The Dangote Group is looking to cash in on the foreign exchange reforms that have made local production “cheaper” to drive its growth plans across its product sectors and expansion in Africa.
“As a group, we are looking at our growth coming from three sectors, foods and agriculture; that’s the first one, cement and building materials, and then oil and gas,” Aliko Dangote, president of the conglomerate, represented by Aliyu Suleiman, group chief strategy officer of Dangote Group said at BusinessDay’s 13th CEO Forum held in Lagos Thursday.
“In food and agriculture, we are also driving local production. One advantage of the reforms that are coming, like the FX reforms, is that it now makes local production cheaper versus imports.”
Africa’s top oil producer embarked on two radical reforms in May/June 2023, including the removal of subsidies and allowing the currency to be more market-determined rather than the artificial pegging that has widened the exchange rate gap between the official and parallel markets.
Read also: Dangote targets expansion in refinery, cement, agriculture
The liberalization of the naira saw the currency shed more than 41 percent of its value in 2024, piling pressures on entities that were exposed to FX.
But the narrative is changing. The naira has become more stable freeing off the volatility of oil prices and heightened global tensions.
According to Suleiman, prior to the reforms era, the company sourced its sugar from Brazil, one of the world’s largest producers, but with the naira devaluation, the firm has embarked on backward integration in sugar, rice mills, and tomato to streamline operational costs.
“When we started our sugar-backward integration, we struggled with the economics because you can always get sugar from Brazil cheaper than from Nigeria,” he said.
“But with the devaluation now, sugar produced locally is actually cheaper than sugar that is imported. So in the area of agriculture, we have projects that will still continue.”
Suleiman revealed that the firm is on course to more than double its fertilizer output in a bid to meet the growing demands both locally and across Africa.
“There’s a plan to more than double the fertilizer production capacity and to also invest in other areas of fertilizer, so that all the fertilizer needs of Nigeria and other African countries can be met by the group,” Suleiman said.
