We speak to Abdel Sayed Taha (AS), Managing Director at Kenana Sugar Company, about the company’s highly praised business model, the importance of sugar production’s by-products and where stakeholders’ value in the company is to be found
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LE: Please highlight Kenana’s activities, and can you tell us a little bit about its origins?
AS: Kenana is a private, multinational investment company, registered for the production of sugar in 1975 and, these days, we also deal in the production of many of sugar’s by-products. The mere production of sugar cane lends itself to investments in other industries, like animal feed, ethanol and the fattening of animals. Kenana’s investments are currently divided across 17 projects. Putting these projects of Kenana on a forum for investment is exactly what the company needs at this stage. Our major shareholders are the government of Sudan, the State of Kuwait and the Kingdom of Saudi Arabia. In 1975, the total equity participation plus loans for the capital cost was $800,000,000 (US). Now the company is worth over $3 billion (US).
LE: Can you elaborate on the company’s business model?
AS: We use a diversification strategy, within which we have adopted new business units that each work on different projects and that work for themselves. So, each of these units owns their own profit and loss accounts, and each has a GM who is responsible for that unit’s positive contribution to the company, all within the value added concept. This so-called integration model has been designed around the cane itself, and around the fact that sugar cane doesn’t only produce sugar but ethanol, animal feed and in turn the capacity for producing red meat. These aspects have been integrated into the company in a very successful manner.
The model we use was praised by the ACP (African, Caribbean, and Pacific Group of States) in 2012, in Fiji, when the company was invited by the ACP summit to provide a model for sugar industries, and in particular one through which sugar industries in the least developed countries could provide diversification and overcome the hazards of commodity markets. Sugar being a commodity, it is important to not wholly depend upon it, but to diversify the portfolio.
LE: What is the main competitive advantage of Kenana?
AS: Kenana has successfully served the export market of the European Union since 2001. We have been active in sugar export since 1992 when, for the first time, we took our sugar to Kenya, Yemen and Bangladesh. When people talk about sugar in Africa, they associate it with Kenana. We are partners and members of international sugar bodies worldwide, which increases trust in us and improves our network of first-class customers worldwide, dealing in ethanol, raw sugar, white sugar and animal feed. We have taken our animal feed very successfully to East Africa and have a very good record in that regard. Utilizing sugar’s by-products is the key to maximizing the added value and the entire value chain completely. We are looking forward to the future, with an open mind and open arms to investors.
LE: What CSR initiatives is the company currently implementing?
AS: The company is deeply interested in human development and acts to improve it. The report that was issued by the UNDP in 2013 praised the company’s social welfare model in healthcare and education for the local people, including our employees. Our farms are in the “new south” of the country, close to the border with South Sudan. Our model has also extended its free-of-charge services to our non-workers in the nearby areas and villages. We provide clean drinking water stations, healthcare and education. Kenana has even been integrated into the syllabus of schools in Kenya, to teach pupils that we are the largest sugar industry in Africa and central to the pride of Africa.
LE: What does Kenana do to improve its circumstances even with challenging external pressures?
AS: Kenana has its own image within Sudan. We always say that despite the American sanctions against Sudan, Kenana is protected from them by going to the OFAC and getting our own licences for Kenana. We use John Deer tractors, which are 100% American. Because Kenana has done more than enough to prove that it is producing sugar for the people, we are able to use those machines. As Kenana is now a reference and model in the sugar industry in Africa, we also provide consultancy through our subsidiary KETS (Kenana Engineering and Technical Services), which was established in 1986 between Kenana Sugar company and Frances Schaffier Associates in the US. To date, this company has successfully implemented many overseas projects, for instance in Nigeria and Mauritania. We also give technical back-up and services to our fellow Africans in Ethiopia, Kenya, Benin and Ghana.
LE: For those who might be curious about investing in Kenana’s projects, what would you highlight?
AS: We are open to many investment ideas but one thing we will always keep the same is that our projects are fully invested in, in terms of equity, loans and technology.
We are currently investing in a terminal in Port Sudan, to improve the efficiency of the port. When exporting sugar, at the moment it takes a vessel headed for the European markets seven days to be loaded beforehand with 25 metric tonnes of sugar. With our investment in a first-class terminal, the number of days will be reduced from seven to one.
Every time we launch a new project, we look for the best partners. We go to the shareholders for investment and, for example, to Italy for port handlers. We have the confidence, the contacts, the shareholders and the expertise to jump into almost any interesting investment related to the sugar industry. But we seek to be a global leader in technology and innovation. Outside investors forming partnerships with us would capture value from our technological innovations. We have world-class environmental, social, and corporate governance programs that create significant stakeholder value. Should foreign investors wish to come onboard with their strategic resources, we will make sure we exploit our synergies, to ensure they have a sustainable rate of return on their investment.