By Peter Egwuatu
Dangote Industries Limited (DIL) has signed about $400 million (N60 billion) value of investment with the Government of Zambia in accordance with the Investment Promotion and Protection Agreement of the country.
According to a statement from the company, the signing ceremony took place last weekend in Zambia, thus marking a significant milestone in Dangote’s quest to establish a cement plant in that country.
The Investment Promotion and Protection Agreement is a requirement for all major investors in Zambia, which offers them additional incentives and safeguards their investments in case of changes in legislation.
In his remarks at the occasion, the statement stated “ President of Dangote Group, Alhaji Aliko Dangote, expressed delight that negotiations between both parties over the proposed investment had finally yielded fruits with the signing of the agreement.
“As Dangote Industries Limited’s investment is among the largest investments outside the traditional mining sector and Chinese investments in Zambia, it has understandably attracted a lot of attention,” he said.
“The fact that it is an African investment also generates a great deal of interest. Let me assure you that we are equal to the task; we have similar investments in more than 10 other African countries. We spent about nine months negotiating and I am delighted that we are now at a point where all parties are agreeable to the deal.”
According to Dangote, the proposed cement plant in Zambia with an installed capacity of 1.5 million metric tonnes per annum, will be up and running 27 months from February/March 2011. He said DIL’s choice of Zambia for this multi_million dollar investment is quite strategic, noting that the World Bank had in 2010 named Zambia as one of the world’s fastest economically reforming countries. Zambia, he recalled, is also rated as one of the most highly urbanised countries in sub-Saharan Africa with 44 percent of the population concentrated in a few urban areas.
He said this high level of urbanisation poses a challenge to the government in terms of how to provide adequate infrastructure for the people. Citing a report by the McKinsey Global Institute issued in June 2010, which stated that Africa would require at least $46 billion in spending annually to meet infrastructural needs Dangote said it has become quite obvious that African governments alone cannot hope to meet this demand.
“It is in this light that we have decided to invest in Zambia,” he explained. “We are motivated to create an African success story because we believe that entrepreneurship holds the key to the future economic growth of the continent. We are spurred on by the fact that the rate of return on foreign investment is higher in Africa than in any other developing region.
“We are also particularly encouraged with the Zambian government’s robust economic diversification programme designed to reduce the reliance on the copper industry, which is the mainstay of the economy. Our investment in cement in Zambia will help to complement the government’s efforts in stimulating economic growth and creating jobs.”