.” After this initial training, the candidates were given a month to prepare a business plan. A panel of judges in each region assesses these plans and awards grants to between five and eight of the most promising. Thabang came third in her region and was awarded R40,000 (US$6,250), which she used to buy new equipment to attract the sort of clientele she wanted. She was also assigned a business mentor to guide and advise her over eight months. As a result, Roots began to attract an older and more affluent customer base. Although ages range from 23 to 89, the majority are now over 40 – male and female. Thabang’s mentor was impressed with her growing business acumen, and recommended that Roots be one of the two businesses chosen to represent the region in the national final. Thabang went on to win first place. This brought her a prize of R150,000 (US$23,400), which she used to open a second shop in Spruitview in the East Rand. Kickstart has helped Thabang make Roots a success, and has given her the confidence and business skills to aim high and achieve. It has also provided less visible but no less precious opportunities for people like Tebogo, who might otherwise, despite her many skills, have remained without a job. While Johannesburg’s unemployment rate is lower than the national average, it is still very high – showing how much work there is still to do for programmes such as Kickstart. Unemployment is exacerbated by the fact that South Africa has one of the world’s lowest rates of entrepreneurial activity, and Kickstart was launched in 1995 to counter this. The original intention was to develop local entrepreneurship as a means of contributing to poverty alleviation. However, the organisers monitored the results closely, and realised that SAB MILLER AFRICA TEXT 11/10/05 4:51 pm Page 13

A day in the life of our African businesses 13

the programme would be more effective if it were more ambitious. In 2002 the focus changed to creating successful, sustainable larger businesses – with new criteria for applicants to ensure that the business leaders of the future are selected. Since it began 10 years ago, Kickstart has grown to become one of the largest privately funded entrepreneurship-development projects in Africa. In that time, it has invested R34 million (US$5.3 million), trained 22,000 people and helped to start 3,000 businesses. Of the grant winners 90% are still in business, their companies turning over R22 million (US$3.4 million) and signing contracts worth R6.5 million (US$1 million) each year. In addition to the applicants and prize winners, it has created many extra jobs, touching the lives also of their families, dependents and customers.

1:00pm A health and safety inspection begins. This will ensure that the brewery continues to comply with the regulations set out in the government’s 2003 Occupation Safety and Health Act. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 14

14 A day in the life of our African businesses

2pm,Dar es Salaam Supporting local distributors

Tanzania Breweries Ltd (TBL) provides business training to the independent operators who deliver its beer. This helped increase its sales by 9% last year – one of the most dramatic rises of any SABMiller subsidiary.

Augustine Kissinga, owner of Makambako Depot, is helping his employees to load a delivery truck. They are busy. In an average week, they distribute 175,000 bottles of beer. It isn’t long since Makambako Depot was owned by TBL, whose marketing department Augustine worked in. Then TBL decided to make the depot independent, and Augustine successfully applied to run it. He used his savings and an affordable loan from TBL to set himself up, and then bought the depot outright. Since then he has increased volumes by 40%. Much of Augustine’s success results from business training that he received from TBL under a programme called ‘Faida Kwa Wote’ (‘profit for all’). The training has been given to over 200 independently owned depots, distribution centres, bulk buyers, and to sales people involved in the process of getting TBL’s beer from its three breweries to bars and retail outlets throughout Tanzania. TBL introduced the training because it understood that by making its delivery people and bulk buyers more profitable, it could do the same for itself. So the training is practical and business-oriented, and aimed at making the distribution process as efficient as possible. These efficiencies are vital if TBL is to satisfy the growing demand for beer among an increasingly affluent but still largely rural and dispersed population. These efficiency drives and the close co-operation with partners have produced clear results. Augustine and his fellow distributors have seen profits rise, and TBL reported 9% growth last year – one of the best in the whole SABMiller group.

3:15pm Workers begin loading vehicles for the next day’s deliveries. On average 28,000 cases of beer leave the brewery every day. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 15

A day in the life of our African businesses 15

Driving for success 3pm,Pretoria

SAB Ltd set up an owner-driver scheme to improve the delivery of its products throughout South Africa in 1987. The company has invested US$312 million in the project. As a result, 1,000 jobs and 248 independent, sustainable businesses have been created.

Victor Mndaweni is driving his truck along the main highway between Johannesburg and Pretoria. As one of SAB Ltd’s owner-drivers, he has only praise for the company that gave him the opportunity to start his own business. “I’m on top of the world, because my dream of being my own boss is a reality”, he says. In 1995, after spending 10 years training drivers for SAB Ltd, Victor decided to use his experience to go into business as a driver. “I see myself as a role model to all the young men who want to start their own companies but are scared of failing”, he says, adding that many of the younger drivers whom he trained often come to him for help and advice. SAB Ltd is one of only a few companies that can deliver its products to any area of South Africa within 24 hours of an order being placed, so it relies heavily on its drivers. It introduced the Owner-Driver programme in 1987 to improve customer service and productivity, and to enable company employees to become independent businessmen. The scheme has proved popular. Applicants must show that they can provide a cost-effective and reliable delivery service, ensure excellent customer service, and maintain their vehicles. When successful applicants first join the scheme, they rent a truck, which remains SAB Ltd’s property for between one and two years. Then, after appropriate training, the driver buys the truck, enters into a 10-year cartage agreement, and starts developing the business. Today, the programme accounts for more than half of all SAB Ltd’s deliveries, and involves 250 drivers. Each of these drivers employs a crew of at least four, so the project has provided at least 1,000 jobs and created 250 independent, sustainable businesses.

4:04pm TBL’s Barley Development Manager meets with farmers in Arusha to discuss the quality of the current barley crop, which is soon to be harvested and processed into malt at the company’s malting plant in Moshi. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 16

16 A day in the life of our African businesses

4pm,Gaborone Fighting HIV/Aids among employees

When Leso Rankgabo publicly acknowledged that he was HIV positive, he became the first employee in Botswana to do so. His courageous act changed attitudes and behaviour, and the proportion of SABMiller’s employees in Botswana being tested for HIV has increased to 58%.

Leso is sitting with a worker who has just tested positive for HIV. The man is fearful, but Leso, who has been HIV positive since 1992, speaks encouragingly. “HIV need not be a death sentence”, he says, “but a beginning of a new chapter in one’s life – a chapter filled with love, compassion, renewed health and hope. With these possibilities, I know without a doubt that we can live fulfilling lives. But without action, we are doomed.” His words are true not just at the personal level, but at the national and international level too. For any company doing business in Africa, HIV is a fact of life. Currently, 7.6% of the economically active population of Sub-Saharan Africa is infected, and reduced labour productivity is already evident. In Botswana, the prevalence rate is 37.3%, meaning that HIV/Aids is even more of an issue for companies there. SABMiller is committed to taking action against HIV/Aids, and Leso, an employee of Kgalagadi Breweries Ltd (KBL), SABMiller’s Botswana subsidiary, plays an important part. In 2004 after living with HIV for 12 years, Leso decided that he wanted to be open about his status with his colleagues at KBL. Before doing anything, he talked to Mokgadi Nteta, KBL’s HR director. To support him in making his decision, she arranged for him to see a counsellor who was HIV positive so that he could talk the issue through with someone who had real insight. Just one week later, Leso returned, firmly convinced that he would be doing the right thing by publicly acknowledging his status. Anticipating that employees would want to ask his advice once his status was public, Mokgadi asked Leso to take a two-month counselling course so that he would have the skills to deal with all the issues they would raise. Leso agreed. As soon as he had finished this training, he announced his status, becoming the first KBL employee to do so. To begin with, some of his colleagues were shocked and found it difficult to adjust. Like everyone who works for SABMiller, they had been through Aids-awareness training. But there is a difference between knowing something intellectually, and overcoming a natural emotional response. It took time for his colleagues to work through their worries and to be able to use the same lavatory and washbasins as him. But they trusted and cared enough about Leso that they managed it. Leso is now one of KBL’s three full-time HIV/Aids counsellors, and the only one who used to work on the factory floor. As a counsellor he forms a crucial part of KBL’s voluntary counselling and testing (VCT) programme, SAB MILLER AFRICA TEXT 11/10/05 1:43 pm Page 17

A day in the life of our African businesses 17

educating employees and talking to people who are thinking of taking an HIV test, or who have tested positive. VCT is provided free to all employees, as well as their partners and up to three dependents. Any who test positive are also provided with free treatment, including antiretroviral (ARV) drugs. Just as important as this practical, hands-on work is the change in attitudes that Leso’s stance has inspired. To prove that he really was HIV positive, he volunteered to take an HIV test Our Life Threatening Diseases Policy in public. The effectiveness of his outlines the company’s commitment to example is undeniable. After he confidentiality, non-discrimination, respect disclosed his status, the proportion for the rights of employees and reducing of employees being tested rose and managing the impact of life-threatening to 58%. From a low percentage, diseases on employees, their dependents Botswana has now almost reached and the workplace. the average testing rate for SABMiller’s employees in Africa. There is still much progress to be made in Botswana, and KBL is still discovering new ways of approaching the problems there. However, one recent indication that progress is being made came when a female former colleague of Leso’s recently became the second KBL employee to publicly disclose her HIV positive status.

5:00pm Employees leave for the day. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 18

18 A day in the life of our African businesses

6:00pm The second shift in the brewery begins. New workers continue packaging. By this point, approximately 3,000 hectolitres of beer have been bottled. This amounts to over 1.1 million bottles of beer. SAB MILLER AFRICA P19 ONLY.qxd 11/10/05 12:23 pm Page 19

A day in the life of our African businesses 19

Drinking responsibly Johannesburg6pm,

As one of the world’s largest brewers, SABMiller is committed to promoting responsible consumption of its products and to combating abuse and misuse. It has a demanding policy relating to the responsible use of alcohol which is set out in its Alcohol Manifesto. It supports this by investing R25.6 million (US$4 million) in Africa annually to promote responsible drinking.

Back in South Africa, work colleagues are stopping by the company pub for a beer at the end of their shift on the packaging line. Like all SABMiller’s sites, Rosslyn brewery has an onsite pub. This one is called ‘Lapologa’, a Tswana word meaning ‘to relax’. This is a place where ‘going for a beer’ means just that – people stop by to compare notes on the day’s events, have a single drink and relax before heading home. SABMiller actively promotes sensible drinking. Alcoholic beverages, consumed responsibly by those not at risk, can be part of a balanced, healthy lifestyle, bringing people together and adding to the sense of occasion at celebrations. To promote this kind of consumption and to combat alcohol abuse and misuse, SABMiller has made commitments with which every one of its subsidiaries and employees must comply. These are contained in the company’s Alcohol Manifesto which includes its Code of Commercial Communication. All SABMiller employees attend workshops to assist in embedding the Manifesto in the day-to-day business of the organisation, and a comprehensive guide entitled ‘The Responsible Way’ has been produced. The Code of Commercial Communication sets out detailed policies governing the group’s marketing activities. The Manifesto gives the big picture, with requirements for employee alcohol policies, working with retailers, encouraging research and educating consumers. SABMiller does far more than it is required to by law. In South Africa, it invests heavily each year in promoting responsible drinking. In 2004 to support World Health Day on 7 April, it launched a major road-safety campaign using the slogan ‘Drink responsibly. Drive responsibly. Live responsibly’. This complements its work with ARA, the Industry Association for Responsible Alcohol Use. SAB Ltd contributes 50% of ARA’s funds, and works with the organisation to combat underage drinking and discourage drinking when pregnant, for example. Being such a large producer of beer, especially in South Africa, gives the company some influence. Hence, it has helped informal, unlicensed bars or ‘shebeens’ to gain licences and enter the formal economy, thus affording them protection and enabling standards to be enforced. To this end, the company has engaged with licensing authorities, and has also invested in training for owners of shebeens. SABMiller believes in partnerships and works with organisations such as ARA, licensing authorities, governments and retailers to encourage responsibility. By co-operating with as many stakeholders as possible, SABMiller aims to ensure that its products are enjoyed just as responsibly everywhere as they are at Lapologa.

6:01pm Local bars open for the evening. Outdoor bars called Nyama Chomas are a popular meeting place. SAB MILLER AFRICA TEXT 10/10/05 10:09 pm Page 20

20 Business and development: Future challenges

Business and development: future challenges

2005 has been a pivotal year for those direct impact on its business: on its customers interested (and invested) in Africa. The and staff, its supply chain, transporters and combination of the UK Commission for Africa, retailers. And looked at in more detail, the G8 Summit with its focus on Africa and agriculture, water, health, communications and climate change, and the Make Poverty History local economic activity are all key aspects of campaign, has served to put the continent’s the company’s business. economic and social development onto the Like any company, SABMiller has to front pages and editorial columns of the balance the often-competing timetables, world’s press. There is a growing consensus demands and expectations of an ever- that what is bad for Africa is bad for the world. widening list of interested parties – staff, At the same time, the review of the UN’s shareholders, customers, suppliers, local Millennium Development Goals has served communities and governments. There is a to highlight the gap that exists between the growing consensus that the role of companies various social, environmental and economic goes beyond the Chicago school of thought targets set by the world’s leaders, and the that ‘the business of business is business’. reality of slow progress in some parts of the The traditional approach of being a tight world – particularly wide in the case of many business with some philanthropy at the margin Sub-Saharan countries. works to a point. It may offer short-term benefit For at least some of the companies that with a specific community and reflect well on have signed the UN Global Compact and the company, and it should not be dismissed adopted the 10 principles of business practice, wholesale. However, more thoughtful the next step is relatively clear, particularly if their companies are developing approaches business is related directly to a Millennium Goal. ‘beyond philanthropy’ and are actively Companies involved in the water, sanitation, exploring ways in which their core business health, infrastructure, and communications activities can start to operate in ways that are sectors can have a direct impact on progress good for business (and by extension for their towards the achievement of the MDGs through shareholders), help to develop new markets the link with their core business activities. (and hence product demand) and at the same Happily, it is clear that an increasing number time contribute to wider social benefit – vital for of companies are trying to work out how to long-term economic success. develop products or services in ways that are The question for many as they embark on relevant to the needs of poor people, can this redefinition of roles and responsibilities is contribute to progress towards the MDGs how far should this process go, and at what and, importantly, make commercial sense. As stage does what is good for business encroach Graham Mackay says in his introduction, “Private- on what is the proper responsibility of others? sector involvement in development will only be Like many people, we tend to be sceptical effective and sustainable if it is based on a hard about corporate (and, to be fair, NGO and business case and good business practices”. government) rhetoric unless it is matched with For SABMiller, the link between healthy action. It is one thing to produce a nice economies and its major product is, at first brochure and quite another to get results on glance, less obvious. Yet for a global company the ground. One of the major challenges for with its roots in Africa, the practical any organisation engaged in this arena will be consequences of underdevelopment have a how to measure progress to ensure that the SAB MILLER AFRICA COVER 11/10/05 1:44 pm Page 2

Business and development: Future challenges 21

We’re working in Africa

SABMiller plc SABMiller plc (Registration No. 3528416)

Registered office SABMiller House, Church Street West, We’re working in Africa Woking, Surrey GU21 6HS

Head office One Stanhope Gate, London, England W1K 1AF

For further information please go to www.sabmiller.com