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Dangote sees agriculture as having biggest growth potential

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Nigerian conglomerate Dangote is set to increase the amount of land it cultivates as it seeks to become more self-reliant and vertically integrated.

The move meets the aspirations of Nigeria's president, Muhammadu Buhari, who last week told the country's economic summit that there needed to be a focus on "made in Nigeria" goods to reduce dependence on imports and to develop an export business.

The country is currently dealing with a recent recession and stagflation, as well as issues caused by the collapse in oil and gas prices.

'Strategic goal'

In an exclusive interview with Agrimoney, Dangote Industries' group chief risk office, Dr Adenike Fajemirokun, said the conglomerate was "focussed on producing foods where we own the value chain".

"It is a strategic goal across all of our businesses," she says.

For the sugar business, this means increasing the current cane acreage in Savannah from 6,500 hectares to 23,000 hectares, while in Lau/ Tau in Tarawa State, a new greenfield project will see 17,000 hectares out of a total 29,000 hectares utilised for cane.

The company owns and runs the largest sugar refinery in the world.

Dangote has integrated supply chains across many of its businesses, and Dr Fajemirokun, who is speaking at the upcoming Agrimoney Agri Risk Forum, believes this approach allows it to be good at managing risk.

"We are not dependent on too many third parties or people having silo mentalities – they are open to how each part of the chain can have an effect."

Agricultural growth

While the group produces everything from oil and gas to cement, Dr Fajemirokun says the agriculture sector provides the biggest growth potential, specifically because of the value chain opportunities and the opportunities it provides in general for the country.

"As a business, we have a mission to provide for the needs of people. Our main drivers are to be self-sustaining and to create jobs – it is about what we can do for the community.

"As a country we have had a recent recession, so have been adapting our production to maintain affordability for consumers, such as producing sachets of sugar instead of larger bags."

While there may be a short-term additional cost to doing this, she says it should mean consumers stick with the company's brands over the longer term.

Being active in communities, visiting local markets, attending trade fairs and running its own consumer forums means the group is very close to customers and their changing requirements, adds Dr Fajemirokun.

Big potential

However, she says that while growth in Africa may currently be slowing, comparing consumption to other countries suggests there is a lot of growth potential.

For cement, for instance, sub-Saharan Africa uses an average of two bags of cement per person per year – still below the global average.

Dangote is continuing to invest and expand.

It is currently building a US$17bn refinery and fertiliser plant in Lagos which will start production in 2019, creating almost 300,000 jobs, according to Dr Fajemirokun.

It will produce 100% of the country's fuel requirements, with spare capacity to export, while the fertiliser plant will allow farmers to use home-produced product instead of imported fertilisers.

Dr Fajemirokun will be speaking at the Agrimoney Agri Risk Forum in London on 29/30 November about 'Doing business in Africa – quantifying and transferring risk in high-risk markets'. To book, call 0207 202 0900 or see www.agririskforum.com

By Emma Penny

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