Aliko Dangote, Africa’s richest man, made several mistakes early in the billion-dollar company that almost cost him his entire fortune. He, however, didn’t let the missteps deter him.
Through his grit and doggedness, he has built one of Africa’s biggest conglomerates that produces cement, sugar, salt, and fertiliser. Dangote Cement is the largest cement producer in Sub-Saharan Africa.
The cement plant can produce 48.6 million metric tons per year and operates in ten African nations. Dangote owns 85% of the publicly-listed company.
Also, the business magnate is close to completing the much-talked-about Dangote refinery, which will become one of the world’s largest oil refineries.
However, with great risks comes a high potential of making mistakes. And Dangote has had his fair share of costly errors.
Aliko Dangote’s mistakes
Making mistakes isn’t in itself a problem. What counts is what lessons one learns from these mistakes.
At the early stage of Dangote cement, the company decided to construct a cement plant after the government gave some people incentives to manufacture cement locally.
Nigeria’s total production at the time was less than two million tons, but Dangote constructed a facility with a production capacity of five million tons.
After conducting a soil and foundation test, Dangote opted not to do a full feasibility assessment to remain ahead of the competition. This came at a high cost as they were given the wrong soil test. Due to this, the cement plant’s design was inaccurate.
“They returned and claimed we just required a shallow foundation of up to two metres. So the basis for the sketch and everything else was two meters. We realised it was more than this when we were three months into the project,” Dangote said.
Africa’s richest man <strong>Aliko Dangote</strong> Launches the Continent’s Largest <strong>Fertilizer Plant</strong>
Since they had put all the capital into the business, how to save the multimillion-dollar project became a priority: a price Dangote had to bear alone.
As such, the drawings were changed. He said, “We were suddenly confronted with the construction of 1,000 piles, and there were insufficient rigs in Nigeria. We had to place additional orders for rigs and even purchase rigs for some contractors.”
To effectively execute it, they needed $480 million. This wasn’t easy since 90% of banks had a market value of less than $20 million at the time.
There were also no long-term loans available, only short-term loans. And since using a short-term loan to finance a long-term business was such a wrong decision, the project was halted, and the blueprints were altered.
Aside from that, there was the issue of infrastructure. No gas pipeline existed. So, the company built a 92-kilometre gas pipeline.
Failure was not an option at that point for Dangote.
He said, “I kept the project designs on my wall in my office, but I knew that if this project failed, the group would be gone. That motivated me to keep going. It was a significant project for us since our size when compared to a project worth half a billion dollars at the time, was substantial.”
Light at the end of the tunnel
The breakthrough occurred when a consortium of banks led by the International Finance Corporation (IFC) approved a $479 million loan for the company. However, the storm had not yet subsided.
According to Aliko Dangote, “The most challenging part was dealing with the expense overrun. We had completed the cement plant, but it was not working. But we were tenacious and persevered. We faced difficulties for almost a year, and the plant was on and off.”
Ever since, the Dangote Group has grown into 18 sub-Saharan African nations, including Nepal.
Sammie Okposo, a leading Nigerian gospel performer, passed away early on Friday, the 25th …