Aliko Dangote began the business right around four decades as an just an exchanging endeavor – concentrating on items, for example, bond, sugar, flour, salt and fish – and later wandered into full-scale producing. Today the business is a behemoth with interests in concrete, sugar, salt, pasta, drinks and land, to give some examples.
Cement is one of Dangote’s best items, and the organization is right now Africa’s greatest maker. It has existing and arranged operations in 16 African nations, including Nigeria, Senegal, South Africa, Cameroon and Ethiopia. Dangote Cement’s unaudited comes about for the half year, 30 June 2017, came to ₦291.4bn (US$924m), while turnover from whatever is left of the landmass remained at ₦124.4bn ($394m).
In any case, it appears that notwithstanding for one of Africa’s wealthiest men, owning an African organization hasn’t generally been smooth cruising. Talking amid a session at the current Afreximbank yearly broad meeting, held in Rwanda’s capital Kigali, Dangote distinguished a portion of the worldwide development leaps, his organization needed to overcome.
One of these has been lawful activity by nearby bond organizations who weren’t content with another competitor. Some of these cases delayed for whatever length of time, and even wound up in the court.
To mitigate against the potential adverse effects of a change in power, Dangote advises foreign investors to decline concessions or incentives not available to other players in their sector. This means they cannot be singled out when a new government introduces policy changes – the entire sector would be impacted.
Dangote said foreign companies typically wait for the results of the next election before entering a country. However, once the election is completed, they again postpone their investment decision as they wait for the government to stabilise.
But this is not how Dangote does things. “With us as Africans, we are used to this, we are not going to wait for any election outcome, we will continue to invest. And even if there is a new government, we are not going to wait and see the stability of that government. We will continue in the hope that they will do the right thing,” he explained.
“In a country like Nigeria, from 1977 to date, we’ve seen 11 governments. And I think so far, so good – we’ve not been thrown out, yet.”
Becoming an electricity producer
Many African countries suffer from inadequate grid-connected electricity to drive industrialisation. However, Dangote Cement has overcome this challenge with a simple solution – generating its own electricity to power its plants.
“We are power producers… In the entire Africa, only in South Africa and Ethiopia, we don’t produce power. [In all the] other countries, we produce our own power for our businesses.”
Dangote added that in Nigeria, which is known for its significant electricity deficit, it costs the company three times less to generate its own power than what it would have paid to buy it from the national grid.
Cross-border trading challenges
Transacting across borders in West Africa is “very, very tough”, according to Dangote, due to the numerous extra costs and transport challenges.
For instance, the Dangote Cement plant in Nigeria’s Ogun State is located much closer to countries such as Benin, Togo and Ghana, than to some major Nigerian cities – Ghana is about 450km from the factory, while Nigeria’s capital Abuja is 670km. However, despite the proximity of these countries and the fact that they rely on imported cement from as far away as China, it has been challenging for the company to sell its cement there due to various border charges that can inflate costs by as much as 30%.
According to Dangote, the markets in some individual African countries are often too small to justify investing in a dedicated factory. To benefit from economies of scale, manufacturers therefore need to be able to easily sell their products across borders.
Dangote said the new $11bn oil refinery and petrochemical complex his group is constructing in Lagos will produce enough fuel and polypropylene (a common component of plastic products) to cater for the entire West Africa region. “In refining, the margin is not that much. So the only way you can make money is by volume of business.”
He further highlighted the challenges associated with moving staff from one African country to another. As a Nigerian, he requires a visa for over 30 countries, while a British passport holder needs a visa for only a handful of African territories.