The Founder and Chief Executive Officer of Dangote Industries Limited, Aliko Dangote, has revealed that his company paid interest rates as high as 40 per cent to Nigerian banks while securing funding for the construction of its Obajana Cement plant in Kogi State.
Dangote disclosed that the project, which was initially projected to cost $1bn, experienced delays and significant cost increases due to inadequate infrastructure and other operational difficulties.
He made this known on Thursday during the 25th annual conference of Women in Management and Business (WIMBIZ) in Lagos, where he urged female entrepreneurs to explore industrial ventures and pursue ambitious business investments.
Speaking about the financial challenges surrounding the development of Obajana, which has become Dangote Cement’s flagship facility, the billionaire businessman explained that the company obtained loans from local banks when their capital base was around N25bn.
“You won’t believe how much interest we were paying when we built Obajana (Kogi State, Nigeria). I tell you, we were able to do it when the banks were at N25bn capital. And we took on a project of $`180m,” Dangote said.
He noted that the company initially failed to provide critical infrastructure, including gas pipelines, fuel facilities and power plants, because it anticipated that the government would ensure adequate public utilities were available.
“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,” he said.
According to him, the infrastructure challenges significantly increased the project’s cost to $1bn, forcing the company to approach the International Finance Corporation (IFC) for additional funding.
Dangote explained that the IFC turned down the company’s initial proposal to repay the loan within three years after reviewing its financial projections, instead offering a seven-year repayment structure.
“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.
However, he maintained that borrowing from Nigerian banks came with enormous financial pressure, as the company paid interest rates of up to 40 per cent.
“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.
The industrialist further disclosed that he invited the bankers to dinner six months before the 18-month financing arrangement expired, where he presented cheques to settle the outstanding loans.
“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,” he said.
Obajana remains Dangote Cement’s biggest manufacturing facility in Nigeria, with an installed production capacity of 16.25 million tonnes annually across five production lines.
The factory began operations in 2007 with two production lines and a combined annual capacity of five million tonnes.
Its production capacity rose to 10.25 million tonnes in 2012 following the installation of a third line. Two additional production lines, each capable of producing three million tonnes annually, were subsequently introduced in late 2014 and 2020.
Dangote also spoke about the challenges encountered during the construction of the Dangote Petroleum Refinery, revealing that several international engineering firms and industry stakeholders initially questioned whether the project could be successfully executed.
He said the company originally planned a refinery with a daily processing capacity of 300,000 barrels before raising its target to 650,000 barrels, despite concerns about the project’s complexity.
According to him, some international engineering, procurement and construction (EPC) firms declined to participate, citing the risks associated with doing business in Nigeria.
Dangote said the company eventually assumed the responsibility of its own EPC contractor and delivered a refinery that has since surpassed its original design capacity.
“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.
He encouraged women in business to remain ambitious, establish measurable goals and have confidence in their ability to achieve challenging targets.
“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.
The businessman also described poor infrastructure as one of the major obstacles confronting Nigerian businesses, explaining that companies are sometimes compelled to independently provide facilities that should ordinarily be available through public investment.
“We are facing a lot of issues in terms of infrastructure. And right now, sometimes, what we do is we put the money down. I would like to build this infrastructure, and then we just do it on our own,” he said.
He further advised entrepreneurs and business executives not to give up when confronted with difficulties, stressing that building successful businesses and undertaking industrial projects require determination and resilience.
“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.
Dangote also revealed that the Dangote Petroleum Refinery was expected to achieve the highest profitability in Africa within 55 days, describing improved profitability as the company’s immediate objective.
Earlier at the conference, WIMBIZ Founding Chairperson and Trustee, Omobola Johnson, reflected on the organisation’s 25-year journey and its commitment to establishing a sustainable platform for women in management and business.
Johnson attributed the organisation’s longevity to its emphasis on inclusiveness, mutual respect, collective leadership and proper succession planning.
She noted that WIMBIZ had consistently disproved the belief that women struggle to work together, pointing to the organisation’s achievements over the past 25 years.
“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 prioritised their shared vision over individual ambitions and ethnic differences, while maintaining a commitment to diversity and collective progress.
