Nigeria 2017 | ECONOMY | INTERVIEW

TBY talks to Aliko Dangote, Chairman of Dangote Group, on maximizing production capacity, increasing foreign exchange through diversification, and reaching self-sufficiency across various critical sectors.

Aliko Dangote
Aliko Dangote founded Dangote Group over 30 years ago and has turned the enterprise into the largest business conglomerate in West Africa, with a market capitalization of USD15 billion as of October 2015. A leading global philanthropist, he set up the largest foundation in Africa with an endowment of USD1.25 billion in March 2014. Dangote is a member of the UN Secretary-General’s Global Education First Initiative steering committee and a founding member of the Private Sector Health Alliance of Nigeria, the Global Business Coalition for Education, the Board of the Corporate Council on Africa, the Clinton Global Initiative, and the World Economic Forum.

Nigeria is Africa's largest oil producer but still suffers from refined fuel scarcity. What is the status of your refinery project at the Lekki Free Trade Zone (LFTZ)?

Our subsidiary, Dangote Oil Refining Company Ltd (DORC), is developing a 650,000bpd greenfield oil refinery, fertilizer, and petrochemical complex in the LFTZ. The complex, when fully operational, will eliminate Nigeria's reliance on imported petroleum and petrochemical products and add value to Nigeria's crude oil as the nation becomes an exporter of refined petroleum products. The refinery when completed will be the largest single train in the world. Existing refineries in the nation—a combined capacity of 445,000bpd—are not running efficiently, below 10% of installed capacity, because they are obsolete and poorly maintained. The non-functioning at full capacity of existing refineries made the nation dependent on imports of refined petroleum products with a negative impact on foreign exchange. We are on course to change the tide with the new refinery. The project will enable Nigeria to conserve and even earn foreign exchange through exports of refined product.

What will be the impact of this investment on the Nigerian economy as a whole?

The refinery will have a multiplier effect. It will ensure fuel sufficiency in Nigeria, thus keeping people and businesses moving. During the construction period, the project will provide jobs for about 35,000 people directly and indirectly, and about 1,500 permanent jobs and 15,000 indirect jobs in the community. The economy will gain in terms of significant skills transfers and technology acquisition opportunities. It will also spur activities in the financial services sector such as insurance and banking. In addition, supply of petrochemical feedstock—polypropylene and polyethylene—will create a new market for plastics and nylons, which are imported at the moment.

The import of foodstuffs is an important issue. What are you future plants to develop diary plants in the country?

We are making investments in an integrated rice production and processing business, which will meet 16% of Nigeria's rice needs. We have started production in some states like Jigawa through an out-grower program where we teach farmers modern ways of farming and also supply them with agricultural inputs such as seeds and fertilizer. We have also embarked on a sugar backward integration project that will ensure self-sufficiency in sugar. We noticed that 98% of all dairy products consumed in the country are imported, which is why Dangote Group has planned to develop dairy plants and homegrown milk production to reduce imports. By 2020, it is estimated that the Nigerian population will grow to between 207 million and 210 million. If we do not make efforts to grow and process our own foods, God forbid, we will go hungry.

What role does Dangote Group play to support the government's goal of diversifying the economy?

We are making investments in agriculture and agri-processing, automobile assembly, petroleum processing, power generation, and more, which are all areas the government is looking at for diversification. These investments diversify the Nigerian economy and when fully completed will bring in foreign exchange. The Dangote rice project will generate a significant number of jobs and increase take-home pay for smallholder farmers, all the while diversifying Nigeria's economy and reducing the nation's food import bill. Through the Dangote rice outgrowers scheme, we partner with outgrowers (smallholder and contract rice farmers) to cultivate and grow rice paddy. Specifically, we will provide inputs, technical assistance, extension services, land preparation services, and equipment directly to farmers.

What are your expectations for the year ahead?

The business environment is tough. The economy is in recession but we have faith in the Nigerian economy and will continue to invest here. If Nigerians lose hope and pull out their investments, no external investor will be willing to come here. We have established a new business, Dangote Sinotruk West Africa Co. Ltd., as an assembly plant for heavy-duty trucks.