Dangote Cement’s Cape-to-Cairo Ambition
Aliko Dangote, the richest African with a reported US$13.8 billion wealth, is rapidly expanding his cement business across the continent.
Dangote Cement already plays a dominant role in the Nigerian economy.
When it was listed on the Nigerian Stock Exchange in October 2010 it accounted for a staggering quarter the stock exchange’s total market capitalization.
Now, Dangote has plans to make his the biggest cement company in the world.
The recent accelerating expansion of Dangote’s cement empire has left industry analysts speechless and its expansion has started in no fewer than 11 African countries.
Dangote’s Nigerian cement plant is the largest in Africa and Dangote Cement production capacity stands at a whopping 14 million tonnes per year – its new projects will add a further 11.1 million to that figure.
A US$620 million cement plant in Ogun state, southwest Nigeria, is nearing completion and will add six million tonnes per year to the company’s production capacity.
In recent months an investment agreement has also been signed for US$350m with the Republic of Congo to facilitate the building of a cement production plant in Bouenza, in the southern part of the country.
At around the same time, another deal was struck with the Ethiopian government for a US$400m plant.
Meanwhile, a US$500m plant in Senegal is nearing completion with production due to commence later this year, which is around the same time that Dangote’s US$400m plant in Zambia will come online.
When these are placed alongside plants already in operation in South Africa, Cameroon and Tanzania, and export terminals in Ghana, Sierra Leone, Ivory Coast and Liberia, the extent of Dangote’s Pan-African empire is clear.
In order to consolidate his gains in the cement market and to further enhance its growth, Dangote has embarked on a number of business partnerships with foreign companies.
In April of this year, the Dangote Group in conjunction with Chinese firm The Sinoma International Engineering Company, signed an engineering, procurement and construction contract worth US$3.9b with the aim of enhancing Dangote’s Cement production and supply in Africa to 50 million tonnes per year within five years.
Dangote’s ambitions move further afield with a planned listing of his cement company on the London Stock Exchange in 2012.
This listing may aid the company’s growth and international recognition, and will certainly raise its founder’s profile.
Dangote was born in the northern Nigerian city of Kano in April 1957, three years before Nigeria gained its independence, into a family with a rich business pedigree.
Dangote’s maternal great-grandfather, Alhassan Dantata, was the richest man in West Africa in his time.
Dantata was famed for his wealth and ability to accumulate it.
He became the chief produce buyer of the Royal Niger Company during the colonial era and played a role not dissimilar to the Chinese compradors of the late 19th century.
It seems many of Dantata’s genes were passed down to his great-grandson – from an early age, Dangote was reputed to have sharp business acumen, with stories of his profiteering from sweets in the school yard, however apocryphal, adding to his image of the born businessman.
In his early 20s, Dangote was able to obtain a loan of 500 000 naira from an uncle, which at the time translated to a princely US$500 000.
With this start-up capital, a favourable family name and a firm idea of what he wanted, Dangote embarked on the journey that would see him rise to the summit of the entwined business and political worlds.
Friends in high places
Through his influential contacts, Dangote was close to the military governments of the 1980s and 1990s.
From this association, Dangote received favourable import rights for products such as rice and sugar, and what would eventually gain him the majority of his billions – cement.
A key financier of Olusegun Obasanjo’s successful 1999 Presidential campaign, Dangote soon became the President’s close confidant.
Obasanjo’s eight years at Aso Rock (Nigeria’s Presidential Palace) corresponded with a surge in profits for the Dangote Group.
With valuable import licences in place, Dangote’s cement business was able to thrive and virtually monopolize the sector.
The controversial acquisition of the government-owned Benue Cement Company further strengthened Dangote’s hold on the sector, and, as testament to his undeniable ability, he transformed it from a struggling, inefficient and dilapidated company into one of the most profitable arms of his cement empire.
Dangote is a well-known supporter of the ruling People’s Democratic Party and dipped his hands into his deep pockets for both of Obasanjo’s election bids – it was reported that US$6m and a private jet have been given to Obasanjo by Dangote before and after election bids, while Dangote is also thought to have contributed to the election campaign of the late Umaru Musa Yar’Adua in 2007.
While it is the norm for donations to be made by wealthy individuals during campaign season, there remains little doubt that the huge sums given by Dangote have only helped to entrench him among Nigeria’s political elite – and some have alleged that the returns on his political investments have not always been transparent and accountable.
A low point for Dangote came when his 2009 election to the presidency of the Nigerian Stock Exchange was annulled.
Dangote, who had outlined ambitious plans for the NSE in his acceptance speech, was embarrassingly stripped of the position less than a year later by a Federal High Court.
The court, sitting in Lagos, cited mass irregularities in the election and non-adherence to procedures.
“The conduct of all officials of the NSE and SEC (Security Exchange Commission) who organized and/or participated in the purported election of Dangote is reprehensible and highly condemnable,” the court said. Dangote has however rapidly recovered from the setback. President Goodluck Joanthan only recently inaugurated a 15-member economic management team to oversee the economy in which Dangote was a surprise inclusion alongside ministers, governors and economists.
And when Jonathan paid a visit to Rwanda at Paul Kagame’s invitation earlier this month, Dangote was present – with a selection of other elite business leaders – alongside the president.
There is little doubt that Dangote is a leading light of not just Nigerian but African business.
Dangote’s businesses pay millions of dollars in tax every year, his total workforce numbers are in the tens of thousands, and his closest employees hail from a variety of ethnic groups, shedding the cloak of tribalism.
However, the degree to which Dangote’s success can be seen as a template for aspiring business leaders without his level of contacts remains to be seen.
While there is little doubt that Dangote has mastered the business know-how, networking and perseverance needed to succeed in business, he must also be aware that the preferential treatment he receives from Nigerian government may not last forever.
But while Obasanjo continues to wield the immense power he still retains, there is little doubt that Dangote will remain the toast of the town.
If this success continues, Dangote’s aspiration to be bigger than France’s Lafarge, the world’s largest cement producer, may happen sooner than anyone expects. – Think Africa Press