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Add Local Value To Resources To Avoid Global Shocks, Says Abdul Samad Rabiu

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ABDUL SAMAD RABIU CHAIRMAN BUA GROUP 1.jpg

A conversation with Abdul Samad Rabiu by Omar Ben Yedder

BUA’s $400m sugar refinery points the way to the future of African agriculture, as the company’s founder and chairman tell us.

Agriculture will create Africa’s next billionaires, the president of the African Development Bank Akinwumi Adesina is fond of saying.

His proclamations have not fallen on deaf ears and one current billionaire, Abdul Samad Rabiu, founder of the BUA Group, is doing just that, investing in a vertically integrated sugar facility in Nigeria’s Kwara state.

The $400m project includes a 20,000-hectare sugar plantation, a sugar milling plant, a sugar refinery, an ethanol plant, and a 35 MW power plant fuelled by bagasse, a sugar cane residue.

Sugar may not get the attention of other crops, even though it is frequently in the top five crops traded globally by value. Africa has some important producers – notably in Southern Africa such as Eswatini and Mozambique – but countries such as Nigeria, Egypt, and Algeria still import more than they consume. In Nigeria, imports account for 90% of consumption.

Making use of competitive advantages

For Rabiu, sugar is one of many low-hanging fruits when it comes to agricultural opportunities and to working within the country’s import substitution strategy. His group – one of the most important diversified conglomerates in Nigeria, is already the fourth largest listed company in Nigeria by market capitalization, operating in foods, cement, mining and infrastructure, and now agricultural production and processing.

Rabiu made his fortune in cement and is applying the same logic to agriculture: tap into what your country produces and take advantage of your country’s resources and competitive advantages.

In cement, all the inputs – primarily limestone and gypsum – can be found in Nigeria. As a result, production costs make them highly competitive against imports, both in Nigeria (which has become self-sufficient in cement) and also neighboring countries. Energy costs remain a concern, however.

Localized production is key

Still, the maths are simple in terms of agriculture, he says. As Rabiu points out, the conflict between Russia and Ukraine has once again highlighted Africa’s vulnerabilities. 

Countries that produce what they consume have been better able to manage their inflationary risk.

Uganda for example produces most of its staples – namely matoke, cassava, and sweet potatoes – and as a result, has not suffered as badly as other countries when it comes to food inflation. And with an appreciating dollar, importing inflation is now a bigger risk for countries in Africa and elsewhere.

Rabiu’s model is simple and effective: “We concentrate on areas where we can add value to resources that we have locally… this makes you less susceptible to shocks. We’re sitting on 60% of the world’s arable land and 30% of the natural mineral resources.”

Rabiu himself has seen the mounting costs of global shocks. Increases in the price of wheat are threatening the viability of BUA’s flour and foods business.

“Last year we were paying $250 a tonne to import wheat. Today that has increased to $600. So if you are importing 1m tonnes a year, that is adding close to $30m per month to your cost base. We can’t pass this cost to the consumer, they just wouldn’t pay it, so yes it’s a cause for concern.”

His business model going forward is therefore to be as little exposed to foreign exchange risk as possible and localize as many stages of the production process as possible. This is evident in the new sugar facility.

Fully integrated plantation and mill

“The beauty of the sugar refinery is that in terms of agriculture it’s the way to go. Our plantation is going to be completed by next year. It’s a 20,000-hectare fully integrated four-in-one plantation with a sugar mill, sugar refinery, ethanol, and power plant. Once we complete it, it should reduce Nigeria’s import bill by $150m a year. 

“And we should be creating 6,000 direct jobs. It’s an exciting project. Even the power we produce to run the mill and refinery comes from a bi-product of the sugar cane. Agriculture is turning out to be a game-changer. And Nigeria sits on almost 48m hectares of arable land between Kwara state, Niger state and Kogi state – flat, arable, fertile land.”

For the time being, sugar will be sold in the domestic market. With a population of 200m, satiating local demand makes business sense. And selling to other countries is still tough.

Despite the implementation of the African Continental Free Trade Area, Rabiu says there are still challenges to cross-border trade as governments make a substantial chunk of revenues from import duties.

The Kwara state government was supportive in giving them the land on a freehold basis, although they did have to compensate local communities at a considerable cost. Getting the title deeds in a clean and transparent way was a deal clincher, he explains.

Once this was settled, everything else, including finance, was relatively straightforward. Half of the project costs are being financed by the Africa Finance Corporation.

Nigeria must solve its power problems

Rabiu is known for his optimism and for continuously selling the Nigerian opportunity. But he admits to concerns over the country’s inability to get to grips with long-standing power supply difficulties.

Power, he says, which is critical to many of his businesses, is still a major issue. Africa, he says, has 180 GW of production capacity, with half of that in Egypt and South Africa. California as a state, he says, produces 285 GW. Nigeria produces less than 10 GW.

All these eat into a company’s productivity. Not to mention the fact that most projects will require a fully integrated solution, and that involves a higher capital expenditure than in other countries. But the returns, he says, are generally highly attractive. “Beneficiation is where the value is.”

With Nigerian elections approaching, he sends a message to the prospective candidates: “What I am looking for is somebody that can come and unlock all the opportunities in this country. It makes me sad that we have everything and yet we have nothing. We import almost 80% of what we eat. We have no business importing food. These are the issues that we want our leaders to address and help us resolve.”

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Dangote Boosts Abuja Trade Fair

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World Water Day: Dangote, Others Make Case For GroundWater Protection

Olushola Okunlade Writes

The Dangote Group has been described as a significant premium player as over 300 corporate exhibitors are participating in the 17th Abuja International Trade Fair (AITF) that is expected to be declared open by President Muhammadu Buhari on Friday.  

Speaking to newsmen, the Director-General of the Abuja Chamber of Commerce and Industry (ACCI), Ms. Victoria Akai said: “As a member of ACCI, the Dangote Group further strengthens the position of ACCI in implementing business activities and advocating for business-friendly policies.

”The DG said the Dangote-ACCI partnership is strategic and geared towards showcasing made-in-Nigeria products, which will help inform prospective exporters about the available opportunities and processes.  

Ms. Akai said the company had been a significant sponsor of the Abuja International Trade Fair, including this year’s Trade Fair. In the same vein, the President of ACCI, Dr. Al-Mujtaba Abubakar, told newsmen that the theme for this year’s exhibition: “Creating an Export Ready Market through SMEs Digitization,” offers a wide range of opportunities for Small and Medium Enterprises to ginger their performance, and especially in relation to the non-oil sector.  

He said: “The Abuja International Trade Fair, since its inception, has served Nigeria as a trusted global trade destination and a potential market for over 50,000 consumers.”

The 17th AITF is scheduled to hold between Friday, September 30 and Sunday, October 9, 2022, at ACCI Abuja International Trade Fair Complex.  

The Dangote Group’s Executive Director of Government and Strategic Relations Engr Mansur Ahmed said the partnership with ACCI offers the company the opportunity to display its numerous innovative products while contributing its quota to the Nigerian economy through Trade Fairs and expos.  

He said the President of the Group Alhaji Aliko Dangote is passionate about developing the Nigerian economy, exporting made-in-Nigerian goods, earning foreign exchange, and creating jobs for the populace. Engr Ahmed said the company is desirous of entering into any strategic partnership that will set the country on the path of rapid growth and development.  

Aside government, the Dangote Group is the second biggest employer of labour in Nigeria.  

A statement by the Corporate Communications Department of the company said a special help desk has been set up at the company’s pavilion to respond to queries while urging participants to leverage the numerous innovative products which include the: Dangote Fertiliser, Dangote Sugar, Dangote Cement, Dangote Salt, and lots more.  

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PhotoNews: LCCI President Visits Association Of German Chambers Of Commerce And Industry (DIHK) In Berlin, Germany

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LCCI President Visits Association Of German Chambers Of Commerce And Industry (DIHK) In Berlin, Germany

Olushola Okunlade Writes

The President of the Lagos Chamber of Commerce (LCCI), Dr. Michael Olawale-Cole, CON, has paid a courtesy visit to the Association of German Chambers of Commerce and Industry (DIHK) in Berlin, Germany.

Asiwaju Dr. Michael Olawale-Cole, CON met Mr. Heiko Schwiderowski, Director of the Africa section of the Association of German Chambers of Commerce and Industry (DIHK) during a courtesy visit to the Association of German Chambers of Commerce and Industry (DIHK) in Berlin, Germany on Thursday, September 28, 2022.

LCCI President Visits Association Of German Chambers Of Commerce And Industry (DIHK) In Berlin, Germany
President of the Lagos Chamber of Commerce (LCCI), Dr. Michael Olawale-Cole, CON, and Mr. Heiko Schwiderowski, Director Africa Section of the Association of German Chambers of Commerce and Industry (DIHK) during a courtesy visit to the Association of German Chambers of Commerce and Industry (DIHK) in Berlin, Germany on Thursday, September 28, 2022.
LCCI President Visits Association Of German Chambers Of Commerce And Industry (DIHK) In Berlin, Germany
President of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Michael Olawale-Cole, CON, and Mr. Edgar Zedler Head of Regional Affairs NUMOV/ German Near and Middle East Business Association during a visit to the Association office in Berlin, Germany on Thursday, September 28, 2022.

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The Impact Of E-commerce On Supply Chain

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The Impact Of E-commerce On Supply Chain

….as Jumia leads the fast and reliable digital market hub

Olushola Okunlade Writes

The rise of E-commerce and the digital marketplace has changed the composition of consumers buying behavior and expectations, as consumers now expect fast, free shopping and competitive pricing.

This demanding delivery schedule challenges traditional logistics and supply chain models, and companies are now forced to adjust their strategies to provide the low-cost and on-demand delivery service that consumers now demand.

Technological advances in many aspects of our lives have resulted in buying, selling, and other forms of transactions being executed online. Once the consumer makes an online purchase, the work begins to transport the products from the seller to the consumer – and that’s where the logistics sector comes into play.

Statista claims that the logistics sector is one of the pillars of global trade, valued at more than 5.7 trillion euros.

In Nigeria, the logistics and supply sector is growing exponentially. According to the 2018 Logistics & Supply Chain Industry Report, Nigeria’s logistics industry was worth 250 billion naira ($696 million) as of 2018, which represents an increase of 50 billion naira ($140 million) from 2017 statistics. This value has increased over the years. The industry is currently expanding because of improved aviation and rail infrastructure, stronger international relations, expansion in the manufacturing and export industries, and continuous e-commerce growth.

E-commerce and the Supply Chain Sector

The Impact of E-commerce on Supply Chain

The supply chain links numerous parties and organisations, including consumers, enterprises, merchants, financial, and information flows. To deliver high-quality services and products, managing various groups and activities requires a method that can effectively and efficiently integrate interactions among the entities, particularly when organisations use resources from different regions of the world.

The supply chain has grown more adaptable and effective as a result of e-commerce. It has given businesses fresh and creative ways to connect with consumers. E-commerce also has made it possible for companies to offer goods directly to consumers instead of through conventional retail channels.

The increase in e-commerce adoption has made logistics services a necessary component of daily living in Nigeria’s major commercial cities. Access, cycle time, dependability, and cost of logistics are directly impacted by the state of the available infrastructure and the degree of integration. High-performance government agencies, funding, and industry expertise are also essential. Therefore, logistics is a primary marker of economic advancement as represented in trade facilitation and company competitiveness.

How E-commerce is Revolutionising the Supply Chain Sector

The Impact Of E-commerce On Supply Chain

E-commerce has several advantages in the supply chain sector. Firstly, it offers real-time data on inventory levels and order status. This lowers the possibility of stockouts or overstocks by helping businesses to make better decisions about when to produce or order products.

Collaboration between businesses and their suppliers and consumers is also made simpler by e-commerce. For instance, a business can quickly place orders and submit estimates to suppliers. This lessens the amount of paperwork required and helps to speed up the ordering process.

A company like Jumia in the supply chain sector, through e-commerce, connects vendors with consumers across a broad delivery area. As a result, local vendors and international brands can effectively reach more consumers across the country using the platform. In addition, consumers’ shifting preferences, lifestyles, and behaviours have led companies like Jumia to introduce quick commerce to make online shopping more convenient than ever before.

With speed and convenience becoming more important than ever, Jumia opened its logistics services to third parties. Its logistics network smoothly connects hundreds of logistics partners across Nigeria, from small business owners to significant logistics service providers. It offers merchants the advantage of a distributed and scalable logistics service and gives consumers quick access to the products they desire.

What Does the Future Hold for Logistics?

The Impact Of E-commerce On Supply Chain

Technology remains a strategic imperative for supply chain organisations. In the next three to five years, we will see an increase in the adoption of digital supply chain technologies, including those that improve human decision-making.

It is predicted that the future of the supply chain sector will be defined by data, analysed by artificial intelligence, and driven by machines. Gartner has predicted that by 2023, AI techniques will be embedded across 50% of all supply chain technology solutions.

Already, Jumia Logistics is leading the forefront, as the company has invested in machine learning and several data science techniques. This has helped to offer more precise delivery times based on multiple factors, and even to predict the ideal routes that delivery agents can rely on to meet their targets. Consequently, online consumers will have better experiences on the mobile app with greater certainty about the progress of their orders from purchase to delivery.

Furthermore, the company’s move into drone delivery with its recently announced collaboration with Zipline, the world’s largest instant delivery service, is another game changer for the industry. Using the latest instant logistics technology, Jumia will be able to offer consumers living in rural or remote areas on-demand delivery of the products they need.

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