BY EMEKA EJERE
The Dangote Group is positioning to reap the gains of the Africa Continental Free Trade Area (AfCFTA) through strategic expansions that will contribute meaningfully to the growth of Nigerian and African economies.
The Group’s cement expansion plan and fertilizer investments are strategies aimed at leveraging trade deals and opening new trade routes for Nigeria under the AfCFTA.
As businesses across the continent strategize under the trade deal, the AfCFTA is providing the Dangote Cement Company the impetus to expand its cement production capacity with new plants in Africa.
AfCFTA aims to create the world’s largest free trade area with the potential that brings together more than 1.2 billion people with a GDP of over $2.5 trillion and usher in a new era of development.
It has the potential to generate a range of benefits through economy of scale, trade creation, structural transformation, productive employment, and poverty reduction. Trading under the agreement began on January 1, 2021 after it was postponed from 1 July last year because of the COVID-19 pandemic.
Africa’s largest cement producer that already has plants in more than 10 countries said in a statement that the expansion would “open new trade routes for the company and Nigeria under AfCFTA”.
Dangote would be commissioning new cement plants in the five West countries of Niger, Benin, Ghana, Cote d’Ivoire, and Togo while existing factories in Cameroon and Nigeria would be increasing their output, the company said.
“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,” Dangote said in the statement.
With the United Nations Conference on Trade and Development (UNCTAD) report for 2020 clearly stated that for the Africa free trade area to work, the deficit in infrastructure should be looked into. Dangote is hoping to leverage the infrastructure deficit with his cement investments in the continent, according to the statement.
“For Dangote Industries Ltd., 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,” he said.
Also speaking, Mr. Devakumar Edwin, the company’s Group Executive Director, stated that the movement of products via road was expensive.
Edwin added that the governments of Togo and Benin Republic had complained of the pollution that the trucks brought 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.
“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.
In November, Dangote Group announced that its $2 billion Granulated urea fertilizer plant which is located at Ibeju Lekki, Lagos state, would start operations before the end of December.
The disclosure was made by the Group Head, Corporate Communications, Dangote Group, Mr. Anthony Chiejina, during a chat with the News Agency of Nigeria (NAN).
Mr. Chiejina said: “The project will be ready for take-off before the end of December. The pre-testing has already been done and the delay in starting operations was due to the COVID-19 pandemic.”
Alhaji Aliko Dangote, Group president of DILs had in February projected that the plant would begin operations in July. He had said that the project would be the largest fertiliser plant in the world with its three million tonnes per annum capacity.
According to Dangote, the plants would make Nigeria the only urea exporting country in Sub-Saharan Africa, as the fertiliser and petrochemicals plants were capable of generating $2.5 billion annually, an amount, he said, is almost 10 per cent of what Nigeria is getting from home remittances, which is one of the highest in the world.
In 2019, Dangote Industries and the Togolese Government announced the conclusion of a partnership to develop a phosphate fertilizer processing industry in Togo.
The project, which was to cover part of West Africa’s phosphate fertilizer needs and create several thousand direct jobs, was to gulp an estimated $2bn in investment, which was to come from both partners.
Togo is one of the continent’s leading phosphate producers: the country has more than two billion tonnes of phosphate in its subsoil. The Dangote group, for its part, relied on its future ammonia and urea plant based in Lagos, expected to be commissioned in 2021.
“Ammonia is an essential ingredient in the transformation of phosphate into phosphate fertilizers derived from phosphates,” Dangote had said in a statement, adding that “Togo will provide access to phosphate resources and the Dangote Group will provide access to ammonia and the Nigerian market.
Togo hoped to benefit from the expertise and investment capacity of one of Africa’s largest industrial Groups, whose revenues were close to $5bn in 2018.
“By processing our phosphate, we will not only create jobs, but we will also be able to provide our farmers with good quality fertilizers at an affordable cost,” said Togolese President Faure Essozimna Gnassingbé.
“This partnership is part of our transformation agenda to create prosperity and strengthen economic development not only in Togo, but also in Africa,” said Aliko Dangote.
His group had also announced the establishment of a cement production plant in Lomé, which was to start construction in the first quarter of 2020, with commissioning scheduled for before the end of 2020. The investment estimated at $60 million and was expected to create 500 direct jobs.
Projects in Congo-Brazzaville
In line with this investment in the fertilizer sector, Aliko Dangote also met with the President of the Republic of Congo, Denis Sassou Nguesso, on 21 August 2019. It was an opportunity for Aliko Dangote, already present in the country with the Yamba cement plant, the largest in Central Africa, to express his willingness to develop other projects there.
“We plan to make major investments in potash, phosphate and if possible ammonia as we have done in Nigeria. We have confidence in the Congo. These are large industries that will create many jobs and trade with the outside world,” Dangote said.