BUA: An emerging African conglomerate

BUA is inevitably one conglomerate to watch in Africa within the next decade.

Apart from the diversification that has taken place in the group in the last twenty years, BUA has a well-defined strategy to tap into the federal government’s plan to expand the economy through the real sector.

BUA Group has over the past few years embarked on a series of strategic acquisitions and new business developments, which have seen its business portfolio expand to include the Cement Company of Northern Nigeria (CCNN), Edo/OBU Cement, BUA Flour Mills, BUA Sugar Refinery, BUA Pasta, BUA Ports and Terminals, Lafiagi Sugar Company and BUA Estates, among other agribusiness holdings.

“We made our initial foray into business in 1988 and we have so far taken BUA from strength-to-strength by contributing enormously to the growth of the Nigerian economy,” said Abdulsamad Rabiu, chairman, BUA Group.

BUA Group started as a trader, specialising in the importation and marketing of iron & steel, agricultural and industrial chemicals. The group was then challenged by poor access to funding and foreign exchange. However, resilience transformed the company from a mere trader into a manufacturing conglomerate.

The results of BUA Group’s tenacity was the setting up of a flour plant in Lagos in 2005, a mega sugar refinery with 720,000 metric tonnes per annum capacity in Lagos in 2008, and another 720,000mtpa plant that will soon be commissioned in Port Harcourt. The group also has the vegetable oil processing mills and the cement projects. The company recently started production of cement from its three million metric tons per annum plant in Obu, Okpella, Edo State.

“In addition to the Obu Plant, the Edo Cement Plant, which has a capacity of 500,000tonnes/annum, is also being rehabilitated and would be receiving clinker from the Obu Cement plant before being fully rehabilitated. A $600million, 3.5million metric tonners/annum second line project for Obu cement plant is expected to come on stream by 2018. Upon completion, the Obu and Edo plants would be rolling out about 7million tonnes/annum of cement. Aside from the initial costs of over $500 million in Obu Cement, we have also invested over $100 million in gas turbines to power a 50-megawatt plant for 24-hour electricity generation as well as the construction of a 30km gas supply pipeline.” Rabiu said.

The company said it would soon start exporting cement to neighbouring countries, especially given the export potential of CCNN’s Sokoto Cement plant which is in close proximity to Nigeria’s border with Niger Republic.

Just recently, the group announced the divestment of its flour assets to Olam International in a deal worth $275m.

According to Abdulsamad Rabiu, the chairman of the group, the business’ strategic focus would now be to diversify to areas with greater potential for export, where the sourcing and utilisation of foreign exchange are less and most of the materials needed for production sourced locally, while also positioning the company’s current line of foods and infrastructure business for market leadership.

“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 to ten million metric tonnes per annum within the next 18 to 36 months,” he said.

Hence the group has clear-cut plans to emerge as one of the biggest investors in Africa by, first, tapping into the continent’s biggest economy and later expanding its operations into other strategic African countries in the short-medium term.

As part of strategic plan to effectively implement government policy on backward integration of the manufacturing sector of the Nigerian economy, BUA Group has since embarked on rapid expansion of its sugar plantations inKwara and Kogi States.

“Extensive work is ongoing in Lafiagi, Kwara State, with over 20,000 hectares and we have another 50,000 hectares of farmland in Bassa, Kogi. These two operations form the fulcrum of our backward integration programme for sugar and this will further reduce the country’s dependence on imported raw sugar while supporting the value chain in sugar production within Nigeria,” he noted.

Rabiu appreciates the work being done by government to involve the private sector in ensuring that all legal and regulatory frameworks are effectively in place to boost the real sector of the Nigerian economy.

“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 N5trilion in the next 3 – 5 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.”

“Taking the cement industry as a prime example, we have always had a lot of limestone reserves in the country, but look at how much the industry has grown now that people are investing in that sector.

“Nigeria is a challenging environment but the returns are high. A good idea will always be a good idea, no matter where you are,” he added.

He believes that the current government will focus on resolving issues in the power sector to boost the real sector of the Nigerian economy.

“It won’t be easy, but I am hopeful it is going to work this time. The most important thing has been achieved, which is allowing private investors to come and invest. Once we solve our power issue, Nigeria will fly,” he said.

ODINAKA ANUDU