NATIONAL PLANS

Nigeria 2016 | INDUSTRY | INTERVIEW

TBY talks to Alhaji Abdulsamad Rabiu, Chairman of BUA Group, on diversifying business lines, imports and exports, and the potential effects of new legal reforms.

lhaji Abdulsamad Rabiu
BIOGRAPHY
Billionaire industrialist, Alhaji Abdulsamad Rabiu is the Executive Chairman of BUA Group, one of Nigeria’s leading foods and infrastructure conglomerates with interests spanning cement manufacturing, sugar production and refining, real estate, flour and pasta milling, rice production, and port concessions.

The BUA group has interests across the economy. What strategy governs that growth and diversity?

Simply put, Nigeria has a population of 180 million people, meaning manufacturing and agriculture are going to play an important role in the country's development. When the company started, we were focused on import and export, but later we moved into flour milling, sugar refining, ports management, real estate development, and cement manufacturing. In 2008 we bought a majority stake in the publicly listed Cement Company of Northern Nigeria (CCNN), which had an old plant that we took over and optimized. We also bought the 500,000 tons per annum Edo Cement Company and developed a 3-million tons per annum greenfield Obu plant. In total, we will have around 10 million tons of cement production in the next two years. For agriculture we have sugar plantations and processing facilities; however, Nigeria still imports over 95% of its sugar needs as raw product. We also have the 50,000-ha Bassa sugar plantation, which is by far the biggest in the country. One of the main challenges for most manufacturing businesses in Nigeria however, is sourcing foreign exchange. With the price of crude oil coming down and the demand for foreign exchange going up, we made a strategic decision to venture into businesses where the sourcing or utilization of foreign exchange is less, and where most of the material needed for production can be sourced locally. This will help create badly needed jobs locally, diversify our business further, and stimulate the Nigerian economy.

Last year there was a drop in cement prices by Dangote. How has that changed your business model?

Dangote has been blessed in the sense that prior to our scaling up capacity, they were doing businesses with minimal competition, but situations like that do not promote industry efficiency. When we started production, one of their strategies was to bring down prices when the price would have fallen naturally, as there was no reason why cement should be sold at almost twice the cost of production per ton. When we started we reduced the price by about $20 per ton and Dangote dropped their prices further. It did not affect our business model and we will continue to do whatever is necessary, regardless of what Dangote does. The market is big enough for everybody and I would even welcome more investors into the industry.

What lines of your business are you looking to push in the future?

We are pushing a backward integration program on sugar, which will see us invest heavily in the short-term in bringing our sugar plantations fully on stream. We currently have about 75,000 ha of farmland, which we intend to dedicate to this. We believe this will further reduce the country's dependence on imported raw sugar while supporting the value chain in sugar production within Nigeria. We are also working on several infrastructure development projects in view of Nigeria's huge infrastructural deficit and the commitment of the new government to closing that gap. We expect to almost double our cement production within the next 18 to 36 months.

What reforms would you like to see from the new government to help realize Nigeria's potential?

We provided inputs into the drafts of the Nigerian Industrial Revolution Plan and the Petroleum Industry Bill. The NIRP seeks to increase the contribution of the manufacturing sector to Nigeria's GDP by adding about NGN5 trillion in the next three to five years to annual manufacturing revenues and reduce the country's dependence on oil. Backed by ongoing reforms in key sectors of the economy, especially in the area of energy and power generation, this plan can be achieved. Also, the president has already approved the joint venture companies for NPDC to come together with their partners and corporatize. This is a good thing, but the most important thing is to have transparent and non-corrupt institutions. Once that happens, everything will fall into place. The new cabinet has been inaugurated, so we will soon have a clearer map for reforms. I am hopeful because our government is conscious of the fact that Nigerians are expecting a lot.