Nigeria will see massive growth as Africa's richest man Aliko Dangote took a $3.3-billion loan that will turn the country into an oil exporter.
Dangote Industries, the umbrella firm of Africa's richest man Aliko Dangote, signed off on a $3.3-billion loan on Wednesday for an oil refinery and petrochemical plant, with Standard Chartered and Guaranty Trust Bank leading the deal.
The refinery will produce somewhat 400 000 barrels a day and will be the largest in Africa, turning Nigeria into a petroleum exporter, Dangote told the BBC.
Other banks involved were South Africa's Standard Bank and FirstRand, Nigerian lenders Access Bank, Zenith Bank, Ecobank Nigeria Limited, Fidelity Bank, First Bank, Diamond Bank, UBA and First City Monument Bank.
Dangote will also spend $1.5-billion on cane farming over the next five years, its managing director said, responding to a government drive to make the country less reliant on its oil industry.
Dangote Sugar Refinery, majority-owned Dangote, has previously shied away from the risks associated with growing cane itself and preferred to focus on refining imported raw sugar.
But progressive hikes in government duties along with tax breaks and other incentives for agricultural development have persuaded it to think again.
"In the next five years, we should be able to produce 1.5-million metric tonnes locally, from around 50 000 metric tonnes now," Abdullahi Sule said late on Tuesday on the sidelines of a conference in the Nigerian capital Abuja.
He said the firm, which claims 70% of the domestic sugar market, would invest $1.5-billion in the process.
Sule also said Dangote Sugar would expand its refining capacity to 2.5-million metric tonnes a year by the end of 2014 from 1.4-million now, at a cost of around $100-million.
The company expects consumption of sugar in Africa's most populous nation to rise from 1.2-million metric tonnes in 2012 to at least 1.8-million this year and 2.2-million in 2014.
President Goodluck Jonathan is trying to revive farming to reduce Nigeria's reliance on a notoriously corrupt oil industry whose exports account for around 80% of government revenues, and to cut down its $11-billion-a-year food import bill.
Agriculture makes up around 45% of the economy, against 15% from oil, partly because it feeds a huge domestic market of 160-million people.
But the sector is in disarray and largely the preserve of peasant farmers.
To encourage its development, the government has scrapped duties on imported machinery for sugar processing plants.
Firms who invest from "sugarcane to sugar", rather than just on refining, have also been given a five-year tax break.
Meanwhile, raw sugar import taxes rose to 60%, from 5% last year, and the government says they will keep rising to a level of around 90%.
Nigeria has also banned imports of refined sugar in retail-ready packets, although supermarkets still stock them.
Dangote Sugar's competitor Flour Mills of Nigeria is also planning major expansion into sugar production, Vice chairperson John Coumantaros told the Abuja conference.
Dangote Sugar shares, which have risen around 76% so far this year compared with a 29% gain for Nigeria's stock index, were unchanged on Wednesday. – Reuters.