Friday 20th October, 2017
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Savannah Sugar and Dangote's midas touch

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 at the Financial Times’ fourth annual Africa Sum­mit at Claridges in London. There, in the presence of the Vice Preside­ny, Prof. Yemi Osinbajo, Congolese presidential hopeful, Moise Ka­tumbi, and about 300 other busi­ness leaders, Dangote, easily Afri­ca’s most successful business leader, outlined the key to his success: self-sufficiency and backward integra­tion, a manufacturing strategy that extracts value from entire process­es. “We are not going to import an­ything any longer. In Nigeria, we are learning how to produce the entire value chain”, the corporate Com­mander-in-Chief said.
 
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. Mr. Ma­hesh Gupta, the ebullient and hard­working Managing Director of the company, who disclosed this recent­ly at Numan, the plantation base of the company, said additional N1bil­lion had also been invested in the re-plantation programme embarked upon by the new management.
 
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, according to the company’s chief executive, 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. However, like is possible in any type of business, a maiden cane harvest attempt and sugar production proved less suc­cessful during the intervening year. But between 2007 and 2008, a to­tal of 7,000 tones 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 as one of the conditionalities handed down to the third world countries by the In­ternational Monetary Fund (IMF) and the World Bank.
 
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. As an integral part of this na­tional plan, Dangote Sugar in 2012, committed itself to becoming an in­tegrated sugar business, serving lo­cal and export markets from inte­grated plantation and refinery sites to be built across Nigeria. If its goal of building a capacity to produce 1.5 to 2.0 million tones of refined sug­ar annually from its own sugar cane is realised, Dangote Sugar will be­come a global force in sugar produc­tion for the benefit of its stakehold­ers and the country at large.
 
Adamu is an Abuja-based pub­lic relations practitioner.

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