Aliko Dangote is set to expand his energy and industrial footprint in East Africa with a proposed $16 billion refinery in Kenya, as the industrialist pushes for greater local processing of Africa’s natural resources.
The Dangote East Africa Petroleum Refinery and Petrochemicals Special Economic Zone (SEZ), planned for Mokowe in Lamu County, is expected to have a processing capacity of 700,000 barrels per day and is targeted for completion by 2030.
The project is scheduled to break ground on Wednesday and is expected to process crude from Kenya’s Turkana oilfields as well as supplies from other parts of Africa.
The refinery is also expected to help reduce East Africa’s dependence on imported petroleum products by increasing regional refining capacity.
Speaking to reporters in Nairobi on Tuesday, Dangote said the project formed part of a broader effort to move Africa away from exporting raw materials towards producing and exporting finished goods.
“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,” Dangote said in response to an AFP question about when Africa would no longer need to import fuel from outside the continent.
Dangote also dismissed concerns surrounding the Kenyan project, which is planned for Lamu on the Indian Ocean coast and has faced a land-rights court case as well as opposition from environmental groups, including Greenpeace, over its potential environmental impact.
“There’s actually no problem with these sort of cases,” Dangote said. “There are people who don’t want the development of Africa.”
Dangote plans further African investment
Dangote, who has disclosed plans to invest an additional $50 billion across Africa after committing more than $25 billion to existing businesses, said the next phase of the group’s expansion would combine large-scale industrial investment with greater public ownership through African capital markets.
Speaking during a fireside chat with Nairobi Securities Exchange Chief Executive Officer Frank Mwiti at the “Dangote Petroleum Refinery IPO High Level Investor Engagement” organised by the NSE, Dangote said Africa could not afford to take small steps 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.”
Kenyan President William Ruto’s chief economic adviser, David Ndii, said the Lamu project emerged from discussions among African policymakers, financiers and business leaders on how the continent could use its natural resources to drive industrialisation rather than simply export raw materials.
According to Ndii, those discussions identified petroleum refining as a strategic opportunity for East Africa and led to engagements involving Dangote, Ruto, Ugandan President Yoweri Museveni and other regional leaders.
He said a closed-door meeting in April examined an addressable East African market for finished petroleum products estimated at 20 million metric tonnes annually, potentially rising to 30 million tonnes.
Ndii traced the project’s origins to an earlier meeting in Nairobi convened by Ruto and Samaila Zubairu, President and Chief Executive of the Africa Finance Corporation. The meeting examined the challenges facing efforts to finance infrastructure aimed at processing Africa’s natural resources locally.
Quoting a phrase from Zubairu, Ndii said: “We export our minerals FOB and import inflation CIF.”
He said the Lamu project represented an attempt to reverse that pattern by encouraging greater local processing and value addition.
Dangote pushes wider public ownership
The East African expansion is also part of Dangote’s broader push to increase African ownership of some of the continent’s largest businesses.
Dangote told investors that the ongoing public offer for Dangote Petroleum Refinery was not primarily intended to raise capital but to broaden participation in the wealth generated by the group’s industrial investments.
“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 said the group was prepared to progressively release more equity in its businesses as investor demand grows.
“I’ve said that all the companies that we operate from today, eventually all of them will be owned by the people,” Dangote said.
The industrialist disclosed that a new shipping business being developed by the group would eventually be taken to the capital market, while its expanding fertiliser operations would also be opened to public participation.
“Let people own it,” he said.
Dangote said the group’s ambition was to create millions of African shareholders who could benefit from both dividends and potential capital appreciation as the underlying businesses expand.
He also said that if the Lamu refinery eventually becomes publicly listed, it should be listed in Kenya rather than automatically taken to the Nigerian market.
“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.
