7 March 2011

Nigeria: Senegal Confirms Dangote's Novel Investment

The Government of Senegal has confirmed that Dangote Group is the first wholly owned African Company to invest massively in the country.

Special Adviser to the President of Senegal on Foreign Investment, Serigne Mbacke, gave the hint in Dakar, Senegal while reviewing the West African nation's efforts to drive an inflow of foreign investment into the country.

Mbacke said apart from European nations who control most of the private investment in Senegal, Dangote is the only company, of total African extraction that has committed huge funds to the real sector, creating thousands of the teeming population of Senegalese.

"Apart from the foreign investors from Europe and other parts of the world, Dangote Group is the first wholly owned African company to commit huge investment to our country and we are proud of him and urge other African companies with similar financial and technical capacity to tow the path that Dangote has initiated," he said.

The Presidential adviser said on completion of Dangote's investment, which will cover cement production, sugar, flour among others, the company would expend a minimum of USD1 billion.

Dangote Senegal Cement factory, which is to be completed in November 2011, is expected to gulp $500 million, while the other arms of the investment will gulp the remaining $500 million.

He said the government had extended various incentives including a 5 years tax holiday and a tariff regime of only 2.5 percent to Dangote Group to encourage the African real sector giant.

Mbacke added that the government of Senegal gave about 8,000 hectares of land to the group for the cement manufacturing, sugarcane plantation and sugar refineries. He said that the investment is an indication of a strong belief in the future growth of Africa's economy.

He said Dangote's target production of about 45 million tonnes of cement was feasible with the level of massive investment in the expansion of old plants and construction of new plants in African countries.

The senior adviser said that Senegal, with a population of about 16 million, is becoming one of the fastest growing economies, adding that the demand for cement was high, because of the demands to meet housing needs. He said that the country has all the raw materials to produce enough cement and export to other continents.

Also speaking at the forum, General Manager, Project, Dangote Industries in Senegal, Mr. Ganapathy Balasubrahanian, said that the cement plant had installed capacity of one million metric tonnes per annum.

"We are hoping to have more than 1,500 direct workers and 7,000 indirect workers at the site. Before the end of 2011, that is, between November and December, we will start operation. We are hoping that Dangote's investment in the country

will complement the government's efforts in stimulating economic growth and creating jobs," he said.

According to Balasubrahanian, at the moment only two cement manufacturing companies, SOCCOSIM and SEHEM, are operating in Senegal. He said that the companies produce 2.5 million tonnes per annum as against the local demand of 3 million tonnes per annum.

The investment marked a significant milestone in Senegalese quest to be self-sufficient in cement production.

According to him, the plant is being constructed by SINOMA, a Chinese company in a site with abundant raw materials that can last for 50 years life span. He said that in spite of the availability of power in the country, the company would build a coal power of about 30 mega watts to power the plant.

On the choice of coal, he said "it was chosen because of lack of adequate water to build hydro power and insufficient gas in the country for now. For now going hydro or gas will not be prudent but one thing about the group cement plants is that they are built in such away to utilise different types of power".

Balasubrahanian noted that the investment was strategic, adding that Senegal with a population of about 16 million was becoming one of the fastest growing economy with it attendant need for more housing.

He added that Dangote's target of producing about 45 million tonnes of cement in Africa was very feasible with the level of massive investment in old and new plants in some African countries.

Lauding Senegalese investment and trade policy, he said the land was free and the company also enjoyed tax holiday for about 10 years and free duty for all imported equipment for the construction of the factory.

On challenges faced in distribution of the cement being a bulking product, he said "there is rail system from the factory to the various parts of the country and Mali," adding that Dangote presently has cement manufacturing firms in 14 countries in Africa alone.

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