Dangote Shares Secret of Backward Integration with Investors

Africa’s richest man and President of Dangote Group, Alhaji Aliko Dangote, has shared the secret of backward integration with investors at the Financial Times’ fourth annual Africa Summit at Claridges in London.

FT’s Editor-In-Chief, Lionel Barber, conducted an extraordinarily candid public conversation with Dangote, Africa’s most successful business leader, in the presence of the Vice-President, Yemi Osinbajo, Congolese presidential hopeful, Moise Katumbi, and about 300, other business leaders.

Mastering detailed production statistics and highly-compelling demographics on promising sectors of the African economy, Dangote outlined the key to his success: self-sufficiency and backward integration, a manufacturing strategy that extracts value from entire processes.

“We are not going to import anything any longer. “In Nigeria, we are learning how to produce the entire value chain,” Dangote added. Once a heavy importer of fertilizer, Nigeria is now gearing up to produce three million tonnes of locally manufactured fertilizer, transforming the country into one of the largest fertilizer exporters in Africa.
In 2007, Nigeria was the second largest importer of cement after the United States Dangote reminded the audience of business elite.
“Today, we have not only satisfied domestic needs, we have become a leading exporter of six to seven million tonnes of cement,” he added.

Diversifying into agriculture, Dangote has eyes on the dairy industry motivated by the fact that “98 per cent of all milk consumed in Nigeria is imported.”
Same for rice. Dangote Group has invested heavily in rice production by investing in local farmers and then offering to buy back the one million tonnes at open market prices that they are growing. “Soon we will be able to feed not only Nigeria but the entire 320million large West African market,” he added.

Dangote’s business acumen was on rare exhibition as Barber himself seemed impressed with the business mogul’s quick familiarity with the nuts and bolts of his businesses.
“Are we going to continue to import everything?” Dangote asked.
“Freight rates are now cheap but they will go up soon. A population of over 200million cannot continue to import basic needs on a daily basis,” he answered himself.

By 2100, Dangote stated that Africa would represent 49 per cent of the world’s population, up from 30 per cent today. “If you don’t think big we won’t grow at all; In Africa you have to play long-term, he noted.
Aside from Nigeria, which African nations do you think are good growth opportunities? Barber asked Dangote. “Aside from Nigeria?”
“I’d have to pick Nigeria. I am a big fan of Nigeria. We are only using eight per cent of our land,” Dangote added.