A GRI Power Brokers feature on Nigeria’s Aliko Dangote. In a continent where few billionaires take risks venturing into manufacturing, Dangote, the continent’s richest man, has seized the mantle as Africa’s
industrializer. –

Born in 1957 into a Muslim family of successful merchants that traded in groundnuts, the leading export commodity for Nigeria before the prominence of oil, Dangote seemed pre-destined for a career in commodities. Starting his own trading business after acquiring a business degree from Egypt’s Al-Ahzar University in 1977, Dangote quickly diversified his interests across commodities that included rice, sugar, salt, flour and cement. It was the 1980s however that would arguably be his most formative years.
Calamitous 1980s
Post-independence Nigeria soon became dominated by the so-called politics of the Big Man, where politicians, military generals and tribal leaders spread across the disperse ethnic groups jockeyed for a stake in the most lucrative source of income – oil.
Yet despite the country rapidly urbanizing – and awash with vast sums of oil revenue – there was little capacity to produce even basic commodities such as flour and sugar. Dependent on importing these items, Nigeria quickly amassed an unsustainably high level of debt to GDP – from 1.9% in 1960 to 92.6% by 1987.
When the current sitting President of Nigeria General Muhammadu Buhari had his first stint as president in 1983, courtesy of the country’s 5th military coup since independence, he faced the ominous task of staving off both political rivals and the international credit institutions. He lasted all but 20 months. Fiscal mismanagement, endemic corruption and collapse in oil revenues as a result of the OPEC crisis, pushed debt levels upwards of 400% of income by the late 1980s, forcing Nigeria over the fiscal cliff. Exceeding the World Bank’s guidelines of 30% total debt ratio, by 1986 Nigeria was undertaking a structural adjustment program to cut its overall debt exposure.
It was in this environment that Nigeria became infamous for financial mismanagement of epic proportions. From failed wheat import-substitution-industrialization program, spending vast sums on irrigation with little to show for it, to arguably the most infamous blunder, the mass over-importation of cement for a public housing scheme.
The latter, known as the “cement aramada,” resulted in 36 bulk carriers carrying in excess of 20Mt of cement, log-jammed in and around the Port of Lagos due to the ports 6Mt capacity. The fiasco resulted in ships sitting in port for upwards of 6 months, racking up hundreds of millions of dollars in demurrage fees. The cause of the blunder, however, was the over-issuing of import licenses by corrupt public officials.
From merchant to manufacturer
It was in this high risk environment that Dangote cut his teeth. After a study trip to Brazil in the mid-1990s, he shifted his focus down the value chain into agro-processing and manufacturing. After years spent importing Brazilian sugar, it was only natural that his first commissioned facility would be a sugar refinery. Coming online in 2001 and supported by his own 200,000-hectare sugar plantation, the refinery has expanded to become one of the largest refineries in the world, capable of refining 1.44Mt per year.
Buoyed by the newly elected support of President Olusegun Obasanjo in 1999 and his drive to protect infant industries through a range of protectionist measures, including high tariffs, legislating price drops and tax holidays for investors in manufacturing, Dangote soon followed in other commodities, acquiring flour mills and textile and food manufacturing facilities.
Yet it was cement that would eventually make him Africa’s richest man. Recognizing the immense extent of demand for cement in Nigeria, he acquired a struggling state owned cement plant in 2000 together with limestone quarries. By 2004, Dangote looked to expand his operations, undertaking to build one of the largest cement plants in world, Obajana, capable of 10Mt per annum.
During this period, however, Nigeria was again facing a financial crisis of historic proportions, having attained the dubious title of being, along with Iraq, the most indebted nation in the world – with total debt at $36 billion against total federal government revenue of $9 billion.
With domestic banks basically insolvent, Dangote’s capital expansion ambitions would depend on raising capital outside of Nigeria, cashing in much of his personal real-estate holdings and assets to the tune of $319 million. Together with a World Bank loan of $480 million, the ambitious Obajana plant was realized. A reprieve and debt cancellation agreement by the Paris Club followed for Nigeria in 2005, cutting the country’s total debt by $18 billion; with interest, this represented a 60% reduction in total.
“There is no right time to invest”
For Dangote, however, the commissioning of Obajana plant was far from smooth sailing. Experiencing significant delays and cost over-runs as result of the remoteness of the build, necessitating everything from constructing a gas power plant, gas pipe-lines, to 700 houses for his workers, pressed the Dangote Group to the hilt.
Spurred by the untapped potential in Africa, the Group has managed to grow from $3.3 billion market cap in 2008 to $17.3 billion in 2016, with interests spread across a range of agro-processing and manufacturing sectors, including flour, sugar, salt, cement, coal, steel, oil and gas, fertilizer, as well as specialized logistics services. Employing over 20,000 employees and accounting 25% of the Nigerian Stock Exchange, Dangote’s overall goal is to reach a market cap of $100 billion by 2020. His short term plans, meanwhile, include listing on the London Stock Exchange once governance criteria have been met.
With Africa’s rapidly urbanizing population said to increase from 1 billion to 2.5 billion by 2050, and recognizing the already unprecedented growth in shopping malls across Africa, cement and construction should continue to drive Dangote’s success. In 2015, for instance, the group saw revenue climb 26%, while profits surged 15% to $919 million. Cement production volumes grew by 35% to 19Mt, with production capacity increasing from 22Mt to 44Mt, an increase of 87% year on year.
Accounting for a whopping 60% of Nigeria’s burgeoning cement market, Dangote has expanded his operations across fourteen African countries to include, amongst others, Ghana, Kenya, Tanzania, South Africa and Ethiopia. He has also set his sights on Asia. By 2019, he says, the group can claim a 28% share of Africa’s total cement production capacity. This would make Dangote Cement the sixth largest producer in the world.
Dangote’s philosophy pivots on continual expansion and the plowing back of virtually every cent. Currently, the group has $16 billion in capital projects underway, including its flagship $14 billion refinery project, set to become the fifth largest crude oil, polymer and fertilizer complex, capable of producing 650 000 barrels per day. The refinery plugs an important gap in an oil rich country that has virtually no refining capacity or facilities, despite being Africa’s largest producer. This should also cover Nigeria’s demand for oil exports, which is roughly 450,000 barrels per day.
Looking ahead, moreover, it is hoped the refinery will play a key role in exporting refined products to the West African region, earning the country $6.5 billion in foreign exchange earnings per year. Yet the key test for the sustainability of Dangote’s strategy, however, is whether Sub-Saharan African countries, including Nigeria, will be able to diversify from the over reliant dependence on natural resources rents, driving recent consumer driven growth. If that happens, Dangote’s remarkable fortunes could soar even higher.
GRI Power Brokers features high-level individuals having a positive impact on political risk environments. Through interviews, in-depth analysis and insider profiles, GRI explores how power brokers are affecting the distribution of political or economic power, offering unique insight into those individuals that are shaping market trends in all corners of the world.