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Border closures will not stop Dangote expansion
Dangote Industries supported the Nigerian government's decision to close the Lagos-Benin Republic borders, despite a disruption in trade.
Despite the disruption of trade activities by the Nigerian government’s shutdown of the Lagos-Benin Republic borders, Dangote Industries supports the government decision, group executive director Devakumar Edwin told The Africa Report.
“We were taken by surprise and had cement in the border for 30 days, then 45 days. We then had to start pulling them back because the cement will get caked. But we felt that this is a sacrifice we make in the larger interests of the country,” he said.
He continued: “If we do not protect our borders and if we do not develop a sound manufacturing base, we will continue to import. Yes there are good quality, good things coming into the country and they’re relatively cheap. Initially it may be painful to shut the borders and focus inwardly. But if we do not, the country’s manufacturing base will be weak and we will still be dependent upon imported goods.”
West African trade
For Dangote Industries, moving goods like cement by road from Nigeria where they are manufactured to Ghana, where there is a big market, is “unviable”. According to Edwin, this is expensive because the governments of Togo and Benin complained of the pollution that the trucks will bring to the environment as well as the toll on the roads.
Edwin explains: “We had to talk with the presidents and then they said, okay we will allow you, but this is the fee you have to pay.”
On paper, this goes against the basic principles of ECOWAS, the economic community of West African States.
There are questions around ECOWAS trade agreements and the rights to free movement within the West African bloc, as well as for the African Continental Free Trade Agreement (AfCFTA), which Nigeria was a late signatory to.
By shutting off the border, Nigeria hopes to develop its own agricultural and manufacturing base, but it is also shutting off Nigerian companies from West African markets where they are at an advantage.
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The IMF has forecasted a 3.4% inflation in Nigeria thanks to the COVID-19 pandemic.
Early forecasts showed that between 5 million and 25 million jobs could be lost globally with foreign direct investment flows dropping by 30% to 40%. This presents a chance for the structure of global trade to change, at the very least temporarily, and protectionism might be the new order of the day.
The policy does have plenty of support in Nigeria. Speaking to us on a visit to the Paris Agricultural Fair, the Governor of Kwara State AbdulRahman AbdulRazaq says, “It is working – you just have to see the wealth of rice growers in my state, the border closure is working”.
Dangote’s expansion plans
Dangote has moved on to invest individually in newer markets.
“Right now I’m putting up a grinding plant in Côte d’Ivoire, I’m putting up a grinding plant in Takoradi in Ghana. I’m about to start another grinding plant in Tema, also in Ghana. I’ve just started a similar grinding plant in Togo, I’m about to start a similar grinding plant in Kano, we have secured the land, everything, the permits, we’ve just completed negotiating the prices. Gabon, we have already placed all documents for a new grinding plant, and Senegal we are also looking at expansion of capacity. And in Niger, a fully integrated second plant is in conversation. So if you look at it in the West African markets, I will not slow down. In fact the number of plants I am building, nobody is building that number in this region,” he said.
There is still a fear that the AfCFTA will not pass or work the way it is supposed to.
But Dangote Industries hopes, through its expansion, it will be immune from hiccups in the rollout.