Dangote’s Pan-African Industrial Drive

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Dangote Cement Plant

Africa represents a compelling frontier market for both local and international investors. Jonathan Eze examines the recent inauguration of the Dangote Cement factory in Congo and concludes that the conglomerate’s industrial drive is revolutionary

Partnerships between governments and the private sectors are surely needed for economic growth and development in the region and Africa has a unique opportunity to attract strategic, job-creating investments. This is no doubt the thinking of Africa’s richest man, Alhaji Aliko Dangote as demonstrated last week with the inauguration of 1.5Mta plant near Mfila in Congo which is the largest ever in the country.

Situated on the road between Pointe-Noire and Brazzaville, the plant is ideally located to replace imports and serve key cement demand centers in and around the capital.

As predicted by global economists, the sub-Saharan region will see more people joining the labor force in the next 20 years than the rest of the world combined. How will Africa reap the benefits of this demographic transition? The burgeoning working-age population will need to be gainfully employed, and significant investments must be made to support the economy and meet market demands. Dangote cement is already spearheading this initiative with its pan African expansion and it appears to be more consciously determined to continue with the investment drive with the proviso that an enabling environment is provided for same.

The new plant estimated at $300 million has potential for about 1,000 direct employment and thousands of several other indirect jobs.
Regarded as the biggest plant in the country, Congo President, Mr. Denis Sassou Nguesso, while inaugurating the plant, said the investment was an industrial revolution, sort of, within the Economic Community of the Central African States (CEMAC), saying his country was happy to host the investment.

According to him, his government has observed the operations of Dangote cement in other African countries and it has helped buoyed their economies by sparking off other allied industries, as he expressed the hope that Congo situation would not be an exception.
He described the coming on stream of the Dangote cement as timely and encouraging because it is starting operations at a time the total government revenues have plummeted by 31.3 per cent and revenues from the oil sector have fallen 65.1 per cent since 2015 due to a slide in global crude oil prices.

Dangote, in his address said his company was delighted to have completed the plant on schedule, saying the addition of Dangote Cement’s 1.5 million metric tonnes per annum plant has more than doubled the total cement production capacity of Congo, which now stands at 2.550 million metric tonnes per annum, far in excess of national demand.

“It is envisaged that this would contribute substantially to the availability and affordability of cement in the country and the Republic of Congo will no longer need to depend on imports to bridge the gap between demand and supply.

“It is our hope that the inauguration of the plant will boost Congo’s economy, conserve foreign exchange that would otherwise have been spent on imports for the country, and create employment opportunities down the value chain,” he stated.

Dangote also commended the Congolese Government, noting that the bold economic reform measures put in place by President Denis administration have been quite salutary. “The construction industry, which is a major sector of the economy, is a beneficiary of his policies, and has been receiving the attention of investors. We believe that our investment will contribute to Congo’s current economic renaissance under the leadership of President Nguesso.”

He added that his organisation received tremendous support and encouragement both from the government and the people of Congo-Brazzaville, right from the conceptualisation stage of the project, to its final completion, and commissioning.

Towards reciprocating the support he enjoyed from the Congo people, Dangote disclosed that without waiting to stabilise production, the cement company had already commenced CSR projects with the construction of a road with a length of 30kilometres around Yamba, which would have cost the local government approximately 240 million CFA to execute.

He stated further: “We have also disbursed scholarships for students and we are also building a school and renovating a hospital within our host communities. Apart from these, we have repaired a dilapidated bridge on a major highway at a cost of $300,000, to enable heavy duty vehicles to cross the bridge. As a policy, we also ensure that we give priority to qualified indigenes from our local host communities in our recruitment drive.”

Dangote also told the gathering that Dangote Cement’s total production capacity across Africa at the end of May 2017, stood at 45.8 million metric tonnes per annum, making it one of the biggest cement producers on the continent, adding that the aspiration is to rank among the top 10 cement producers in the world by 2020.

Dangote, with his investments is creating jobs for African teeming youths especially with the recognition that youth unemployment and underemployment are among the main barriers to development in the region.
Not only does the exclusion of young people from the labour force perpetuate generational cycles of poverty, it also breaks down social cohesion and can be associated with higher levels of crime and violence among idle youth.

According to data from the International Labour Organisation (ILO) in sub-Saharan Africa, the youth unemployment rate hovers around 12 per cent. While this is slightly lower than the global youth unemployment rate of 12.4 per cent, the African region has the world’s highest rate of working poverty — people who are employed but earning less than US$2 a day.

Africa has the largest “youth bulge” in the world, and the number of youth is expected to grow by 42.5 million between 2010 and 2020, says the World Bank.

On his part, President Muhammadu Buhari who was represented at the event by a delegation led by the Minister of Mines and Steel Development, Dr. Kayode Fayemi, commended Alhaji Aliko Dangote and his cement company for championing economic renaissance of Africa with the construction of cement plants across several African countries, saying the sterling accomplishment makes the Dangote Cement brand, and indeed Dangote himself worthy ambassadors of Nigeria.

Buhari said his government has consistently supported and encouraged the Dangote Group in its quest to contribute its quota to the economic emancipation of the African continent, which is blessed with a plethora of natural resources.

“I believe that it is only home-grown practical solutions that can address the myriad issues plaguing Africa today and one of such challenges that Africa has been grappling with for decades, is the infrastructure deficit. I am confident that massive investments in cement production, which is a key driver of infrastructural development, will contribute in no small measure to addressing this perennial problem,” he said.

The President recalled with satisfaction that local cement manufacturers have exploited one of the solid minerals, limestone, which is a basic input for cement production and which Nigeria has in abundance, in different parts of the country to achieve self-sufficiency in local cement production in 2015, and is now a net exporter of the product.

“The backward integration policy of the federal government in the cement sector, which was launched in 2002, has contributed to this success story by successfully substituting imports with local production. We have saved over $2billion spent on cement importation into Nigeria, annually.
“We have also started using cement for road construction in the country due to its numerous advantages over the more common bituminous road. Again, in this area, Dangote Cement is leading the charge, through AG-Dangote, its joint venture with Andrade-Gutierrez, a construction giant in Brazil,” the Nigerian president stated.

Dangote had at many occasions reiterated the fact that his conglomerate was committed to a diversified economy by exploring opportunities in different sub sectors.
He opined that what Africa needed was to add value to its natural resources toward improving its competitiveness in the global economy.

According to him, within the next five to 10 years, Dangote would not just be the largest conglomerate in Africa but aspires to be among the top 20 in the world.
However, for sustainability of businesses in the region especially with the speed of Dangote’s investments, African governments must increasingly adopt policies to energise markets. Although the policies of many governments have a long way to go, these important first steps enables private business sector to emerge and to grow.