We Paid 40% Interest On Obajana Loans — Dangote

The President and Chief Executive of Dangote Industries Limited, Aliko Dangote, has revealed that his company paid interest rates of up to 40 per cent to Nigerian banks while financing the construction of its Obajana Cement plant in Kogi State.

Dangote disclosed this on Thursday at the 25th annual conference of Women in Management and Business (WIMBIZ) in Lagos, where he encouraged women entrepreneurs to pursue ambitious business ventures and investments in the industrial sector.

Recounting the financial challenges associated with the project, he said the company initially estimated the cost of developing the plant at $180 million but eventually spent about $1 billion due to infrastructure deficiencies and other operational difficulties.

He explained that when the project was conceived, Dangote Industries had a capital base of N25 billion and relied on local banks to finance part of the investment.

According to him, the company initially failed to provide essential infrastructure, including gas pipelines, fuel facilities and power plants, because it expected the government to supply adequate public utilities.

However, the absence of the necessary infrastructure created operational challenges and contributed to the increase in the project’s overall cost.

Dangote said the company subsequently approached the International Finance Corporation (IFC) for additional financing after encountering difficulties with the project.

He explained that although the company initially proposed repaying the loan within three years, the IFC reviewed its financial projections and offered a seven-year repayment arrangement.

Under the arrangement, the company was not expected to make repayments during the first two years, while the remaining five years were designated for repayment.

Despite the extended financing arrangement, Dangote said borrowing from local banks remained expensive, with interest rates reaching 40 per cent.

He recalled that he invited the bankers to dinner six months before the expiration of the 18-month financing arrangement and subsequently settled the outstanding loans.

Obajana Cement plant, which serves as Dangote Cement’s flagship Nigerian facility, has an installed production capacity of 16.25 million tonnes annually across five production lines.

Commissioned in 2007 with two production lines and a combined capacity of five million tonnes per annum, the facility was expanded to 10.25 million tonnes in 2012 following the addition of a third line.

Two additional production lines, each with a capacity of three million tonnes annually, were subsequently introduced in late 2014 and 2020.

The industrialist also recounted the challenges encountered during the construction of the Dangote Petroleum Refinery, saying several international engineering companies initially doubted the feasibility of the project.

He disclosed that the company initially planned to build a refinery with a capacity of 300,000 barrels per day but later increased the target to 650,000 barrels per day despite concerns about the scale of the investment.

According to him, some international engineering, procurement and construction companies declined to participate in the project because they considered Nigeria too risky.

Dangote said his company eventually assumed the role of its own engineering, procurement and construction contractor, completing a refinery whose capacity has since exceeded its original design.

He disclosed that the facility had reached a production capacity of 710,000 barrels per day.

The businessman also urged women entrepreneurs to set ambitious goals, take calculated risks and remain confident in their ability to achieve their business objectives.

He identified inadequate infrastructure as one of the major challenges confronting businesses in Nigeria, noting that companies were increasingly forced to invest in facilities that should ordinarily be provided through public infrastructure.

Dangote further encouraged business leaders to remain resilient when confronted with difficulties, maintaining that industrial investments and entrepreneurship require determination and the ability to overcome setbacks.

He also disclosed that the Dangote Petroleum Refinery was expected to record the highest profitability on the African continent within 55 days, describing profitability as the company’s immediate priority.

Earlier, the Founding Chairperson and Trustee of WIMBIZ, Omobola Johnson, reflected on the organisation’s 25-year journey and its efforts to promote women’s participation in business and management.

Johnson said the founders had sustained the organisation through inclusion, mutual respect, shared leadership and effective succession planning.

She added that WIMBIZ had challenged the perception that women could not work together, noting that its continued existence and growth demonstrated the importance of collective vision and commitment.