Why I invested $600m in Tanzania – Dangote
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.