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From the desk of Rama Musa, Editor | 22 Sept. 2013

photo: Forbes

Africa’s richest man, Alhaji Aliko Dangote, has plans to build West Africa’s largest oil refinery and petrochemical and fertilizer plants. The proposed industrial complex is expected to produce 400,000 barrels of oil per day, 2.8 million tonnes of fertilizer per year and polypropylene, a plastic polymer used in many industrial products.

In early September, the Nigerian billionaire stated:

"This plant will further entrench Africa’s role on the global map as not only a valued contributor for natural resources, but also a competent manufacturer of refined products and fertilizer. As a result, several African nations will be less reliant on importing fuel and fertilizer from foreign markets."

The Dangote plants will cost $9 billion to build; the company will invest $3 billion in equity and seek an additional $6 billion in loan capital. In partnership with 12 local and international banks, Standard Chartered Bank and Guaranty Trust Bank Plc signed a $3.3 billion term loan agreement with the Dangote Group, West Africa’s largest industrial conglomerate.

Although Nigeria is Africa’s top crude oil producer, the country is heavily reliant on fuel imports for 70% of its domestic needs.

According to Bloomberg, Nigeria’s four refineries, which are in a state of disrepair, produce only 445,000 barrels of oil per day. The Dangote Group estimates that its plants will cut fuel imports by 50%, halt foreign fertilizer imports, and generate nearly 35,000 in direct and indirect jobs. The refinery is expected to be completed in 2016. 

Christian Opoku-Biney, Partner, Jacana Partners, Accra, Ghana

Q: What are the biggest challenges of investing in West African SMEs?  
A: One of the challenges we face in West Africa is finding the right businesses to invest in. As our business environment is less developed, finding a company that has an established market, capable management, and the ability to achieve scalability is a constant struggle. Another challenge is achieving a successful exit from the investment. Most of the companies available for investment are so small that they are unattractive to trade investors. Secondly, the stock exchanges are fairly illiquid and thus do not present an attractive exit route for investors.

Q: Former U.S. Secretary of State Hillary Clinton once said that women hold the key to economic growth in Africa. How does Jacana address gender equity in its investment strategy?
 A: A number of our investee companies in East and West Africa are run by women. Within our investee companies, we work with management to ensure that best-in-class governance policies offer women the same opportunities and career progression paths as their male counterparts.

Q: What are the future trends of private equity in the ECOWAS?
A: The private equity environment in the ECOWAS is constantly changing. In Nigeria, the passage of the Contributory Pension Scheme has seen assets under management grow to $13.2 billion. The same scenario is likely to happen in Ghana following the implementation of the three-tier pension scheme. Another trend is the increasing interest being shown by global players such as Blackstone and Abraaj.

Q: Which global entrepreneur do you most admire? 
A:  Warren Buffet.  He keeps business simple, but makes the right returns.

The 2nd EU-Nigeria Business Forum will be held in Lagos, Nigeria, on October 3-4, 2013.   

This year's theme, Forging Partnerships in Africa's Economic Powerhouse, will offer policymakers and business representatives an opportunity to engage in pre-registered B2B meeting sessions, a trade fair, and panel sessions on agriculture, energy, construction and infrastructure, and the current business environment in Nigeria. 

Copyright © 2013 Neue Afrique, All rights reserved.

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