The richest man in Africa, Aliko Dangote, is contemplating to invest in the Sugar industry in Ethiopia.
The Ethiopian government has invited the Nigerian business tycoon to invest in the sugar manufacturing sector. Dangote Industries has built the biggest cement factory in East Africa in Ethiopia that started production in June 2015.
Deep Kamara, managing director Dangote Industries Ethiopia, told The Reporter that in a recent discussion between Prime Minister Hailemaraim Dessalegn and Aliko Dangote investment in the sugar sector was a point of discussion. “While they were discussing the yield of sugar and the capacity Ethiopia is building Mr. Dangote took up a position that he would like to see the opportunity to invest in the sugar capabilities in Ethiopia. It is still in the conceptual stage I should say,” Kamara said.
The Ethiopian government through the state-owned the Ethiopian Sugar Corporation is making hefty investments on sugar industries development. Aiming to become one of the top ten sugar producing countries in the world by 2023, ESC is building ten sugar factories in different parts of the country. The ambitious plan aims at boosting annual production capacity from the existing 300,000 metric tons to a staggering four million.
However, the government is facing budget constraint to finance the completion of the ongoing construction of the sugar factories. In addition to looking for loans, the government is trying to attract foreign companies to partner with ESC.
Kamara said Dangote expressed his interest to invest in the Sugar sector. “Within the group we have capability for sugar manufacturing.” However, he said it is yet to be decided whether to buy stake in the existing sugar factories or set up an independent sugar manufacturing plant. “Both options are open for discussion but as I said the discussion is at an early stage and the details have to be worked out,” Kamara said.
Kamara said that Dangote is very optimistic about Ethiopia and wants to continue investing in Ethiopia.
Dangote has set up a cement factory in Ethiopia at a cost of 600 million dollars. The factory, which has an annual production capacity of 2.5 million tons of cement, began running in June 2015. The factory lies on 134 hectares plot of land in West Shoa Zone, Adaberga Wereda, near Muger town, 85 km west of Addis Ababa and employs 1,500 workers.
“Dangote Cement is well established in Ethiopia and it is doing very well. We are one of the market leaders in the Ethiopian cement market. We have customer acceptance based on product quality and service. We could have done better unfortunately due to some circumstances the trend has not really gone to where we have expected it to be. Going forward things are improving and we will be doing much better,” Kamara said.
Dangote Cement is currently building a third silo and PP Bag manufacturing plant. The PP Bag manufacturing plant, which is being constructed at a cost of 19 million dollars, will have an annual production capacity of 120 million cement bags.
“We are building a PP Bag factory almost double the capacity of our requirement. Not only for us but we would like to export and service the local market with our PP Bag capability,” Kamara said.
It will take six to eight months to complete the construction of the third silo. The factory also hopes to finalize the PP Bag manufacturing plant by July this year.
Dangote Cement has a plan to build a second cement manufacturing plant. “It is not immediately on the chart because we have not yet reached our full capacity. We are looking at some technological improvements which would help us enhance our capability by 15-20 percent to optimize our cost. Once that is done we will look at the second line.”
The road to investment in Ethiopia has not been a bed of roses. There are obstacles hindering the progress of Dangote’s investment in Ethiopia. Some equipment and machineries of Dangote Cement have been vandalized during the recent political unrest. “We have some challenges but we are on the right track. We hope to achieve the planned capacity and export to other countries.”
Kamara said that fluctuation in electric power supply and shortage of foreign currency are some of the challenges facing his company. Particularly, unavailability of foreign currency has become a critical challenge.
According to Kamara, his company is not able to procure spare parts. “Our plant is not new anymore. It has been a year and a half since it started running and it now needs parts for regular maintenance. It has been close to eight month since we requested forex.”
Spare parts for cement industry are not manufactured in Ethiopia. And it is not readily available on the shelves in the international market. Orders have to be placed for production. It takes three to six months to get delivered.
“This has affected our productivity to some extent. We are in the critical zone. That is a major constraint we have at the moment and we are expecting help from the government,” Kamara said.
According to him, his company needs 10-15 million dollars for the procurement of spare parts to service the cement manufacturing plant.