Africa’s industrialisation drive is set for another major development as Aliko Dangote prepares to break ground on a proposed $16 billion refinery and petrochemicals project in Lamu County, Kenya.
The groundbreaking ceremony for the Dangote East Africa Petroleum Refinery and Petrochemicals Special Economic Zone is scheduled to take place on Wednesday in Mokowe, Lamu County.
The massive facility is expected to process about 700,000 barrels of crude oil per day and is targeted for completion by 2030.
The refinery is planned to process crude from Kenya’s Turkana oilfields, alongside supplies from other African countries. Its promoters expect the project to help reduce East Africa’s dependence on imported refined petroleum products.
Speaking to reporters in Nairobi ahead of the ceremony, Dangote said the investment was part of a broader effort to move Africa away from exporting raw materials and importing finished products.
“By 2030, the majority of African countries will be self-sufficient. It does not matter where it is refined, but it should be in the African continent, on the soil of Africa,” he said when asked when Africa could stop depending on fuel imports from outside the continent.
Dangote dismisses opposition to project
The Lamu refinery has already faced challenges, including a land rights lawsuit and opposition from environmental groups such as Greenpeace over the potential impact of the project on the area.
Dangote, however, said such challenges would not discourage the development.
“There’s actually no problem with these sort of cases,” he said.
“There are people who don’t want the development of Africa.”
The businessman also disclosed plans to invest an additional $50 billion across Africa, following more than $25 billion already committed to existing businesses.
He said the next phase of the Dangote Group’s expansion would involve large-scale industrial investments while also creating opportunities for Africans to own stakes in major businesses through capital markets.
Speaking during a fireside discussion with Nairobi Securities Exchange Chief Executive Officer Frank Mwiti at an investor engagement event on the Dangote Petroleum Refinery IPO, Dangote said Africa needed to pursue projects at a much larger scale if it wanted to compete globally.
“We have already invested more than $25 billion, but right now, we’re going ahead to invest an additional $50 billion,” he said.
“We want to create and generate wealth for Africans, to make sure that we defend our markets. And the only way to defend the market is not to do baby steps. It’s better we do big scale.”
How the Lamu project emerged
David Ndii, Chief Economic Adviser to Kenyan President William Ruto, said the Lamu project emerged from discussions among African policymakers, financiers and business leaders on how the continent could use its natural resources to build industries rather than simply extract and export them.
According to Ndii, petroleum refining was identified as one of the strategic opportunities for East Africa, leading to discussions involving Dangote, Ruto, Ugandan President Yoweri Museveni and other regional stakeholders.
He said a closed-door meeting held in April examined the potential East African market for refined petroleum products.
The market was estimated at about 20 million metric tonnes annually, with the potential to increase to 30 million tonnes.
Ndii also traced the thinking behind the project to an earlier meeting in Nairobi convened by President Ruto and Samaila Zubairu, President and Chief Executive of Africa Finance Corporation.
The meeting examined why international financing often flows more easily into infrastructure designed to move Africa’s raw materials out of the continent, while projects designed to process those resources locally struggle to attract similar financing.
Ndii recalled a phrase from Zubairu that he said had stayed with him:
“We export our minerals FOB and import inflation CIF.”
He said the Lamu refinery was an attempt to change that pattern by keeping more value within Africa.
Dangote wants Africans to own major businesses
The Kenyan refinery project is also connected to Dangote’s wider plan to increase African ownership of major businesses.
Dangote said the ongoing public offer involving Dangote Petroleum Refinery was not primarily about raising additional funds for the business.
Instead, he said, the objective was to allow ordinary Africans to participate in the wealth generated by large-scale industrial development.
“It’s not because we need the money. No. It’s because we want to share this prosperity with everybody,” he said.
“The real purpose is for us to democratise wealth-making.”
He disclosed that the group was prepared to gradually release more equity in its businesses as demand from investors increases.
Dangote said the long-term plan was for all the group’s operating businesses to increasingly become accessible to public ownership.
“I’ve said that all the companies that we operate from today, eventually all of them will be owned by the people,” he said.
Shipping, fertiliser businesses also targeted for public ownership
The industrialist disclosed that a new shipping business being developed by the group would eventually be taken to the capital market.
He added that the group’s growing fertiliser operations would also be opened up to public participation.
“Let people own it,” Dangote said.
He said the broader ambition was to create millions of African shareholders who could benefit from dividends as well as increases in the value of the businesses they own stakes in.
Dangote also said that when the Lamu refinery eventually becomes ready for public ownership, there would be no automatic reason for it to be listed on the Nigerian capital market.
Instead, he said the refinery should be listed in Kenya to allow people in the country where the facility is located to participate directly in its ownership.
“If tomorrow we are going to have the refinery here in Lamu to be listed, we don’t have to list it in Nigeria. We shouldn’t list it in Nigeria. We should list it here,” he said.
The proposed 700,000-barrel-per-day refinery therefore forms part of a wider strategy to expand refining capacity in Africa, reduce dependence on imported finished petroleum products and increase African participation in the ownership of major industrial businesses.
Source: AFP.
