The African Millionaire: Aliko Dangote Africa's Richest Billionaire from Nigeria Cement and Diversified Industries

Within the last three years, imagination on whether a Nigerian manufacturing brand could assume immediate international prominence, recognition and acceptability, has been receding and reality is dawning. The process is already well grounded as Aliko Dangote, Nigeria’s most enterprising entrepreneur, gradually plants the country’s leading brand across the African continent. In the next three years, a firm statement would have been made: Congratulations Nigerians, a Nigerian brand has truly arrived on the manufacturing map.

By 2013, Dangote Cement will be fully producing in 14 African countries. And in the medium to long term, the Group is moving into the Middle East and Asia in furtherance of its drive to exploit the abundant resources that abound in Emerging Markets. Seems impossible? Then you have not seen the small plaque with only three words placed conspicuously on the edge of Aliko Dangote’s table in his moderately-appointed office at the Union Marble House, Ikoyi, headquarters of the Dangote Group. NOTHING IS IMPOSSIBLE, the plaque says.

Indeed, nothing is to Dangote, least of all the business globalisation dream. Steadily, he has been internationalising the Dangote brand by instituting Dangote Cement plants in many countries in Africa. Dangote Cement has invested $28mn in the 1.2 million tonnes per year Tema Cement Factory, Ghana. In South Africa, the Dangote Group is investing $112mn in Sephaku Cement. The company is a unit of Sephaku Holdings Limited, a South-African black-owned minerals exploration development and investment firm. This latest investment takes Dangote’s stake in the cement company to a 64 per cent controlling portion and will contribute largely to actualising the 2.2 million tonnes a year plant billed to start production by 2012. Twenty cement professionals with a combined experience of 200 years have been recruited from all the cement companies. The plant will be built in Aganang.

The Dangote Group had, in 2008, invested over $3bn in Sephaku Cement to finance construction of the plant. This latest financial injection will help provide guarantees the company needs to secure debt funding for the new plant, fund any over-runs on the project with a loan of about $35mn and finance the company’s limestone exploration programme in Western Cape and Limpopo Province. Sephaku is developing the Aganang project that will produce 900,000 tonnes and the Delmas plant which will produce 1.25 million tonnes a year. The company also has a plant in Benin Republic. With Dangote Group’s total stake in Sephaku, confirmed as the largest investment by any private company in South Africa, Aliko takes over as chairman of the South African firm. The Dangote Group will soon be producing in Senegal, Ethiopia and Sierra Leone and is moving into Cameroun and the Congo Republic.

Dangote cannot wait to see the plant grinding. “In Nigeria, we are doing 12 metric tonnes per annum. So this is not a big deal. Dangote Industries will bring its full experience to the project. We foresee growth in South Africa and other African countries. We shall build modern cement plants in strategic locations. We shall build using the latest technology and we’ll stick to environmental requirements. Indeed, we’ll generate less dust than German requirements. We have been looking outside our home market for growth. There is no way to invest in Africa without coming to South Africa. We want to be a pan-African company, the champion in the sector. Africa is the only continent with a cement supply deficit. Many countries rely on imported products and pay a price premium,” Aliko said.

The Ghana investment is a three-legged affair. Dangote Cement is the first foreign investor into that country’s cement production business through its subsidiary there, Green View International Company Limited, and is competing with three indigenous others: Ghana Cement Company, West African Cement Company and Savanna Cement. Ghana Cement and West African Cement depend mainly on importing and bagging the product with no local value added. But Dangote is, barring any hitch in obtaining all the relevant approvals, working towards full local production from limestone to bagged cement. Already, as disclosed by Green View’s Managing Director, Kwame Siriboe, sufficient limestone deposits to support full-scale manufacturing have been discovered in northern Ghana. The Ghanaian government and people are ecstatic that when local production eventually commences, it will usher massive investments into Ghana, with all its multiplier effects, create many jobs and bring about technology transfer.

At present, Green View is still bagging imported cement for sale from its $28mn investment facility located in the port of Tema in southern Ghana. It is also erecting another $28mn facility in northern Ghana to enable it distribute the product effectively across the country. Executive Vice-Chairman of the Dangote Subsidiary in Ghana, Mr. Tajudeen Sijuade, promised Ghanaians that Dangote Cement’s activities in Ghana promise many things for the indigenes in terms of investments, jobs and offshoot small and medium scale enterprises. Dangote Cement will be filling a yawning gap in Ghanaians’ cement demand that Ghana Cement and West African Cement cannot collectively fill. Whereas statistics released by the Association of Ghana Industries estimated local demand at 3 million tonnes per year, the two indigenous cement bagging companies can only supply 1.4 million metric tonnes.

That desire to lift Africa from the backwaters of industrial inactivity to enable it compete with the BRIC nations and peers like Malaysia, Singapore, South Korea and Indonesia has also taken Dangote to Zambia where the Group is building a $400mn 1.2 million tonnes per annum cement plant. With construction of the plant, being done by a Chinese firm, not expected to last more than 24 months, the Zambian government is looking forward to seeing the country commence cement production latest 2012. President of Zambia, Mr. Rupiah Banda, was effusive with praises for Aliko Dangote when he visited Abuja, Nigeria’s Federal Capital Territory in October. Banda was emotionally moved that an African is investing in African economies most of which and especially Zambia’s, he pointed out, are controlled by the Chinese and Indians. The Zambian president wished other African businessmen would employ their resources patriotically to developing the African continent.

Last Tuesday, Dangote Cement formally merged with Benue Cement Company, BCC, and was listed on the Nigerian Stock Exchange. That merger makes it Africa’s largest producer of cement, having overtaken Pretoria Portland Cement Co., PPC. The South African company has cement production plants in South Africa, Botswana and Zimbabwe with an overall production capacity of 8 million tonnes annually. Production capacity at the consolidated Dangote Cement alone rubbishes that output: Currently, the Obajana cement plant in Kogi State produces 5.2 million tonnes per year while BCC can do 3.2 million. Dangote Cement plans to double output at Obajana by next year to 10 million tonnes per year while the BCC plant, which Dangote bought over from government in 2002 as a near-moribund entity and turned around, is being expanded.

The Group projects to increase production over five-fold by 2015, as it capitalises on expected construction boom across Africa. It is looking at a whopping 46.2 million tonnes by that year garnered from its plants that would have been completed and producing across the continent. The breakdown puts output from Dangote Cement plants in the West African region at 30 million tonnes per year while the remaining 16.2 million tonnes annually will come from other African countries where it is currently putting up plants.

And Aliko Dangote is putting them up in style. Insisting on modern cement technology, Dangote is not sparing any dollar in ensuring that today’s technology is transferred to Dangote Cement’s plants in full measure. A visit to the $1.2bn Obajana Cement plant will be highly informative. When Dangote, in 2002, expressed his intention to build a huge modern cement plant in Nigeria, some pessimists sneered. Obajana would be the single largest private investment and third overall largest plant in Nigeria, beaten only by Ajaokuta and Aladja steel plants. But then those pessimists did not have the NOTHING IS IMPOSSIBLE plaque on their tables and lack the vision, commitment and patriotic fervour of Aliko Dangote. The conception was, indeed, quite ambitious and would truly frighten timid African entrepreneurial minds. Only a business Hercules that Aliko Dangote is would carry such an Atlas of a project on his shoulders and would not buckle one nerve!

The project is a total business solution, complete with three 45-megawatt each power plants. A 90-kilometre pipeline was laid from Ajaokuta to supply gas to both the power and cement plants. It sources all its raw materials – aluminium, clay, marl, laterite soil and laterite iron – at a vast mine located some five kilometres behind the plant. Only gypsum, another vital raw material in cement production, like aluminium, is not available in the immediate environment. It can, however, be sourced easily from mines not too far from Obajana. Experts have estimated the rich, sprawling limestone mines to be about 60 metres deep and could be exploited for nothing less than 70 years. Crushers located near the mines work on limestones and the other materials at the primary crushing location and then send them through a long, fast conveyor belt to the cement plant.

The latest Gamma Matrix online analyser technology installed at the mine ensures automatic right-mix of raw materials. To further enhance quality control, installed in the factory is a robotic laboratory that samples products and corrects errors, if any. Then there is the Experts Control and Supervision Unit which continuously monitors kiln operation, a process that updates plant information regularly. Mr. Joseph Makoju, Managing Director of Dangote Cement, boasted to TheNEWS magazine that Obajana Cement is 100 per cent pollution-free.

As has become the tradition wherever it operates, the Dangote Group has transformed the sleepy Obajana village that hitherto lacked all amenities into a lively commercial town. Apart from constructing the access road to the factory (a road that has become a major by-pass for all vehicles), the Group built a network of roads for the community, thereby opening it up from a one-path hamlet to a civilisation bustling with activities. The Group has done boreholes for the people to afford them potable water, built schools, started a micro-finance scheme and is providing them with jobs, either as skilled or unskilled workers. David Ogah, who told this magazine he hails from Obajana, admitted he probably would still have remained in abject poverty if the Dangote Group had not come to town.

What the Group did in Obajana, it more than replicated in Gboko, home of BCC. Whereas the Group easily got the cooperation of the indigenes in the location of the Obajana cement plant, it was entirely another story in Gboko. Aliko Dangote’s acquisition of the decaying plant in 2000 as core investor met with strong opposition from the indigenes who regarded him as a usurper who wanted to snatch what they regarded as their birthright. This BCC instance was yet another proof of Dangote’s doggedness, perseverance and commitment to a cause. The Gboko people virtually rose up in war against him, vowing an “outsider”, as they called him, would not take over BCC. Some other entrepreneurs would have quit. But not Dangote, whose business philosophy, one of many, is WINNERS DON’T QUIT. For three years, the impasse could not be resolved, but he hung on.

Today, he is not only fully in control of the plant, he has turned it around completely. When Dangote bought BCC, the company was in debts, the machinery was outdated and rusty and staff morale was low. It was barely loading 25 trucks per day. All that has changed. The debts have been cleared. By end of 2008, the company was doing 200 trucks a day. By the beginning of this year, it was hitting 500. The BCC stock on the Nigerian Stock Exchange by the last quarter of 2006 was a mere N5. Before it was suspended for the merger with Dangote Cement and the listing that eventually held last Tuesday, the price had climbed up to N67.50.

The government and people of Benue State, initial antagonists of the takeover, have been the greatest beneficiaries of the investment. Since its arrival, Dangote Group has practically taken over the role of the government, providing amenities and jobs. It has provided water and electricity and bought motorcycles under a revolving loan arrangement. It also organised farmers in the community into a cooperative society to enable them benefit from fertiliser supply and funds. Every year, a number of youth also benefit from scholarships, just as there is a conscious arrangement that ensures that, at least, 60 per cent of the community’s indigenes are employed by the plant.

The Dangote Group is also providing jobs for indigenes in Ibeshe, a community near Ilaro, Ogun State, where it is erecting a six-million metric tonnes capacity plant scheduled to begin production in March next year. The $680mn is being handled by Sinoma International Engineering Limited, a Chinese firm. A sum of $280mn of the amount is being invested on a 105-megawatt power plant that will run on bio-fuel (natural gas and coal). The 22km long gas pipeline will be completed by December this year and is expected to be linked to the national grid early next year.

The factory occupies about 2000 hectares of land for mining of limestone deposits of about 240 million metric tonnes with an estimated lifespan of 90 years. It is expected to produce 7200 tonnes of cement per day. It will have a 300,000 metric tonnes storage capacity and six cement silos. It also plans to provide two boreholes for the community, as well as schools and hospitals.

The Dangote Group also, in 2004, acquired a 75 per cent stake in Bonny Allied Industries Limited, BAIL, a cement terminal formerly managed by a Scandinavian company at Onne, Rivers Port. The company, which has a production capacity of 700 tonnes, about 233 trucks per day, services about 70 per cent of the south south and south east markets.

The Dangote Group is making giant strides in sugar production. In 2003, it bought over the non-performing Savannah Sugar Company in Numan, Adamawa State. Since taking over, the Group has invested about N12bn purchasing state-of-the-art machinery, trucks, canal construction, high quality seedlings, fertiliser and boosting staff morale. It has since increased sugar production at the plant from 1040 tonnes in 2002 to 50,000 metric tonnes for the 2009/2010 season. It built a N500mn 16km canal to ensure all-year cultivation of sugar cane and increased cultivable land between 2003 and 2009 from 20 to 6330 hectares. In seven years, staff strength has increased from 700 to 5000.

By 2012/2013, production capacity is planned to increase to 250,00 tonnes per annum, with staff strength going up to 25,000. The Dangote Group will be establishing a 1000 cattle dairy farm with the aim of using cattle feeds from molasses (one of the by-products from the plant). On the whole, the Group plans to cultivate a total of 100,000 hectares of land in northern Nigeria for sugar production. In Lau, 35,000 hectares will be cultivated; in Hadeija, 15,000 hectares will be cultivated while in Galala, 25,000 hectares is planned for cultivation. A total of 1 million tonnes of sugar will be produced annually. As in other communities, the Dangote Group is impacting extensively on the lives of the Numan communities and its neighbours in its corporate social responsibility. The Group built the Zanghum-Imbru road, constructed a 10-metre bridge over the canal, renovated primary schools in Zanghum, Gwayana, Burthi and Kem, constructing a secondary school in Zanghum, equipped and is maintaining a health community centre with modern facilites and provided a 500kva transformer to Gwayana community. It plans to build a school there for vocational training and upgrade the schools.

To make farmers self-reliant, it has organised the Outgrowers Scheme, in conjunction with the Nigeria Sugar Development Council to assist local farmers in cultivating sugar cane using Dangote’s resources and then paying them for the produce after the harvest. Under the arrangement, the Savannah Sugar Company will provide farmland, fertiliser, water for irrigation, seedlings and farming implements. The company is providing 1000 hectares of land for 1000 farmers over the next two years.

Dangote Group is ensuring there is something for every home from its mills – from sugar to salt to pasta to noodles, to semovita (Danvita) to juice drinks to flour to bottled water and, yes, to agro sack to pack them all. Across the country, from Lagos to Kano to Calabar, the Group is building subsidiaries, serving the nation, providing employment. In 1997, Dangote began production of salt at its plant in Apapa, Lagos. Since then, there has been, as in every other one of its ventures, no looking back. It is now clearly the market leader, operating under the quoted name of National Salt Company of Nigeria plc and producing table salt in 500 gramme and 1kg sachets and 25kg bags. It also produces industrial salt, butter salt and kitchen salt in 25kg bags. It has installed three plants in Apapa, Oregun (both in Lagos) and Port Harcourt to produce salt sold not only in Nigeria but across the West African coast. The Oregun factory is a modern facility capable of turning out 30,000 tonnes a year and there are plans to increase the figure, especially in table salt to 150,000 as the commodity gains more acceptability in the ECOWAS markets. About 40 per cent of salt from all the three plants goes to the North for sale while the remaining 60 per cent is distributed in the South. Dangote Salt is an international award winner, having won the International Standard for System Quality (ISO 9000-20001). It has also won the Nigerian Industrial Standards, NIS, award for quality.

Ever one to exploit advantages in favourable government policies, the Dangote Group is, at its Abule-Oshun, Lagos, factory, churning out a wide variety of fruit juice drinks, Ziza milk and the Mowa bottled water under its subsidiary name, Dansa Foods. The federal government had banned importation of packaged juice and beverage products. The company is cultivating 400,000 hectares of farmland in Calabar to source its raw materials with a view to, as Pankaj Kumar, its Managing Director told this magazine, reducing its dependence on imported concentrate juices. The company also needs more raw materials as it steadily expands in both local and international markets. At present, about only 20 per cent of its concentrate requirement is produced locally. Dansa Foods has now commenced processing of pineapple juice on its farm to feed the Abule Oshun plant while arrangements continue to start cultivating other citrus species.

Dansa Foods provides both direct and indirect jobs for over 20,000 Nigerians that could otherwise have been unemployed, thus, as in the objective of the entire Dangote Group, contributing to poverty alleviation. Its operations also conserve foreign exchange that would otherwise have been spent on importing fruit juice drinks. Although wholesale dealers have been marketing Dansa Foods products across the West African coast, the company itself has concluded arrangements to formally launch the products in the sub-region, as disclosed by Kumar. It would soon begin commercial packaging of its fruit juice range in Ghana, to be followed in the not-too-distant future by full establishment of a manufacturing plant there.

As usual, Aliko Dangote has not spared funds in ensuring high technology operates at the Abule Oshun plant to guarantee production of unblemished products for the good health of its numerous customers. Dansa Foods partnered with Tetra Pak in the supply and maintenance of the ultra-modern juice production equipment worth over N10bn covering 13 production lines. It employs 649 direct workers to keep it running. In addition is a highly automated machine capable of producing 4 million bottles of the Mowa table water per month without any human contact whatsoever with either the liquid or the bottles. As was revealed by Prem Kanojia, Dangote Foods Sales Manager, the company had from zero per cent captured 11 per cent of the market share within a short time and would soon increase to 15 before the year ends.

Dangote Pasta produces spaghetti and macaroni at its plant located in Ikorodu, Lagos State. It began operations in 2000 with only one line producing 2500kg of spaghetti per hour. Capacity has gradually increased over time and it currently boasts about six lines producing about 30,000 metric tonnes per annum, of variants of macaroni and spaghetti. Of the six, five lines are dedicated to spaghetti production while one is for macaroni. Each production line turns out 10kg carton. The noodles unit also has six production lines in Lagos, Calabar and Kano and a back-up line. Two more lines are planned to be added. Equally spread across Lagos, Calabar and Ilorin are the Group’s flour mills. The Group started flour production in Apapa in 1999 with a capacity of 500 tonnes a day. Today, it is the biggest player in flour manufacturing in Nigeria with total milling capacity of 4800 metric tonnes a day, a figure it is working on to jack up to 7300 metric tonnes. At the Calabar mill, TheNEWS saw engineers from Switzerland installing more state-of-the-art equipment to boost production.

Aliko Dangote has always believed in uplifting the living standard of man. Consequently, he has established the Dangote Foundation to affect the welfare needs of both countries and individuals. The Foundation was established in 1993 and has been silently involved in egalitarian interventions over the years. It has worked to provide drinking water and health facilities in partnership with many state governments. It has also provided grants to individuals and groups for health, education, economic development projects, among others.

Aside the numerous welfarist projects the Dangote Group itself is engaged in as part of its corporate social responsibility, the Dangote Foundation is separately touching lives of many individuals and needs of countries and states. This year alone, the Foundation has provided 50 boreholes in all the 23 local governments in Kaduna State. Apart from the boreholes in Kaduna State, it has also dug boreholes worth over N100mn across the country. In Lagos State, it provided a dialysis machine to the Lagos Island General Hospital. It provided food items worth over N70mn to victims of the Jos and Bauchi crises, apart from cash worth over N50mn earlier provided.

For the Nigerian youths, Aliko Dangote has established the Dangote Academy which is taking off this year. The Academy will be training free of charge students in electrical, mechanical and instrumentation engineering. The students will have the advantage of benefiting, apart from theories that will be delivered to them by excellent lecturers, from practical courses in the modern, hi-tech plants and laboratories in Dangote subsidiaries spread across the country, like the Obajana Cement plant in Kogi State, the Savannah Sugar plant in Numan, Adamawa State, the Dangote Flour Mill in Calabar, Cross River State and Dansa Foods in Lagos. Some of the graduates will be lucky to swell the 14,000-man workforce of the Dangote Group. “

—Tayo Odunlami