Savannah Sugar and Dangote’s Midas touch
For most discerning Nigerian corporate watchers, what distinguishes Dangote’s Industries Limited (DIL) from others is the intractable resilience and Midas touch of the Chairman and Chief Executive Officer of the Dangote Group, Alhaji Aliko Dangote. But the guru who is indisputably the richest man in Africa, shared the secret of his business successes with investors […]
For most discerning Nigerian corporate watchers, what distinguishes Dangote’s Industries Limited (DIL) from others is the intractable resilience and Midas touch of the Chairman and Chief Executive Officer of the Dangote Group, Alhaji Aliko Dangote. But the guru who is indisputably the richest man in Africa, shared the secret of his business successes with investors at the Financial Times’ fourth annual Africa Summit at Claridges in London. There, in the presence of the Vice President, Prof. Yemi Osinbajo, Congolese presidential hopeful, Moise Katumbi, and about 300 other business leaders, Dangote outlined the key to his success: self-sufficiency and backward integration, a manufacturing strategy that extracts value from entire processes.
In no other business venture has Dangote demonstrated unalloyed commitment to his secret business ideals than the Savannah Sugar Company. It is amazing to note that Dangote Industries Limited, the current owners of Savannah Sugar Company Limited has invested over N12billion in the turnaround activities of the organisation since it took over its management in March 2003. The buy-over, orchestrated by the Bureau of Public Enterprises, was the fallout of the failure of the Federal Government to reposition the foremost sugar company after several attempts.
It is heartwarming to note that the new management avoided the lackluster attitude of the past and wisely invested into factory and estate rehabilitation; purchase of vehicles, trucks and heavy duty equipment; salaries and wages; farm inputs like fertilizers and chemicals, among others, spare parts for factory and heavy duty equipment and payments in the form of Sugar Development Levy. The company has also not been found wanting in the area of meeting up its obligations in power consumption; packaging materials; taxation; fixtures and fittings; office equipment and purchase of all types of vehicles.
When the Federal Government which had the largest shareholding volume, indicated its desire to divest a greater proportion of its shareholding (up to 49 per cent of its shareholding structure) in the company in 2001, DIL subsequently emerged as the core investor following its privatization. But the transfer of ownership of the company to DIL was effected in March 2003. Initially, KETS, from Kenana Sugar Company, Sudan, was appointed to manage the Savannah Sugar Company activities. About 4,500 hectares of cane plantation had been burnt by the disengaged workers of the company, over alleged non-payment of their entitlements, prior to the transfer of ownership.
This situation forced the new management of DIL in Savannah Sugar to go to the Nigerian Sugar Company Limited, Bacita, Kwara State, to purchase seed cane to the Numan-based Savannah Sugar Plantation for planting. In fact, the act of massive transportation of seed cane of 2,000 tones over a distance of 1,000 kilometres, was the first in the history of the sugar industry in the whole world. Again, to improve the variety base of the farm, five varieties were flown from Khartoum in Sudan to Yola en route Numan. The five varieties were planted on a total area of 1.54 hectares in the space of four years. Indeed, over 1,240 hectares have been developed after the four years.
Interestingly, as at 2006, a total of 5,500 hectares had been planted with fresh canes. But between 2007 and 2008, a total of 7,000 tonnes of sugar was produced under KETS management. What this implies is that the privatization of Savannah Sugar Company Limited is one of the few success stories in the history of privatization and commercialization programme of the Federal Government which was started in 1986 by the Ibrahim Babangida military regime.
Until the emergence of Dangote Sugar as a major player in the industry, Nigeria has had no functional sugar production industry despite the fact that Nigeria is blessed with abundant fertile land suitable for sugarcane farming. To confront this agonizing paradox, the Federal Government in 2012 drew up and implemented the Nigerian Sugar Masterplan (NSMP), an ambitious drive to make the country self-sufficient in sugar production by achieving 1.7 MT of refined sugar from locally grown sugarcane per annum. The plan also includes the reduction in outflows of Nigerian cash for imports and creating thousands of jobs in sugar production.
Abdullahi Alhaji Adamu, Abuja.