Dangote Group has revealed plans to invest up to $3.8 billion in sugar and rice, and $800 million in dairy production in the next three years as the company seeks to expand and deal with a shortage of dollars in Nigeria.
Edwin Devakumar, group managing director of Dangote Cement plc, said on Tuesday in an interview in Lagos that the conglomerate planned to increase its production of sugar to 1.5 million metric tons a year by 2020, from the present level of 100,000 tons.
Devakumar also said they were seeking to add 1 million tons of rice, with plans to have 50,000 cattle producing 500 million litres of milk a year by 2019.
According to data from Financial Times (FT), shares of Dangote Sugar appreciated by 2.27 percent in three days to close at N8.98 on Wednesday. Data obtained from Bloomberg revealed that Dangote Sugar equity had posted year-to-date return of 46.97 percent as of Wednesday.
Devakumar said shortage of foreign exchange had curtailed the capacity of local agricultural companies to meet demand for food from Nigeria’s more than 180 million people.
Dangote Group, whose cement company is Nigeria’s biggest listed company, has been investing in agriculture as the country’s government seeks to diversify away from oil, which accounts for 90 percent of the nation’s export earnings and the bulk of revenue. The economy, which plunged into its first recession in a quarter-century last year amid falling crude prices, is forecast by the World Bank to expand by 1.2 percent this year.
The company has established Dangote Rice Limited and will list the unit on the Nigerian Stock Exchange “at the appropriate time,” Devakumar said.
Dangote Group plans to cultivate 350,000 hectares (864,850 acres) of land for sugar cane and add 200,000 hectares for rice, according to the executive director. The company has ordered five plants for sugar milling and 10 for rice from Switzerland to be located in the north of the country, he said.
A Bloomberg report quoted Devakumar to have said that the Lagos-based company will finance the projects through ‘internal resources or equity funding’ and loans from banks and export-credit agencies.
Dangote is also at the initial staged of plans to invest in other agricultural projects such as soybean, oil palm, palm kernel and corn, according to the executive director.
Bunmi Banjo, with wired report
