Africa’s rich­est man might quit Ethiopia

The Sunday Mail (Zimbabwe) - - FOREIGN BUSINESS -

DANGOTE Ce­ment Plc, con­trolled by Africa’s rich­est man, Aliko Dangote, said it may shut its oper­a­tions in Ethiopia if au­thor­i­ties in the cen­tral state of Oro­mia don’t re­verse an or­der to ce­ment mak­ers to hand over con­trol of some parts of their busi­nesses to lo­cal young peo­ple.

Oro­mia state’s East Shewa Zone ad­min­is­tra­tion wants the Nige­rian com­pany to out­source its pumice, sand and clay mines to youth groups or be re­spon­si­ble for “any prob­lems” that may arise, ac­cord­ing to a let­ter from the author­ity to Dangote that was seen by Bloomberg and ver­i­fied with a rep­re­sen­ta­tive of East Shewa’s ad­min­is­tra­tion.

The re­gional gov­ern­ment sees the trans­fer of jobs in pumice pro­duc­tion as a way to ease youth un­em­ploy­ment and quell un­rest, ac­cord­ing to the doc­u­ment.

Any mis­man­age­ment of min­ing in­fra­struc­ture in­clud­ing build­ings and ex­ca­va­tors could “lead to to­tal break­down of our busi­ness,” Dangote Ex­ec­u­tive Di­rec­tor Ed­win De­vaku­mar said in an in­ter­view at the com­pany’s head­quar­ters in La­gos, Nige­ria’s com­mer­cial hub, last week.

The ce­ment maker will write to the fed­eral gov­ern­ment this week to ask it to in­ter­vene and will con­sider shut­ting the plant in Mugher, about 90 kilo­me­tres north of Ad­dis Ababa, as a “last op­tion” if this fails, he said.

The com­pany listed Ethiopia as one of its three “key” mar­kets, along with Nige­ria and South Africa, in a pre­sen­ta­tion in May.

There’s “no in­ten­tion to dis­place any in­vest­ment,” so long as Dangote is “work­ing by the laws and reg­u­la­tions in our re­gion and coun­try,” Tekele Uma, head of Oro­mia’s trans­port author­ity, said by phone.

“If any­one’s com­plain­ing about Oro­mia re­gional state, we are ready to talk with them. Any in­vest­ment can come. Any in­vest­ment can go.”

Mo­tuma Mekassa, Ethiopia’s min­is­ter of min­ing, pe­tro­leum and nat­u­ral gas, said by phone he wasn’t aware of an at­tempt by Dangote to reach his of­fice.

An of­fi­cial at the fed­eral min­istry said Dangote should make an ap­proach through “ap­pro­pri­ate chan­nels,” as op­posed to through the me­dia, ask­ing for his name to be with­held, cit­ing the sen­si­tiv­ity of the is­sue.

The Ethiopian gov­ern­ment is search­ing for ways to re­duce youth un­em­ploy­ment af­ter vi­o­lent protests by Oromo com­mu­ni­ties over al­leged land dis­pos­ses­sion, po­lit­i­cal marginal­i­sa­tion and re­pres­sion led the gov­ern­ment to de­clare a state of emer­gency last year.

Dangote Ce­ment was among sev­eral busi­nesses at­tacked dur­ing the un­rest.

The protests trig­gered a 20 per­cent slump in for­eign in­vest­ment to US$1,2 bil­lion in the six months through De­cem­ber com­pared with the same pe­riod a year ear­lier, ac­cord­ing to the gov­ern­ment.

The or­der to out­source min­ing is “a vi­o­la­tion of our rights be­cause the gov­ern­ment has given us a min­ing li­cence,’’ said De­vaku­mar, who was Dangote Ce­ment’s chief ex­ec­u­tive of­fi­cer un­til 2015.

“If I don’t have lime­stone and ad­di­tives my ce­ment plant is use­less.”

Although the dis­putes haven’t forced Nige­ria’s big­gest listed com­pany to halt pro­duc­tion, it will miss tar­gets if the im­passe isn’t bro­ken, the ex­ec­u­tive di­rec­tor said. Dis­rup­tion in pumice flows will re­duce out­put and trig­ger job cuts, De­vaku­mar said.

Dangote em­ploys about 1 500 work­ers di­rectly in the coun­try, while an es­ti­mated 15 000 peo­ple earn a liv­ing in­di­rectly through the firm’s ce­ment and min­ing fa­cil­i­ties, he said.

The dis­agree­ment is also ham­per­ing Dangote’s Ethiopian ex­pan­sion plans.

The com­pany has stopped an ad­vance pay­ment on a con­tract to dou­ble pro­duc­tion ca­pac­ity of the 2,5 mil­lion met­ric-tonne per year plant af­ter sign­ing an agree­ment, De­vaku­mar said.

The com­pany has spent more than US$700 mil­lion in the coun­try and is “dis­cour­aged from in­vest­ing more,” he said.

Ethiopia’s gov­ern­ment said in Fe­bru­ary it’s only likely to at­tract US$3,2 bil­lion of for­eign di­rect in­vest­ment this year, com­pared with a tar­get of US$3,5 bil­lion.

Dangote Ce­ment, which has a mar­ket value of US$11,1 bil­lion, has ex­panded rapidly across Africa since 2014 and now op­er­ates in nine coun­tries aside from Nige­ria. The shares were lit­tle changed in La­gos on Thurs­day. — Bloomberg.

Mr Dangote

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