Lawyers for the family of Thomas Sankara, the father of the Burkinabe revolution who was killed in the October 1987 coup d'état, say want former president Blaise Compaoré to face trial, voluntarily or by force.
Interview: Abdul Samad Rabiu, Founder and chairman, BUA Group
Abdul Samad Rabiu is a good sport. He has just finished being grilled onstage at our annual Africa CEO Forum opening panel, held in Abidjan. With barely time for a sip of water, he agrees for the grilling to continue offstage. Affable, without over-claiming, he lays out his view of how business and politics should work together to move the continent forward.
It is a vision that has evolved over time. His father, Isyaku Rabiu, was a famous entrepreneur who ran into trouble for dodging duties on rice imports in 1983, following General Muhammadu Buhari’s coup. Today, Buhari is once again in charge, and now Rabiu junior is the famous entrepreneur. Nigeria’s elites are nothing if not narrow.
But Abdul Samad Rabiu is no longer so keen on imports. Instead, he is an evangelist for ‘Made in Africa’ as a way to fix the continent’s employment crisis. “Why is Nigeria importing rice? Why is Nigeria importing sugar? We can do those things,” say Rabiu. “We have a young, teeming population that needs jobs.”
He is not exaggerating about the jobs emergency. Nigeria’s National Bureau of Statistics estimates that youth unemployment is at more than 33% – that is the equivalent of the entire population of the United Kingdom out of work.
Rabiu takes the reins
Back in 1983, Abdul Samad Rabiu took over the family business and successfully steered it through a difficult patch. If the duties scandal that undid his father affected him, Rabiu did not show it, setting up his own import business in 1988 called BUA. It included different interests in sugar and rice, steel and iron.
A contract in 1990 to import iron for the state-owned Delta Steel Company – which was paid in finished steel – proved a lucrative boost for Rabiu. He parlayed the earnings into finance, buying a bank, then a peanut-oil mill in Kano in 1995. In 1997, BUA opened a flour-refining factory in Lagos, with a flour mill opened in Kano the following year.
These were the years of military dictatorship, of finding accommodations with generals. There was no disciplined effort by government to enact industrial policy to encourage more sophisticated local production. “Everyone was lazy, trading imports took over in the last days of the previous regimes,” says Rabiu.
But when the former military leader turned democrat Olusegun Obasanjo was elected in 1999, his government launched a new scheme known as the Backward Integration Programme (BIP). It created import bans on cement, with the idea that this would encourage local production.
Some sceptics say this is just crony capitalism. The programme handsomely benefited cement magnate Aliko Dangote, leader of Obasanjo’s fundraising committee. Rabiu, too, was a major donor to the then governing People’s Democratic Party.
But it turns out that several governments, from the United States to Japan and South Korea, have successfully used backwards integration tools to kickstart domestic industry.
These work best when governments are disciplined. That may not be the first word that springs to mind when pondering Nigerian administration. Nevertheless: “everybody thought the government was crazy,” Rabiu recalls. “But they kept on it, they kept confiscating [cement].”
Proof in the numbers
For Rabiu, the proof is in the numbers. Back then, Nigeria was producing around 4m tonnes per annum. “Today, we have the capacity to produce over 40m tonnes,” says Rabiu, imagining the chaos that would take hold if Nigeria’s creaking ports were forced to bring in even half that amount. “It has saved us so much hassle, not to mention the money we have saved and jobs we have created.”
It has helped him become a heavyweight player in the cement sector. In 2008, BUA Group bought a majority stake in the Edo Cement Company, following a privatisation round. A decade later, in August 2017, Nigeria’s vice-president, Yemi Osinbajo, inaugurated BUA’s state-of-the-art cement factory extension in Okpella, Edo State, which has the capacity to produce 3m tonnes per annum. In July this year, Osinbajo was back to open the $350m BUA cement plant in Sokoto, which will be able to produce 1.5m tonnes. A new cement factory is in the pipeline for Ebonyi State.
BUA Group accounts for around 10-15% of the Nigerian cement market. Given the neat overlap between the activities of Dangote Group and those of BUA, it is perhaps not surprising that the two have had skirmishes. In December 2017, Rabiu asked President Buhari to intervene, saying that Dangote was trying to force his way into limestone-mining areas belonging to BUA.
Rabiu laughs it off: “Some mischief-maker approached Dangote saying he had title to the land where we were operating. Aliko acquired this ‘fake licence’, and so we got into discussion. But Aliko is a brother and a friend.”
The issue is still in arbitration but appears to have been set aside. There are large limestone deposits in the area, and Dangote has his own $1bn cement factory in Edo State, which began construction in 2016, so perhaps friction is inevitable.
But perhaps Dangote knows that it is a threat to have Rabiu in the rearview mirror. Rabiu broke Nigeria’s sugar-refining monopoly in 2008, held by Dangote, opening a 720,000tn-a-year facility that largely uses sugar from Brazil.
It is unlikely that the rivalry will affect their long-term relationship: they were recently spotted together on a panel exhorting the government to begin a mass housing policy to meet Nigeria’s large unmet needs; something that would no doubt give a filip to cement demand, too. Both men have done well from government policy. The administration of President Goodluck Jonathan in 2013, for example, finally activated the BIP scheme for the sugar industry that Obasanjo had proposed in 2004.
Both BUA and Dangote Group have access to large swathes of land to grow cane. They – along with the third sugar producer, Flour Mills of Nigeria via their Sunti Sugar subsidiary – have seen less explosive success than in cement. Floods and struggles with host communities have tamped down progress. BUA Sugar has invested $300m into developing a 20,000ha site in Lafiagi in Kwara State and has a 50,000ha site at Bassa in Kogi State, too.
The Sunti Golden Sugar Estate offers an instructive example of the sector’s problems. It had aspired to be the exemplar of the sugar masterplan outlined by the Jonathan government, which wanted the country to reach 70% self-sufficiency. This May, Sunti temporarily closed the facility less than 100 days after opening because it could not source enough sugar cane from farmers.
Despite sugar taking the slow lane, the Nigerian government’s drive for economic nationalism continues. This is in part because of the huge pressure that imports are having on exchange rates. When the oil price crashed in 2015, foreign exchange became scarce, putting all businesses dependent on importing raw or intermediate products under pressure.
“I’m happy that [for] the businesses we are now in we really don’t need to import or spend a lot of foreign exchange,” says Rabiu, who sold off his wheat-milling interests to Olam for $275m in 2016.
Rabiu is beginning to weigh the upside in higher value-added manufacturing, such as steel. “If you mine iron ore, your cost per tonne is $25; you need 3tn of iron ore for a tonne of steel, which sells for, say, $500 a tonne,” rattles off Rabiu. “And that is just the basic product. As soon as you go into steel sheets, pipes, valves, you quickly hit $2,000-$3,000 per tonne.”
Government must help
This will not happen in Nigeria without the government. Steel mills require steady and affordable electricity and supportive policy.
“If I were in government,” says Rabiu, “I would look at the $3bn-4bn we spend importing steel pipes, find out who was importing them and tell them: ‘Guys, we are stopping those imports. But we will give you five years and help you produce steel in Nigeria fully integrated from iron ore.’ And it’s easy. We did it in cement. We did it in sugar.”
Rabiu might also get into finance. The former chairman of the Bank of Industry has particular views on the state of banking in Nigeria. “Most of these banks are actually just buying [government] bonds for 10% [returns],” he says. “Someone might have a very good business plan, and it would work, but he can’t find the money.” Rabiu argues that governments are the only ones who will be able to help entrepreneurs access long-term money at palatable rates.
BUA has started talks with Chinese company Sinoma – which built the Edo cement plant – about building a steel plant. Should that plan come to fruition, it would close a remarkable circle for Rabiu: from steel importer to steel maker. “How can you call yourself the biggest economy in Africa and not make steel?” he asks.
This article first appeared in the October 2018 print edition of The Africa Report magazine