One of Africa’s richest men in a T-shirt, jeans and black overcoat. Hardly how one imagines the publicity shy chairman and CEO of BUA Group, a privately-owned conglomerate with annual revenues estimated at $2 billion. The look may be unpretentious. His ambitions are anything but, as revealed by his plans to invest more than $500 million in Nigeria’s economy over the next few years. This is Abdulsamad Rabiu, the unassuming Nigerian business tycoon, full of life, with a keen ear and a great business story. SEE MORE AFTER CUT>>>>>>>>
FORBES AFRICA, working with FORBES magazine in the U.S., calculates that Rabiu’s stake in his commodities and cement empire, plus his real estate holdings in South Africa and London, are worth $1.2 billion, up from $670 million a year ago, primarily due to better information on Rabiu’s holdings and the revenue of his companies. He ranks 23rd on Forbes new 2013 list of Africa’s 50 Richest.
Born in Nigeria’s northwest state of Kano, Rabiu, age 53, is the son of well known businessman Isyaku Rabiu, who made a fortune in trade and industry in the decades after Nigeria’s independence from the UK in 1960. By the 1970s, Isyaku emerged as a key sponsor of the National Party of Nigeria, which became the ruling political party after the country returned to civilian rule following the elections of 1979. A military coup in 1983 toppled the government and led to the arrest of then-President Shehu Shagari and many of his close associates, including Isyaku.
Around this time, the younger Rabiu earned his bachelor’s degree in economics from Capital University in Columbus, Ohio. He returned home to find his father’s business in a precarious state following his incarceration. Barely 24 years old, with little business experience, Rabiu had to lead his father’s business empire during dark days.
“It was very difficult. When we started, our dad was not there. There was this huge vacuum because of his personality. He grew the business, he did everything, everybody reported to him, and then he wasn’t there anymore. So at a very tender age, I was saddled with so many things. I had to take a lot of important decisions, and don’t forget that this happened suddenly,” says Rabiu.
“At the time, there were three ships being discharged, rice and sugar ships. The government agencies tried to seize the goods, so we were discharging. They were taking. We were taking back. It was a big, big issue,” he continues. “The biggest challenge was that there were restrictions on confirming letters of credit because of the coup. Then there was the issue of the planes. There were two private jets and we didn’t know what to do with them. We couldn’t fly them. They actually grounded the jets. We were able to get the big one out and we decided we didn’t need it. I just got rid of it.”
In 1988, Rabiu set up his own business, BUA International, with the blessing of his father. He imported rice, sugar and edible oils, as well as iron and steel rods. His big break came in 1990 when a friend informed him of an opportunity with a government-owned steel company.
Production at the Delta Steel Company had been beggared by the Nigerian government’s decision to reduce grants. The company was considering approaching private business to finance the procurement of raw materials and Rabiu saw the promise. The deal needed approval from the government. After approaching the minister of steel, who hailed from Rabiu’s home state, he was asked to finance the project.
“We were able to get the business, which was worth almost $20 million at the time, but the idea was that we were importing their raw materials to the tune of 25,000 to 30,000 tons per month, and instead of them paying us back in cash, they gave us the processed products. We didn’t want to collect money because at the time you would sometimes never get it,” Rabiu explained.
The payment method was favorable for Rabiu and his company because the price of the products was government controlled. “I think it was around $6.30 from the company, but around $90 in the open market. So it was quite a good opportunity for us and we made quite a bit of money,” he recalled.
By 1992, a regime change came and the honeymoon was over. With the substantial profits he had made from the steel venture, Rabiu invested in Tropic Commercial Bank, which operated in Nigeria. He became the chairman of the bank after buying a majority shareholding.
In 1995, BUA acquired Nigeria Oil Mills, a peanut processing company in Kano, for more than $20 million. The previous owners had offered BUA the business based on its status as a player in the edible oils business. Two years later, BUA Flour Mills’ first factory was established in Lagos. The Kano flour factory was launched in 1998. Thereafter, BUA set up its sugar refinery in Lagos. The 2,000 million tons per day capacity plant is the second largest sugar refinery in West Africa, after the Dangote Sugar refinery, which produces an estimated 2,400 MT per day.
On a hot morning in Port Harcourt, on the coast of Nigeria, FORBES AFRICA visits one of Rabiu’s biggest projects, the BUA Mixed Development, which includes a sugar refinery with a production capacity of 2,000 tons per day and a 65,000MT storage; a flour mill; a pasta, semolina and rice mill. In the capital, Abuja, Rabiu’s BUA group has a huge housing project of 200 homes to be completed by early next year.