Nestlé’s demands on Ethiopia

The Swiss multi-national food giant, Nestlé, committed last week what may be the publicrelations blunder of the decade, according to a commentary in The Lancet. Nestlé shocked many by demanding from Ethiopia return of US$6 million that the company feels it is owed as "a matter of principle". In 1986, Nestlé bought the parent of a German company which the Ethiopian government had nationalised in the 1970s. The government had offered Nestlé US$1.5 million (at today's exchange rates) as compensation, but the company, using the exchange rate at the time of nationalisation, says the debt is now US$6 million.

The situation was brought to light on December 18 2002, in an Oxfam press release highlighting Nestle's demand. US$6 million would, Oxfam argued, provide safe water for 1.5 million families or antidiarrhoeal medicines for 750,000 children in one of the poorest countries in the world. In response, there appeared to be some mellowing of the company's position, but not the principle that a debt was outstanding. Nestlé said they would invest any repayment proceeds in Ethiopia in a project that will benefit the country. Last year, Nestlé made profits of US$3.9 billion.

McNamee, D (2002). Commentary, The Lancet, Vol 361, Jan 4, 2003, p12