11 September 2017

Nigeria Remains the Best Place to Invest, Anywhere in the World - - Chairman, BUA Group

interview

Nigeria's cement sub-sector is sustaining the giant strides it started about a decade ago when some indigenous manufacturers began to take possession of the public sector institutions championing the industry, while moving away from importation to local manufacturing and even more.

Here, Abdulsamad Rabiu, Chairman, BUA Group, one of the indigenous organizations championing the new direction, spoke on the milestones and more.

Excerpts.

What has been achieved in Nigeria's cement industry so far

The journey of the Nigerian integrated cement manufacturing, which took a new course just over a decade ago, has seen Nigeria move from a nation with under 3 million tonnes of production capacity to a country that will have some 45 million tons of cement manufacturing capacity by next year - implying about 15 fold increase in capacities. This important feat has not only made Nigeria self sufficient in cement production but also a net exporter of the commodity.

Some of the real impact on the economy

The cement sub-sector today represents over 90% of the Nigerian mining sector and employs some 30,000 p eople directly and over 2 million people indirectly. It also saves the Nigerian economy some 2billion dollars in foreign exchange.

BUA Cement's latest achievement in the industry

Today's event shall witness the commissioning of one of the best cement plants anywhere in the world. It is engineered to be the most environmentally friendly cement plant in Africa with the most advanced duct emission systems. Our technology has the latest filtration with capacity of less than 10 milligram per normal cubic meter. We use natural gas, which is a very clean energy for both our kiln as well as the power plant in addition to having a very green environment.

Supplied by the FL Smidth of Denmark, one of the best cement equipment suppliers in the world and powered by Siemens turbines, the plant that has the capacity to produce about 9,000 tons of cement per day or 230,000 per month. CBMI of China is currently building the second Obu cement line on an EPC contract with technology from the best European suppliers.

The construction of the first line, which commenced commercial production early last year, came with a lot of challenges. BUA had to build a 31 Kilometre 16 inch gas pipeline that is capable of transporting over 100 mscf of gas, which if it was meant for power generation alone, it could transport gas that would generate over 500 mega watts of electricity.

The company also invested millions of dollars into purchasing an over 50-mega watts power plant for the facility. We had 2-kilometer horizontal water boreholes that are supplying water to plant at a rate of about 50-cubit meter per hour.

BUA Group's place in the decade old private sector led cement revolution in Nigeria

BUA entered into the Nigerian Cement industry in 2008 with the acquisition of BUA Cement 1, a 2-million toner floating cement terminal that was able to process bulk cement into bags on a vessel. It was the first time any company brought that to Nigeria. The trajectory of the Group's cement operation saw it acquire a controlling stake in the publicly listed Cement Company of Northern Nigeria PLC or CCNN, as well as in Edo Cement Company Limited in the same year.

The company went on to invest in the construction of a greenfield 3 million tonnes plant in Obu. The success and impressive efficiency of the Obu cement plant in its first year of operation, which was over 90% in an industry where efficiency averaged 60%, led BUA to commence the construction of a second cement plant line of 3 million tons. Similarly, BUA has started the construction of another greenfield cement plant in Sokoto State with an annual capacity of 1.5 million tons at a cost of over $300 million which, hopefully, will be commissioned early next year.

Real impact of BUA Group's role in Nigeria's economy

It is worth mentioning that BUA's investment in the cement line in Sokoto is the single largest private sector led investment in the North-Western part of Nigeria. This is particularly important because Sokoto cement is the largest employer of Labour in Sokoto State after the State Government, and the 60-year-old company founded by the Sardauna of Sokoto needed that investment to keep those jobs.

Additionally, our investments in the two cement lines in Edo State represent the largest non-oil and gas related investment in the whole of the South-Southern region of Nigeria. With these, BUA would have invested over $2 billion dollars in the Nigerian cement industry with capacities in excess of over eight million tons per annum within the course of a decade. These kinds of investment in important sectors of the economy are not only necessary, they are critical.

Where the roles of private sector and those of government intersect

In order to reverse our import dependency and diversify the economy, large corporations have to engage in game-changing investment in sectors such as agriculture, mining, and infrastructure, while the Government at all levels ensures an enabling environment for the investments to thrive.

It is our firm belief that the responsibility to diversify the economy cannot be left only with the government; the private sector must be in the driver's seat with the support of the government. This is needed to create jobs that would curtail idleness within our youths that make them to engage in vices as well as have a more balanced source of revenue as government and businesses.

Other areas of BUA Group's role in the Nigerian economy

We have intensified our investments in some of the most critical sectors of the economy. In agriculture for example, we are creating an ecosystem where we are participating in the businesses of inputs, production, processing and distribution of some agricultural commodities. In this space, we have acquired machineries to establish the first limestone granulation plant in Nigeria for fertilizer production.

It is hard to believe that Nigeria currently struggles with producing quality limestone granules used as filler for fertilizer blending. The granulation plant will be integrated to a one million tons fertilizer blending plant, which we have also acquired to be sited in Edo State. On completion, it will be the largest fertilizer blending plant in Nigeria.

To mirror the trajectory of the cement sector and further diversify our economy, we are ambitiously developing our sugar estate in Lafiagi, Kwara State. The $300 million investment will enable us produce over 1.8 million tons of sugarcane; about 250,000 tons of white refined sugar, 20 million litres of ethanol and generate some 35 MW of electricity.

Our sugar refineries in Lagos and Port Harcourt are being structured to better serve the local markets as well as competitively target the markets of ECOWAS member states, officially making Nigeria a sugar-exporting nation. We are also up-scaling our rice milling facilities to reach one million tonnes capacity in the next few years.

This is being done by upgrading our rice mills in Kano as well as establishing new ones. And to feed the mills, we are developing massive commercial rice production in Niger and Jigawa States in addition to the specially designed rice out-grower scheme that we have piloted with 2,000 farmers in Kano State.

The Nigerian investment and business environment

The reality is that Nigeria remains the best place to invest, anywhere in the world. With the size of our market and the abundance of our resources, nowhere else comes close to us. For us to unlock our true potential and make even more significant economic progress, the private sector needs to closely engage with Governments on policies and innovative arrangements, such as PPP, in order to invest in sectors that have the potential to make the greatest impact on the economy and our people. One of such sectors is the textile sector. Nigeria currently imports $4 billion worth of textile annually at the expense of millions of jobs at home.

To reverse this trend, BUA Group is partnering with the Federal Government and the Katsina State Government to develop a 500ha Textile and Garment cluster that will possess all the necessary infrastructure and incentives needed for a smooth and efficient textile and garment businesses operation. The cluster has the potential to bring in over $5 billion worth of investments, creation of 25,000 direct jobs, FOREX earnings of over $2 billion and FOREX savings of over $4 billion.

Lessons from the success of the Nigerian cement industry

The success of the cement industry has shown that with the right Government policy and encouragement, it is actually possible to reverse our import dependence for many commodities, and by so doing, generate jobs and create wealth for our teaming population and preserve our scarce foreign exchange.

The Nigerian cement industry went from a few hundred million dollars to almost $20 billion in enterprise value in just over a decade and there is still room to do much more. We still need more plants to produce more cement, increase our per capita consumption, and bring down our housing and infrastructure deficit.

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