Aliko Dangote, President and Chief Executive of Dangote Industries Limited, has revealed that his company paid as much as 40 per cent interest on loans obtained from Nigerian banks to finance the construction of its Obajana Cement plant in Kogi State.
The industrialist said the high borrowing costs, coupled with infrastructure gaps and other operational difficulties, contributed to a significant escalation in the project's cost from an initial estimate of $180m to approximately $1bn.
Dangote made the disclosure on Thursday at the 25th annual conference of Women in Management and Business (WIMBIZ) in Lagos, where he spoke about the challenges of building large-scale businesses in Nigeria and encouraged women to venture into industrial investments.
He recalled that the company embarked on the Obajana project when Nigerian banks had a capital base of about N25bn, explaining that the financing process exposed the difficulties businesses faced in accessing affordable credit.
According to him, the company initially failed to make adequate provisions for critical infrastructure, relying instead on government assurances that electricity and other essential utilities would be sufficiently available.
However, the absence of reliable public infrastructure forced the company to provide its own gas pipeline, fuel facilities and power generation infrastructure, adding considerably to the project's financial burden.
“So we ended up having a problem. We didn’t put in a gas pipeline, we didn’t put fuel in, we didn’t put in a power plant. All these things, because the government announced that we’d be having enough power, we’d be having enough this and that,” Dangote said.
He explained that the company subsequently sought additional funding from the International Finance Corporation (IFC) after the cost of the project rose beyond its original projections.
Dangote said his company had proposed repaying the financing within three years, but the IFC, after examining its financial model, considered the repayment plan unrealistic and extended the arrangement to seven years.
Under the revised terms, the company was not expected to make repayments during the first two years, while the remaining five years were designated for repayment.
“We wanted to pay within three years, but when the IFC used their own financial model, they said our business plan was wrong. They gave us seven years. They said in the first two years we cannot pay anything. Then, in five years, is the payment period,” he said.
Despite the arrangement, Dangote said the company continued to contend with expensive domestic financing, with interest rates on loans from local banks reaching 40 per cent.
He said he eventually decided to settle the outstanding obligations ahead of the agreed deadline after inviting the bankers to dinner.
“But because our interest rates were high, we were paying combined. Also, I don’t want to mention the name. But we were paying interest at 40 per cent to the local banks. They can check the records,” he said.
Recounting how the loans were settled, he added: “On the 18th month, six months before the expiry, I invited the bankers to dinner, and at the end of the dinner, I gave everybody their cheque. I paid off.”
The Obajana facility, which is the largest Dangote Cement plant in Nigeria, currently has an installed capacity of 16.25 million tonnes per annum across five production lines.
The plant began operations in 2007 with two production lines capable of producing five million tonnes annually. Its capacity rose to 10.25 million tonnes in 2012 following the installation of a third production line.
Two additional lines, each with an annual capacity of three million tonnes, were added in late 2014 and 2020.
Beyond the cement business, Dangote also recounted the resistance and scepticism his company encountered while developing its petroleum refinery, saying some international engineering firms initially considered the project too ambitious for Nigeria.
He said the refinery was initially conceived as a 300,000-barrel-per-day facility before the company increased its planned capacity to 650,000 barrels per day.
According to him, several international engineering, procurement and construction contractors declined to participate because of concerns about operating in Nigeria.
Dangote said the company eventually assumed the role of its own engineering, procurement and construction contractor, taking responsibility for delivering the massive project.
He disclosed that the refinery, originally designed to process 650,000 barrels of crude oil daily, had achieved a capacity of 710,000 barrels per day.
“We’re able not only to deliver the 650,000, which they say will not be done. We now are at 710,000 barrels,” he said.
The businessman urged women seeking to establish businesses to develop ambitious goals and remain confident in their capacity to execute them, regardless of the obstacles they might encounter.
He advised entrepreneurs not to allow doubts expressed by others to discourage them from pursuing large-scale investments.
“Don’t let anybody tell you that you are not able to do it. You must think very, very big. You must be very ambitious. You must give yourself a target and believe that you can deliver that target,” he said.
Dangote identified infrastructure deficits as a major impediment to business expansion in Nigeria, noting that private companies were often compelled to invest their resources in facilities that should ordinarily be provided by the government.
He said his company had increasingly adopted the approach of independently developing critical infrastructure needed for its operations rather than waiting for public authorities to provide them.
The industrialist also stressed the importance of resilience, arguing that entrepreneurs must be prepared to confront difficulties and withstand pressure in the pursuit of their objectives.
“There is nothing in life that is easy. So you must say that yes, it’s difficult for me, but I can surmount all these pressures,” he said.
He further disclosed that the Dangote Petroleum Refinery was expected to become the most profitable company on the African continent within 55 days, identifying profitability as the immediate focus of the business.
Earlier, the Founding Chairperson and Trustee of WIMBIZ, Omobola Johnson, reflected on the organisation's 25 years of promoting women's participation in leadership, management and entrepreneurship.
Johnson said the organisation's longevity was the product of a deliberate commitment to inclusion, mutual respect, shared leadership and succession planning.
She noted that WIMBIZ had also disproved the perception that women were incapable of working together to build sustainable institutions.
“We countered the fallacy that women cannot work together. We have worked together for 25 years, and we have built an institution that has endured, stood the test of time,” Johnson said.
She added that the founders had maintained a collective vision by placing the organisation's interests above individual ambitions and ethnic differences, while embracing diversity and shared responsibility.
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