When AshakaCem Pacified Disaffected Host Communities

When AshakaCem Pacified Disaffected Host Communities

— Jun 27, 2014 2:30 am | 1 Comment

Community relations, as one chief executive recently put it, “is food for the soul of the organization.” It has ceased being an afterthought or corporate window-dressing, but is now a serious, strategic aspect of business for organisations, a fundamental ingredient for their success.

A recent research in the United States showed that companies do achieve an increasing comparative advantage by improving community relations.

When a company makes a commitment to the community part of its core business strategy, it not only helps attract and retain top employees, but it also positions itself positively among customers and, increasingly, improves its position in the market. Positive, proactive connections to the community can translate into a boost to the bottom line. That is exactly what AshakaCem Plc realised when relations with its host communities almost turned sour. The management exhibited a high level of crisis management skill to pacify the host communities, who staged a walk-out, during its Annual General Meeting (AGM) on June 17 in Abuja.

The Funakaye Development Forum Gombe, which represents the host communities, expressed worry that though it had held six meetings with the company’s management, it is still not comfortable with the decision of Lafarge International to merge its Nigeria and South Africa businesses to create Lafarge Africa. Lafarge International owns 58.6 per cent of Ashaka Cement Plc.

Also, the host communities wondered why Lafarge International has not brought about the desired expansion of production in Ashaka Cement, three years since it acquired the majority shares in the cement company. They questioned the ground breaking event done on April 28 to mark the start of the expansion. Such were the grouses of the communities that they planned to disrupt AshakaCem’s AGM.

However, in response to Funakaye’s complaints, the Managing Director of AshakaCem, Leonard Palka, said that the company is engaging with the communities as it has spent N151.3million on various projects in the communities between 2011 and 2013. While commending the host communities for providing a conducive atmosphere for the business, Palka did not directly address the issues raised by the Funakaye group.

Thus, the stage was set for an interesting AGM. While declaring that the company made a profit after tax of N2.8 billion, the chairman, Board of Directors, AshakaCem, Umaru Kwairanga (Sarkin Fulanin Gombe), reeled out further achievements of the company within the 2013 financial year.

“We gave 42 kobo, which I believe when you look at the earning per share of Ashaka Cement, this is a very good dividend for us. Despite what we have in the pipeline and capacity expansion, we still believe that there is a need for us to give something to our shareholders because we felt that at the end of the day it is with the support of the shareholders, prayers of the shareholders and the community at large that we can be able to move forward.”

Also, the company increased production to 757, 000 metric tonnes of cement which is 2.2 per cent over 2012. There was also increasing progress made in expanding its production capacity from the current 0.5 million metric tons to 2.5 million metric tons through the installation of a completely new production line. In its continued efforts to generate its own electricity and also electrify its ghost communities, the company is building a 64-megawatt power plant using coal from own mine at Maiganga in Gombe state. While the company will use about 40 megawatts, the remaining 20 megawatts will be supplied to neighbouring communities in Gombe state. This will save the company huge expenses currently incurred from use of fossil fuel to power its machineries.

It’s now clear to leading-edge companies that to succeed in a global economy, the corporation has to be more than a preferred shareholder but must embrace require a new perspective on corporate governance and behaviour. Consequently, in addition to becoming the investment of choice, a company must become the supplier of choice, the employer of choice and what is now called “neighbour of choice.”

Thus, when representatives of the host communities threatened to walk out of the AGM, the company realised that it needs good neighbours to thrive and succeed in business. It took intervention of elder statesman Alhaji Umaru Mutallab, and former Chairman AshakaCem Brig. General Emmanuel Ikwue (retd), and some other notable sons of Gombe State to pacify the aggrieved indigenes. It was impressed on the representatives that it requires time and care to nurture the only functioning and profitable company in the Northeast to greatness.

In the realisation that there is a great need for improved communication between the company and its host communities, Alhaji Kwairanga promised that the host communities will be carried along in this time of great happenings. He told the representatives that though not much can be seen on ground as the company expands, a lot is being done behind the scene to mobilise men and materials towards the must be expansion. Assurance was given of the commitment to expansion as the ground breaking event for the new production line, which was witnessed by President Goodluck Jonathan, represented by Minister for Industry Trade and Investment, Dr. Aganga, would increase capacity from 700,000 to 3 million tonnes.

For a company that says it has ‘has a commitment to open communications and proactively communicates with its stakeholders on a number of developments, activities, events, and efforts to develop a stronger brand’, it needs to engage its stakeholders to avoid incidents like what happened at its last AGM.

With respect to the communities’ disaffection with Lafarge International merger of its Nigeria and South African businesses to become Lafarge Africa Plc, the host communities need to be educated in the dynamics of modern business of mergers and acquisition.

The management has to explain to the indigenes that merger will create a nationwide coverage in both Nigeria and South Africa, with cement capacity of about 12 million tonnes, as well as operations in aggregates, ready-mix and fly ash. The strong operational track record and management skills within the combined businesses as well as continued support and expertise from Lafarge Group will position Lafarge Africa to offer a full range of value added solutions to meet customers’ needs. Thus AshakaCem will benefit immensely from the expertise and gains of international corporation that it is now part of. For the host communities to think that the company does not want to expand in the juicy Nigerian market, shows the depth of disconnect between them and the company, which has to be bridged,

AshakaCem Plc was incorporated in August 1974 and commenced production in 1979 as a cement manufacturing and marketing company under the name Ashaka Cement Company Limited. The Company was initiated by the Nigerian Industrial Development Bank Limited in collaboration with Blue Circle Industries Plc UK (now LAFARGE SA), the Nigerian Bank for Commerce and Industry, Northern Nigeria Investment Limited and the Government of the then North- Eastern State (now Adamawa, Bauchi, Borno, Gombe, Taraba and Yobe States). Today, however, AshakaCem Plc is a full subsidiary of Lafarge SA.