We must begin to look at a cross-pollination of our industries amid economic integration and finally, as Nigerian business leaders, we need to be less shy and more bullish in taking advantage of opportunities. This is my charge to us all, and I humbly expect to cheer on and learn from your successes in the coming financial year.
Demand and consumption currently outstrips supply. Our population is increasing, logistics remains a huge challenge, coupled with reduced production amongst some players. This is why the price of cement in the market is currently about 20 per cent higher than the price of cement ex-factory. Plants are aging and BUA is one of the few that have new plants. We have therefore taken it upon ourselves to tangibly bridge the demand gap by 2022. The potentials exist because ideally, Nigeria should be producing at least 300 kilogrammes per head or about 60 million metric tonnes per annum – which is double our current production capacity.
Imagine with me for a second, if we were still importing cement. The cost of logistics alone would have made the price of cement out of the reach of many – especially those in far-flung states. As I said earlier, and as many of us have experienced, the retail price of cement is currently high. However, at about $120/ton ex-factory, this is still lower than the price of cement per ton in many African countries. This equally means the market is big enough for new investments and unless we all come out to face these challenges as leaders, development will be difficult to achieve.
In view of these challenges, I am happy to announce that our third cement line of three million metric tons (mmt) per annum in Sokoto is expected to be commissioned in the middle of 2021, and I am also pleased to inform you that we are commencing the construction of three more cement plants of three million tonnes each in Sokoto, Edo and Adamawa at the cost of $1.050 billion, which should be completed by the end of 2022. The contract signing is expected to happen this week. However, I am also of the strong belief that it is not only in cement that these large-scale projects are possible. Nigeria hosts other huge mineral deposits waiting for us to add value to, to extract maximum benefits from. Iron ore is one of them.
Our country is one of only 11 countries in the world that is sitting on iron ore, coal and even gas, and yet we appear to be the only ones yet to take full advantage of these resources. It is estimated that we spend about three billion dollars a year importing steel, which we can produce locally using our resources, thereby saving billions of dollars in foreign exchange every year.
In fact, if we can have a two-million-tonne fully integrated steel plant at the cost of about $2 billion, we will be saving about $2 billion every year. By fully integrated, I mean processing from iron ore to beneficiation, pelletising, DR plant, SMS, steel, long products, sheets, angles – all aspects of the value chain. If we even decide to undertake beneficiation alone, this would be more lucrative than processed limestone, which is the raw material for cement. I daresay if we are able to take full advantage of this, then we can firmly place our sector and country on the road to sustainable development.
As business leaders, we are not exploring and exploiting these opportunities enough, and the few of us who are doing so definitely cannot do it alone. I say this because there are huge opportunities in mining, manufacturing, and the agricultural value chain – just as there are in the services space. Agriculture is a prime area in need of serious intervention, and we need more Nigerians to step up here.
…I want to say again that we NEED MORE PEOPLE TO COME AND INVEST in various sectors of the Nigerian economy. We have the climate, people, land, water, mineral resources – we have almost everything. The final piece is that we must begin to produce what we consume and consume what we produce. Where we cannot do either, we must become a regional powerhouse in value-addition…
Do you know that 60 per cent of the world’s arable land resides in Africa? And as is often said, “if potential were edible, Africa will be the best fed continent in the world.” The same applies here to Nigeria. I flew last week from Lagos to Sokoto and could see the fertile plains from Kwara, Niger, all the way to Sokoto, waiting for us to take advantage of. How long will we continue to rely on imported food? Our continued inability to grow what we eat exposes us to various shocks, the most debilitating being the 2020 pandemic. This is one of the reasons why at BUA we are renewing our focus on the agriculture and foods space.
Just like I said last year for cement, BUA is also looking to combine our food businesses – from sugar, flour to pasta – to list these as BUA FOODS on the Nigerian Stock Exchange (NSE) by the end of 2021. In sugar, we have our integrated plantation in Kwara State set to produce 200,000 tonnes of refined sugar, 20 million litres of ethanol annually and 35 megawatts of power – all utilising the by-products of cane sugar. We also have refineries in Lagos and Port Harcourt. In flour and pasta, we have also started looking at backwards integration for Nigerian-grown wheat, to reduce our dependence on imported wheat and revive production in the sector. Nigeria currently imports over five million tonnes of wheat and this places a huge strain on our scarce foreign exchange as a country.
The opportunities in the agriculture and agribusiness space are endless. How are we as leaders looking to take advantage of this space? How can we work together, and what examples or opportunities are on the horizon?
In terms of our plans, we recently announced that BUA will be building a refinery and petrochemicals complex. Why? Because we see an opportunity, even though there is another big project in that space coming on stream. Local consumption is quite huge and estimated at 800,000 barrels per day. This is in addition to the huge regional market that exists for petroleum products. Alongside the refinery, we are building a polypropylene plant, which will answer the demand for polypropylene in the region. It is common knowledge that about a third of our country’s foreign exchange earnings go towards the importation of petrol and petroleum products. More strange is the fact that the cost of logistics for transporting these products to Nigeria could instead be deployed to significantly revamping the refining space and therefore, at BUA, we couldn’t just sit back – we knew we had to take action and I am certain we have made the right call yet again.
On a final note, I want to say again that we NEED MORE PEOPLE TO COME AND INVEST in various sectors of the Nigerian economy. We have the climate, people, land, water, mineral resources – we have almost everything. The final piece is that we must begin to produce what we consume and consume what we produce. Where we cannot do either, we must become a regional powerhouse in value-addition – if not for anything, but to take advantage of the benefits of the African Continental Free Trade Area (AfCFTA), which presents a massive opportunity for us as a country. Unless we take full advantage of AfCFTA, we may become a dumping ground due to Nigeria’s unique position of being Africa’s largest economy, and our huge population. We must begin to look at a cross-pollination of our industries amid economic integration and finally, as Nigerian business leaders, we need to be less shy and more bullish in taking advantage of opportunities. This is my charge to us all, and I humbly expect to cheer on and learn from your successes in the coming financial year.
Abdul Samad Rabiu is founder and chairman of BUA Group.
This speech was presented on the admission of Mr. Rabiu as a Fellow of the Institute of Directors (Nigeria) on Sunday, December 20, 2020.