Dangote set to invest $16bn in Africa in 3yrs

Dangote Group plc is set to invest $16 billion in new and existing projects across Africa between now and 2018, according to Aliko Dangote, president/CEO, Dangote Group, at the commissioning of his sixth and largest offshore cement plant in Ethiopia.

Speaking at the commissioning ceremony of Dangote Cement Plant, Ethiopia, last Thursday, Dangote said the investment was in line with the company’s long-term vision to become one of the world’s biggest cement producers, saying “we envisage that by the time we complete all our ongoing African projects, will be on track to achieving our target.”

To achieve this, the company is currently and simultaneously setting up new cement plants and terminals across 16 African countries, which include Ethiopia, Senegal, Cameroon, Ghana, South Africa, and Zambia, where the company’s plants are currently running outside Nigeria.

While the cement plant in Tanzania is set for commissioning in few months time, others in other African countries are in various stages of construction, and are scheduled for completion next year, he said.

However, the construction on the new 2.5 million metric tons per annum (MMTPA) Dangote Cement plant in Mugher District in Ethiopia started in March 2012.

The choice of Mugher, a village located about 85 kilometres from Addis Ababa, the Ethiopian capital, for the $600 million project is informed by the availability of abundant natural resources such as limestone, gypson, clay, silica sand, and ferrogeneous basalt required for the manufacture of cement, he explained.

The Ethiopian plant is expected to create 2,000 direct employment, with a fleet of about 600 trucks, as well as over 5,000 indirect employment.

Haile Mariam Desalegne, prime minister, Federal Democratic Republic of Ethiopia, said, ”Dangote’s investment in the country is a welcome development to the growing list of cement companies in Ethiopia,” adding that his government would stop at nothing to address whatever challenges that would come the way of the plant, as his government was currently reviewing the country’s laws to make room for more local and foreign investments.

Godwin Emefiele, governor, Central Bank of Nigeria (CBN), said, ”Dangote’s investment in Ethiopia underscores the importance of intra-African investments.

It confirms that Africans have the capacity to drive Africa’s economic integration rather than depend on foreign investors.”

Apart from engendering economic growth and development and creating employments, the project would advance the continent’s quest for self-sufficiency in cement, Emefiele said,  stressing that the investment would spur a lot of positive externalities as well as encourage bilateral economic ties.

Ahmed Abitew,  Ethiopia’s minister for industry, said the country had seen significant growth in GDP in the past decade, making the country one of the fastest growing economies in the world.

The government of Ethiopia has put in place the right socio-economic policies and strategies that have created new opportunities for investment, he said, adding that the manufacturing sector has been given priority to ensure increase in its contribution to the country’s GDP from the current 4 percent to 18 percent.

Buhari faces challenge of resuscitating 74 ailing sub-sectors

As Buhari settles down to the task of managing Nigeria’s economy, one basic fact that stares him in the face is the resuscitation of 74 out of 77 ailing manufacturing sub-sectors.

Out of the 77sub-sectors in the Nigerian manufacturing classification, only three were given the desired attention by the immediate past administration of Goodluck Jonathan.  The industries which got the biggest stimulus were automotive, cement and sugar. But these were at the expense of other 74 sub-sectors, according to manufacturers.

To develop the cement industry, the past administration implemented the backward integration policy (BIP), which consequently attracted $7 billion in private investment, according to Olusegun Aganga, immediate past minister of industry, trade and investment.

The BIP shot up cement capacity to over 40 million metric tonnes.

With the same policy, the sugar industry attracted over $2.6 billion in investments and a number of mini firms from the likes of Dangote, Flour Mills of Nigeria, Crystal Sugar and McNichols, among others.

Similarly, about 21 automobile dealerships in Nigeria made commitments with some foreign technical partners to set up assembly operations in the country since the introduction of the new automotive policy in 2013, according to National Automotive Council (NAC).

However, similar strong policies have not been extended to other sub-sectors such as toiletries and cosmetics,  fruit juices, electronics, aluminium, iron and steel, carpet rubber and foam.

Industries such as domestic/industrial plastics, nail and wire, footwear/ leather, packaging, rugs, furniture, crayons, glass, textile and ceramics, among others, have been unable to compete with imports due also to the absence or near absence of clear-cut policies and well-defined incentives to drive them.

“While we recognise the efforts of successive governments at providing the necessary structures for rapid industrialisation over the years, these have not yielded expected results,” said the Manufacturers Association of Nigeria, in an industrial memorandum to Buhari, dated  April 8, 2015.

“Failure to provide necessary conditions in the past has resulted in eventual closure of factories and declining capacity utilisation of some manufacturing outfits. The experience of emerging economies has also shown that certain conditions are critical for accelerating manufacturing activities,” added MAN.

Some manufacturers in the basic metal, iron and steel and fabricated group of MAN have accused the immediate past administration of issuing unfair waivers to some members of the group at the expense of others.

In the aluminium segment, players say unbridled import of cheap and substandard products will continue to kill the industry unless a serious step is taken to stop this.

“What you have here is reverse economics. What type of manufacturing policy does your government have?” asked Robin Neville, managing director, First Aluminium plc, manufacturer of roofing sheets and coils, while bemoaning a near absence of checks at the borders and lack of policy direction in the industry.

According to Neville, the aluminium industry is stifled by the influx of sub-standard products, resulting from laxity by the Nigeria Customs Service.

“We lost 200 employees in 2012. We had to close down operations in December 2012, because production was and still is uneconomic,” he stressed.

Currently, only ten textile firms have survived the tough Nigerian terrain. Each of them does something else to augment margins. Smuggling, high production costs, absence of black oil in the North, poor patronage and lack of research and development (R&D) in cotton have been the biggest drawbacks.

 “Government uniformed agencies do not patronise the industry. Government often gives out contracts to people who go abroad and import the uniforms,” Paul Jaiyeola Olarewaju, director-general, Nigeria Textile Manufacturers Association (NTMAN) told Real Sector Watch, in an earlier interview.

Most of the raw materials used by local pharmaceutical industry are imported from India. Poor packaging and patronage as well as non-certification of many drug firms by the World Health Organisation (WHO) have been the bane of the industry.

The plastic industry is also not left behind. Joseph Makoju, group executive director, Dangote Group, attributed the problems in the plastic sector to the inability of the country to develop a virile petrochemical industry.

Makoju, who was represented by Knut Ulvmoen, deputy president, Lagos Chamber of Commerce and Industry (LCCI) at  a power sector event held by the chamber last November, said high spending on diesel has discouraged investors from establishing hi-tech plastic manufacturing firms, where precision machinery and power reliability are critical.

The ceramics industry is also stymied by lack of interest by investors that have seen no government intervention in creating the right environment to develop silica, quartz and feldspar, which are raw materials and are locally available. Lack of skilled manpower and unbridled imports have made the country a dumping ground for ceramic products from China.

“I believe if we are serious about industrialisation, we should look at investments in these minerals to help our struggling industries,” said Patrick Oaikhinan, professor of ceramics engineering and chief executive officer (CEO), Epina Technologies Limited, in an interview with BusinessDay.

Apart from Cap plc and Berger Paints, other paint makers seem to be struggling, as they are bedevilled by low capacity and poor patronage. Over 60 percent of paints used in the country are still imported, according to findings. The Local Content Law has failed to prevent a number of oil and gas firms from importing protective paints, rather than patronise local firms.

Despite the introduction of automotive policy, no company has yet established components factory in the country that can produce bolts, tyres and clutches, among others.

Michelin and Dunlop, two key tyre makers, have long left the country. Dunlop plc, now DN Tyre and Rubber plc, now import tyres from Spain and South Africa, among other countries.

In a 2013 interaction with BusinessDay, Olufemi Babayemi, company secretary, DN Tyre& Rubber Plc, pleaded with the Federal Government to bail it out in order to return to tyre manufacturing, for which it has been known over the years. Babafemi said the company needed to pay huge debts it incurred before closure in 2008 before resuming production.

‘’We hope that the government will help us to go back to manufacturing of tyres by cutting down on our debts. We hope that the discussion with the National Automotive Council in respect of promoting tyre manufacturing will be successful at the end,’’ she said then, in a telephone chat.

Also, thousands of shoe, bag, box and trunk makers in Aba, Abia State, South-East Nigeria, are asking for finance that will enable them to drive the sector. Currently, adhesives many of them use are still inferior, while banks demand double-digit interest rates.