The Group has over 24,000 direct employees and provides indirect employment to tens of thousands of others who are engaged in activities relating to our businesses. Today, Dangote Cement has presence in eighteen African countries and this number is expected to grow in the not too distant future. In 2015, six new plants commenced full operations (Tanzania, Cameroon, Ethiopia, Senegal, South Africa and Zambia) while 12 MOUs for a total contract sum of over US$4 Billion were signed.
So how did we get here?
My first foray into business was in 1978, when I used the seed capital given to me by my grandfather, Alhaji Sanusi Dantata, to trade in local commodities and building materials. He also gave me a loan of N500,000 to be repaid whenever I was able. I repaid the loan within three months, as I made good profit from my cement trade, which surprised him greatly.
Initially, the cement trade was good, but soon enough there were challenges. Those were the days of the infamous ‘cement armada.’ The business climate became difficult and I therefore diversified into other commodities. We provided hundreds of direct jobs to Nigerians and paid billions in taxes, contributing directly to government revenues.
But there was a snag. When you import, you export jobs to other countries, and import poverty to your country. These considerations caused a major shift in our operations, especially after I took a trip to Brazil in the mid 1990s.
I was shocked to discover that another developing country similar to Nigeria, had huge manufacturing complexes providing jobs for her citizens and developing the country’s economy, despite hyperinflation.
I realized that if they could do it in Brazil, we could replicate the same in Nigeria.
We organized a Retreat that was anchored by Arthur Andersen, and the outcome was the decision to move into manufacturing. We also took a strategic decision to our banking interests (two banks). We identified the two main reasons why previous industrialists failed, namely: Lack of power and inconsistency in government policies.
We embarked on an import substitution strategy, investing in the local manufacturing of the products that we were importing into Nigeria. We had traded in these products for some years at that time and therefore had a ready market. Transiting into a manufacturing model allowed us to retain our customer base which was a major advantage. We rolled out 13 projects at the same time.
First, we established Agrosacks, which is now the largest polypropylene bag manufacturing company in the world producing 650 million bags per annum. We are in the process of setting up another plant in Ethiopia. Secondly, as the largest importer of salt, we established a salt milling and refining plant.
Thirdly, from being the largest importer of pasta from Italy, we switched to manufacturing pasta locally. To manufacture pasta, we needed wheat flour and so we got into the flour milling business.
We also ventured into sugar refining. Prior to that, we were the largest importer of sugar since 1986. Instead of importing refined sugar, we built a 1.4 million MT per annum Greenfield sugar refinery in Apapa, which is the second largest sugar refinery (under one roof) in the world and also bought the Savannah Sugar Company.
We replicated the same strategy in cement, transitioning from a cement terminal that was commissioned in 2000 to acquiring the comatose Benue Cement Company, which took us 43 months to take over and building brand new plants of our own in Obajana, Kogi State, with a capacity of 5MT.
Having established ourselves as a major player in the manufacturing sector, we continued to sustain our growth through expansion of existing capacities and establishing new businesses.
We also expanded our capacities to take advantages of economies of scale, as large scale production lowers marginal cost. As our business expanded, we commenced formalization of business processes and structures to align with our new vision and direction.
This resulted in the unbundling of Dangote Industries Limited based on commodity lines and the establishment of Dangote Sugar Refinery Plc. and Dangote Flour Mills. We divested 25% of our investments by listing on the Nigerian Stock Exchange to enable other Nigerians to become co-owners of these companies. Dangote Salt was listed through a reverse merger with NASCON. In 2009 we took a decision to pay-off all our loans ($2.2 billion) thus becoming debt-free.
Realizing that Africa was gradually becoming a dumping ground for cement from Asia, we took the strategic step of evolving from a cement bagging company to having our own fully integrated cement plants. The strategy was designed to make Nigeria self-sufficient in cement production given the abundant deposits of limestone across Nigeria coupled with the ever growing local demand for cement.
Today we have production operations in eight African countries including Nigeria, with investments at various stages in another ten countries and growing.
In Nigeria we have three cement plants with a combined installed capacity of 29.25 million MT per annum. The Obajana Cement Plant in Kogi state is the largest cement plant in the world with a current capacity of 13.25 million MT. The Ibese cement plant in Ogun State has combined installed capacity of 12 million MT while the Gboko plant has installed capacity of 4 million MT.
We are currently building a new 6 million MT plant in Itori, Ogun State among several other new projects, and by the time we complete all our existing Africa projects in 2017 we will have a total installed capacity of 80 million MT.
It is heartwarming to see new settlements and businesses are opening around the locations of the various plants and many new support businesses, such as banks, materials and service suppliers, restaurants, hotels, workshops, artisans and others helping to further drive local and national economic growth and development. To train our people, we set up the Dangote Academy that provides vocational training to 2,000 of our staff annually and we have plans to upgrade it to a full-fledged university in the very near future.
The Next Trajectory
Over the next five years, our focus will be on generating foreign exchange savings and earnings for Nigeria. When all our projects are completed, we will be the country’s largest earner of foreign exchange after the NNPC.
1) In the sugar sector, we are actively pursuing a backward integration master plan with a target of making Nigeria self-sufficient in sugar production. Over 260,000 Hectares of sugar plantation will be cultivated and refineries to produce 20 million MT cane and 2million MT sugar will be constructed. Other products to be realized include ethanol, molasses, bio compost, animal feeds and power generation.
2) We have also committed US$1 Billion towards the commercial production of rice paddy. We plan to produce nearly 1 million metric tonnes of parboiled white rice. The project is expected to significantly boost smallholder rice production in the country through a nucleus and out-grower farming model, as 30% of the paddy will be by smallholder farmers, thereby transforming tens of thousands of livelihoods in rural Nigeria.
We hope that our investments in agriculture (sugar and rice) will open doors and attract other serious entrepreneurs into this sector that is vital for our national economic diversification and development. The two projects will create 180,000 jobs across six states.
3) By the beginning of this decade we had turned our focus to addressing the huge need in the energy markets in Nigeria. More specifically to address the perennial petrol scarcity in Nigeria, we have embarked on the construction of a 650,000 bpd petroleum refinery, the world’s largest single stand-alone refinery, and a separate petrochemical complex in the Lekki Free Trade Zone. This followed the cancellation, by mutual agreement with government, of the privatization program under which we purchased the Kaduna and Port Harcourt refineries in 2007, and the refund of our $750 million. The refinery will meet Nigeria’s and some of West Africa’s local demand and save the 38% of foreign exchange earnings spent on petroleum product imports in Nigeria.
4) The petrochemical complex includes a 1.2 million mtpa polypropylene and polyethylene plant (which is 10 times the size of the existing facility at Eleme Petrochemicals) and a combined capacity of 2.8M mtpa Urea and Ammonia fertilizer plant, the largest in the world. Given the huge contribution of Agriculture to GDP (more than oil), it is important for the country to produce its own fertilizer. We are in the process of acquiring potash and phosphate supplies to have the full basket of fertilizer.
It is envisaged that when completed in 2018, the refinery will create jobs for thousands of Nigerians, end the nation’s dependence on petroleum products imports, turn the country into a next exporter of petroleum products, generate more than $6 billion foreign exchange for the nation and have a massive multiplier effect on the Nigerian and regional economies.
5) Given the central role of power in industrialization and the deficit in the country, We are further breaking new ground in the energy sector with our investments in two 554 km, 3 billion square cubic feet (scf) gas offshore pipelines, which will be the first indigenously owned undersea gas pipeline to supply critically needed gas to industry and power plants. Currently, the gas supply in the country is 1 billion scf with an additional 1.2 billion lost to flaring, so this project will be a game changer for the nation and potentially turn Nigeria into the “Qatar of Africa”. The pipelines will run from Bonny through the various gas fields and the gas can generate 12,000 MW of power. Recall that government’s sale of NIPPs totaling 6,800MW has not been successful because of inadequate gas supply.
6) We have also entered into a $5 Billion joint venture agreement with the Black Rhino Group, a subsidiary of the Blackstone Group, the largest Private Equity and Asset Management Company in the world, with assets of $334 billion under management, to develop energy infrastructure in Africa. I am proud to say that the Chairman of the Black Rhino Group is no other than the Chairman of today’s lecture, His Royal Highness, the Emir of Kano, Muhammad Sanusi II. Allah ya taimaki Sarki.
Specifically in Nigeria, we are already looking into setting up power plants in Kano and Abuja. Elsewhere on the continent we are already exploring opportunities in Togo and Zimbabwe, and most of these plants will be coal-based, as we have developed expertise and capacity through the provision of captive power to all our factories. This has been a key factor in our success as our cost of power is 4 cents/kWh on average, compared to 15 cents/kWh average for residential users.
In total we will be investing over US$19 Billion across our various businesses as we consolidate in some, grow others and venture into new fields and enterprises.
It is worth noting that as an entrepreneur, I have not limited myself to physical investments only. Due to the scale of the need and the magnitude of the benefits; I also advocate for greater participation by other investors, policy makers, financiers, innovators and communities. In this spirit, I serve on the World Economic Forum’s Global Business Council, Harvard University’s Global Advisory Council as well as the Global Advisory Board of McKinsey, among others. I am a co-founder of the African Energy Leaders Group and inaugural member of the Breakthrough Energy Coalition. Successful entrepreneurs must know how to build partnerships, coalitions and consensus to succeed.
As an entrepreneur, nothing gives me more pleasure than the opportunity to give back to the community. Our companies are at the forefront of corporate social responsibility initiatives. In addition, at a personal level, I set up the Dangote Foundation in 1993 as another platform for philanthropy. Two years ago, I endowed the Foundation to the tune of $1.25 billion and it has been focusing on the areas of education, health, empowerment and emergency relief.
From the foregoing, we can safely conclude that entrepreneurship is the only way to secure Nigeria’s future. We have all the resources - both human and natural - at our disposal to do this and owe it to ourselves.
Is entrepreneurship easy? Certainly not! Throughout my journey I encountered several challenges and obstacles and some failures. But I kept going.
Attempts to solve social problems frequently fail because they require collective action from governments, universities, civil society and the private sector. Producing large-scale, reliable, affordable, and environmentally sustainable goods and services is a key global challenge. But the solutions are within our grasp. Nigeria’s future is bright. And its future lies in its youth. To realize its full potential, we need to build our human talents and resources for the challenges of today and tomorrow.
Institutions like ABU need to move out of the comfort of their traditional environment and work more actively with institutions, groups and individuals in the market place, on the fields and in politics, and business; physically and metaphorically speaking. We must collectively take deliberate steps to nurture our entrepreneurs to enable Nigeria to take her pride of place in the comity of nations.
Long live the Ahmadu Bello University.
Long live the Federal Republic of Nigeria.
Thank you and God bless you all.
The Role Of Entrepreneurship in National Development: The Story of The Dangote Group Reviewed by Link Naija on 22:16 Rating: