Africa’s leading industrialist, Aliko Dangote, has announced plans to invest an additional $50 billion across the continent, expanding an investment programme that has already committed more than $25 billion to his existing businesses.
Dangote made the disclosure in Nairobi, Kenya, on Tuesday, September 29, a day before the planned groundbreaking ceremony for the Dangote East Africa Petroleum Refinery & Petrochemicals project in Lamu.
The planned investment marks what Dangote described as the next phase of the Dangote Group’s expansion, combining large-scale industrial projects with efforts to broaden African ownership of major businesses through the capital markets.
Speaking during a conversation with the Chief Executive Officer of the Nairobi Securities Exchange, Frank Mwiti, at the “Dangote Petroleum Refinery IPO High Level Investor Engagement,” the billionaire industrialist said Africa needed to move beyond small-scale approaches if it wanted to compete effectively in the global economy.
“We have already invested more than $25 billion, but right now, we are going ahead to invest an additional $50 billion.
“We want to create and generate wealth for Africans, to make sure that we defend our markets. And the only way to defend the market is not to take baby steps. It’s better we do big scale,” Dangote said.
Lamu refinery project
The announcement came as Dangote prepares to extend his group’s petroleum and petrochemical operations into East Africa.
The groundbreaking for the proposed refinery in Lamu is scheduled for Wednesday, September 30, although the project is facing a legal challenge over part of the proposed site.
The Malindi Environment and Land Court has directed parties to maintain the status quo on the disputed land until October 14 following a petition filed by 133 residents who claimed rights over the property.
The court order, however, did not prevent the planned groundbreaking ceremony from going ahead.
Dangote said he only became aware of the legal dispute after arriving in Kenya and seeing a media report on the matter.
He described disputes over land and other issues as part of the challenges that could arise in the course of executing major infrastructure projects.
How the project emerged
Kenya’s President William Ruto’s chief economic adviser, David Ndii, provided an account of how the Lamu refinery project emerged from discussions about Africa’s approach to industrialisation.
According to Ndii, African policymakers, financiers and business leaders had been examining ways of using the continent’s natural resources to drive industrial development rather than simply exporting raw materials.
Petroleum refining emerged from those discussions as one of the strategic opportunities for East Africa, leading to engagements involving Dangote, Ruto, Uganda’s President Yoweri Museveni and other regional leaders.
Ndii said a closed-door meeting in April examined the potential market for refined petroleum products in East Africa.
He put the addressable market at about 20 million metric tonnes annually, with the potential to rise to 30 million tonnes.
According to Ndii, the discussions eventually boiled the investment proposition down to three fundamental questions posed by Ruto: whether there was a market for the products, whether African capital was available to finance the investment and whether there was an entrepreneur with the proven capacity to execute a refinery of such scale.
With the answers to the three questions being affirmative, Ndii said Ruto asked: “Why would we fail?”
The response from those in the room, he recalled, was equally emphatic: “We cannot fail.”
Push for wider African ownership
Beyond expanding his industrial footprint, Dangote said he wanted his businesses to increasingly become vehicles through which Africans could participate in wealth creation.
He linked the planned expansion to the Dangote Group’s broader efforts to use the capital markets to widen ownership of its businesses.
The ongoing public offer for Dangote Petroleum Refinery, he told investors, was not primarily about raising additional funds for the company.
Instead, Dangote said the offering was designed to give more Africans an opportunity to participate in the value generated by large-scale industrial investments.
“It’s not because we need the money. No. It’s because we want to share this prosperity with everybody,” he said.
“The real purpose is for us to democratise wealth-making.”
The industrialist disclosed that the Dangote Group was prepared to progressively release more equity in its businesses as demand from investors increased.
The strategy would potentially give African investors greater exposure to large industrial enterprises while allowing the group to mobilise capital through local and regional financial markets.
‘Big scale’ strategy
Dangote’s latest investment announcement signals an expansionary strategy centred on large-scale industrial projects, particularly in sectors considered critical to Africa’s economic development.
His comments also reflect an argument that greater local ownership of major businesses could help retain more of the wealth generated by Africa’s expanding consumer and industrial markets within the continent.
The proposed Lamu refinery is expected to form part of this wider industrial strategy, while the Dangote Petroleum Refinery in Nigeria continues to serve as the group’s flagship investment in the downstream petroleum sector.
For Dangote, the immediate focus is not only on building more industrial capacity but also on ensuring that Africans participate more directly in the ownership and wealth created by that capacity.
As the group prepares to begin work on its East African refinery project, the industrialist is positioning the next phase of his expansion around two objectives: investing at significant scale across Africa and widening African participation in the ownership of its businesses.