Space is virgin territory, yet, for Sir Richard Branson.
But even that, he appears set to conquer commercially with his company Virgin Galactic this year.
One of the greatest business minds on earth, Branson is in the space race.
In a CNN interview mid-February, commenting on South African billionaire Elon Musk’s recent SpaceX test-launch of the Falcon Heavy rocket, Branson said: “I was a little bit jealous,” and called Musk’s feat “extraordinary”.
The British tycoon, known for his profound love for adventure and sport, admitted in the interview that Virgin Galactic is hoping to put people in space in the coming months.
He also hints about it on his blog: “The team are working tirelessly, and each flight brings us one step closer to commercial service in New Mexico’s Spaceport America.”
“One of our biggest investments has been the space companies, which we have already invested $1 billion to set up,” he says in FORBES’ 100th anniversary issue in 2017.
And should Branson – worth $5 billion according to FORBES – be one of the first space tourists to look down on earth, he would no doubt marvel at the continent he often visits – Africa.
In his new autobiography, Finding My Virginity, launched last year, you find multiple mentions of Africa, and memories and images of the people and places he keeps returning to on the continent.
Nelson Mandela, Archbishop Desmond Tutu, Graça Machel… are revered in these pages.
Branson tells FORBES AFRICA, in an exclusive interview in November last year when in Johannesburg for Virgin Atlantic’s ‘Business is an Adventure’ event, that “almost since the day Nelson Mandela left prison, I got very involved in Africa”.
Almost three decades on, he continues to be.
On the continent, Virgin’s biggest presence is in South Africa.
Worldwide, Branson owes his fortune to diverse businesses bearing the Virgin name. The son of a barrister and flight attendant, he started almost 50 years ago with a mail-order record business. He was a school drop-out, but never looked back.
He founded the Virgin Group, which now has interests in mobile telephony, financial services, travel, hospitality, holidays and health, among others.
He created his music label Virgin Records in 1972, signing on artistes such as Mike Oldfield, Janet Jackson, The Rolling Stones and the Spice Girls.
A disruptor in the aviation industry, Branson started Virgin Atlantic in 1984, and the airline has been flying between London Heathrow and South Africa for the last 21 years, and Nigeria for over 16 years.
In his new book, he says he is often asked the question: “How do you go about becoming a millionaire?” And his answer has been the same: “Start as a billionaire and launch a new airline.” He recounts the first 15 years of Virgin Atlantic as “a topsy-turvy tale of excitement, innovation and survival”.
Branson famously lives on Necker Island, a British Virgin Islands retreat, which, according to FORBES, he bought for $180,000 in 1978. Tutu has been a visitor: there is an endearing 2006 image of Branson planting a kiss on him with the azure sea in the background.
Far from Necker, at the ‘Business is an Adventure’ event in South Africa in November, Branson, the man who never wears ties, is in a pale blue shirt and khaki chinos. He enters, waving his hands in the air simulating the wings of an aeroplane. And on stage, much to the audience’s delight, rips off fellow panelist and Discovery Group CEO Adrian Gore’s tie, saying: “I believe the workplace should be comfortable, it should be relaxing.”
He recounts his entrepreneurial experiences, and pulls out a little black book to note down everything he learns from the people he meets.
“A notebook you can refer back to, especially if people share pearls of wisdom,” he quips.
And he has found enough wisdom in Africa.
Along with British pop musician Peter Gabriel, Branson was instrumental in starting The Elders, formally launched by Mandela in Johannesburg in 2007. An independent group of global leaders working together for peace and human rights, it also includes stalwarts Tutu, Kofi Annan and Ban Ki-moon.
In 2005, the billionaire also started the Branson Centre of Entrepreneurship in South Africa to “address a critical need for entrepreneurs, at a time when there were few organizations offering free, practical business training and mentoring to start-up businesses”.
The physical center in Johannesburg is now closed as they “review their entrepreneur support strategy”, but has over 12 years supported more than 4,300 entrepreneurs.
Tracey Webster, who headed the Branson Centre of Entrepreneurship in Johannesburg for almost three years from 2011, vividly recalls her interactions with Branson.
“He is shy and unbelievably humble,” she says. “He is smart about getting everyone else to do the talking – he’s so charming and gracious about giving others the platform; he just has a way in which he promotes people on the ground.”
Webster, who is currently CEO of Enterpriseroom in South Africa, says the most important leadership lesson she received from Branson was “to respect absolutely every single human you came in contact with”.
“He taught me to be a listener rather than a talker,” says Webster, of the shy, introverted man millions look up to.
‘Africans Are Natural Entrepreneurs’
In our interview with Sir Richard Branson, we let him do the talking, about his new ventures in Africa, his work for the communities around his businesses, his take on wildlife, and that moment he almost fell off the stage in South Africa.
You have a special affinity for Africa. Why, and what is on the cards for you on the continent?
Almost since the day Nelson Mandela left prison, I got very involved in Africa and one of the first things we did was put up a statue to [South Africa’s anti-apartheid activist] Steve Biko in East London [in South Africa’s Eastern Cape]. That was an incredible event with Nelson Mandela presiding over it. I have told quite a few of these stories in my latest book.
I have done quite a few things with Mandela, and Desmond Tutu, and Graça Michael and Kofi Annan, for things like The Elders and so on.
We are building a mobile phone company or financial services company, [then there’s] Virgin Active, Virgin Insurance…
But I suppose the thing I love the most is the bush. I spend a few days in Ulusaba [the reserve Branson owns], which was voted the best game lodge in Africa last year. And we love working on protecting species and wildlife. We also draw circles around any of our properties and try to help the communities within those circles, so quite a lot of our time and energy is spent on [work], for example, near Ulusaba, we set up quite a big clinic to make sure the people got anti-retroviral drugs, malaria tablets and TB tablets and were helped in other ways. We set up orphanages and small schools and so on.
Around our Virgin Active health clubs, we are doing similar things. Not for companies to draw circles around themselves, but to help the communities within those circles. Hopefully, one day all the circles will join up and most of the problems will be solved.
Your most abiding memory of Mandela?
I was at his funeral and invited by the family to join them by the graveyard. The coffin had been put in. And then I saw one of his grandsons falling into the hole and I thought ‘why is everybody not reacting, everybody just looks very calm about it’ and I saw another grandson jump down in and I assumed he was going to rescue the first one and then another grandson jumped in and I had to turn to somebody on my left and ask, ‘are they okay’ and he said ‘oh, they are just putting personalized gifts on the coffin to send Madiba on his way’. Anyway, I felt pretty foolish after that.
When we did the original Steve Biko statue in East London, there was just myself and Peter Gabriel there who weren’t local. There must have been a 100,000 people in the crowd and Madiba was standing on a small stage with the other main African leaders. He was president at the time, and he made this incredible and impassionate speech trying to unite the country and all the people on stage. The politician in him was coming out as well as the philanthropist he had become and when he finished, I went up on stage and whispered to him and he then gestured Peter forward who then took the microphone from Mandela and sang the song Biko with all the 100,000 in the audience singing along with him. It was the most wonderful moment. And then the crowd rushed to the stage and the whole stage started collapsing and we only just got Mandela and everybody off just in time before the whole thing collapsed.
After all your visits here, what are your lessons for Africa’s youth?
Because of the Branson School of Entrepreneurship, I got to know lots of wonderful young people over the years, and I think Africans are natural entrepreneurs and need help and need encouragement. This morning [November 10], I was at this wonderful center, the GEN 22 On Sloane [a start-up campus in Johannesburg], where they are going to have a few hundred entrepreneurs working there and in fact, [we] may end up doing something there as well.
We spend a lot of time encouraging entrepreneurship in the UK as well and managed to encourage the government to start something – start-up loans – which is loans to help budding businesspeople. Britain is the only country doing it. And what we are trying to do is to encourage Africa to do the same thing… The other thing the government could do is to get out of business completely themselves, as best they can, and break up any businesses the government is doing into small units and get entrepreneurs to run them. And I think governments have got to encourage competition… and the most important role governments can play is break up monopolies in order to enable thousands and thousands of new jobs to be created by new businesses being started.
The fourth industrial revolution, AI, robotics… where do you see Africa headed? Do you have any investments in these sectors?
One area of AI that we are working with in Africa is with a wonderful foundation and they are trying to get 50,000 women in African villages to have an iPad each; they are not trained as doctors or fully-trained as nurses, but using that iPad, through the fact that thousands and thousands of women have used this iPad and every time they make an answer, it gets better and better and better, they can actually act almost as good as a doctor or a nurse by just asking questions and getting answers and then prescribing malaria tablets, or TB tablets, and even anti-retroviral drugs and so on. Obviously, with serious cases, they’ll refer them to a surgeon or doctor, but again, the tablet will show that. So that actually will create 50,000 jobs and definitely save a lot of lives.
If it works, it will cost about a dollar a person, for a pretty good health service. And that should be happening, they have already trained up to 7,000 and the idea is to go up to 50,000.
You own a wine estate in Cape Town, is that something you see your future in?
Well, we need to be able to party as well and relax after all the hard work. We found Mont Rochelle and fell in love with it three or four years ago and felt we could turn it into one of the best vineyards in Africa. I think the team have done a great job and of course a lot of people who get to the bush want to come down to the Cape as well, so it’s nice they can stay in the Virgin family.
You started your entrepreneurial journey at the age of 16, any advice for innovators that young?
One of my books is called Screw It, Let’s Do It and I would just say follow that philosophy and give it a go. If you fall flat on your face, beat yourself up and do it again until you succeed.
Branson’s Ventures in sub-Saharan Africa
- The Virgin Group operates 140 Virgin Active health clubs across southern Africa. More recently, it opened its first club in Botswana and a second in Namibia, a strong indication of the growth potential that exists in Africa for the group.
- Virgin Active’s presence in South Africa came about following a request by Nelson Mandela to Richard Branson, asking him to help save the country’s Health & Racquet Club chain, which was about to collapse. This resulted in Virgin acquiring the 76 Health & Racquet Clubs in South Africa.
- In South Africa’s Western Cape province, in the wine town of Franschhoek, Branson owns Mont Rochelle, a luxe hotel and vineyard an hour’s drive from Cape Town.
- Mahali Mzuri is Branson’s safari lodge in Kenya, positioned within the Maasai Mara ecosystem.
- The Virgin Limited Edition’s Ulusaba private game reserve in South Africa supports the local communities through a not-for-profit called Pride ’n Purpose, focusing on sustainable development initiatives and improving access to food, water and health services.
- Elsewhere in Africa, projects include an investment in M-Kopa, focused on solar power in East Africa and primarily Kenya, helping families gain access to energy using solar technology at affordable prices.
- In the financial services sector,Virgin Money has just launched a peer-to-peer payment service called Virgin Money Spot. The app allows customers to send money to friends in a simple, safe and social way.
- The Virgin Group has recently invested in South African mobile software firm wiGroup.
- Virgin has initiatives called Living Goods and Last Mile Health, aiming to have just under 50,000 digitally empowered community health workers across sub-Saharan Africa by the end of 2021, reaching a total of 34.3 million people. This will be through a mixture of digital devices, including iPads.
Artist, Icon, Billionaire: How Jay-Z Created His $1 Billion Fortune
Nine years ago, two unlikely lunch partners sat down at the Hollywood Diner in Omaha, Nebraska. One, Warren Buffett, was a regular there. The other, Jay-Z, was not. The billionaire and the rapper ordered strawberry malts and chatted amiably, continuing the conversation back at Buffett’s Berkshire Hathaway offices.
Buffett, then 80, walked away impressed with the artist 40 years his junior: “Jay is teaching in a lot bigger classroom than I’ll ever teach in. For a young person growing up, he’s the guy to learn from.” This moment, which was originally captured in our 2010 Forbes 400 package, made it clear that Jay-Z already had a blueprint for his own ten-figure fortune. “Hip-hop from the beginning has always been aspirational,” he said.
Less than a decade later, it’s clear that Jay-Z has accumulated a fortune that conservatively totals $1 billion, making him one of only a handful of entertainers to become a billionaire—and the first hip-hop artist to do so. Jay-Z’s steadily growing kingdom is expansive, encompassing liquor, art, real estate (homes in Los Angeles, the Hamptons, Tribeca) and stakes in companies like Uber.
His journey is all the more impressive given its start: Brooklyn’s notorious Marcy housing projects. He was a drug dealer before becoming a musician, starting his own label, Roc-A-Fella Records, to release his 1996 debut, Reasonable Doubt. Since then he’s amassed 14 No. 1 albums, 22 Grammy awards and over $500 million in pretax earnings in a decade.
Crucially, he realized that he should build his own brands rather than promote someone else’s: the clothing line Rocawear, started in 1999 (soldfor $204 million to Iconix in 2007); D’Ussé, a cognac he co-owns with Bacardi; and Tidal, a music-streaming service.
Kasseem “Swizz Beatz” Dean, the superproducer behind some of Jay-Z’s biggest hits (“On To The Next One,” Beyoncé’s “Upgrade U”), looks at Jay-Z as something others can model: “It’s bigger than hip-hop … it’s the blueprint for our culture. A guy that looks like us, sounds like us, loves us, made it to something that we always felt that was above us.”
“If he’s a billionaire now, imagine what he’s about to be,” Swizz Beatz says. “Because he’s only just starting.”
What’s Jay-Z Worth?
To calculate his net worth, we looked at the artist’s stakes in companies like Armand de Brignac champagne—applying our customary discount to private firms—then added up his income, subtracting a healthy amount to account for a superstar lifestyle. We checked our numbers with a roster of outside experts to ensure these estimates were fair and conservative. Turns out, Jay-Z really is a business, man.
Armand de Brignac
Jay-Z has used his music to shill the $300 gold bottles of the “Ace of Spades” champagne since launching the brand with the 2006 video “Show Me What You Got.” More recently, his verse on Meek Mill’s “What’s Free” put a half-billion-dollar value on the wine, which seems like a bit too bubbly a number.
Cash & investments
A vast investing portfolio includes a stake in Uber worth an estimated $70 million. He reportedly purchased his piece for $2 million back in 2013—and then wired founder Travis Kalanick another $5 million in an attempt to increase his holdings, but was rebuffed.
Jay-Z’s cognac, a joint venture with beverage giant Bacardi, moves almost 200,000 cases and has grown nearly 80% annually. “Jay-Z resonates with consumers who are attracted to the ultra-premium lifestyle,” says Eric Schmidt, Beverage Marketing Corp.’s Director of Alcohol Research.
In 2015, Jay-Z submitted a bid to purchase the Scandinavian streaming service’s parent company for just shy of $60 million. He relaunched Tidal later that year with a roster of celebrity investors including his wife, Beyoncé, and other music luminaries, from Kanye West to Calvin Harris.
This wide-ranging entertainment company started over a decade ago as part of a joint venture with concert giant Live Nation. Roc Nation represents some of the top stars in the entertainment through its sports agency (Kevin Durant, Todd Gurley) as well as its record label and artist-management arms (Rihanna, J. Cole).
Before the beginning of his stint as Def Jam’s chief in 2004, Jay-Z negotiatedthe eventual return of his master recordings from the aforementioned label that helped launch his career; in a separate deal with EMI, he clawed back his publishing rights. Wise move: his hits now clock close to 1 billion streams annually.
In the song “Picasso Baby,” Jay-Z boasted about a “Basquiat in my kitchen corner.” He probably wasn’t kidding. For over a decade, he’s been scooping up masterpieces like Basquiat’s “Mecca,” purchased in 2013 for a reported $4.5 million. “He’s rapped about it all in detail,” says Fab 5 Freddy, a contemporary and friend of the late painter. “Jay-Z helped educate millions of hip-hop fans mentioning Jean-Michel.”
After welcoming twins in 2017, Jay-Z and Beyoncé bought a pair of homes to match: a $26 million East Hampton mansion and a $88 million Bel Air estate. Jay-Z also owns a Tribeca penthouse, snagged for $6.85 million in 2004.
–Zack O’Malley Greenburg;Forbes Staff
MacKenzie Bezos Will Donate Half Her Fortune To Charity
MacKenzie Bezos is the latest billionaire to sign the Giving Pledge and commit at least half of her $35 billion fortune to charity. Bezos joins Mark Zuckerberg, Richard Branson, and Robert F. Smith on the list of donors to Bill Gates and Warren Buffett’s initiative.
In a letter published by Giving Pledge, Bezos writes of having “a disproportionate amount of money to share” and credits “an infinite series of influences and lucky breaks we can never fully understand” for her wealth.
Bezos’ signature, alongside hedge fund billionaires David Harding and Paul Tudor Jones, Brian Armstrong chief executive of cryptocurrency company Coinbase, and WhatsApp’s co-founder Brian Acton, brings the total signatories to more than 200 people.
The Giving Pledge began in August 2010 when 40 of America’s wealthiest individuals made a commitment to give more than half of their wealth away. The scheme is described as an “open invitation for billionaires … to publicly dedicate the majority of their wealth to philanthropy”.
Although MacKenzie Bezos doesn’t list any particular causes she writes, “My approach to philanthropy will continue to be thoughtful. It will take time and effort and care. But I won’t wait. And I will keep at it until the safe is empty.”
Who is MacKenzie Bezos?
Although amicable, the settlement is biggest of all time with MacKenzie receiving 4% of Amazon stock, worth more than $35 billion on April 4 2019.
With Amazon’s current market cap of $897.66 billion, MacKenzie’s 4% stake is now worth $35.9 billion.
MacKenzie is also a successful novelist, described by author Toni Morrison as “one of the best students I’ve ever had.” She met Jeff Bezos while both were working at hedge fund D.E. Shaw in New York and they married in 1993. MacKenzie Bezos confirmed her divorce on twitter, stating she was, “Grateful to have finished the process of dissolving my marriage with Jeff.”
L’Oreal heiress Francoise Bettencourt Meyers is the world’s richest woman with a net worth of $53.6 billion, while Alice Walton of Walmart fame is the only other woman ahead of MacKenzie with a $47.1 billion fortune.
-David Dawkins;Forbes Staff
How mogul Abdulsamad Rabiu has become a billionaire again
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.
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.
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