Big-spending Dangote to fly Nigeria’s flag in Zimbabwe
A VISIT to Zimbabwe by Nigerian billionaire Aliko Dangote this week to scout for investment opportunities in cement manufacturing, power generation and coal mining will not threaten the dominance of South African-linked firms that have been investing there for years.
Zimbabwean Mines and Mining Development Minister Walter Chidhakwa said the government would treat all investors “equally”.
South Africa and Nigeria are widely seen to be competing for domination on the continent, with the former enjoying a stronger presence in Zimbabwe in various economic sectors. Nigeria is a latecomer to investing in resourcerich Zimbabwe.
“We promote all investment in Zimbabwe, those that are already in the market and those that are coming in. We will not take any position against an investor,” Chidhakwa said in an interview this week.
“What we want to see is healthy competition which will result in improved products.”
Dangote this week indicated his intention to set up a $400-million (about R5.4-billion) cement plant in Zimbabwe in the first quarter of next year, which could double the country’s production capacity.
“We are in the country to scout for investment opportunities and invest like we have been doing in all the other African countries,” he said.
“We want to set up an integrated cement plant here that will be bigger than all the plants that we have. We look at setting up something that can translate into 1.5 million tons so that even when we continue to use cement, there won’t be a shortage of cement here. We will make cement available,” he said.
The entry of Dangote Cement plc into Zimbabwe will bring in muchneeded foreign direct investment for the cash-strapped administration of President Robert Mugabe and set the stage for increased competition among cement makers: South African-owned Pretoria Portland Cement, French-owned Lafarge Cement Zimbabwe and Chinese-owned Sino-Zimbabwe Cement.
The three have a combined capacity of 1.46 million tons.
Production figures show that PPC has 760 000-ton capacity, Lafarge 450 000 tons and Sino-Zimbabwe 250 000 tons.
Additional capacity of 700 000 tons is expected from PPC’s new Harare plant, which is expected to be commissioned next year and will allow PPC to export cement to Mozambique.
Tendai Biti, an opposition leader and a former finance minister in the unity government, said this week that any form of competition was welcome because the players in the market would be forced to improve their products.
“PPC should be worried, and not because this will be a Nigerian investment but because it will now have to improve on its product,” he said.
“On the whole, however, I don’t think that the $400-million investment is targeting Zimbabwe alone, as the country is too small a market given the extent of the collapse of the economy. Dangote is using Zimbabwe as a base into the rest of southern Africa — he has intentions to enter Mozambique, Angola, Zambia and even the South African market.”
Biti said Nigeria would never be able to muscle South Africa out of Zimbabwe because the links between the neighbouring countries were based on geographical interdependence and their common economic reliance on the mining industry. “Nigeria will never break that, it won’t happen. Therefore, the intentions of Dangote cannot be seen in a geopolitical context.”
Biti said both Nigeria and South Africa faced domestic challenges such as gross underdevelopment and unemployment, “which means it will be some time before their rivalry sets off in earnest”.
Vince Musewe, an independent economist in Harare, said the current players in the cement sector could not satisfy demand and Dangote would help to fill the gap.
“PPC and Lafarge are embarking on expansion drives . . . Dangote’s presence will add more variety and increase availability.”