Dangote Industries Limited (DIL) is the largest industrial conglomerate in Nigeria, by far. A holding company controlled by Africa’s richest man, Aliko Dangote, DIL has operations across every major segment of Nigeria’s $440 billion economy.
DIL’s businesses include Cement manufacturing, Sugar refining, Salt refining and seasoning, Flour and Semolina (about to be acquired by Olam for N120 billion), Pasta processing, Packaging, Real Estate, Port operations, Beverages (bottled water and juice production), Transportation and logistics/ haulage, refining and petrochemicals, Fertilizer, Agriculture, Infrastructure construction, Automotive assembly and oil and gas pipeline infrastructure.
Dangote Cement (DANGCEM) which is listed on the Nigerian Stock Exchange (NSE), with a market capitalisation of $8 billion (N2.93 trillion) is the current jewel in the crown of DILs industrial empire.
However DANGCEM, which boasts of assets such as the 13.3 million metric ton per-annum (mmtpa) capacity Obajana cement plant, the largest in Africa, will soon begin to play second fiddle to a new mega project by DIL.
Set to be completed in 2020, on more than 6,700 acres of former swampland in the Lekki axis of Lagos, which needed to be extensively sand filled, DIL is constructing a Fertilizer plant capable of producing up to 2.8 million metric tons of urea a year and petrochemical complex valued at $5 billion, plus a 650,000 barrel per day oil refinery at a cost of $12 billion.
The projects are set to be highly transformative for Dangote Industries’ (and by extension Nigeria), and would catapult DIL’s annual revenue to $30 billion, from about $4 billion, or roughly 6.8 percent of Nigeria’s gross domestic product (GDP).
However there remains a yawning gap in the industrial conglomerate, which Dangote and DIL would need to fill for the sake of the future growth of the company and perhaps Nigeria.
DIL has to be prepared to be a part of the knowledge-based future where new technology, cloud computing, big data, artificial intelligence, driverless cars, nano technology and quantum computing will change the face of industry globally and disrupt firms unwilling to adapt.
The move to a digital world has led to the emergence of large and dominant Tech companies or FAANGs (Facebook, Apple, Amazon, Netfilx, and Google) that continue to grow at a rapid pace.
At the same time, big industrials (General Electric, Caterpillar) are struggling to grow.
18 years ago in the year 2001, the top 5 largest publicly traded companies in the world were: 1) General Electric ($406bn), 2) Microsoft ($365bn), 3) Exxon ($272bn), 4) Citigroup ($261bn), 5) Walmart ($260bn).
Then you had an industrial conglomerate (just like DIL), in GE topping the list, one tech company, an oil and gas firm, a financial and a retailer.
Today (2019), the largest companies in the world are Microsoft ($1.03 trillion), Apple ($932.7 billion), Amazon ($889 billion) Google ($819.2 billion), and Facebook ($523 billion).
As can be seen they are all Technology firms and all American (but that is a story for another day).
Globally most companies don’t invest enough in cutting-edge research and development or technology to compete with the rest of the world.
This is a particularly acute problem in Africa, especially Nigeria, where Research & Development expenditure was equivalent to just 0.2 percent of GDP in 2018 or $1.37 billion, compared to South Africa’s 0.8 percent of GDP and expenditure of $5.48 billion.
The little R & D spending in Nigeria is done mostly by Government and Universities, according to data from the UNESCO institute for Statistics.
In South Africa, Businesses account for 45 percent of R&D spending at $2.4 billion.
As Dangote sets out to expand DIL’s empire from its humble food and beverage and cement beginnings, one advantage he has is that he can keep re-investing profits and pumping money back into businesses owned by DIL or buying new ones.
This is where a ramp up in R&D spending on Technology and the innovations that will shape our world in the coming decades would be of immense benefit to DIL, as well as Nigeria.
DIL may also consider acquiring cutting edge Technology firms in which it can fund research into new products.
Dangote could achieve this by embedding a Technology or innovation division the parent company, similar to googles X Labs or the Koch Industries Koch Disruptive Technologies, whose mandate often is to come up with (or acquire) technologies that will disrupt large sectors in the coming future, rather than satisfy the short-term demands of shareholders.
In a recent interview Dangote acknowledged the heavy weight on his shoulders as he seeks to industrialise Africa’s most populous nation, and the continent “Nobody can actually sit in Dangote Group and take the kind of risk that I can, because I’m the owner. My real job is to see how do I transform Nigeria and Africa and to take this kind of risk.”
It is perhaps time to also consider investing a tiny bit of the huge free cash flow that DIL generates annually by betting on innovations and Technologies that will define the next 100 years for Africans and mankind as a whole.
