Succour for the Economy as Dangote’s $11 Billion Investment Matures
In the next one year, barring unforeseen circumstances, the ongoing $11 billion (about N4 trillion) petrochemical and fertiliser projects that Aliko Dangote, Africa’s richest man, embarked upon some 18 months ago would be expected to start running, which is expected to transform the economy, writes Bamidele Famoofo
Aliko Dangote, Africa’s richest man, according to Forbes Magazine 2019 ranking, is working assiduously to take Nigeria to the next level with the injection of $11billion (about N4.0 trillion) into the recuperating economy.
The investment, which has been described as a ‘transformational project for Nigeria’, according to the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, will go a very long way in achieving the economic diversification plan of the biggest economy in Africa.
“This is certainly a transformational project for Nigeria. And it totally keys into the objectives of President Muhammadu Buhari that focus on how we need to conserve foreign exchange, diversify the economy,” a visibly elated Emefiele announced during a recent facility tour of the project site situated at the Lagos Free Zone in Ibeju Lekki.
Emefiele hinted that a major gain the nation will experience when the projects fully come into fruition by first quarter in 2020 would be to save the economy foreign exchange on importation of petroleum products that accounts for at least one- third of forex spent by the CBN on importation of goods.
“To put it in a proper perspective, by the time you dimension the size of the forex we use in importing petroleum products into the country today, it is at least one third of the forex that the CBN spends to import items into Nigeria today,” he said.
The fertiliser section of the multi-billion dollar project is fully completed as at January 19, 2019 and would be expected to be commissioned for operation sometime between April and May in 2019 while the 650,000 barrels per day capacity refinery is expected to come alive in first quarter of 2020.
Describing the magnitude of the project and its projected impact on the economy, Emefiele said: “For the fertiliser (let me describe the scope of the project for you guys to understand what I am talking about), though Nigeria is almost self-sufficient in fertiliser production, the size of the plant here is twice that of the Eleme petrochemicals. For the refinery, by the time it takes off around the first quarter of 2020, just one year ahead; Nigeria will not only be self-sufficient in the production of refined petroleum products, but also will join the league of countries that export refined petroleum products. I’m sure by that time the CBN will be begging Dangote to sell foreign exchange to her. The petrochemical plant, I understand is about 10 times the size of Eleme Petrochemical.”
While the CBN said it will become more aggressive in increasing the list of forex restricted items from 42 at the moment to about 50 as a means to further save forex, Emefiele is confident that by the Dangote projects kick- off, close to about 55 to 60 per cent of what government spends in funding its foreign exchange operations would have been saved.
“I’m truly looking forward that I would be alive by the time all these come into fruition. We need to really thank the president of Dangote Industries, Alhaji Aliko Dangote, GCON, for this gigantic project. I’m sure that if he knew the scope of the project that he was going into at the time he conceived of it, with the kind of stress that he goes through today, trying to actualize this project, maybe he would not have started it. But l want to thank him and congratulate him for persevering this stress,” he added.
The $11 billion project is being funded not only by Nigerian banks, but also by foreign banks as well as equity funding from Dangote Industries Limited (DIL). Dangote, president of DIL, hinted that 60 per cent equity funding is involved in the project, while debt accounts for 40 per cent. A combination of local and foreign banks provides the loan. The CBN is however not left out as it has so far injected N125billion (about $348million) into the actualisation of the project. Though Emefiele described the contribution of the CBN as a drop in the ocean, Dangote said it was a morale booster for the group and a show of commitment by the CBN to grow the economy.
Emefiele said the CBN will continue to support individuals and companies that displayed the determination to support the government and the CBN in restructuring the base of the country. “This is what we need and l feel so delighted that this is happening in my own lifetime and I’m sure you all feel so happy that you have gone through this today. We have not been trekking, but driving for about four hours on about 100 hectares of land that Aliko has put this project. I’m sure by April we would all be here again to witness the cranking of the engine for the fertiliser plant. Whether or not I’m the governor of CBN, l will come and crank this engine by April this year.”
The apex bank governor urged Nigerian companies that put priority on items along manufacturing goods like agricultural items in the entire value chain to come forward for funding support from the bank. “I seize this opportunity again to repeat the commitment that when we find people like the Dangote Industries venturing into this kind of project, CBN stands ready to give them all the support both in naira funding and provision of forex because we know that ultimately this country stands to gain from these ventures.”
Reeling out first-hand information on the projects, Aliko Dangote said: “We have a couple of projects here first of which is the fertiliser plant on which we are spending $2billion. He, however, lamented that most people don’t understand what these projects mean. “They mean that we are transforming the Nigerian economy. The biggest challenge we have is that Nigeria imports more than she produces. But by the time we finish our fertiliser plant, l think Nigeria will be the largest exporting fertiliser country in Africa and not just sub-Saharan Africa. We would be also the largest exporter of petrochemicals. Then we would be the biggest in Africa in petroleum exportation. So, the change in terms of importing of 90 per cent of what you consume and exporting about one third instead of importing will bring a major transformation.”
Besides petrochemical and fertiliser, Dangote says he is investing in gas. “The gas pipeline project is actually 3billion scf which is equivalent to NLNG today. All these are projects which l believe will transform the economy of Nigeria. But these are things that are not well advertised and so people don’t even know what is going on. But there is a lot going on in Nigeria and we hope and pray that other Nigerians will join in developing our own economy not by word of mouth, but by action. They need to bring their capital and come in to do what we believe transform the economy. And l think a lot areas will be transformed with the help of government like what we did in cement. If not what we did in cement, Nigeria won’t even be able to import cement by now as we don’t have the capacity or logistics to do so in the country. By the grace of God, we will still have other things that will help to grow the economy.”
Speaking about how much job the project will generate for Nigerians after they come alive, Emefiele said: “If you consider today that we import petroleum products, If you consider today that until just last month, we were importing fertiliser, if you consider today that we import polypropylene products and now we are saying that we will begin to produce them in Nigeria. First, we will save forex; secondly, it will certainly create jobs. These are not jobs from the companies that are producing these products, but be virtue of the fact that you now have people coming here to buy those items, they in turn will also create jobs.
There are so many sub-companies that will come to live by coming to do business here. By the time this project comes on live you can imagine the industries that will open around this vicinity. Conservatively, besides the direct jobs from Dangote, millions of indirect jobs will be created around this project. The multiplier effect will be huge and that is what Nigeria needs”.
But speaking in specific terms, Dangote revealed that about 26,000 workers are currently engaged in the complex and added that that figure will increase to almost 80,000 by the time the projects come alive.