Why I in­vested $600m in Tan­za­nia – Dan­gote

Daily Trust - - BUSINESS - By Ibraheem Hamza Muham­mad, who was in Tan­za­nia

Pres­i­dent of the Dan­gote Group, Al­haji Aliko Dan­gote, last week­end com­mis­sioned the $600m ce­ment plant in Tan­za­nia with ca­pac­ity to pro­duce three mil­lion tonnes per an­num. The latest plant is one of the 18 he is build­ing across Africa and Nepal, Asia. He en­ter­tained ques­tions from the press

Why did you in­vest in Tan­za­nia? A key fac­tor that drives in­vest­ments in an econ­omy is the pres­ence of an in­vestor-friendly busi­ness cli­mate. In­deed, Tan­za­nia is one of the most at­trac­tive in­vest­ment des­ti­na­tions in Africa. This is at­tested to by the sub­stan­tial amount of for­eign di­rect in­vest­ments (FDI) that flow into the coun­try, an­nu­ally.

The eco­nomic re­forms in Tan­za­nia, es­pe­cially in tax, public sec­tor, fi­nan­cial sec­tor, in­no­va­tions in ru­ral fi­nance, telecom­mu­ni­ca­tions and in­fra­struc­ture, as well as re­vamped leg­isla­tive frame­works, have pro­duced an en­abling en­vi­ron­ment that has fur­ther pro­vided a plat­form for fu­ture growth. All these fac­tors made us to con­sider in­vest­ing in the coun­try. We hope to see more for­eign in­vestors take ad­van­tage of these op­por­tu­ni­ties and in­vest in other sec­tors that will have mul­ti­plier ef­fects on the Tan­za­nian econ­omy.

How promis­ing is Tan­za­nian econ­omy in­vestors?

The Tan­za­nian econ­omy has been grow­ing rapidly over the last few years. GDP growth rates have av­er­aged 7 per cent per an­num. The World Bank pre­dicts that Tan­za­nia can main­tain this im­pres­sive growth over the next five years if the gov­ern­ment con­tin­ues to spear­head these laud­able re­forms. This at­tests to the suc­cess of Uja­maa (African So­cial­ism) that Tan­za­nia has vig­or­ously cham­pi­oned.

The con­struc­tion sec­tor is a ma­jor emer­gent com­po­nent of the Tan­za­nian econ­omy that has been re­ceiv­ing the at­ten­tion of in­vestors. This makes it an ideal mar­ket for ce­ment pro­duc­tion. The ex­ist­ing ce­ment man­u­fac­tur­ers have his­tor­i­cally been un­able to sat­isfy lo­cal de­mand, which has been filled by im­ports. As es­sen­tial econ­omy-driven in­fra­struc­ture con­tin­ues to be built to im­prove elec­tric­ity sup­ply and the trans­port net­work, ad­di­tional de­mand for ce­ment can be ex­pected. The Dan­gote Ce­ment in­vest­ment (as has been the case in Ethiopia, Cameroon and Zam­bia), will cer­tainly con­trib­ute to Tan­za­nia’s on­go­ing story of in­fra­struc­ture the

to de­vel­op­ment, job cre­ation and broad eco­nomic de­vel­op­ment.

Is the coun­try in­vestor­friendly?

We have re­ceived tremen­dous sup­port and en­cour­age­ment from both the gov­ern­ment and the good peo­ple of Tan­za­nia, right from the con­cep­tu­al­iza­tion stage of our pro­ject, to its fi­nal com­ple­tion. We are grate­ful for such over­whelm­ing sup­port and ask that this same level of sup­port be ex­tended to our oper­a­tions, now that we have fully started pro­duc­tion.

What are the main things that at­tract for­eign di­rect in­vest­ment (FDI) that an in­vestor con­sid­ers be­fore he in­vests in a for­eign coun­try?

Our strat­egy is to in­vest in coun­tries that of­fer in­vestors at­trac­tive re­turns on in­vest­ment, as well as pro­vide them with an en­abling en­vi­ron­ment to op­er­ate. It is our sin­cere belief that our $600m in­vest­ment in Tan­za­nia will fur­ther speed up in­fras­truc­tural de­vel­op­ment and com­ple­ment the gov­ern­ment’s ef­forts in stim­u­lat­ing eco­nomic growth and cre­at­ing jobs for the peo­ple.

When in full pro­duc­tion, this plant will make Tan­za­nia self-suf­fi­cient in ce­ment, with a lot of the prod­uct for ex­port to neigh­bour­ing coun­tries. Tan­za­nia has an abun­dance of lime­stone, a ma­jor in­put for the pro­duc­tion of ce­ment. The abun­dance of this vi­tal raw ma­te­rial en­cour­aged us to site this pro­ject here. With our Mt­wara plant in full pro­duc­tion and lo­cal pro­duc­tion of ce­ment in ex­cess of de­mand, there will be no fur­ther need for the coun­try to ex­pend scarce for­eign ex­change on clinker and ce­ment im­por­ta­tion.

What would Tan­za­nia ben­e­fit from you?

We are here to cre­ate wealth and pro­vide jobs for Tan­za­ni­ans. In fact, one of our key strengths lies in our abil­ity to un­der­stand the pe­cu­liar needs of Africans and how to do busi­ness suc­cess­fully on the con­ti­nent. That is why we have made Africa the cen­ter­piece of our multi­bil­lion dol­lar in­vest­ments. We be­lieve that it is only Africans who can de­velop Africa. We are also mo­ti­vated to cre­ate an African suc­cess story be­cause we be­lieve that entrepreneurship holds the key to the fu­ture eco­nomic growth of the con­ti­nent. As a grow­ing con­ti­nent, the de­vel­op­men­tal chal­lenges of Africa are quite enor­mous and re­quire con­certed ef­forts to over­come them. This is why pri­vate com­pa­nies should com­ple­ment the gov­ern­ment’s ef­forts. It is in this light that we are here to con­trib­ute our own quota to trans­form the Tan­za­nian econ­omy.

While we take pride in the fact that an African com­pany is mak­ing this in­vest­ment in a sis­ter African coun­try, we are even more ex­cited that the con­cept of re­gional in­te­gra­tion, which our found­ing fathers had en­vi­sioned long ago, has now taken firm roots in the con­ti­nent. This, in­deed, shows that Africa is grad­u­ally tak­ing her des­tiny in her own hands rather than wait for in­vestors from out­side Africa. In­vest­ment in the real sec­tor of the econ­omy is the only way that our con­ti­nent can achieve ac­cel­er­ated growth and de­vel­op­ment that we have yearned for in or­der to lib­er­ate our peo­ple from the shack­les of poverty.

What is your plan for the fu­ture?

This pro­ject is only one of our sev­eral suc­cess­ful projects presently on­go­ing in more than 18 African coun­tries, in line with our pan-African in­vest­ment strat­egy. In Au­gust this year, we com­mis­sioned two ce­ment plants in Zam­bia and Cameroon. In June this year, we also com­mis­sioned our ce­ment plant in Ethiopia. Be­fore the end of this year, we plan to com­mis­sion some of our other African plants in Sene­gal and South Africa. We strongly be­lieve in the eco­nomic po­ten­tial of Africa and its fu­ture growth. The level of our in­vest­ments across the con­ti­nent clearly at­tests to this.

Can you ex­plain the bil­lion dol­lar con­tract your com­pany gave re­cently?

In Au­gust this year, in La­gos, we signed a deal val­ued at $4.34 bil­lion, with Si­noma In­ter­na­tional En­gi­neer­ing Com­pany Lim­ited for the con­struc­tion of 10 ad­di­tional new ce­ment plants across Africa, and one in Nepal in Asia. The com­bined ca­pac­ity of these new projects will be 25 mil­lion met­ric tonnes per an­num. By the time all these new projects are com­pleted in the next few years, we will have a to­tal ca­pac­ity of 81 mil­lion met­ric tonnes per an­num. This will make us one of the largest ce­ment com­pa­nies in the world.

When would Dan­gote Ce­ment be listed on the New York Stock Ex­change?

We are cur­rently con­sol­i­dat­ing our ce­ment busi­nesses across Africa to reap the ben­e­fits of scale. As a mat­ter of fact, our op­er­a­tional off­shore ce­ment plants have started to make sub­stan­tial con­tri­bu­tions to our group rev­enue. The list­ing of Dan­gote Ce­ment Plc on the Nige­rian Stock Ex­change (NSE) in Oc­to­ber 2010 has to­day made us the big­gest listed com­pany not only in Nige­ria but also in West Africa. That was part of our strat­egy. We plan to do a list­ing in Lon­don and Johannesburg in the near fu­ture. Our in­ten­tion is to con­sol­i­date our ce­ment as­sets into one com­pany that will have the scale and re­sources to com­pete glob­ally.

Are your get­ting the de­sired sup­port from the Nige­rian gov­ern­ment?

This pro­ject, and all our other projects for that mat­ter, would not have ma­te­ri­al­ized if we did not re­ceive the full back­ing of our home coun­try. I, there­fore, wish to use this op­por­tu­nity to again ex­press our deep sense of ap­pre­ci­a­tion and eter­nal grat­i­tude to the Fed­eral Gov­ern­ment of Nige­ria for the un­quan­tifi­able sup­port we have en­joyed over the years, par­tic­u­larly with re­gard to our African projects.

What cor­po­rate so­cial re­spon­si­bil­ity pro­grammes and projects are you giv­ing the lo­cal com­mu­nity?

While we are in the busi­ness of cre­at­ing wealth pri­mar­ily, we are not un­mind­ful of the need to touch lives of peo­ple. As a com­pany, we have al­ways been con­scious of the need to give back to the so­ci­ety as a guar­an­tee for sus­tain­able busi­ness suc­cess. This has been our guid­ing busi­ness phi­los­o­phy in any coun­try we op­er­ate. We are al­ready com­mit­ted to as­sist­ing the Mt­wara com­mu­nity, where our plant is si­t­u­ated, to build a mar­ket, school, clinic and other so­cial ameni­ties as part of our CSR ini­tia­tives, just like we did at our Oba­jana, Ibese and Gboko ce­ment plants in Nige­ria. It is our hope that all these projects will give the com­mu­nity a sense of own­er­ship. A few weeks ago, we gave a grant of $500,000 to the needy peo­ple in the nearby com­mu­nity.

Aliko Dan­gote

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