DANGOTE OILS AFRICA’S ECONOMY
African billionaire’s oil and fertiliser projects are set to change the face of Nigeria’s economy
THE best way to appreciate Aliko Dangote’s empire is to hitch a ride on one of his private jets. A halfhour after his Bombardier Challenger 605 takes off from Lagos Airport, it descends into a seemingly desolate area of Kogi State in central Nigeria, dusty fields and clusters of trees stretching to the horizon.
Suddenly a tangle of exhaust stacks, silos, and kilns pierces the sky to the left of the aircraft as Dangote Cement Obajana plant comes into view. It’s already the biggest in
Africa, churning out enough sacks of cement to fill 1 000 trucks a day.
A fifth production line now under construction will make it one of the world’s largest.
The cement plant and its two sister factories in Nigeria have long been the bedrock of Dangote’s fortune. But his future – and, as he likes to say, that of the entire continent’s economy – lies to the south on the Nigerian coast.
About 65km east of Lagos, on more than 2 700ha of former swampland bound by a lagoon and the Atlantic Ocean, contractors are putting finishing touches to a fertiliser plant valued at $5 billion (R71bn).
Next to it, construction of an oil refinery — a $12bn project — is under way. If all goes to plan, the complex will immortalise Dangote as Africa’s most prominent industrialist, vaulting Dangote Industries’ annual revenue from $4bn to about $30bn, roughly 8 percent of Nigeria’s gross domestic product.
Oil industry experts such as London-based CITAC questioned the project’s timeline, citing logistical and financial challenges. But Dangote insists the refinery, which will be Africa’s largest, is on track. “By 2020 I will finally dispatch oil,” he said in January.
Despite controlling the world’s 10th-largest oil reserves, Nigeria has only four ageing, inefficient stateowned refineries, leaving it almost wholly reliant on imports for its fuel needs.
Dangote says his massive refinery could end that dependency and lift electricity generation in a nation plagued by blackouts: “It will change the entire economy of Nigeria.”
The fertiliser plant, which Dangote says will come online in a few months, will be capable of producing up to 2.8 million metric tons of urea a year.
“It’s probably the largest-volume urea plant ever executed at one time,” says Alistair Wallace, head of fertiliser research at Argus Media in London.
Nigeria’s natural gas prices are the lowest in the world, meaning Dangote’s fertiliser will likely be profitable even in the competitive export market.
“It will generate hard currency and bring in dollars. It will be a good look for the administration and for Dangote,” Wallace says.
Born into a wealthy Muslim family of traders, Dangote incorporated his own business, selling cement, at 21. He shifted to manufacturing the building material in the 1990s, convinced his homeland, the world’s seventh-mostpopulous country, could meet its own demand for staples.
Dangote factories churning out sugar, flour, and salt followed. A vertical integration push gave rise to other businesses, including oil, property management, packaging, and port operations. Four publicly traded companies under Dangote account for about a third of the value of the Nigerian stock exchange. While shares of Dangote Cement tumbled 26 percent in the past year amid a sell-off in emerging markets, the fertiliser plant has helped boost Dangote’s net worth to $17bn.
Critics have attacked him for holding much of his wealth offshore and say he’s a shrewd monopolist who has plied his political connections to secure an advantage over competitors.
They claim his marketdominating cement company squeezes local consumers with prices three times the global average while slashing prices in neighbouring markets to crush rivals. Dangote shrugs off such criticism, while preaching the gospel of markets as the best way to narrow the divide between the haves and have-nots.
“China in 30 years has taken almost 500 million people out of poverty,” he says.
Soft-spoken and polite, he offers up his chair in meetings to guests and serves food for others during a lunch in an office conference room. But the courteous chief executive is also a hard-driving manager.
“‘Not possible’ aren’t words he understands,” says Giuseppe Surace, chief operating officer of the refinery project, as our convoy sets off on a four-hour tour of the site. “In his own way, he is very tough.”
Nigeria’s $376 billion economy is, by some measures, Africa’s largest, but the operational challenges for companies are also outsize. Nigeria’s chronic logistical logjams, infrastructure failings, and political risk are why CITAC says Dangote’s 2020 timeline for the refinery may not be feasible.
Yet even by the continent’s standards, the project could be characterised as a heavy lift. Dangote Industries bought the plot for
$100 million at the end of 2013, but it took almost three years – and many truckloads of sand – to prepare the ground for construction.
The company erected a jetty and widened and reinforced roads to accommodate shipments of cranes and other equipment.
Dangote’s existing empire gives him advantages. The refinery is a customer of Dangote Cement, and the roads to and from the quarries are clogged with his trucks.
Also, his timing was fortuitous. The project geared up during a recession, giving him more bargaining power over contractors keen to land work. Plus its location inside a free-trade zone means the complex should be better insulated from the Nigerian political scene. “We’re an island,” says Surace. Talk to ordinary Nigerians and plenty crack smiles at the mention of Dangote, who’s featured in internet memes, while a recent single by local singer Teni plays on his wealth. It’s the kind of name recognition any politician would envy.
But Dangote says he is not interested in governing. “If I exit from business and go into politics, nobody can actually sit in Dangote Group and take the kind of risk that I can, because I’m the owner,” he says. “My real job is to see how do I transform Nigeria and Africa and to take this kind of risk.”|