All Africa | 13 January 2021
Nigeria: Dangote leveraging expansion under AfCFTA
By Olushola Bello
With many countries strategising for the African Continental Free Trade Area (AfCFTA) that kicked off at the beginning of this month, Dangote Industries Limited, has stated that its cement expansion plan and fertiliser investments will open new trade routes for the company and Nigeria under the trade deal.
Already, the cement company, despite an installed capacity of 29.3Mta in Nigeria, is targeting an expanded entity in-country and in Cameroon, while new plants will soon be ready for commissioning in Niger, Benin, Ghana, Cote d’Ivoire and Togo.
According to president/chief executive, Dangote industries, Aliko Dangote, Africa needs to deliberately improve its per capita consumption of cement in order to aid infrastructural development by stimulating further demand and forcing down the cost of the commodity.
With the United Nations Conference on Trade and Development (UNCTD) report for 2020 clearly stating that for the Africa free trade area to work, the deficit in infrastructure should be looked into, Dangote is hoping to leverage the deficit with his cement investment in the continent.
For Dangote Industries, moving goods like cement by road from Nigeria where they are manufactured to Ghana, where there is a big market, is unviable, hence, the need for new plants that will open multiple trade routes.
Group executive director of Dangote Industries, Devakumar Edwin, earlier explained that the movement of products via road is expensive as the governments of Togo and Benin complained of the pollution that the trucks will bring to the environment as well as the toll on the roads.
With the success of the Doula plant in Cameroon, the company is already doubling its capacity in Yaoundé and targeting three million tonnes in the country to check competition as well as earn foreign exchange.
Last year, Dangote Cement’s Pan Africa performance has been strong for all its operations in terms of margin in local currency with a few exceptions due to COVID-19. As the restrictions in many economies are lifted, the company is hopeful of improved performance and earnings.
In 2011, Dangote had announced plans to invest $100 million to build a cement factory in Cameroon, in a move that would come to check monopoly and impact the economy of the country.
Dangote however described the plant as "our largest Greenfield project in a neighbouring country with which we not only share a boundary but also a long history of brotherly relationship dating from our colonial days. Owing to the rich culture and history that we share, we have a better understanding of Cameroon."
He had said, "Our desire to increase our investment with the Phase 2 project is based on not only the fast growth rate of the Cameroonian economy but also due to the warm welcome extended to us and the enabling environment created by the government of Cameroon.
"Our choice of Cameroon for this multi-million-dollar investment is quite strategic. Cameroon is the largest economy in Central Africa and is well endowed with abundant natural resources. The country also enjoys political stability, adequate security and growing infrastructural development. In addition, President Paul Biya of Cameroon has created an enabling environment that has continued to attract investors both from within and outside the African continent."
He said that the desire to ensure that Africa becomes self-sufficient in cement production informed the signing of a $4.34 billion contract with Sinoma International Engineering Company Limited, a Chinese construction giant, for the construction of 11 new cement plants in 10 African countries, and Nepal in Asia.
Pioneer country manager, Dangote Cement Cameroon SA, Abdullahi Baba, stated that the journey in the last five years has been excellent, noting that it was not easy to oversee a project from the drawing table until full actualisation.
"We came in and the market was already satisfied but we brought out high quality products at affordable prices. We are so proud at the way we have been received both by the government and the people of Cameroon and I want to say that as at today, we have become the household name and we have come to stay in the entire country.
"There are so many high points for the company. The first was that we came into Cameroon with the best technology available in the industry anywhere in the world. The other was that we introduced products that were the trailblazer in Cameroon as at that time because our quality was up there," he pointed out.
He however noted that though competition has been coming up fast in the country, the firm is not relenting on its oars, saying, "We are doing everything we can to ensure that we maintain this position, but the key thing is the market share, the profitability and the maximising of the use of local raw materials in the production of cement.
"As we continue to work on volume increase and cost reduction, our current programme of alternative fuel system for all of our plants will equally change the game. By leveraging alternative energy, we hope to bring down our cost as much as possible considering that cement production is a high-energy intensive activity."
Minister of Mines, Industry and Technological Development (Cameroon), Gabriel Dodo Ndocke, stated that since Dangote Cement was established in Cameroon, accessibility to cement product, the price and the quality has been enhanced, adding that the impact of the company on the economy is huge.
"Today you can get cement everywhere and the price is accessible for everyone and the market has been open to other investors creating job opportunities. Dangote has thrown the market open and before he came to Cameroon, our market was with just one investor in the sector. The presence of other investors has made it easy for us to get cement in a good quality and at an accessible price," he added.