Nigeria: Dangote Fertiliser Driving Productivity, Saving Multi-Billion Dollar Capital Flight
By Olushola Bello
The importance of agriculture in Nigeria’s economy cannot be overstated. Farming and livestock rearing are the main livelihood for over 70 per cent of households in a country, which has again emerged as Africa’s largest economy.
Agriculture contributed 29.94 per cent to nominal Gross Domestic Product in the third quarter of 2021, according to the National Bureau of Statistics (NBS). This is significantly higher than the 7.49 per cent derived from the oil sector within the same period.
However, the country’s promising agricultural potential has not been fully realised. In all likelihood, low fertiliser use is still a major factor in explaining the low agricultural productivity in Nigeria.
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Nigerian farmers need fertilisers to redeem the country’s impoverished farmlands and forestall a looming food crisis in the country. The coming on stream of Dangote Fertiliser Limited has been regarded as a timely intervention in this space, and it is expected to boost farm productivity and save the country from multi-billion-dollar spent to import fertiliser from abroad.
The Dangote Fertiliser plant commenced production on June, 2021, with a capacity of three million tons per annum, has been classified as the biggest project in the entire fertiliser industry history in the world.
Africa is expected to have the highest growth rate in fertiliser demand in the medium term, given the large expanse of arable land and great agricultural growth potential in the decade to come.
Current consumption of Urea in Nigeria is one million tonnes per annum. The country has very low per hectare usage of fertiliser leading to very poor crop yield. Target of 50 kg Fertiliser consumption per hectare in SSA countries; currently Nigeria is close to 20 kg per hectare only. So, there is huge scope to reach 50 kg target although it is far below the world average of 140 kg per hectare.
By 2030, Nigeria’s population is expected to hit over 262 million, which would lead to huge increase in food consumption. Estimates point out that around five million tonnes of fertiliser are required per year in Nigeria in the next five to seven years bifurcated into 3.5 million tonnes of Urea and 1.5 million tonnes of NPK.
With the Nigerian population projected to rise to 262 million by 2030 and 398 million by 2050, little wonder the Dangote Industries Limited, as a true leader in the Nigerian business space, seized the initiative to actualise a vision where Nigeria will be self-sufficient in catering for its own food consumption.
It has been noted that Dangote Fertiliser will help Nigeria to retain $125 million in import substitution and provide $625 million from exports of products from the fertiliser plant.
Dangote Fertiliser Driving Productivity Growth
In what industry watchers have described as a potent step to liberalise the fertiliser market and further enhance the agricultural production, president of the Dangote Group, Aliko Dangote said, the plant, with a capacity to churn out three million metric tonnes per annum of urea, has been classified as the biggest project in the entire fertiliser industry in the world.
Speaking to top bankers, including the governor of Central Bank of Nigeria (CBN), Godwin Emefiele, who were on hand to witness the commencement of production, Dangote said: “the Phase one of the project, which is estimated to cost $2.5 billion, is to manufacture 3mmtpa of urea per annum. This capacity will later be expanded to produce multi grades of fertilisers to meet soil, crop and climate specific requirements for the African continent.”
According to Dangote, the fertiliser plant would make Nigeria the biggest urea exporting country in sub-Saharan Africa and biggest producer of polypropylene and polyethylene.
The Fertiliser complex consists of Ammonia and Urea plants with associated facilities and infrastructure, to produce 3 MMTPA Urea. The complex comprises: 2 x 2,200 MTPD Ammonia Plants based on Halder Topsoe technology, 2 x 4,000 MTPD Melt Urea Plants based on Snamprogetti technology, and 2 x 4,000 MTPD Urea Granulation Plants based on Uhde Technology. Dangote made the disclosure at the facility’s final inspection tour by the Central Bank Governor (CBN), Godwin Emefiele, on June 4, 2021 in Lagos.
Dangote said: “the three million tonnes of Urea is certified, licensed by all regulatory authorities in Nigeria. We have gotten all licenses from the National Security Adviser, the Ministry of Agriculture, Standard Organisation of Nigeria (SON), NAFDAC and all other authorities.”
The company, he stressed, planned to saturate the market with Urea and having already collected the database of farmers, would also ensure adequate training of farmers on best application of Urea, saying, “our primary interest is to saturate the local market. Training farmers will help to sustain farming activities, and this will ensure food security.”
Dangote commended Emefiele and the banks CEOs for being there to ensure the success of the plants, adding that the time had come for the country to move away from selling crude oil to value added petroleum products.
He urged them to target mostly gas-based industries so the country’s economy could improve and make a lot of dollars. “We need to look at transforming the industrial capacity of the country earning dollars and at the same time doing what we call import substitution,” Dangote noted.
Speaking on the occasion, Emefiele pointed out that Nigeria has the potential to export at least 3.5 million metric tonnes of urea to different parts of the world.
“Nigeria needs between one million metric to 1.5 million metric tonnes of Urea to meet the local demand. So, we have potentials to export at least three to four million metrics tonnes of Urea to different parts of the world. With this latest development, Nigeria has become one of the major producers of Urea in the world. This for me, is a story, which no one would have believed would happened in Nigeria.
“Nigeria now ranks amongst the leading countries in the production of Urea in the world. This, for me is a story that no one would have believed will happen in Nigeria,” he said.
“The mechanical commissioning of the Petrochemical and Refinery plant would kick off by the end of the first quarter of next year. Dangote has committed that mechanical completion will be achieved by the end of this year and we are expecting that the refinery will be completed by the first quarter of next year,” he pointed out.
Speaking on behalf of the bankers, the group managing director of Access Bank Plc, Mr. Herbert Wigwe expressed joy for the support they gave to Dangote to create a world class manufacturing enterprise in Nigeria.
“There was a lot of skepticism along the way as we moved on; can this project be completed, are we sure we have the right financing models and all of that.
“Today we saw Urea produced, we saw it bagged and we saw it loaded on trucks, and by Monday it will be in our markets. This for us is a very important milestone for Nigeria and Africa,” Wigwe stated.
On his part, the president, African Development Bank (AfDB), Dr. Akinwumi Adesina, stated that, Dangote’s fertiliser plant will drive productivity growth in Nigeria, adding that, prices will come down and quality will improve.
The AfDB boss, who disclosed this during a tour of Dangote Fertiliser and Petrochemical plants, stated that, the petrochemical plant will save Nigeria the sum of $9 billion a year in imports.
“One of the things I admire the most about Alhaji Dangote is that, he actually believes in Nigeria and Africa and invests his money in Nigeria and Africa.
“Dangote is quite an inspirational and visionary business leader and for anybody to have done what I have seen here, I think that person deserves world-class kudos. I see a company that I will proudly call Africa’s growth accelerator company.
“With this project, we see an acceleration of how to reduce imports, have an outbound on export; a value chain development and how to compete regionally and globally. I am completely blown away with what I saw here today as this project will reverse the huge sum the nation spends on foreign exchange,” he stressed.
He added that, “when you look at how much we import, it is about $57 billion worth of different products and we export only about $50.4 billion, so we have to balance that with about $7 billion.
“Talking to them here, they showed us that they can have a domestic market of about $11 billion and that is an incredible market, so this is huge for Nigeria and even for Africa as a continent.”
On the fertiliser complex, Adesina said: ‘it will drive productivity growth in Nigeria, prices will come down and the quality will also improve.’
Dangote Fertilizer’s Community Development Initiatives
Dangote Fertiliser has also shown commitment to holistic development of its host communities and local institutions. The company executed comprehensive and robust community development initiatives in partnership with host communities. Some of these initiatives are also designed to mitigate project impact on these communities whilst also improving operational efficiency of DFL. Some of these notable initiatives include; Water, Sanitation & Hygiene (WASH) Initiative, Farmers Livelihood Support Programme, Education Support Initiative, Scholarship, Scholarship, School Infrastructure Support, Youth Development, Institutional Building and Project Disclosure Meetings.
Dangote Fertiliser Plant is Africa’s largest Granulated Urea Fertiliser complex. The plant occupies 500 hectares of land in Lekki Free Trade Zone, Lagos Nigeria.
The capacity will later be expanded to produce multiple grades of fertilisers to meet soil, crop and climate-specific requirement for the African continent. Fertiliser is essential for agribuWWsiness in Africa. Dangote Fertiliser would surely make Africa self-sufficient in food production and a net exporter of food to the world.