In an exclusive interview, Paul Kagame, Rwandan President and Chair of the African Union, speaks to Methil Renuka about intra-Africa trade, how governments can drive entrepreneurial growth and why he will always find time to play sports.
The appointment is at 11AM on a November morning in Kigali, and past the tight security at the presidential offices located on KG7 Avenue, the views are of manicured lawns and a verdant paradise with hulking trees, chirping birds and cobbled pathways fringed by hibiscus and frangipani flowers. Kigali is a clean city with rolling hills and green valleys, but the foliage within Village Urugwiro, where we are meeting President Paul Kagame, is a botanist’s dream. A few minutes in the airy waiting lounge – accentuated by cream, olive green colors and a touch of wood – and the president walks in, tall and in an immaculate blue suit. He greets us warmly and is relaxed, joking about how much he dislikes posing for photographs. Yet, he obliges, against the greenery.
Kagame, who is also head of the African Union (AU), has been adjudged the ‘2018 African of the Year’ at the eighth All Africa Business Leaders Awards (AABLA).
Who is he dedicating it to, we ask? “The people of Rwanda,” he says. He shares more with FORBES AFRICA:
Q. You are completing a year as chair of the African Union. Africa is such a diverse heterogeneous continent, with each country having its own interests. How challenging is your job in bringing a balance?
A. It’s absolutely challenging, and as you rightly said, you have to deal with diverse interests, cultures and backgrounds. Yet, Africa needs to be together in handling continental matters because there are more things that similarly affect Africans than are different. There are also different mentalities. You find some people are used to doing things a certain way, even if they are shown – or they see for themselves – that doing things differently might bring better results, they still stick to the old ways.
Talking about my task… The first thing is to pay attention to people’s concerns, to people’s ways of looking at things and take all that into account, as you also create space for people to discuss openly and show how we are all together in a different time than we have been used to… The moment you create that space for discussion, which we have done, the moment you increase consultation and also allow people to participate in challenging the points of views out there that tend to shape directions, we all have to follow, especially when you are able to identify things with certain success stories that exist. For example, in a country not making good progress or that is not ready to change, you can still point to their own situation and say ‘no, but you actually made good progress in this area because these were the contributing factors’. This can always be explained even in the wider context of where we want to go as a continent by coming together. So unity and regional integration have been emphasized.
We have been able to show that entrepreneurship, business and intra-Africa trade that have been lacking are actually more important than focusing solely on the market outside of the continent… That conversation helps people understand more, it helps people come together and we keep reminding them your neighbor is more important than someone far away from you. We are all neighbors one way or the other. My country has four neighbors and then one of the other countries we are neighbors with has nine neighbors. So it cuts across. We find we are actually very closely-linked and therefore, as we look at ourselves as individual countries, we need to recognize that if it’s sub-regional blocs or the continent, we become bigger, we are actually better off for it if we work together. Businesses and economies grow multiple times when we work together.
What I discovered from the beginning was there is no magic here other than just working with what there is and being realistic about it and allowing that conversation, and challenging one another, and being real in pointing out real things that matter, and we take it from there. And I think it has been good progress. We have put a lot of effort into it and every African country, every African leader, has played their part. So we just keep encouraging and keep going. Later, we can show everyone the benefit coming out of this very short period’s effort of working together.
Q. One of the aspirations of Agenda 2063 of the AU is a united Africa. How important is it for the rest of the world to see Africa as a single powerhouse?
A. We need it. We need that backdrop from which we should see things and remind ourselves how this continent is actually great, a continent projected to be 2.5 billion by 2050. That’s huge, bigger than any other continent. Africa is endowed with all kinds of resources, and natural resources, so how do you not think it’s important? Therefore, we have to create a clear context in which we operate and understand all aspects of this value of being in a position where we have huge assets in terms of people and natural resources and everything that anyone would wish for. So what remains is, how do we harness this? How do we leverage this? So we had to create long-term, medium-term pathways and say we should develop human capital and infrastructure. This huge workforce that keeps coming… 29 million supposed to be [pouring] into the labor market every year [until] 2030; you’ve got to think about this and ask what it means. It’s a huge asset if we make correct investments. It’s also a huge risk if you just keep [pouring] 29 million people in the labor market when they have nothing to do. The framework of 2063 provides sufficient room for us to think, reflect and therefore make the right investments for us to fulfill continental aspirations.
Q. The concept of a single African market. How far are we from realizing that?
A. I was pleasantly surprised when we had the summit here for the African Continental Free Trade Area. Initially, scepticism was expressed by some people, saying ‘but this can’t work, it can’t happen, Africa is divided, it never gets things right together’. So when the leaders came to Kigali for this extraordinary summit, we expected only a few countries to sign up, but we got 44 countries signing up on the first day. But we have also seen how it has been increasing, with countries ratifying the free trade area and free movement of people, goods and services. Therefore, that is a signal Africans understood the importance of this, and it is important indeed if we want to transform our economies and allow opportunities for prosperity to our people… I think [the single African market] is making very good progress even with that background of scepticism. We have already left that behind us and are moving forward.
Q. You are a leader who looks to the future not forgetting a painful past. How hard were the last two decades for you?
A. Very hard (laughs), which is an understatement, but that is the spirit, about learning lessons of the difficulties you have gone through but not allowing that to hold you back, to make you a hostage of that tragic experience, but rather learn lessons as quickly as you can and focus on where we are going in the future and doing our best to even keep making references to that past if you will. And therefore helping you to decide which choices to make at any given time in the future. So, 20 years has been a journey of difficulties but I think of the good stories too, and that is what encourages all of us.
We have had tragedies, and at the same time, the efforts of bringing people together through reconciliation, through deciding which direction we take for our future… the people have responded with energy, with positivity, and that has not come to nothing, it has actually borne fruit. We’ve seen progress.
Even the people, when you look at their faces and you look at how they go about things, it as if nothing ever happened here, yet history is loaded with terrible experiences. And apart from those tragic experiences, we have had other external pressures – people who are quick to forget. Sometimes, the demands [are] even from the outside about how we should deal with things, what we should do, what we shouldn’t do, as if our lives are to be decided from the outside and as if we have nothing to do with determining our own course in the future.
But we have calmly had dialogue with such people behind those pressures. We have also focused and really concentrated on what we understand, even the hard choices we have to make, but the good thing is, every three or five years down the road, we were able to measure and say, ‘well, what have we gained from the different choices and efforts we made’. Could we have done things differently or even better? Even putting into account all these unnecessary external lessons, and pressures, we still listen. We don’t fall short on that. We always listen, but at the same time, we fully understand we are the ones for ourselves.
Q. Speaking about the future, Rwanda has been a pioneer in private sector-led economic transformation. What to you are the new industries and wealth creators of the future?
A. From the outset, we understood we have to deal with people. How do you invest in them, how do you prepare them for their role? As a government, we have to improve their lives but also allow this broad national transformation to take place. Then it comes to skills. You give them more opportunities to access things that cut across what they have to do, whether it is the agriculture sector and the agri-businesses around that and the whole value chain, and remembering that agriculture, for example, is very important.
The other part is we have seen, in terms of technology, infrastructure, digitalization, the internet; we have to prepare people to use that, as they have a multiplying effect in many ways, even if it is in public service, and delivery of that in the population that plays that part… Different sectors are impacted by this, therefore, provide the infrastructure to do that, and then the innovation that will come along with it… So these are things we think about – how to create wealth for our own people, how to allow people to thrive…
But then, around that are rules of the game. How do you create an environment to allow disruption and innovation? For example, if you look at how we have been preparing the ground and allowing these activities to take place, in terms of even globally in the ease of doing business – the World Bank report where Rwanda is 29th in the world and second in Africa. All these are to answer that question: how do we create this wealth? It’s the environment, it is specific things to invest in, it’s how we leverage the resources we have.
Q. How do you promote entrepreneurial capitalism, how are you looking at youth-led startups?
A. The question you raise is important. For example, we have an initiative called YouthConnekt, where we try to encourage young people to be innovative. We give them cash prizes, but this is to excite them and make them think innovatively. It also creates healthy competition among young people, but above all, it stimulates them to think [about] what they need to do that fits in with the times we are in. We also have formed business development funds that cut across districts and the country that help people understand what entrepreneurship holds for them and that they can participate and therefore, we give them seed money, if they specifically come up with these ideas but some of the ideas may come through this support by educating them. We have created an Innovation Fund, and help thousands of our young people by combining both innovation and entrepreneurship, we hope to keep exciting our young people to be able to do a number of things. We have national entrepreneurship programs.
Every five years, we see what this has done, what impact it has had, and also make improvements. So it keeps going. It has had a huge impact. We see it has been working and draw lessons from these experiences of young people feeding back to us as government institutions and then we respond as much as we can. Of course, governments have limitations. It doesn’t have everything it requires or wishes to deploy, to reach the goals we want. We’ve been trying to be thoughtful in involving the young people. We have also provided them educational programs that include vocational training and technical programs that help them to not just study in schools and sometimes come up with no skills, but to also acquire knowledge. The skills that are required for employment are lacking so we have also tried to cover that gap and are making good progress.
Q. What really drives entrepreneurship? How do we make sure young people stay on the continent?
A. It is a combination of many things. Some of it may even be political, meaning, the political environment must be that of reassurance to the citizens in general, but to the young people as well, and reassurance in a sense that it not something you just deliver to them, but something you deliver by allowing them to participate or [by conveying that] they have a place in their own country, and politically, they can participate, which again relates to the socioeconomic part of it.
Therefore, if politically, they understand they are participants and not just observers – they need to even participate in addressing some of the problems – then the next demand is ‘what about these bread-and-butter issues, how do I take care of myself, take care of my family; every effort is being done by the government to allow us young people to really play our part; and it means I start with my own environment, in my country, but how about if we connect across borders’?
So to a great extent, it speaks to politics. How do African countries and leaders allow this cross-border economic activity that interests these young people and holds them here so they don’t reach a point where they become desperate in which [case] they go to other places? Sometimes, they reach these [other places] and actually find the situation is even worse, so we have to find a way of talking directly to the young people, but above all, create new things on the ground they can experience and participate in.
It’s not one side that is going to deliver it and put on the table, it’s everybody. It has to be everyone, leaders of countries, and leaders of different kinds who have to play a bigger role.
Q. How do you think capitalists, billionaires and African business can help this process and work collaboratively with the government?
A. We want the private sector to be in the lead of our countries’ or continental transformation; that is for sure, but again, collaboration is important and this is the big burden that lies with governments and we must address how we allow not only the private sector to thrive, to freely do what it is meant to do, but how do we work with them. For example, many times that there have been discussions about private-public partnerships, some people are uncomfortable about them. You don’t understand why. There is no question that if the government played its part in allowing the private sector to thrive and the private sector also understands that if they do their part with the government, that’s very important in the thriving of the citizens of the country, which again constitute the market in which we operate.
So if the people of Rwanda are thriving, the citizens are well, then the business person should be happy because this is the market in which they play. But you can’t be rich and continue sustainably as a businessman in a very impoverished market. It’s just common sense. So if the market, the people are thriving, it feeds back to the private sector but then the private sector should respond in the same way… I mean if you’re a government person, a political leader, you also want to see a country that is registering economic growth, registering development. I think the private sector-mind is going to respond positively to these good signals originating from the political environment, from the leadership. It’s in their interest as well. So we really should be happy with the private-public partnership. There is no question about it, it’s a win-win sort of relationship.
Q. A leader, military leader and father to four children. What is the role you cherish most and how do you find the time to do justice to each?
A. I consider myself lucky, in this sense, I don’t even have to make a lot of effort in being myself; that is the starting point. I try to be myself, I try to be a family person, a person that relates with relatives, friends, and not only here, but outside the country. So I am first and foremost comfortable with that. The rest that comes along with that is the responsibility I now hold. I need no reminder that many people look up to me to say ‘what is he thinking [about] us, what are we going to be able to achieve with his leadership’. It doesn’t matter how the leadership role I play came about, whether it was accidental or planned, but I am there, so I have to play this role effectively.
It’s really trying to be comfortable with myself, comfortable as a family person, as a person who has friends, and who relates to even those who are not my friends directly (laughs). I have the responsibility to them and I must do as much as I can fairly without fear or favor. The balance has been happening without much effort.
Q. How do you unwind? Do you get the time to play sport?
A. I do a lot of sport. I have to create time, there is no doubt. In fact, at times, I have to do things at strange hours, sometimes when others are sleeping… I even do my exercises very late in the night when I should be resting, but again, I always find ways of compensating for what I have missed because I also have to find time to rest, to sleep, above all.
I never lack sleep. Whenever I have a few hours to put my head on the pillow, without much effort, I go to sleep.
I do follow sport. I have been a good fan of Arsenal football club for about three decades now. Whenever they are playing, whatever game, whenever I have the time, I always want to watch.
I do follow other sports as well. I watch tennis, basketball – I follow the National Basketball Association (NBA).
I used to play basketball for fun, but am not a professional, and I never came anywhere near that. But I play tennis, I work out and enjoy watching games if I am not able to play.
Q. Your favorite sportsmen…?
A. They are many. For basketball, for many years, my favorite team for NBA has been the Golden State Warriors. I enjoy watching Stephen Curry, Kevin Durant, Klay Thompson, but of course I also enjoy watching LeBron James, and then there are young upcoming players I have now started following.
‘2018 African of the Year’
‘African of the Year’ is one of the categories at the eighth All Africa Business Leaders Awards (AABLA).
The annual event (held this year on November 29) honors business excellence and leaders who have had a considerable impact on their industry and community. The nominees for the ‘African of the Year’ category, including several African statesmen, were judged based on the following criteria: their international profile, positive impact, their ability to build equality, develop society, champion inclusiveness, deal with corruption, transform society, enforce governance, alleviate poverty, lead economic development and be an African leader who is a role model.
Paul Kagame: The Rwandan president and head of the African Union (AU) has spent this year improving the economic conditions of his country, and talking continental trade. He made headlines for the partnership with Alibaba, and for improving the ease of doing business in Rwanda as attested by the World Bank. Rwanda has inked a three-year deal as the tourism partner of English football club Arsenal. As a tribute to growing regional cooperation, three months after assuming the chairmanship of the AU, Kagame hosted, in Kigali, over 50 African heads of state, for the signing of the African Continental Free Trade Area, which envisions a single market expected to generate a combined GDP of more than $3.4 trillion and benefiting 1.2 billion people. So far, 49 countries have come on board.
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.
The Madhvanis: The Industrialists Who Have Tasted Sucrose And Success
The Madhvanis started with sugar and now lead diversified global businesses. In a rare interview from their home base of Kakira in Uganda, Mayur and Kamlesh Madhvani, the Joint Managing Directors of the Madhvani Group, share a century-old tale of extraordinary family enterprise and how they are continuing the legacy of their forefathers.
It’s a bumpy 100km drive from the Ugandan capital of Kampala to the town of Kakira in the east. Past the swaying sugarcane plantations and green hillocks and roundabouts intermittently featuring the words ‘Madhvani’ and ‘Sugar’ that announce you have arrived, a tranquil avenue, immaculately lined by pine trees and acacia, leads to Kakira.
From this little town, an international empire was built, with a reach in far and distant lands. To this little town, have many a cavalcade, bearing presidents and global business tycoons, made its way.
At the sugar factory that is the pulsating heart of Kakira, the quiet of the verdant landscape rapidly gives way to the deafening sound of production.
The sound of enterprise, the sound of African industry.
Close to the equator and Jinja, the source of the Nile, I am in the ‘cane yard’ of Kakira Sugar Limited, watching giant machines noisily swallow up truckloads of sugarcane and crush them into pulp.
READ MORE | Uganda Sees 11% Growth In Sugar Output This Year
Under the sweltering African sun, these monsters, also known as feeder tables, are four in number around me, relentlessly chopping tons of sugarcane fed by a long line of at least 400 trucks piled high with unruly cane stalks gathered from the fields in this eastern corner of Uganda.
This is the back-end and the beginning of a well-oiled factory process that will eventually turn sugarcane into foamy rivers of juice and finally sugar.
The entire process, from feeder table to sugar crystal, is completed in eight hours, resulting in bags of refined sugar at the other end.
Inside the factory, even the air is calorific, with the saccharine-sweet smell of sugar – and success. The factory is the soul of the 14,000-hectare Kakira Sugar Estate, which provides a livelihood to some 9,300 direct employees, and sugar to the rest of Uganda and East Africa.
It is the core business of The Madhvani Group, Uganda’s biggest sugar producer. And everything within a 10km radius from here, belongs to the group.
Generations of the Madhvani family have been based in Kakira, and much has happened here over the last century: success, strife, destruction and resurrection.
It all started in 1908, when at the age of 14, the family’s venerable patriarch, Mujlibhai Madhvani undertook the long and arduous journey from India to Uganda, to join his uncles Vithaldas and Kalidas Haridas in their shop in Iganga. By the time he was 20, Mujlibhai was tasked with opening and managing a shop in Jinja, a town at the source of the Nile River.
The waters ran deep in his veins as he was determined to make a success of his enterprise. He was appointed the Managing Director of Vithaldas Haridas & Company, which in 1918, bought around 800 acres of land in Kakira. The sugar factory subsequently started operating here in 1930, with a cane crushing capacity of 150 tons per day.
Mujlibhai built his empire on sugarcane, and laid the foundation for Kakira’s development, also empowering the communities within. Kakira grew around the factory and family home.
Soon, Mujlibhai Madhvani & Co. was also manufacturing sweets, soap, cooking oil, ghee, tea, margarine and pastry shortening. It also made cotton and became the agents for imported goods such as Goodyear tyres.
The late Manubhai, Mujlibhai’s second son, writes in his book, Tide of Fortune, an account of the family’s tale, with British author Giles Foden: “My father was the first person in Jinja to own a radio, which he bought in 1938. He purchased a record player in 1940 and soon afterwards, he became the proud owner of a 9.5mm film projector. His love of cars led him to purchase an extremely expensive powder-blue Buick, as well as an Oldsmobile.”
After Mujlibhai’s death in 1958, his eldest son, Jayantbhai, took over the business. Manubhai worked closely with him. By 1970, the Madhvani Group, according to Tide of Fortune, was at its peak with rapid annual growth of at least one new manufacturing unit a year. Manubhai says of his brother Jayantbhai: “I admired his humility and his commitment not only to serve the family, but also the community at large.”
And he further pens: “How did we select the industries we were expanding into? It was a combination of two or three policies, really. The first was to seek vertical integration. If you make beer, you will need bottles, so why not manufacture them and some plastic crates as well?”
Unfortunately, for the Madhvani family, tragedy struck when Jayantbhai died of a massive heart attack in 1971.
Politically too, Uganda’s destiny was changing.
When Idi Amin came to power in 1971, Manubhai was thrown into the Makindye military prison, an infamous hell hole, by the ruler for 21 days. The Madhvanis, along with the rest of the Asians living in Uganda, were notoriously expelled by Amin in 1972. The family relocated to London and then Kenya.
The sugar mill operation, which was producing 83,000 tons of sugar and contributing to 10% of the country’s Gross Domestic Product (GDP), was destroyed, looted and run down.
“Production had been at a standstill since the end of 1983 and the great hangar where sugar had once been produced was now a home to birds and animals,” says a line in Manubhai’s book.
When Amin was toppled, the Madhvanis returned, to the vestiges of their farm and factory, and a family squabble, with a segment of the family taking over the business in 1980.
The property was returned and the process of recovery started in 1985, with Manubhai and Mayur, Mujlibhai’s youngest son.
“When you repossess assets that are completely destroyed and run down, there is obviously a great emotional side to this,” says Mayur, the Madhvani Group’s Joint Managing Director, when we meet him in his offices at the Kakira sugar factory on a sun-filled afternoon in March.
The offices he shares with his nephew and Joint Managing Director, Kamlesh, Manubhai’s elder son, are adorned with tasteful MF Husain paintings, family memorabilia and redolent with the smell of incense. The British-educated Mayur, wearing a crisp white linen shirt, warmly invites us to his office space.
“For us, it was not so much a business decision, I think it was more of an emotional decision but it ran into the business arena because we knew that once the industry would come up, there would be growth,” continues Mayur about the challenging 1980s.
Kamlesh, 64, who joined the business a few years later, and is the younger of the two, chips in: “Kakira is where the roots of the family are. What we learned very quickly was that it is far easier to build something new than to rehabilitate something that is in total disrepair. It is not only the physical assets but also the mentality of the people.”
They had to work hard to return it to the glory days of the past.
“When we were here before 1972, we had connections with a lot of leaders. Mrs Indira Gandhi visited us, and also the Kennedys; they all used to visit Kakira. Martin Luther King was here, to meet my brother. My father of course is the pioneer. I mean if you look at the way the estate is laid out, it was this man in the early 1950s that laid it out,” recalls Mayur.
Today, the Madhvani Group is one of the biggest diversified private-sector businesses in Uganda, with assets of $750 million for the Kakira sugar business, producing 180,000 tons of sugar, 74,000 tons of molasses and 22 million liters of ethanol.
The sugar factory also makes green electricity. Very little of the sugarcane is wasted. The fiber from the process, or the bagasse residue, is burned in large boilers to generate steam that drives the turbines.
The facility also generates 51MW of electricity daily and of that, sells 32MW to the national grid, “enough to light up Kampala”, says Mayur. This is one of the biggest bagasse co-generation power plants in Africa.
A tour of the sprawling factory is rounded off with a visit to a storage warehouse with mountains of 50kg sugar bags, stacked from floor to ceiling at any given time, ready to be hauled onto waiting trucks.
At an altitude of about 4,000ft, Kakira is lush, fertile territory offering year-round harvest. The sugar factory stops only for a month every year for maintenance. It processes its own cane but also buys from the farmers, or the out-growers, living outside the nucleus of the estate. This is an association built from Mujlibhai’s time.
“There was a genuine affection when we came back [in 1985]. But it was very nice to say the Madhvanis are back but the Madhvanis are not magicians,” recounts Mayur. “It takes a lot of hard work and strategizing, and with government support (President Yoweri Museveni was newly elected at the time), we managed, through our small efforts, to instil in him, the aspect of business not necessarily being a bad thing. He was the one that allowed us to move forward and put this company right and pay taxes.” Fast forward to now, and the group’s focus continues to be to build its core businesses.
It is commencing a new $150 million sugar project in the northern district of Uganda named Amuru, working closely with the government. It has a sugar project in Rwanda, and projects in South Sudan and Tanzania are also on the cards.
“If you are manufacturing food commodities, it’s going to grow and this is the bread basket of the world. The Ugandans went through hell with Idi Amin but you never heard about famine because we can put anything in the ground here. We are so blessed,” says Mayur.
Cashing in on the salubrious climate and natural resources, another focus area for the group is tourism. There are nine lodges that it currently operates in Africa including in Rwanda, Uganda and Kenya.
One of the ways in which it opts to stay relevant is with partnerships.
“In the past, we used to think we can run [the business] ourselves and have those old-fashioned conglomerates. Those days are gone. You need to tap into the international market and get good world-class partners to work with and work with the right value for the African context,” offers Kamlesh.
And this applies to management as well, to further professionalize what is a family-run business.
“Most businesses that have started have been family businesses, if you look at Walmart, Ford, etc. But what you have to do is move away from the family business and let it become a little bit more professionalized,” adds Mayur.
“You want to avoid falling into the trap where the first generation creates, the second generation enjoys and the third generation destroys. We are the second generation moving to the third. The Madhvanis have broken the mould, but now [it’s not] for us to think we are infallible. We need to set up something that other family businesses can emulate, and follow other families that have succeeded in this. For that, you need to have a business that is professionally-run, yet have the family involved to give direction and not lose total touch or control.”
For this reason, the group mandatorily organizes three meetings a year in Bermuda, attended by family members and stakeholders.
But why this location in the Atlantic Ocean, far from Kakira? “We set up our companies in Bermuda in 1958, so we have been there some serious years now,” says Mayur. “In those days, perhaps it’s correct to say Bermuda was a tax haven, but now, the corporate tax structures have changed. Bermuda becomes a good venue because it is one of those tax havens that is also respected by various jurisdictions and for us, it is a historical fact that we were based in Bermuda. Our boards are all there.”
In Bermuda, the family also meets with members not actively involved in the business. Even the youngsters who are a part of the business have to report on their activities.
“We present our reports to the family and I think the secret that myself and Kamlesh are looking at is that the business has to be such that it survives this turmoil of create, enjoy and destroy and there is transparency. The secret is transparency. The more transparency you have in a business, the more likely it is going to survive the long-term because then individuals are not allowed to mess up the day-to-day control systems,” says Mayur.
“Leadership is something that you grow into by an accident of life. I am not the oldest of this family. I have two brothers but they are much older. Kamlesh’s dad, and my elder brother Jayant, sort of had the experience of my father. So did Pratap and Sur, my elder brothers and then things changed. We came back here and I worked closely with Kamlesh’s father and he had a lot of knowledge and I had the advantage I had. We got on as a team wonderfully, and in any business, you always need the ying and the yang. Kamlesh and I work very closely but you will find that each one of us is very good in certain aspects of the business. That is so important.”
As Joint Managing Directors, their offices are adjacent to each other.
“We have this little window and we shout at each other or talk to each other whenever we want,” laughs Mayur.
“We are more like brothers, but he is still my nephew. As children, when we were at boarding school in the United Kingdom, his mother was always worried and I had to look out for him.”
Looking ahead, the Madhvani Group plans to produce rum, vodka and gin, predominantly for the export market. All of these are by-products of the same crop – sugarcane. The distillery at the estate produces 22 million liters of Extra Neutral Alcohol or ethanol a year.
“Sugar is the main product, [but] it’s quite possible in the time to come that some of these other activities from the by-products will become the main product. Such as electricity and alcohol… We are even putting up a plant for carbonated waters coming up next year,” says Mayur.
But Uganda, a part of the East African Community (EAC), has a population of about 45 million and a poor rating score in the EAC when it comes to corruption. Surely, that’s discouraging for investors?
“The biggest problem we have in Africa is nearly 58% of the population is below the age of 30 and these individuals really do not want to hear about the wars because it is history. They are looking to see Africa catapult itself to another level. What the businessman needs is political stability and structured legal systems so that you feel comfortable doing your activity and I think [that is the only way] you will see Africa grow,” says Mayur.
“And yes, we do have corruption; it is endemic, you have corruption in every country. You have got to stop it. You have to have the right systems in place and you have to have total transparency on how businesses are conducted. Countries have gone through these stages and I think you have got to make an effort to try and eliminate corruption actively, without lip service. Now, action needs to be taken. If you look at Rwanda, it has progressed amazingly. As a businessman, what I have seen is the efficiency in which the government works, and the government takes decisions very pragmatically. That is the kind of model one needs to follow.”
At this point, Kamlesh interjects to say decisions taken must be implemented too.
“It leads to frustration. In Uganda, you have the President who has tremendous vision, and his vision towards the private sector driving the economy becoming the engine of the economy is absolutely spot-on, but there is no follow up,” agrees Mayur.
As in other countries of the EAC, in Uganda too, private-public partnerships may be the way forward and it takes effort from the private sector to lead that charge.
“The politics of Africa is very similar. Leadership is important but then [you have to] have growth cycles driven by the private sector. I remember there was a time when in Uganda, prior to the expulsion of the Asians in 1972, to do business was criminal. If you were a businessman, you were regarded as a crook. Today, it is instilled that everyone should do business; business is a good thing. There are positive changes.”
The Madhvani Group’s sugar project in Amuru, in northern Uganda, for example, will be owned 51% by the government and 49% by the group and it will be managing it.
“Eventually, the government will offload the shares to the general public, but I think it is important for all private sector businesses to try to involve the community, the population around you,” says Mayur.
“Kenya’s President Jomo Kenyatta gave a good analogy when we left Uganda. He said ‘in the case of you Madhvani, you are the tree and the tree has fruit and if you share the fruit with the local community, the tree will get water’… For instance, we make the products, but we don’t do the distribution, we allow the others, we have our out-growers.”
“The farmers benefit more, we have a very successful joint venture NGO with them,” adds Kamlesh. “Essentially, we convinced the farmers to contribute a certain amount of money which we will also contribute and this money goes to finance roads, clinics, health facilities and orphanages. This is one quite unique experiment. The farmers have voluntarily sort of parted with money.”
For farmers like 48-year-old Naitema Godfrey, who owns 48 acres of land and has been an out-grower for the Madhvani Group for the last 15 years, sugarcane is everything. Calling himself a “sugarcane millionaire”, he says: “The food crop has given us money, power, sugar and electricity.”
Another out-grower, Robert Waako, who has been supplying sugarcane to the Madhvanis for the last 26 years, says he has been able to put his six children through school and college; four of them are software engineers today.
On the cards for the Madhvani Group is a possible listing in the future. The group also operates properties in India, and is big on religious tourism with hotels in famous pilgrimage sites.
“Indians are very religious, they go to these sites, but don’t have a good place to stay. We built a beautiful four-star hotel in Tirupati. We are now opening one in Bodh Gaya, and we have in Rajkot. At Rishikesh, we have the land, and we are looking at Shirdi and Benares. They are all in the pipeline.”
Back home in Uganda, the group are also big in packaging and steel.
The discovery of oil in the country has made investors and the private sector sit up to the opportunities to fund development.
The Madhvanis are also keen to hop on to the bandwagon.
“We are looking for good partners to work with. We have our infrastructure companies, also working on the logistics side,” offers Mayur, but says Africa’s real strength is the green economy.
“I think oil is overplayed, and is not going to solve our problems. I think oil brings problems in itself, from an environmental point of view and the point of view of not becoming too reliant on this one product. Look at Nigeria and Saudi Arabia; they are all looking at alternatives now. The one thing you have got to remember in Africa is we have the weather, and we have vast tracks of land that are fertile. I think Africa can be a great grain basket for the world.”
The next generation of the Madhvanis are in line to take the company to the future. Mayur’s 34-year-old daughter Tanya, who is based in Rome, is responsible for managing the hotel business.
His nephew Ronnie was tasked with reviving the packaging business and he has built it into “a multi-million enterprise through his creativity and marketing efforts”.
The caveat is that family members who are involved in the business must contribute to its growth. Kamlesh and Mayur too came up learning the ropes the hard way.
“We have enough youngsters in business. But just employing family members for the sake of employing them and giving them a posh office is totally wrong and it hasn’t worked. What you have to do is contribute, and when you do, you also get a share of the success as an individual,” says Mayur.
“Basically, we are all fortunate we had good role models to follow. If you read my father’s book, you will know we had our own turmoil in the family. Kakira did not come to us and say ‘here is the key’; we had to fight for it. We had to fight for it from other family members as well. We are not the perfect family; we had to prove ourselves [in addition to] the passion we had [for the business]. That is the type of determination that made it work,” says Kamlesh.
“We started at zero…” adds Mayur.
Today, the family members all have their own businesses too, and in different countries. “I have my own companies. Kamlesh has his. I have vast real estate in Orlando, we all have assets in Europe, North America and India. But we have been taught to be low-profile,” says Mayur.
The family live in bungalows near the factory in Kakira, minutes from each other. There is nowhere else they would rather be. They have their own airstrip and private planes.
“This is utopia for us,” says Kamlesh.
Succession planning is key in ensuring the Madhvani legacy lives on. Mayur is cognizant of this truism.
“We have reached an age where we know the inevitable is coming. We have to witness the change so we can actually guide that change to some extent, rather than create a vacuum and arrive at a situation where there is no smooth handover,” he says.
“We will have to leave that to the next generation. The important thing is to make sure that whatever business that we have, we maintain a world-class lead in them. Today, our sugar factory is the most modern in the world, and more and more we are moving towards automation, and everybody is going to still need sugar,” says Kamlesh.
“In the end, you don’t work for the money, you work for the passion of it all.” The bags and packets of sugar that go out of this little town of Kakira are testament to the fertile bounties of the land, and the story of a family from India that, through enterprise, resilience and industry, found its fortune in the fields in a beautiful corner of Africa.
Businesses Of The Future: 20 New Wealth Creators On The African Continent
The New Wealth Creators is the first of its kind list by FORBES WOMAN AFRICA. Herein is a collection of female entrepreneurs on the African continent running businesses and social enterprises that are new, offbeat and radical.
These 20 women have been selected because they have created significant impact in their respective sectors by transforming a market or company, or innovating a product or service, and are pioneering their organization(s) in generating new untapped streams of income.
These women come from across the continent, from the villages and the suburbs, and are in their 20s, 30s, 40s and 50s. They have all adopted sustainable development initiatives in one way or another to help solve Africa’s problems.
They may be wealth creators but their businesses, ironically, did not stem from a need to make money, but rather from the need to solve Africa’s persisting socio-economic challenges.
Economically empowering women has shown to boost productivity. It increases economic diversification and income equality, in addition to other positive developmental outcomes.
Simply put, when more women work, economies are likely to grow.
FORBES WOMAN AFRICA put in months of rigorous research, searching near and far for these inspirational entrepreneurs.
We took into account their business model, new ideas, potential, struggles, social impact, growth, influence, resilience and most importantly, their innovation.
Speaking to FORBES WOMAN AFRICA last year at the BRICS summit in Johannesburg, South Africa’s Minister of Science and Technology, Mmamoloko Kubayi-Ngubane, said: “Innovation [is] becoming the cornerstone for our economy going forward.”
As Africa’s population is reported to increase by 53% by 2100, according to the United Nations, new solutions must be created in order for us to keep up.
One question remains: can Africa translate its significant population growth into economic development, and invest this wealth to improve the quality of life?
Entrepreneurship could very well be the answer, or at least, one of the answers.
Last year, the Founder and Chair of the Alibaba Group Jack Ma paid Africa a visit to discuss tangible investment and technology development.
He encouraged African entrepreneurs to take giant leaps in solving the challenges facing the continent and to take advantage of the digital economy.
He said that opportunities lie where people complain.
And these women, through their businesses, have identified just that.
Vijay Tirathrai, director of the Techstars Dubai Accelerator, shared the same sentiments with FORBES WOMAN AFRICA.
“The new wealth creators, for me, are entrepreneurs who are very conscious about finding solutions in the market place, but from a lens of having social impact or having impacted the environment,” he says.
Tirathrai believes that while servicing consumers, new wealth creators are also “making a safer and a greener planet in the process, eliminating diseases, improving health conditions and advocating for equality for women”.
Women on the African continent have been making headway as drivers of change, and in many ways, they embody new wealth.
They are the true wealth.
As FORBES WOMAN AFRICA, we seek to celebrate such women.
Through this list, money is no longer the central indicator of new wealth creation.
It is about job creation, contributing to healthy societies, recycling waste, giving agency to those who are financially excluded and developing solutions for some of the socio-economic problems we grapple with.
These women may all come from different places but they are bound together by one common thread, and that is the thread of new wealth creation.
This compilation is innovative, exciting, inspiring and shows what businesses of the future may look like.
Meet the FORBES WOMAN AFRICA New Wealth Creators of 2019.
The list on the pages that follow is in no particular order.
-Curated by: Unathi Shologu
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