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Japan tobacco assigns new CEO

Japan tobacco assigns new CEO

A couple of weeks after the transfer of 30 percent stake belonging to the Ethiopian government in the National Tobacco Enterprise (NTE) SC to Japan Tobacco International, the company has assigned a new Chief Executive Officer (CEO) to spearhead its operation in Ethiopia, it was learnt.

The appointment of the new CEO, Grant Mowat, came days after the resignation of the longstanding CEO of NTE, Gizachew Hagos, as of this week.

Gizachew, who has been leading National Tobacco for the past 11 years, submitted his resignation on January 14, 2017 to the board of directors of the company.

This change in the leadership of the company came at the point where JTI became the principal shareholder of the company taking over the Enterprise from the Ethiopian government with 70 percent aggregate stake in the national tobacco company.

JTI has paid a total of 434 million dollars to acquire the 30 percent share. It is to be recalled that, JTI also invested 510 million dollars to buy 40 percent stake from the Ethiopian government a while back.

Gizachew has served at the tobacco monopoly for the past 23 years in different positions.

In a letter issued by Mowat, the board was notified that Gizachew has agreed to stand-down.

The new CEO, who was working as the deputy CEO of NTE for the past 18 months, has assumed the new role effective this week.

“As to the management of NTE, I have learned a lot from my predecessor,” Mowat said.

“I hope to showcase an equal level of leadership,” he said.

Before his post to JTI’s Ethiopia business venture, Mowat worked as a country manager of JTI in Nigeria as well as West Africa Director for the past seven years. He also has a 15-year experience working with DHL Express, a global logistic company assigned in different African countries.

“Mowat came into the new role because NTE has to be in line with JTI and the company needs someone who has experience working with JTI,” according to sources close to NTE.

This is part of JTI's plan for aggressive expansion, a Tobacco Control Expert, said.

They need someone with the exposure and experience, he said.

Following his departure, Gizachew will work as an external consultant for NTE.

NTE’s establishment dates back to the early 20th century as the first factory was erected in the town of Dire Dawa, 555km east of the capital. By the time the factory was owned by an Armenian native and then moved to Addis Ababa in 1931. During those early ages, the factory used to have one machine, used to churn out 300 pieces an hour, up until the arrival of the Italians.

Then after, the first tobacco monopoly was established a year after the departure of the Italians in 1942, with 300 employees under the name Imperial Ethiopian Tobacco Monopoly.

 The Monopoly was then restructured in 1981, changing its name to National Tobacco and Match Corporation.

In late 1990s, the company was then reestablished as a share company, with a 250 million birr capital.

Currently, aside from the 70.95 percent, the remaining 29.05 percent stake is owned by Sheba Group, a Yemeni company and longtime partner of the Ethiopian government on the tobacco business.

With a successful acquisition of NTE’s majority stakes, JTI eyes both the Ethiopian as well as the continental market.

“We want to take NTE to a new level,” Getu Alemayhu, communication director of NTE told The Reporter a couple weeks ago.

The company also said that it wants to overhaul the 44 percent of the Ethiopian tobacco market which, according to the company, is filled by illegally smuggled tobacco products.

However, commentators of the Ethiopian tobacco industry see this claim with skeptical eye.

This argument from NTE saying it will focus only on the contraband market is intentionally made to influence the adoption of strict tobacco control regulations, an expert who follows the industry said.

Global Adult Tobacco Survey released last year shows that in Ethiopia there is insignificant number of smokers in relative terms, but the growth is said to be alarming.

Currently, there are around 3.2 million tobacco users out of which 2.9 million of them smoke cigarette. The report also indicates that the price of 20 cigarettes is around 18.4 birr which is much cheaper when it is compared to many countries.