Africa’s richest man targets Nigeria’s rice deficit

Standard

Reuters

November 6, 2014

http://www.iol.co.za/business/international/africa-s-richest-man-targets-nigeria-s-rice-deficit-1.1776609#.VFuRH_nF_lo

Lagos – Nigeria enjoys a perfect rice-growing climate over a vast area yet it is the world’s second biggest importer of the staple, often from countries in its warm, wet tropical latitude like top exporter Thailand.

It’s one of those baffling Nigerian paradoxes, like the fact that it is Africa’s top oil producer yet suffers frequent fuel shortages; or that it is sitting on the world’s eighth largest gas reserves but can only produce a few hours of power a day.

As with the other bottlenecks holding back Africa’s biggest economy, decades of bad governance and corruption lie at the root of Nigeria’s agricultural dysfunction.

But unlike oil, where reform remains deadlocked by vested interests, the government is making serious efforts to clean up the farming sector and attract investment.

Africa’s richest man Aliko Dangote thinks he can resolve the rice conundrum.

He plans to do this by investing in farmland and mechanising farming practices in a country where many farmers still depend on pre-industrial tilling techniques.

Given his track record in other areas, this is a project to watch.

GET LAND, ADD WATER AND SOW

“Everything you need for rice is here, but unfortunately for a long time no one was interested,” he told Reuters in a telephone interview.

Not having enough land was the first obstacle that faced him after he thought of the idea.

He was surprised at how easily that got solved, as the governments of Jigawa, Niger, Kebbi, Edo and Kwara states between them offered 50 000 hectares to Dangote Industries.

“I think this is enough for us to grow and process up to a million tonnes of rice in the next four years,” he says.

“I believe this is just the beginning.”

To back up his optimism, he points to his past success in producing cement.

Dangote grew his company over a decade from a relatively small cement import business to a behemoth that manufactures nearly 30 million tonnes of the stuff a year, makes up a third of Nigeria’s stock exchange and now has factories in various stages of completion across the continent.

For decades Nigeria was one of the world’s biggest cement importers.

“We (Nigeria) were producing less than 2 million tonnes of cement,” in 2004, the tycoon says.

Ten years later and Nigeria as a whole now produces some 40 million tonnes a year, said Dangote, whose cement empire worth an estimated $20 billion (R223 billion) has earned him the label “richest black person on the planet” from Forbes magazine.

This month, Dangote Cement even had to cut prices to make up for falling sales amid oversupply.

Like cement, demand for rice among Nigeria’s 170 million population is huge, so he won’t need to think about export.

Dangote estimates the current rice deficit at 2 1/2 million tonnes a year.

Nigerians eat rice in outsized portions and no party is complete without mountains of bright orange “jollof” rice – a West African style of cooking the grains in tomato paste, onions and fiery peppers.

Parboiled, not white rice, is favoured.

GOVERNMENT SUPPORT

President Goodluck Jonathan made local production of rice a signature promise before he was elected in 2011.

His government has an ambitious target to import zero rice by the end of 2015, using incentives for farmers like free fertiliser and tax breaks for investors. Jonathan will seek another term in February.

Agriculture Minister Akinwumi Adesina has cleaned up corruption in government handouts of imported fertiliser, which have been hampered by fraud and an inefficient supply chain stretching from the port to the remote villages where it ends up.

That was a major obstacle to development of the sector.

Dangote says his own factories will soon be producing more fertiliser than Nigeria could ever need – 2.8 million tonnes a year – which would cut out the need for imports altogether.

His plans for a 400 000 barrel-per-day oil refinery and petrochemical plant remain on track, he added.

Rice smugglers from neighbouring Benin, Niger and Cameroon are the biggest threat to his business model, Dangote complains, but it still stands to be highly profitable.

But with a reputation as a ruthless monopolist, with interests in everything from food milling to petrochemicals and a personal fortune equal to 4 percent of Nigeria’s GDP, is Dangote not getting too big? He expects some will say that.

“People not investing will raise their hands and say ‘he’s got a monopoly in rice’,” he says.

“Everyone has an opportunity. If other people don’t invest, why is that my fault?”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s