Nigeria’s business mogul and third richest man, who cemented his return to Forbes’ African Billionaires List this year since dropping off it in 2015, says he owes his $1.6 billion net worth to being a disruptor – and to being stubborn.
The inside of Abdulsamad Rabiu’s office, on the corner of Churchgate Street, in Victoria Island’s commercial district in the heart of Lagos that is notorious for chaotic, rambunctious traffic, is marked by a serious lack of clutter.
The expansive room is tastefully decorated in cream and black hues. Rabiu’s desk is organized in a manner that seems as though everything is exactly where it should be; completely spotless and devoid of any distractions that will hinder the 58-year-old founder of BUA Group from managing his vast empire, a conglomerate spread across southern and northern Nigeria.
A firm believer in strategy, the cement and sugar tycoon boosted his fortunes by a whopping $650 million this year when he merged Kalambaina Cement, a subsidiary company of his BUA Cement, with the publicly traded Cement Company of Northern Nigeria (CCNN), where he was a controlling shareholder.
That calculated move has made him the third richest man in Africa’s largest economy, with a staggering net worth of $1.6 billion, according to the latest Forbes African Billionaires List, which he dropped out of.
“Nigerian cement mogul Abdulsamad Rabiu, who runs and owns the BUA Group, returns to the list for the first time since 2015. He merged his Kalambaina Cement firm into publicly-traded Cement Company of Northern Nigeria, which he controlled, in late 2018. Rabiu now owns 97% of the list entity,” Forbes reported.
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He says his fall from the coveted list was due to the devaluation of the Naira, which meant that the exchange rate went from N190 against the dollar, to N300.
“That was the main reason I dropped off the rich list. Also, most of our other assets were not being considered because once you are not listed, it becomes more challenging to get an accurate valuation.
“Our assets, in the cement industry alone, are worth more than $2 billion, but that is because Obu Cement [Plant], which is our biggest cement plant, is not listed,” Rabiu says.
His return to the billionaire boys’ club is due to five years of strategic expansion and a much more stable Nigerian economy. However, it is about more than just numbers for Rabiu.
“It is a good feeling to be on the rich list, the most important thing is not about how much money you make, but the impact you make. Touching people’s lives is more important because money is a number. What you need in terms of your day-to-day is not that much.”
One of the secret ingredients to his tremendous success is that Rabiu is a firm believer in delegation.
His phone purrs only occasionally, but this is also because his plants run with clockwork precision in an environment that is chaotic at the best of times.
He has a calm and soft-spoken demeanour, a trait which is, quite frankly, unconventional for someone who has fought his way through hell and high water in business.
“I am quiet but I am very stubborn. If I want something I go for it and if I don’t want it, no matter how much I’m pushed, I don’t do it. If somebody is stubborn, sometimes it’s seen as arrogant but I don’t think I am an arrogant person,” Rabiu says.
It is also immediately clear that he is not a man who rushes into things. He would rather move methodically, with clarity and precision, a skill he picked up in the early days learning the ropes from his industrialist father. Case in point is how he built his empire brick-by-brick from the early days as an importer.
“In 1988, I started my own business and founded BUA International Ltd. At the time, the in-thing was importation of rice, sugar, fertilizer, agriculture etc. So the challenge was that, if there was scarcity of any product, everybody would now go and import the same thing. This pushes the price up and everybody will say the price of fertilizer has doubled, so everyone would now go and import fertilizer and within a short time, the product would now come down to half price and everyone would lose money,” Rabiu says.
He decided to break the mould and instead adopted a value-added approach. He focused on bringing in raw materials to process it locally.
“We started with oil in Kano. We were processing crude palm oil to refine it. We were also getting peanuts from Kano and then crushing and processing, and that was a good business at the time because it was adding value and people were not used to adding value to anything at all. They were importing everything.”
In 2000, BUA acquired Nigeria Oil Mills, which was a peanut processing company in Kano. In 2005, he set up the BUA Flour Mills factory in Lagos. Rabiu saw very early on that he had to be distinctive in a sea of importers who simply followed the trend.
It is this measured philosophy of value that has allowed BUA Group to innovate and expand capacity to about 2 million tons of cement per annum with its new merger. Rabiu says with the consolidation, BUA Group has a market valuation of about $800 million. A far cry from the company’s humble beginnings.
Returning to Kano as a newly-minted graduate with a degree in economics from Capital University in Columbus, Ohio, in the United States, a lot had changed while Rabiu was away.
The country was being run by a military leader and there were severe shortages in foreign exchange which made the business of importation extremely difficult. Following his new ethos of adding value to the production line, Rabiu set his eyes on the sugar business by establishing the 2,000 metric ton (MT) per day capacity plant in Lagos which is the second largest refinery in West Africa, after the Dangote Sugar Refinery.
But the BUA story isn’t without its share of trials and tribulations. The fight began in the early years of business, when the Nigerian government introduced the backward integration policy in the sugar business.
“This is where you were allowed to import raw sugar and process into refined sugar and you must have a sugar refinery facility. So, if you have the facility for a sugar refinery, you were able to import sugar and pay a duty of 5% to 10%, while everybody else was importing refined sugar and paying 50% duty,” Rabiu says.
At the time, it was only the Dangote Group that had the refinery facility, so Rabiu decided the lack of saturation made sugar a viable business to go into.
The government’s backward integration policy is a well-known competitive strategy which allows an organization to control more of its supply chain in order to bring down the costs.
It means that a company is allowed to purchase or internally produce segments of its supply chain. This is done to ensure the supply, along with securing bargaining, leverage on vendors.
To take advantage of backward integration, a company needed to have its sugar refinery at the ports in order to import raw materials in bulk, which made having a terminal at the port a prerequisite.
“At that time, everything was owned by [the] Nigerian Ports Authority (NPA), so you had to go and lease land from them, together with the storage. This was a huge capital investment, and to make matters worse, there was no land at the time because everything was taken.”
Luckily, Rabiu was able to find a company that had a facility that was not being utilized.
“We paid a lot of money to that company, got all the designs, bought all the equipment, we were about to start the company, then the lease was revoked and we could not go there. This was during the [Olusegun] Obasanjo regime. Most of our money had been spent on getting the land and equipment and they revoked the lease and gave it to somebody else. It took us a year and almost $50 million in cost before we were able to start all over again,” he says.
Incidentally, that site was given to Rabiu by his father. Once they took off, the business worked out so well that they were able to recoup their money within a very short period of time. The sugar venture was a cash cow.
The company was able to reap huge margins due to the difference in duties for imports of raw sugar, and, yet again, Rabiu found validation in his strategic approach to business.
Even in those early days, his penchant for success was apparent. The sugar refinery is still operating at capacity and Rabiu is in the process of commissioning another refinery at Port Harcourt in Nigeria. They say the apple does not fall far from the tree, and this is true for Rabiu.
His father, Isyaku Rabiu, was a renowned businessman, who also made his fortune in trade decades after Nigeria’s independence.
His wealth grew significantly until the 1983 coup which toppled the government and led to the arrests of President Shehu Shagari and his close allies, including Isyaku, leaving his business empire in a precarious state.
But where his father lost his footing in trade, Rabiu was destined to find his in cement. Opportunity came knocking in 2007 when the price of cement was so high that the Nigerian government decided to introduce yet another backward integration in the cement industry.
The idea was simple. You could only import cement into Nigeria, if you had a cement factory. At the time, there were only two multinational organizations in the country with the capacity to build their own cement plant.
Local companies like the Dangote Group and Flour Mills of Nigeria were the only two other companies that had signed contracts to build cement factories in Nigeria.
“Nobody else was allowed. So President [Umaru Musa] Yar’Adua was alarmed that the prices of cement was going up every day and he called for a meeting when the price was $300 per ton. He said it was too much, so what do we do? He was briefed on the reason nobody else could bring cement into Nigeria and told that there was a policy in place that only those building factories could import cement into Nigeria, and we did not have enough capacity in terms of manufacturing to meet Nigerian demand.”
There were only three or four cement plants in Nigeria at the time producing about 4 million MT per annum against what the country needed – almost 10 million MT.
The president ruled that the existing backward integration policy could not be continued and established a committee who came up with the idea that the policy should allow companies outside manufacturers who were building plants, in order to bring prices down.
“So they selected six companies to be able to import cement and we were chosen as one of the six companies,” Rabiu says.
But there was a big challenge.
“How do you import a million tons in a year or even 100,000 tons a month in bags? That will be like five or six cargos a month, to be able to take the bags out and transport them all over the country, so nobody could actually do it.
“The other guys had terminals, which means they were discharging the cement in bulk and taking it to their warehouses and bagging them in the warehouses and they had been in the business for a long time,” Rabiu says.
In order to reap the rewards in the lucrative cement industry, all the new six companies who had been granted licenses needed to secure terminals at the port. But the barriers to entry were significantly high.
Rabiu decided on a disruptive approach. “So I now came up with the idea of the floating terminal. It is like a factory on a vessel, so it moves. It is a big ship with a terminal in the ship. It was an idea I read about a long time ago and I decided to be innovative.”
He approached the only terminal at the time that was free in Greece and agreed on a price.
Fearing the size of the competition, Rabiu knew he needed to get protection for his business, if he stood a chance of competing favorably in the new venture.
“I knew that we had tough competition from the people who had factories and they were not happy with the government giving us the license because they were making so much money they did not want anyone to come into the business.
“So they were doing everything to frustrate it [the process]. I knew that there would be a problem. So before I bought my vessel, I came to Nigeria and sought an appointment to meet the president who granted me an audience and I explained everything to him.”
Rabiu made an impassioned plea to President Yar’Adua — he knew he could drive down the price of cement from $300 per bag to $150 if he had his own terminal.
However, building the terminal would take more than a year to complete, during which time cement prices would continue to rise, which would be detrimental to the Nigerian economy.
A floating terminal meant that the timeline of going to market was significantly reduced but more importantly, without the blessing from the president, the other giants in the industry would muscle him out of the game.
Once approval from the president was secured, Rabiu purchased his floating terminal and was ready to reap in the millions of dollars awaiting him in bags of cement.
It was logistically impossible for Rabiu to set up shop in Lagos. These circumstances pushed him to explore other means through which he could realize his goal. He approached Port Harcourt and this move proved to be fortuitous for him because all the eastern markets were coming to the port as there was nothing in the east.
However, not everything was ideal as he was allowed only one week in a month after which point he had to leave the port, making it difficult to offload his cement.
Rabiu was faced with more hurdles but eventually, was forced to consult the highest authority in the country to explain the barriers he encountered.
It was only after an order from the president that the impediments to Rabiu’s business stopped and, with that, came the growth of the BUA Group, to become one of the leading conglomerates in West Africa. As the monopolists gradually loosened their grips on the cement industry, Rabiu used the opportunity to build capacity. The company has five plants now.
“That experience strengthened my resolve because it was not easy. I never thought I was going to quit. If you don’t fight back or if you are weak, you will never survive. You have to understand that this is not personal but business and you have to keep fighting. When they see that you are fighting and not giving up then they let go because most of these things are illegal anyway,” says Rabiu.
BUA Group steadily expanded to cover new ground. With the new merger, Rabiu has seen an opportunity outside Nigeria’s borders. The demand between Sokoto and Niger through to Burkina Faso is estimated to be about 4 million MT of cement per annum.
Coupled with the fact that these countries are landlocked, there is a need to import all their clinker, the raw material needed for making cement.
His new merger with CCNN will create the second largest cement company on the Nigerian bourse after African mammoth, Dangote Cement.
Rabiu believes in Nigeria’s ability to produce its own products without relying on imports from other countries and in so doing, create tens of thousands of jobs for the Nigerian economy.
As the avenues to expand in Nigeria get limited, BUA Group has consistently sought to broaden its reach to new territories.
The fighting days are long gone and BUA under the aegis of its bold leader is ready to conquer new turf in Africa.