In a move to reduce dependence on foreign exchange-impacted raw materials, BUA Foods Plc, a leading food conglomerate majority owned by Nigeria’s second-richest man Abdul Samad Rabiu, has invested over $200 million in its integrated sugar estate located in Lafiagi, Kwara State.
Ayodele Abioye, the Managing Director of BUA Foods, made this revelation during a press interaction at the company’s headquarters in Lagos. Abioye explained that the project, encompassing a sugar refinery, ethanol plant, and supporting infrastructure, aims to address the challenges posed by foreign exchange fluctuations in sourcing raw materials.
“The bulk of our raw materials are FX-dependent, which is a major issue. As it stands today, Nigeria is yet to be an industrial agricultural producer of sugarcane, which is a major source of raw material for us. We still depend on other countries,” Abioye stated, highlighting the significance of developing sugarcane agriculture locally and emphasizing the need for accelerated collaboration with the government to achieve this goal.
Abdul Samad Rabiu’s food business faces a strategic crossroads amidst FX rate fluctuations
BUA Foods, a segment of the Nigerian-based BUA Group, comprises various subsidiaries including BUA Sugar Refinery Limited, BUA Oil Mills Limited, IRS Flour, IRS Pasta, and BUA Rice Limited. The conglomerate is majority-owned by Nigeria’s second-richest man, Abdul Samad Rabiu, and his son, Isyaku Naziru Rabiu.
The integrated sugar estate in Lafiagi spans about 20,000 hectares and includes a combination of cultural estate, a 20,000-metric ton refinery, and a daily capacity to crush 15,000 tonnes of sugarcane. The estate also houses an industrial ethanol plant, schools, an estate under construction, and a three-kilometer airport.
Despite BUA Foods’ remarkable financial performance in 2023, with a reported 74-percent surge in revenue, the company faces challenges in strategic planning due to erratic adjustments in foreign exchange rates for import duties by the Nigerian Customs Service (NCS).
Abioye expressed concerns about the NCS’s decision to adjust the FX rate for tariff and duties, citing a 59.15 percent increase to N1,515 to the dollar on February 15. This adjustment poses a substantial hurdle for BUA Foods, and Abioye highlighted the company’s vulnerability to the country’s ongoing FX crisis, stating, “We’re all impacted, like every other business.”
BUA Foods grapples with weekly changes in duty exchange rates
The NCS relies on the recommendations of the Central Bank of Nigeria (CBN) for its FX rates, and the recent adjustment marks the sixth within February alone. Abioye underlined the difficulties in strategic planning caused by the lack of FX rate stability, revealing that the company experienced four changes in duty exchange rates within a single week.
Despite these challenges, Abioye reassured stakeholders of the company’s active management of fluctuations to maintain affordable product prices. BUA Foods remains committed to its investment in the integrated sugar estate as part of its broader strategy to ensure sustainability and self-sufficiency in raw material sourcing.
