Founded in 1981 as a trading enterprise by Aliko Dangote, The Dangote Group is the largest conglomerate in West Africa. With annual revenues in excess of US$4.1 billion, the Dangote Group is also one of the largest on the African continent. Aliko Dangote, the Group Chairman and CEO, is currently the richest person in Africa with an estimated net worth of US$11.1 billion. He started the Group with a US$3,000 loan from an uncle to venture into sugar and other consumer goods trading. Later, his enterprise would gradually expand into trading other commodities such as rice. In 1981, when import licenses were required to import bulk commodities, Dangote established two business enterprises, Dangote Nigeria Limited, and Blue Star Services and sought to acquire import licenses for various commodities including steel, baby food, and aluminium products. He then added the shipping and the importing of cement to his group’s portfolio, setting himself on new pedestal where he had to compete with Lafarge, a French multinational cement manufacturing company that produces the bulk of the cement used in the continent.
Currently, the group has over 18 subsidiaries, operating in ten African countries. The major subsidiaries are Dangote Cement, Dangote Sugar, Dangote Fertilizer, Dangote Pasta, National Salt Company (NASCON) Dangote Classic Seasoning, Dangote Oil and Gas, Dansa Foods, Dangote Transportation, Dangote Agro-sacks, Greenview Development, Savannah Sugar and MHF Properties.
Headquartered in Lagos, Dangote Cement engages in the manufacture, preparation, import, packaging, and distribution of cement and related products in Nigeria and has plants or import terminals in 9 other African countries. The Company operates through two segments: Nigeria and Pan Africa.
The Company, through its subsidiaries, is engaged in exploration, coal production, cement grinding, power production and limestone mining operations, among others. Its Nigerian operations include its three manufacturing plants in Nigeria: Obajana Cement Plant in Kogi State, Gboko Cement Plant in Benue State and Ibese plant in Ogun State. Its Pan African operations include its factories or import facilities in Cameroon, Ethiopia, Ghana, Senegal, South Africa, Tanzania and Zambia. It is also focused on operating in Congo and Sierra Leone. In Nigeria, Dangote Cement Plc is the largest company by market capitalization while the company’s overall operations make it the largest cement producer in Sub Saharan Africa (SSA) with an installed capacity of 45.6 million tonnes per year across operations in 10 African countries.
The largest company traded on the Nigerian Stock Exchange, Dangote Cement Plc was formerly known as Obajana Cement Plc and changed its name to Dangote Cement Plc in July 2010. Obajana Cement Plc was incorporated in 1992. It is listed on the Nigerian Stock Exchange in October 2010 and as of August 13, 2014, accounts for 20% of the total market capitalization of the Nigerian Stock Exchange. Aliko Dangote has invested US$6.5 billion into the company between 2007 and 2012.
In October 2019, Dangote Cement plc has signed an agreement with General Electric to Modernize Seven GE LM6000PC Aeroderivative Gas Turbines and Install Its Asset Performance Management (APM) Digital Solution at Dangote Cement Plants in Obajana and Ibese, Nigeria in a move believed to help one of Africa’s largest cement company improve efficiency and reliability, both of which are essential to executing the plants’ business strategy. The Contract Includes Service Agreement Extension for Additional 50,000 Operating Hours for Each of the Seven GE LM6000PC Aeroderivative Gas Turbines. The APM Digital Solution supplied by GE is expected to help the company reduce unplanned downtime and enhance operational Performance while GE’s Total Plant Solutions Will Improve Power Supply Efficiency and Help Extend the Life of the Cement Plants.
In March 2020, the company obtained the approval of its board of directors to access the capital market for a medium-term debt funding under its N300 billion (US$818.1 million) bond registration programme. The cement firm in a statement filed at the Nigeria Stock Exchange (NSE) said it intended to issue its maiden series of bonds, tagged ‘Series 1 Bonds’, subject to obtaining regulatory approvals and favorable market conditions. And in June 2021 the company announced the successful issuance of 50 billion Series 1 Fixed Rate Senior Unsecured Bonds under its new N300 billion (US$729m) Multi-Instrument Issuance Programme. The bonds were issued on May 26, 2021, at coupon rates of 11.25%, 12.50% and 13.50% for the 3, 5 and 7-year tranches respectively. Despite market headwinds, the bond issuance was well received and recorded participation from a wide range of investors including domestic pension funds, asset managers, insurance companies and high net-worth investors. The proceeds of the bond issuance were to be deployed for the company’s expansion projects, short-term debt refinancing and working capital requirements. Aside from this first issuance of a traditional bond under the new Multi-Instruments Programme, Dangote Cement has registered a programme enabling it to consider different types of fixed income instruments to cater for different type of investors.
In January this year, the cement producer, bagged AA+(NG) and A1+(NG) ratings from Global Credit Ratings (GCR). GCR in its notice, affirmed the long-term and short-term national scale issuer ratings of AA+ (NG) and A1+(NG) respectively, assigned to Dangote Cement Plc, as well as with the outlook accorded as Stable. In addition, the cement firm’s N100 billion (US$262.12m) Series 1 Fixed Rate Bond has been assigned AA+. This rating signifies that Dangote Cement’s credit profile and liquidity is very strong, with low risk of default. The rating accorded to Dangote Cement is an investment-grade rating, signifying that it is an attractive investment vehicle.
Dangote Cement PLC. has a long-term credit rating of AAA by GCR and Aa2.ng by Moody’s due to its market-leading position, significant operational scale, and strong financial profile evidenced by the company’s robust operating and net profit margins relative to regional and global peers, adequate working capital, good cash flow, and low leverage
Built at a cost of US$2.5 Billion, the Dangote Fertilizer Plant is Africa’s largest Granulated Urea Fertilizer complex. The plant occupies 500 hectares of land in Lekki Free Trade Zone, Lagos Nigeria. Dangote Fertilizer complex was established to produce 3 million metric tonnes per annum of urea fertilizer in phase 1. Its output will be critical in satisfying the existing demand which is pegged at about is 1.5 million metric tonnes as well as cater to demand in other markets in the African continent. Dangote Fertilizer works with Farmer Associations, Corporate Farms, NPK Blenders, NGO/development partners and State Governments all over Nigeria, as well as governments across Africa and beyond who are looking for sustainable approach to improve soil and farm yields.
“This plant in five-ten years will change Nigeria agriculture and economy, as the efforts by Dangote Industries will help to ward off the crisis encountered in local production which has impacted agriculture,” the Minister of the Federal Ministry of Agriculture and Rural Development (FMARD), Alhaji Sabo Nanono during a tour of the fully completed facility in 2020, said.
“The new fertilizer plant will make fertilizer available to Nigerian farmers, now we can forget all those merchants of fertilizer that have been confusing this country for the last 40 years, as we have received an answer from somebody who bypasses them and makes fertilizer available to the farmers.”
Dangote Group recently announced plans to begin the export of its first shipment of fertilizer from its new fertilizer plant at the Lekki Free Zone in Lagos, to the USA and Brazil. Initial shipment from one of the world’s biggest fertilizer plant, which has the capacity to produce 3 million tonnes of urea and ammonia per year, is expected to start in late June or early July. Aliko Dangote said that the new fertilizer plant will export its first shipment in late June or early July, to Louisiana, while the majority of exports from the plant are expected to go to Brazil, adding that it will also be able to supply all the major markets in sub-Saharan Africa. Aside from fertilizer production, the company is already working to support the farmers with training on application of the fertilizer and even establish laboratories across the country for proper soil examination.
Dangote Sugar Refinery Plc commenced business in March 2000 as the sugar division of Dangote Industries Limited. It is a world class 1.44MT/PA facility located at Shed 20 NPA Apapa Wharf Complex, at Apapa Wharf Lagos. The facility was the first sugar refinery to built in Nigeria, with an initial refining capacity of 600,000MT of raw sugar per annum.
In December 2007, DSR Plc successfully exported its first consignment of 1,500MT of sugar to Ghana. Dangote Sugar Refinery is QMS, (ISO 9001:2008), FSMS, (ISO 22000:2005), OHSMS, (ISO 18001:2007) and (FSSC 22000) certified.
Over the years, the facility has undergone two major upgrades which turned it into one of the largest sugar refineries in the world with 1.44MTPA refining capacity, at the same location. The refinery is powered efficiently with gas and/or Low-Pour Fuel Oil (LPFO) with 16MW of in-house power generating capability. The Dangote Sugar refinery, produces 45 ICUMSA Vitamin A Fortified refined granulated free flowing crystal white sugar, packaged and distributed in 50kg, 1kg, 500g, 250g and non-fortified granulated sugar in 50kg bags. The sugar sold under the brand name Dangote Sugar is loved and preferred over any other sugar brand in Nigeria by consumers.
The facility and production processes are operated in line with regulatory and international standards, and can accommodate requests for special products and packaging from customers. The sugar brand is a leader with over 70% of the Nigerian sugar industry market share and are trusted by the various industries it serves. With high volume capacity warehouses at strategic locations across Nigeria, the company has been able to optimize supply chain opportunities by being close to its markets and guaranteeing a very fast and reliable delivery service.
Dangote Oil and Gas
Estimated to hold 37 billion barrels of proven oil reserves, Nigeria is the second biggest oil-rich country in Africa, after Libya. Nigeria is, however, dependent on imported refined fuel products due to lack of domestic refining capacity. The soon to be launched Dangote refinery will double Nigeria’s refining capacity and help meet the increasing domestic fuel demand, while generating foreign exchange through exports. With a capacity of 650,000 barrels per day (BPD), the integrated refinery project under construction in the Lekki Free Zone near Lagos, Nigeria is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility upon completion in 2022. The project as a whole is estimated to be cost about US$19 billion.
The processing facilities at the refinery include a crude distillation unit (CDU) and associated facilities, a mild hydrocracking (MHC) unit, a residual fluid catalytic cracking (RFCC) unit, a naphtha hydrotreater, and a gasoline hydrodesulfurisation (HDS) unit as well as alkylation units. The refinery complex will also house sulphur recovery and hydrogen generation facilities and a polypropylene unit. Comprising two steam methane reformer (SMR) units, the hydrogen generation facility will generate 200,000Nm³/h of hydrogen and steam to produce sulphur-free fuels. Other processing units include the STRATCO® alkylation unit, the MECS® sulphuric acid regeneration (SAR) unit, the MECS® DynaWave® sulphur recovery unit, and the BELCO® EDV® fluid catalytic cracking unit.
The infrastructure facilities include a pipeline system, access roads, tank storage facilities, and crude and product-handling facilities. The Pipeline Infrastructure at the Dangote Petroleum Refinery will be the largest anywhere in the world, with 1,100 kilometers to handle 3 Billion Standard Cubic Foot of gas per day. The Refinery alone has a 400MW Power Plant that is able to meet the total power requirement of Ibadan DisCo. A marine terminal, including a breakwater, jetty and harbour, has also been developed as part of the project. Other facilities developed to support the project include an administrative building, guardhouses, fire station, and pump stations. Furthermore, the refinery complex will house a fertiliser plant, which will utilise the refinery by-products as raw materials.
According to the company, the Refinery will meet 100% of the Nigerian requirement of all refined products and also have a surplus of each of these products for export. Dangote Petroleum Refinery is a multi-billion-dollar project that will create a market for US$11 Billion per annum of Nigerian Crude. The integrated refinery and petrochemical project is also expected to generate 9,500 direct and 25,000 indirect jobs. As a way of supporting the project, Nigeria’s Federal Executive Council (FEC) approved the acquisition of 20% minority stake in the project by state-owned Nigerian National Petroleum Corporation (NNPC) for US$2.76 billion in August 2021.
Nigeria’s Most valuable Brand
Dangote Group as a whole was estimated to have a revenue in excess of US$4.1 billion by 2017 and boasts of a workforce of over employees 30,000 employees. With such staggering figures, its not surprising that Dangote Group emerged the Most Valuable Brand in Nigeria in 2020 for the third year consecutively according to the outcome of the 2020 edition of Annual Brand Evaluation, “TOP 50 BRANDS NIGERIA”.
A brief summary of the 2020 report reveals that Dangote Group topped the list of the Most Valuable Brand 2020, followed by MTN which also doubled as the Most Valuable Multinational and Telecom Brand. The emergence of Dangote brand as the most valuable for the third time in Nigeria is coming a year after the company was named the most admired African brand, of African continent origin, by consumers in the Continent.
AfCFTA herald new opportunities for Dangote
Dangote Industries Ltd had announced in the beginning of the year that its cement expansion plan and fertilizer investments will open new trade routes for the company and Nigeria under the African Continental Free Trade Area (AfCFTA) trade deal that kicked off at the beginning of this year. The African Continental Free Trade Area is an ambitious trade pact to form the world’s largest free trade area by connecting almost 1.3bn people across 54 African countries. The agreement aims to create a single market for goods and services in order to deepen the economic integration of Africa. The trade area could have a combined gross domestic product of around US$3.4 trillion which Dangote can tap into especially for its leading products from sugar, cement, and now refined petroleum products.
Already, the cement company, despite an installed capacity of 29.3Mta in Nigeria, is targeting an expanded entity in-country and in Cameroon, while new plants will soon be ready for commissioning in Niger, Benin, Ghana, Cote d’Ivoire, and Togo. According to President/Chief Executive, Dangote Industries Ltd, Aliko Dangote, Africa needs to deliberately improve its per capita consumption of cement in order to aid infrastructural development by stimulating further demand and forcing down the cost of the commodity. For Dangote Industries Ltd, moving goods like cement by road from Nigeria where they are manufactured to Ghana, where there is a big market, is “unviable”, hence the need for new plants that will open multiple trade routes.
Dangote has set itself apart as a leader in manufacturing excellence in the continent. It has ventured into new territories, creating new business ventures that are impacting the lives of millions of Africans from Nigeria in the west to Ethiopia in the North and Zambia in the South. With future projects lined up not only for Nigeria but also for other parts in the continent, Dangote Group is certainly poised for even more success in future. Its success is enough proof that Africans are capable of building successful billion dollar companies with little to no help from outside players, we just need to be bold and ambitious like the Dangote Group.
This feature appeared in the December 2021 edition of CEO Business Africa magazine. You can access the full digital magazine HERE