Aliko Dangote: Boldly Driving Africa’s Renaissance
Obinna Chima
Africa has always been described as a continent with huge untapped potential. The continent is notable for its rapidly expanding consumer markets as well as its huge youth population. Unfortunately, due to leadership deficit in a lot of countries in the continent, which is responsible for the pallid state of its infrastructure, its vast natural and human resources remain untapped as other continents continue to use Africa as dumping ground for their goods and services, especially poor quality ones.
But driven by purpose and the need to reposition Africa, the President of the Dangote Group, Alhaji Aliko Dangote, is leading the continent’s transformation by boldly driving attractive investments in most countries in the continent.
Over the last four decades, the Dangote Group has embarked on a journey that has been marked by immense growth and expansion. The Group has grown from a commodity trading company to a diversified conglomerate in Africa.
It has experienced significant strides in its expansion efforts across the diverse landscapes of various sectors in Africa. Its investments cut across sectors such as cement, sugar, salt and seasoning, fertilizer, petroleum refinery/petrochemical, packaging, truck assembly, coal mining, construction, and automobile assembly.
Others are upstream oil and gas, sub-sea gas pipeline, rice, sugarcane, and tomatoes.
Speaking at a recent tour of his 650,000 barrels per day Petroleum Refinery and petrochemical plants, Dangote, who is Africa’s richest man said his mission was to transform Africa, while creating sustainable value for all stakeholders
He explained: “The Dangote Group has actually grown from a commodity trading company to a diversified conglomerate over the last two decades. From 1978 to 1997, we started as a trading company and grew to become a leading bulk commodity trader.
“From 1997 to 2003, we transformed from a bulk commodity trading company to a manufacturing concern, targeting import substitution and industrialisation.”
But these did not come easy as Dangote pointed out that all through his life, he has been fighting to ensure that he succeeds in any business he ventures into.
He narrated, “I have been fighting all my life. If you remember, during privatisation, acquiring Benue Cement was tough because they said we didn’t have the technical know-how to take up the plant.
“So, we launched a five-million tonnes capacity plant which was never heard of in Africa. Most of our bankers were scared, but we went ahead with it. People didn’t know what we went through because as at that time, no bank had capital base of N25 billion in Nigeria.
“So, they (the banks) did not have the capacity to finance Obajana Plant. We thought the project would cost us $480 million, but eventually, we spent over $1 billion.
“But it was a big challenge for us. We went ahead and built that capacity of five million tonnes and it was commissioned in May, 2007.
“We had a loan of about $480 million from the International Finance Corporation (IFC) and other banks. The loan was for seven years because they didn’t believe our numbers and they felt they didn’t want us to default. But we paid back the loan in 18 months.
He further said, “From 2007 to 2013 was for expansion and restructuring of the company, where we listed our Cement company and then the institutionalisation of our group in four business processes.
“We are ranked consistently as top tax payer in the country annually. We are committed to complying with all relevant tax laws and regulations.
“We are known as one of the largest employers of labour. However, we are also conscious of ensuring our workers enjoy a good living standard. This is reflected in our inclusion in the list of top paying firms in the country.”
Dangote said he continues to restructure his companies to deliver optimum value to stakeholders.
According to him, “because when you remain at one place, events would take place whereby you will find yourself in trouble.”
“So, we are always trying to be innovative. What we are trying to do is to totally take ourselves out of the demand for foreign exchange (FX) from the Central Bank of Nigeria. What we want to do is be the biggest FX supplier in the market.”
“Today, the Dangote Group is investing in agriculture with emphasis on three crops which would help substitute imports and they include rice, sugar and tomato,” he added.
To achieve this, the group is working on cultivating ~250k Ha of land (directly and via out-growers). It is presently constructing its rice mills of one million-tonnes capacity with its Jigawa plant expected to be inaugurated in a few months.
“All our rice mills would not be connected to the grid. We would produce our own power using the shell of the rice to generate power. Rice business consumes a lot of power so we would not be connected to the grid,” he said.
Also, the Dangote Fertiliser Limited’s plant is Africa’s largest Granulated Urea Fertiliser complex. Its market is largely export-driven: 12 per cent sold domestically and about 88 per cent exported to Sub-Saharan Africa, South America, US and Europe.
Also, the Group’s production increased by 48 per cent to 1.2 million tons in 2023 and it employed about 1,500 persons directly and about 5,000 indirect jobs.
Dangote Cement (DCP) is the leading cement player in Africa with a total capacity of 52 million tonnes per annum (Mta) across 10 countries. The Group revealed that plans are underway to add a total of nine million tonnes of capacity in Nigeria and Cote d’Ivoire.
“For cement, we have spent $1.7 billion and we are building a brand new six million tonnes of cement, mainly to target exports. What we are doing is that we want to make sure that apart from selling domestic, we produce excess and export.
“You really don’t become an exporter until you become self-sufficient and then you export. Normally, you have to protect your domestic market,” he said.
Speaking on the challenges of setting up a refinery in Africa, Dangote stressed that when he ventured into the project, “we didn’t know the magnitude of what we were getting into. That was why I said in a recent interview that if I knew what I was getting into, I wouldn’t have started it at all.”
He continued, “Right from the beginning, we launched 31 projects concurrently and this one (the Refinery) alone is enough to give somebody grey hair.
“But we are in the middle of the sea, and so no going back. If we stop, that means we would sink and the only option is just to continue, no matter how tired you are. I didn’t want to write a book, but for the first time, I am going to write a book about my experience with project execution in Africa.
“That is because in Africa, it is totally different from oversea. Here, there is no infrastructure. As you can see, after we have battled with fixing our own infrastructure, now we have to go and start building roads.
“But what gives me joy is the self-sufficiency and the jobs we are creating and also, we are creating a circular economy.”
According to him, when the loan for the refinery was signed in September 2013, the first drawdown was $2.65 billion, which was put into the project and the remaining went into an escrow account.
He said, “What helped us was the trust the banking industry always have for Dangote. The biggest challenge we had then was with Ogun State government, whereby for three and half years, we could not get access to Olokola plant.
“That delay cost us over $500 million because we were paying interest on the loan and we had our money in an escrow account where there was no interest rate. From there, we bought this land from Lagos State government.
“Even Lagos, when we got in here, we had issue of compensation with the owners of the land. Meanwhile, interest was counting and at the end of the day, we lost more than $620 million in interest payment before we even started the work.”
Furthermore, Dangote explained, “For the refinery, we have spent $19.5 billion and the fertilizer, we spent $2.5 billion. Over the last couple of years, we have spent $25.2 billion.
“Our priority is actually to deliver positive impact in any economy we find ourselves.”
However, Dangote stressed the need for policy consistency by governments at all levels to encourage investors in the country, just as he urged the federal government to focus more on domestic investors.
The billionaire also revealed plan to list the Dangote Refinery and Petrochemical Limited and the Dangote Fertilizer Plant on the Nigerian Exchange Limited in the first quarter of 2025.
“We are targeting end of this year and worst case, we should be able to list them by the end of the first quarter of next year, so that we can sell shares to Nigerians. That is what we are planning,” he added.
Dangote said the Dangote Group expects to grow its revenues by six times to about $30 billion by 2025, from the $5.4 billion it was in 2022. The group is also targeting to achieve 15 per cent of revenue from its cement business; 50 per cent of its Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) from outside Nigeria (including exports) and 70 per cent of revenue from foreign exchange.
The Dangote Petroleum Refinery is an industrial plant that transforms crude oil into various usable petroleum products such as diesel, gasoline (petrol), jet fuel and kerosene.
The refinery produces Euro-V quality gasoline and diesel, as well as jet fuel and polypropylene.
The refinery is designed to process large variety of crude including many of the African crudes, some of the Middle Eastern crudes and the US Light Tight 0il.
Dangote Petroleum Refinery can meet 100 per cent of the Nigerian requirement of all liquid products (gasoline, diesel, kerosene and aviation Jet) and have surplus of each of these products for export.
The refinery was designed to use the latest technology to comply with stringent guidelines and regulations to protect the local environment and at the same time produce the latest environmentally friendly petroleum products for worldwide markets
The refinery has its own dedicated steam and power generation system with adequate standby units for reliable and uninterrupted utility supply to operating plants.
In addition, it has a 435MW power plant that can meet the total power requirement of lbadan Electricity Distribution Company (IBEDC), covering five states, including Oyo, Ogun, Osun, Kwara and Ekiti.
Also, the Petrochemical Plant was designed to produce 77 different high-performance grades of polypropylene. It maximises value addition – extract maximum value from every barrel of crude and minimises low-value fuel oil.
The refinery is estimated to generate an annual market value of $21 billion for Nigerian crude oil; foreign exchange savings/earnings of $9.9 billion and ensures over $25 billion addition to the country’s Gross Domestic Product (GDP), through massive value addition within the country.
To this end, there is need for more African billionaires to look inwards just like Dangote, in order to drive investments in the continent to foster its rapid growth and development.
Africa has potential for greatness, but there is need to support domestic production to enable it become self-sufficient in production rather than a dumping ground for other continents.
