Catalysing investment in Northern Nigeria€¦ · annual group revenue of US$1.6bn(FY06) Spin off of Sugar, Flour, Salt and Pasta divisions to wholly owned subsidiaries Successful

Corporate Strategy

Catalysing investment in Northern Nigeria

April 7 – 8th, 2016 Washington DC

Corporate Strategy

Economic context for Northern Nigeria

Dangote Group’s contribution to the economy

Proposed approach

Agenda

Corporate Strategy

2

Northern Nigeria has about 54% of the countries population and about 70% of the land mass

Lagos

Bayelsa Rivers

Imo Abia

Akwa Ibom

Adamawa

Bauchi

Gombe

Kaduna

Fct

Nassarawa

Plateau

Taraba

Benue

Cross River

Enugu

Ebonyi Anambra

Delta

Edo

Kogi

Oyo

Ogun

Osun Ekiti

Ondo

Kwara

Niger

Sokoto

Kebbi

Zamfara

Katsina

Kano

Yobe Jigawa

Borno

North Central

North East

North West

South East

South South

South West

SOURCE: National Population Commission

15 14 26 12 15 20

Share of population1

% Region

1 based on 2006 census figures

Corporate Strategy

3 SOURCE: Wikipedia; National Bureau for Statistics; Oxford Poverty & Human Development Initiative; WAEC 2014 results

There is a huge development gap between Northern Nigeria and the rest of the country (1/2)

1,179

South East

1,224

South South

South West

1,557

GDP per Capita, USD1

2,244

3,541

North Central

North East

4,322

North West

34

67

60

9

12

9

% in severe poverty

23

10

21

53

43

32

WAEC pass rate, %

4

4

5

9

18

6

IGR (2010), N bn2

Low financial viability at state level

Lower economic output per person

Extreme poverty and inequality

Poor level of education

1 GDP per capita based on pre-rebased GDP PPP 2010 figures 2 IGR numbers for South West exclude Lagos (N16bn a month in 2010 and N23bn in 2014); FCT is also not included

Corporate Strategy

4 SOURCE: World Bank 2015 Poverty Mapping Report (done in conjunction with the University of Oxford) and Demographic and Health Survey (DHS), 2013

There is a huge development gap between Northern Nigeria and the rest of the country (2/2)

Key Statistics (North Central) North Central

North East

North West South East South South

South West

NATIONAL RESULT

General Population 24.8m 27.3m 47.7m 21.3m 27.8m 36.7m Consumption Poverty (%) 36% 44% 45% 30% 26% 21% 35%

Education

Net attendance ratio in primary education 68% 45% 46% 81% 77% 74% 58%

Health & Nutrition

Infant mortality rate 6% 7% 7% 7% 6% 5% 6.8% Antenatal care coverage (4 or more visits) 59% 44% 32% 88% 70% 86% 54%

% of HHs with bed nets for children under 5 19% 12% 15% 23% 19% 20% 16%

Malnutrition (under 5) 16% 25% 40% 10% 11% 13% 25%

Environmental Sustainability

% of pop using an improved sanitation facility 19% 37% 43% 40% 26% 19% 34%

Financial Inclusion

% of HHs with bank account 34% 17% 13% 50% 51% 57% 33%

Key Statistics

Corporate Strategy

5

Drilling down to state level reveals a wide variation in literacy and educational attainment

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

YOBE

PLATEAU

English literacy2

OSUN

OGUN

ONDO

TARABA

KOGI

AKWA IBOM

KEBBI

KADUNA

IMO

ENUGU

EKITI

KWARA

KATSINA JIGAWA

FCT ABUJA

EDO

EBONYI

BORNO

BENUE

DELTA

BAYELSA

BAUCHI

CROSS RIVER

WAEC pass rate1

ANAMBRA

ADAMAWA

ABIA RIVERS

NIGER

GOMBE

OYO

SOKOTO

ZAMFARA

NASSARAWA

LAGOS

KANO

South West

North East South South

North West

North Central

South East

SOURCE: WAEC 2014 results; NBS

1 Five credits and above including Maths and English 2 Percent of persons 15 years and above who can read a simple letter written in English

Bubble size indicates number of students

Corporate Strategy

6

Closing the gap will require focus on five areas

Enhance government delivery – achieve more with less

Develop human capital – improve: education, vocational skills, mindset & values

Improve economic empowerment – support SMEs, create jobs, export talent

Boost economic output – more production of crops, livestock, solid minerals; Agri-processing

Maintain peace & security – proactively manage conflict, reduce crime

Corporate Strategy



Proposed approach

Agenda

Corporate Strategy

8

The Group has grown from a commodity trading company to a diversified conglomerate over the last two decades

Company Foundation

Transition Growth

Sustenance

Expansion and Restructuring

Diversification & Consolidation

Started as a commodity trading company

The abolition of the import licensing regime increased the possible scope of operations

Became a leading bulk trader of various commodities

Transformed from a bulk commodity trading company to a manufacturing concern via an import substitution strategy along the Group’s traditional business lines.

DIL incorporated as the vehicle for executing growth strategy

Developed brand equity for products.

Acquisition of strategic assets

Expansion of existing capacities

Prudent management/ strategy of reinvesting funds

Improved business process and structure to align with the Group’s business vision

A massive conglomerate with annual group revenue of US$1.6bn(FY06)

Spin off of Sugar, Flour, Salt and Pasta divisions to wholly owned subsidiaries

Successful IPO and listing of Sugar, Flour and Salt businesses

Commissioned the largest cement plant in sub-Saharan Africa – Obajana Plant (5MMtpa – Phase I)

Diversification into Infrastructure, Agriculture, Fertilizer, Petrochemicals, Steel, Oil & Gas.

Domestic expansion to ensure strong presence along the food value chain

Improved business processes, governance and organizational structure

Consolidation of Cement interests & listing of DC PLC

Expansion of Cement footprint in Nigeria and across Africa

1978 -1997

2000 - 2003 1997 - 2000

2003 - 2007 2007 - present

Corporate Strategy

9

Today we havee a rapidly evolving multi-business, multi-geography portfolio

Existing businesses Projects

Cement Food Others Oil & Gas Agriculture Infrastruc-ture

Sugar Salt, Tomato

Paste Seasoning Vegetable

Oil Flour, Pasta,

Noodles

Packaging Logistics Steel Real Estate Power Mining

Upstream assets Sub-sea

gas pipeline Petroleum

refinery / petrochem Fertilizer

Rice Sugar cane

Power Cement plants across Africa

Corporate Strategy

10

Project information Fully integrated rice production and processing operation Capacity: 960,000 MT of milled rice per annum

2 rice mills of 240,000 MT / season 2 crop seasons / year

Location: 150,000 Ha across Edo, Jigawa, Kebbi, Kwara, and Niger

Investment: USD 1 billion

Community: 30% of paddy to be provided by Dangote Rice Outgrower Scheme

The rice project will engage over 30,000 outgrowers across 5 states

Progress and challenges

Benefits for Nigeria

Progress

Dangote Rice Outgrower Scheme launched 13th Feb 2016 in Hadejia, Jigawa State

12,000 Ha commercial pilot will launch in 2Q 2016

Challenges

Policy uncertainty (low enforcement within protected industries, high import fees of agrochemical inputs)

Weak agronomic institutions (poorly-funded research institutes, low capacity public extension systems)

Low public sector investment in infrastructure

Job creation: Over 30,000 direct and indirect jobs

Food Security: Rice is Nigeria’s second largest food import

National Security: Available jobs will weaken recruiting tactics of Boko Haram

Economic Diversification: Hedge against crude oil-driven GDP and Government revenues

Corporate Strategy

11

The sugar backward integration project will create more than 150,000 jobs through out-grower schemes and other indirect jobs

Capacity: 1.5 mn MT refined sugar per annum Location: 150,000 Ha across Adamawa, Sokoto,

Kebbi, Jigawa, Taraba, Kogi and Kwara States Investment: USD 1 billion Approach: Two phases over the next 10 years Potential to discourage insurgency in the North

East through massive job creation

Project information Benefits for Nigeria

Progress and challenges Progress ~6,400 Ha pilot in Adamawa up and running 69,000 Ha of cane under cultivation by 2017/2018 Challenges Weak agronomic institutions (poorly-funded

research institutes, low capacity public extension systems) Low public sector investment in infrastructure

(roads, water, power)

Job creation: Create 150,000+ jobs and support a sugar cane outgrower scheme Food Security: Sugar is Nigeria’s third largest

food import Economic Diversification: Hedge against crude

oil-driven GDP and Government revenues

Corporate Strategy

12

The Kano power plant will help reactivate the state’s industrial base

Capacity: 300 – 500 MW from a coal power plant and about 100MW of solar Location: Kano Investment: ~USD 1 billion Approach: Potentially partner with an industrial

cluster who will buy off a portion of the electricity and supply to tenants of the industrial area (along with other services)


Progress and challenges Progress Partnership with Black Rhino group Engagement of the state government and the

National Bulk Electricity Trading company Challenges Coal transportation logistics

Support industrialisation: help reactivate moribund manufacturing capacity in Kano and surrounding states Support SMEs: improve productivity of SMEs by

reducing operating costs and reducing downtime Quality of life improvement: improve quality of

life of the citizenry by providing more stable electricity

Corporate Strategy

13

The Kano power plant will help reactivate the state’s industrial base

Capacity: 1,200 tons of tomato per day Location: Kano Investment: ~USD 20 million Approach: develop own farm to supplement

tomato from out-growers especially during off-peak seasons


Progress and challenges Progress Factory commenced production two weeks and is

gradually ramping up production to full capacity Expansion plans in progress as well as

development of own farm Challenges Dumping of cheap Chinese imports Seasonality in tomato availability / pricing

Empower small scale farmers: empower small farmers through guaranteed off-take at good prices Reduce food waste: reduce the incidence of

tomato waste at peak of harvest (up to 50%) Job creation: more than 5,000 direct and indirect

jobs (plant operators, out-growers, buyers, basket makers, drivers, etc.)

Corporate Strategy

14

Also, the Group President – Alhaji Aliko, gives back to society through his private foundation Selected donations over the past 3 years

Ebola Support:

Established a response center, deployed detection scanners at airports (N250 m) and donated N600 m to the African Union Ebola response efforts

Polio Eradication: Partnered with the Gates Foundation to strengthen routine immunization of children with a view to eradicate polio (N585 m)

Measles Control: Donated N100m to UNICEF to support the response to a measles outbreak in 614 LGAs

Private Sector Health Alliance of Nigeria (PSHAN). Founding Patron and Funder (N130 m)

Health, Sanitation, and Nutrition

School Construction: Support to various projects including: N640m for Bayero University, Kano; ~N129 million for Otuoke University, Bayelsa; and the construction of two dormitories in Wama, Tanzania

Scholarships: Various scholarships to individuals and organizations, including: ~N19 m to the Sultan Development Initiative, N20 million to students of James Hope College Agbor, Delta State, and N234 m to Gordon and Sarah Brown’s GBC

Education

Dangote Micro Grants: Providing N10,000 cash transfer to poor women in all 774 LGAs

Dangote-BOI Job Creation Program: Established a jobs fund with the Bank of Industry to lend to manufacturing sector SMEs with a view to create 1 million jobs

WEF Young Global Leaders African Fellowship Program: Established a fellowship program to support Africans selected to the YGL who work in the non-profit sector

Women and Youth Empowerment

Select donations include: N400 million to support

internally displaced people with food and relief

N540 m to flood victims and women in Kogi

N155 m worth of relief material to fight the Niger famine

N3.2 b to the Presidential Committee on flood relief

N100 m to the victims of ammunition dump explosion in Congo

N400m to UNICEF to Pakistani flood victims

N129m to Lagos flood victims

N200 million to the Federal Republic of Nepal for the earthquake victims

Humanitarian/ Disaster Relief

N4.0 B N3.0 B N8.0B N5.5B

Corporate Strategy



Proposed approach

Agenda

Corporate Strategy

16

RECALL: Closing the gap will require focus on five areas

Enhance government delivery – achieve more with less

Develop human capital – improve: education, vocational skills, mindset & values

Improve economic empowerment – support SMEs, create jobs, export talent

Boost economic output – more production of crops, livestock, solid minerals; Agri-processing

Maintain peace & security – proactively manage conflict, reduce crime

Corporate Strategy

17

A number of ideas have been generated in the past on how to achieve desired objectives in the 5 areas

Improve economic empowerment

Develop human capital

Boost economic output

Maintain peace & security

Enhance govern-ment delivery

Launch the Academy School system (public schools admini-stered by charities)

Encourage vocational education and upgrade technical schools

Focus first year of schooling mainly on learning English (as this is the foundation for learning)

Align vocational training to demand

Organise farmers into cooperatives to enable them secure financing, inputs, better prices

Expand SME financing

Provide financing and mentorship for graduates of vocational training

Unlock land assets by empowering traditional rulers to issue C of Os

Setup a fund to catalyse investment in the region

Setup commodity marketing boards

Setup a strong regional agro-allied R&D organization

Launch irrigation PPPs

Setup business incubators to help new businesses

Subsidise solid mineral production

Setup a roving peace committee

Manage settlement of nomadic herdsmen

Punish incitement and violence

Work with religious leaders to preach mutual respect

Improve planning and performance management capability

Demand transparency on government spending

Benchmark performance across states

Introduce tax on agricultural products to boost IGR

Share learnings across states

But without the right platform these ideas may not come to fruition as has been the case in previous efforts

Illustrative ideas (those related to vocational education highlighted)

Corporate Strategy

18

Description

To achieve a successful outcome, we would like to suggest 3 platforms to facilitate and govern the economic reconstruction

Develop human capital

Improve economic empowerment

Boost economic output

Maintain peace & security

Enhance government delivery

Regional investment fund

Charity foundations

Scope

A body to promote investment in the region (promotion, incentives, infra, etc.)

Cooperation between charities and NGOs to resolve specific social issues

Investment in private education facilities

Support existing public schools

Finance SMEs in the fund’s investment value chain

Provide men-toring and organization to SMEs

Advocacy, benchmarking, idea propagation

Peace committee, community liaison

Commercial investments in the North, capital raising

Regional investment promotion council

An organisation that is able to catalyse investment in the region by raising capital and working with various partners to implement business ideas

Coordination across the whole spectrum

Corporate Strategy

19

In conclusion…

Northern Nigeria has been left behind by the rest of Nigeria To close the development gap we need to focus on

5 areas Dangote Group is doing its share to help the

economy However, there is a need to stimulate many other

investors to do the same Achieving this will require supporting a number of

bodies to facilitate and govern investment

Corporate Strategy

20

Appendix

Corporate Strategy

21

Key Statistics (North Central) BENUE KOGI KWARA NASARAW

A NIGER PLATEAU NATIONAL

RESULT

General

Population 5.6m 4.3m 3.1m 2.4m 5.3m 4.1m Consumption Poverty (%) 44% 22% 34% 34% 34% 46% 35%

Education


Health & Nutrition

Infant mortality rate 7.1% 5.0% 5.5% 7.0% 5.2% 7.0% 6.8% Antenatal care coverage (4 or more visits) 38% 88% 90% 59% 51% 45% 54%


Malnutrition (under 5) 11% 13.% 13.2% 19.1% 22.9% 17% 25%



Financial Inclusion


Key Statistics (North Central)

Corporate Strategy

22

Key Statistics (North East) INDICATORS ADAMA

A BAUCHI BORNO GOMBE TARABA YOBE NATIONAL

RESULT

General


Education

Net attendance ratio in primary 75% 45% 34% 42% 63% 12% 58%

Health & Nutrition

Infant mortality rate 8.7% 9.1% 2.9% 7.3% 7.5% 6% 6.8% Antenatal care coverage (4 or 68% 44% 30% 55% 42% 20% 54%

% of HHs with bed nets for 14% 7% 11% 11% 15% 19% 16%

Malnutrition (under 5) 21% 33% 16% 27.4% 23.5% 29% 25%


% of pop using an improved 42% 15% 42% 67% 23% 27% 34%

Financial Inclusion


Corporate Strategy

23

Key Statistics (North West) INDICATORS JIGAWA KADUN KANO KATSINA KEBBI SOKOTO ZAMFAR

A

NATIONAL RESULT

General

Population 5.6m 8m 13m 7.6m 4.3m 4.8m 4.4m Consumption Poverty (%) 57% 41% 45% 57% 36% 26% 49% 35%

Education

Net attendance ratio in 45% 58% 55% 43% 30% 31% 36% 58%

Health & Nutrition

Infant mortality rate 9.2% 3.8% 7.2% 5.6% 10% 8.3% 12% 6.8% Antenatal care coverage (4 or 36% 44% 42% 24% 19% 17% 20% 54%

% of HHs with bed nets for 28% 7.2% 8.3% 26% 21% 13% 8% 16%

Malnutrition (under 5) 36% 42% 48% 39% 30% 33% 34% 25%

Environmental

% of pop using an improved 49% 22% 64% 42% 52% 44% 7% 34%

Financial Inclusion

% of HHs with bank account 7% 31% 12% 7.3% 11% 8.2% 7.4% 33%

Corporate Strategy

24

Key Statistics (South East) INDICATORS ABIA ANAMBR EBONYI ENUGU IMO NATIONAL

RESULT

General

Population 3.6m 5.4m 2.8m 4.3m 5.2m Consumption Poverty (%) 18% 16% 77% 46% 14% 35%

Education

Net attendance ratio in primary 80% 85% 77% 77% 81% 58%

Health & Nutrition

Infant mortality rate 7.8% 6.2% 8.7% 6.4% 7.8% 6.8% Antenatal care coverage (4 or more 87% 90% 76% 93% 90% 54%

% of HHs with bed nets for children 23% 14% 29% 26% 27% 16%

Malnutrition (under 5) 11.1% 11.1% 11.4% 6.6% 11.1% 25%


% of pop using an improved sanitation 43% 57% 11% 23% 48% 34%

Financial Inclusion

% of HHs with bank account 51% 68% 33% 41% 48% 33%

Corporate Strategy

25

Key Statistics (South South) – DHS, 2013 INDICATORS AKWA

IBOM BAYELSA CROSS

RIVER DELTA EDO RIVERS NATIONAL

RESULT

General


Education


Health & Nutrition

Infant mortality rate 6.0% 5.3% 5.8% 6.2% 3.4% 6.0% 6.8% Antenatal care coverage (4 or more visits) 59% 36% 76% 77% 80% 76% 54%


Malnutrition (under 5) 11% 9.3% 14.3% 13.8% 6.6% 10% 25%



Financial Inclusion


Corporate Strategy

26

Key Statistics (South West) INDICATORS EKITI LAGOS OGUN ONDO OSUN OYO NATIONAL

RESULT

General

Population 3.2m 12m 5.0m 4.5m 4.5m 7.5m Consumption Poverty (%) 15% 13% 27% 16% 21% 34% 35%

Education

Net attendance ratio in primary 79% 75% 74% 80% 79% 66% 58%

Health

Infant mortality rate 5.2% 5.8% 5.9% 6.9% 4.2% 4.2% 6.8% Antenatal care coverage (4 or 95% 97% 93% 82% 55% 82% 54%

% of HHs with bed nets for 21% 20% 19% 28% 7.5% 22% 16%

Malnutrition (under 5) 6.6% 12% 17.4% 13% 10.8% 17% 25%


% of pop using an improved 15% 28% 9.2% 18% 16% 13% 34%

Financial Inclusion


Documents

Catalysing investment in Northern Nigeria€¦ · annual group revenue of US$1.6bn(FY06) Spin off of Sugar, Flour, Salt and Pasta divisions to wholly owned subsidiaries Successful