Africa’s cement king
At the helm of the largest industrial conglomerate in West Africa, and the wealthiest figure on the whole continent, Alhaji Aliko Dangote has been heralded as the most influential black businessman in the world, and an inspiration to the rising generation of young African entrepreneurs. Written by Nicholas Charity.
Alhaji Aliko Dangote was announced as the richest man in Africa in March 2012, with an estimated net worth of US$11.2 billion. ‘Africa’s Cement King,’ as he was dubbed by Forbes Magazine, has built an empire over his 41-year-long career – spanning a number of industrial sectors and employing 11,000 people across 14 different countries.
Mr Dangote, who is married with three children, holds a number of prestigious awards and a wide array of accolades. He holds the second highest honour in the country, of Grand Commander of the Order of the Niger (GCON), and is currently President of the Nigerian Stock Exchange (NSE). In 2010 alone, he was named one of the 50 most distinguished Nigerians, as well as The Sun News’ ‘Man of the Year’, Entrepreneur of the Decade, BusinessWorld’s ‘Investor of the Year’ – and was rated among the top 40 African Challengers by the Boston Consulting Group.
Prior to starting the Dangote Group, the young Aliko graduated in Business Studies at the Al Azhar University in Cairo, and started his first business in Egypt in 1971. Mr Dangote had the support of a driven, well-connected family – his father, Mohammed Dangote, was a well-known figure in business and politics. His mother was the granddaughter of Alhassan Dantata, who was, himself, the wealthiest man in Africa when he died in 1955. In fact, it was a business loan from his uncle, Sanusi Abdulkadir Dantata, which gave Mr Dangote the opportunity to go into business in Nigeria in 1977, as a trader in sugar and cement.
His group commenced manufacturing operations in 1999 – catalysed by the acquisition of a failed Lafarge plant, followed by a rapid process of building capacity. Within its first four years of production, Dangote Cement was already a prominent player in the industry. The finishing move that set Dangote Group above the rest came in 2010 – with the floatation of Dangote Cement on the NSE – expanding Mr Dangote’s fortune by more than 550 per cent in the space of 12 months and making him the world’s highest gainer of that year. Dangote Cement and Benue Cement, also belonging to the group, now account for a quarter of the NSE’s total market cap.
When asked to reveal the secrets of his success, Mr Dangote told an interviewer for MTV that it is all about hard work and determination. “You should not take your business or job as something you must do. You must take it as part of your hobby,” he answered. Another factor for Dangote Group’s rapid growth, he says, is “the sheer amount of money that we have been investing”. “Because we believe in what we are doing, we try as much as possible to put in more equity than debt.” He also maintains that keeping one’s eyes on-target is essential. “We are a focused company. We don’t really go into things that we don’t understand,” he adds. And while Mr Dangote has never taken his sights away from the cement industry, he has successfully integrated the group into other areas, again reaching staggering levels of success. Dangote group has risen to control a major portion of Nigeria’s flour and sugar production, and boasts the second largest sugar refinery in the world at 1.44 million tons per annum.
Building up the business
Mr Dangote has often spoken up about the political and economic challenges that are inherent in Nigeria, including the government’s neglect to invest appropriately in infrastructure. As such, the country’s industrial outputs have long been limited to the oil and gas sector. Mr Dangote, who is dedicated to building Nigerian exports in other commodities, has never been undeterred by any challenge. Emblematic of the Cement King’s unwavering determination, he refuses to let the company’s growth be crippled by bureaucracy, and has implemented a number of crucial infrastructure projects to improve the self-sufficiency of the business.
“What we did was to look at these infrastructural deficiencies and look at how we can sort them out without waiting for the government,” he said in an interview for the Lagos Business School. “If you look at most of our plants, we generate our own power. We never use the national grid, because our generation is much cheaper.” The company has also built certain roads in the areas around its plants, and a 92-kilometre gas pipeline to its onsite power plant at the Obajana cement factory. “So, now we don’t have any problems with infrastructure,” he remarks. “If you wait for the challenges to be sorted out before you do business then you will never do business.”
Investing in Nigeria
As for his commitment to the growth of Nigeria’s industrial sector, Mr Dangote has answered the nation’s call to be self-sufficient in cement production, by almost single-handedly raising the domestic capacity from 1.8 million tons per year to over 25 million – and all within the past decade. Dangote Cement opened its newest cement plant in February 2012, having invested US$1 billion to boost Nigeria’s capacity by 10 million tons, representing an additional 40 per cent from a single plant. The plant – located at Nigeria’s largest economic hub in Ibese, near Lagos – provided 7,000 new jobs directly and transformed the sector, which had previously survived on 80 per cent importation, into an export revenue-generating industry. “We are working towards making the company one of the eight biggest producers of cement in the world,” Mr Dangote said at the opening ceremony. President Goodluck Jonathan, who performed the ceremony, described the plant as a ‘quantum leap’ for the industry.
With the firm intention of attending to the basic needs of the Nigerian people, Mr Dangote has specified that his main focus, as well as providing value-added products to the market, is to offer much needed employment opportunities within the country. In terms of investing in the economy, he regards the group’s high rate of investment with pride, and sets himself apart from other players in the market, who he alleges are damaging the economy with their reluctance to invest.
Dangote has increased its operations in recent years to produce more than 44 million tons in total, supporting its growth with the establishment of a network of cement terminals in Ghana, Sierra Leone, Ivory Coast and Liberia. The company’s production has risen to such an extent in Nigeria that Mr Dangote has implored government bodies to absorb the overcapacity by investing in infrastructural projects.
As well as his aggressive approach to business, Mr Dangote is known for his philanthropic work. In the past five years, Dangote Foundation has donated over NGN 400 million (US$2.5 million) to community projects and over NGN 600 million (US$3.75 million) in crisis support, as well as supporting an ongoing project for the drilling of boreholes – providing water access to a great many communities around the country.
But what Nigeria needs above all else, he says, is confidence in the market. Mr Dangote has faith in the Nigerian economy and describes the country as the world’s best-kept secret for business opportunities. “What Nigeria needs to do is to create liquidity by inspiring confidence in investors. We need [investors] to give all the support that [they] can give, because this market belongs to all of us. Whether you have one share or one million, we are all members of this market,” he said to brokers in May 2012, at his acceptance speech for the presidency of the Nigerian Stock Exchange.
Empowering the people
Despite Nigeria’s projected six per cent growth rate this year, analysts warn that the gap between rich and poor people is only widening. Reiterating his desire to tackle this issue, Mr Dangote has always been driven by the desire to provide jobs, and has so far put 11,000 people in employment. However, more importantly, he recognises the need to spread an entrepreneurial spirit, and hopes to see more Nigerians start businesses of their own. Aiming to inspire the next generation of budding businessmen during his MTV interview, he advised: “The problem with young people today is that they just want to jump and see themselves up there overnight, but it doesn’t really happen. You have to be focused as a person, and be dedicated to whatever you are doing. I think you need to be very focused and once you believe in what you are doing, if you take it as a hobby you will do it better.”
He has expressed regret that the opportunity simply isn’t available for many people – due in large part to the country’s crippling lack of infrastructure. Electricity, he says, is the most fundamental tool for change. “When you look at it, power alone can create a large middle class,” he remarked. “GDP will grow by more than nine per cent if the government fixes the power within the next two years. You will see many people come out of the poor segment and into the middle class. That’s why I keep saying that, if there is enough power today, you will see 60 per cent of young graduates who are creative go and build businesses of their own.”
Mr Dangote announced in April 2012 that he was planning a US$7 billion investment programme for the next four years, focused on Nigeria’s power, petrochemical and mining sectors, as reported by Ventures Africa. Therefore, with a new focus on providing utilities, Mr Dangote’s company will soon become an IPP itself – producing 2 GW of power for the national grid.
On his path to cementing growth in Nigeria, Aliko Dangote has proven his commitment to developing an economic climate where his countrymen can flourish. The power to take things further, he maintains, is in the hands of the private sector, as he has called on local investors to be the force of inspiration. “It is not all about government,” he said. “What drives foreign investment is local investment. We in the private sector need to do our bit and we need to invest in our economy.”
To the foreign investors observing the market from afar, he has called upon them to reach out and actually take a close look at the opportunities that are available on the continent where he has built his empire. “I can assure you that you can make more money in Africa than you can in Asia, and Nigeria is better than any other part of Africa in terms of return on investment,” he says. “But you have to actually believe in what you are doing and you have to have a strategy for achieving your vision. Once you have this, the sky is the limit.”