Posts tagged as: dangote

Don’t Sell Your Agro-Produce, Official Appeals to Farmers

By Jonathan Musa

Simiyu — Farmers have been advised not to sell their produce as this would put them at risk of going without food.

The advice was given on Sunday by Dr Kessam Maswaga, an agriculture officer in Itilima District in Simiyu Region. He explained that the current weather was unpredictable and, therefore, there was a need for farmers to continue holding on to their produce as stock for the future.

“We have been expecting rains since August, this year, but it has not prevailed. This is a challenge which needs proper strategies,” he said.

Tanzania

Minister Defends President Against Billionaire Dangote’s Criticism

Minister of Industries, Trade and Investment Charles Mwijage yesterday defended the government against remarks made by… Read more »

Nigeria: Senate Asks Works Ministry to Remove All Speed Bumps On Federal Highways

By Kemi Busari

The Nigerian Senate on Tuesday asked the Ministry of Power, Works and Housing to remove all speed bumps indiscriminately erected on federal highways nationwide.

The ministry is headed by Babatunde Fashola, a former Lagos State governor.

In a motion moved by Barnabas Gemade, PDP-Benue and Stella Oduah, PDP-Anambra, the Senate noted that speed bumps are erected on almost all federal highways by whoever wanted, thereby causing agony for road users.

More details to follow…

Nigeria

Rumour of 10-Year Tax Holiday Granted Me Preposterous, Untrue – Dangote

Africa’s richest man and business mogul, Aliko Dangote, has debunked the rumours in public domain that his company will… Read more »

Nigeria: Resident Doctors Begin Indefinite Strike in Kaduna

Residents doctors in Kaduna State have begun an indefinite strike on Tuesday over the “sorry state” of healthcare facilities in state government hospitals.

Joseph Jokshan, president, Association of Resident Doctors in the state, said at a press briefing Monday night in Kaduna that the state government had not responded to any of the doctors’ demands issued 21 days ago.

He said the doctors were pained to begin the strike, but “unfortunately, we cannot effectively carry out these tasks in the current sorry state of our healthcare facilities.”

Mr. Jokshan listed issues that prompted the strike to include poor funding, equipping and staffing of hospitals and non provision of living environment for medical, health workers and patients.

He said members of the association were also demanding payment of House Officers salaries and arrears and immediate and full implementation of “corrected” CONMESS.

“Immediate implementation of already approved funding for residency training of Kaduna state doctors in their chosen fields, as well as promotion of our doctors that are due.”

He urged the general public to “join us in this struggle and push the government to do the needful.”

“This is the struggle we intend to see through to the end, not because we are unaware of the implication of this action but because we are left with no other option,” he added.(NAN)

Nigeria

Rumour of 10-Year Tax Holiday Granted Me Preposterous, Untrue – Dangote

Africa’s richest man and business mogul, Aliko Dangote, has debunked the rumours in public domain that his company will… Read more »

Nigeria: Why Agribusiness Foreign Investors Shun Nigeria – Dangote

By Ifeoluwa Adeyemo

The insecurity across Nigeria especially the rising cases of kidnapping is the reason foreign investors in the agribusiness sub-sector are not coming to Nigeria, the Chief Executive Officer of Dangote Group, Aliko Dangote, has said.

Mr. Dangote said this on Wednesday at the ongoing 6th edition of the 2017 AgrikExpo and NABG Conference in Abuja while speaking on the ‘Challenges Facing Agribusiness Investors in Nigeria.’

The billionaire industrialist was represented by the Executive Director, Stakeholder Management and Corporate Communications of Dangote Industries Limited, Mansur Ahmed.

According to Mr. Dangote, the wave of kidnapping along the Kaduna-Abuja Expressway has caused investors who own commercial farms to abandon them for fear of being kidnapped or attacked.

“The security situation in the country is discouraging agribusiness investors. Most of the people that own large farms on the Kaduna-Abuja Road have abandoned their farms due to the menace of kidnapping.”

He also traced the problems faced in accessing land by agribusiness investors to the Land Use Act, and said that if the Act was not revisited, it will obstruct the effectiveness of the diversification of the economy from oil to agriculture.

Mr. Dangote blamed government at all levels for lack of cooperation with and protection of investors in the agricultural sector.

He said there is no synergy in the inter-governmental relationships to enhance performance and productivity by the sector.

He therefore urged that government at all levels should begin to work together, where necessary, on a practical approach, especially on securing land for commercial agriculture.

“Agriculture cannot thrive in this country, except there is cooperation between all the agencies of government. Inter-governmental cooperation is lacking in terms of galvanizing the kind of support that investors need in the sector,” he said.

Nigeria

Illegal Funding of Govt – the Key Question Governor Failed to Answer

In apparent response to an exclusive report by PREMIUM TIMES, the Governor of the Central Bank of Nigeria, Godwin… Read more »

Nigeria: Dangote, Bloomberg, Others Discuss Use of Technology to Tackle Poverty

press release

Bloomberg Philanthropies hosted by former mayor of New York, Michael Bloomberg, inaugurated its first Global Business Forum with an astounding line up of global innovators, including Africa’s richest man, Nigerian industrialist Aliko Dangote.

Following talks by former U.S. president Bill Clinton, French President, Emmanuel Macron, Apple CEO Tim Cook, and Alibaba chairman Jack Ma, Aliko Dangote, took the stage with Bill Gates of Microsoft, Indra Nooyi of PepsiCo, and Masayoshi Son of SoftBank. David Rubenstein, CEO of The Carlyle Group who moderated the panel on technology’s ability to disrupt poverty. Mr Dangote cited Nigeria’s 130 million cell phone lines and his own company’s initiative to use biometric data and mobile banking to target one million Nigerian women for small grants.

‎Mr. Dangote and the Bill and Melinda Gates Foundation cited their collaborated effort in fighting polio by vaccinating seven million children using mobile trackers.

Nigeria

Govt Traces Biafra’s Source of Funding to France

The federal government hinted yesterday that it has traced the financial headquarters of indigenous people of biafra… Read more »

Tanzania: Cement Wars – How Dangote Price Cuts Drive Competitors Into Loss Territory

By Allan Olingo

The entry of Africa’s richest man, Aliko Dangote, into the cement business in Tanzania has rocked the industry in the region, with cement manufacturers looking at huge losses.

The cutthroat competition introduced by Dangote Cement through price cuts, is forcing the firm’s competitors to sell their products at prices lower than their cost of production.

In the past two weeks, two of the region’s cement players with more than 60 per cent combined market share in Tanzania, posted negative results which they blamed on the price wars that have seen them consistently sell their products below cost as they struggle to stay afloat.

The Tanzania cement sector has experienced disruption following the entry of Dangote Cement, as discount pricing unsettled the large cement players in the region, further raising competition and cutting margins in the local and regional cement market.

Tanzania Portland Cement Company (TPCC), majority owned by Germany’s Heidelberg Cement, posted a 45.6 per cent drop in first-half profit after an output glut, while Kenyan headquartered Athi River Mining (ARM) Cement saw its losses compounded fivefold, from $2.54 million to $13.3 million.

ARM chief executive officer Pradeep Paunrana said that in the past six months, they have been forced to sell cement at a price below cost in Tanzania, which has hurt its 26 per cent market share.

“The commodity’s price in the Dar market fell from $88 per tonne in September last year to lows of $60 per tonne this year. This has greatly affected us,” Mr. Pauranha said.

The price cut was occasioned after Dangote Cement slashed its prices by up to 40 per cent in 2015 to gain market share, leaving the smaller players struggling.

TPCC, Tanzania’s biggest cement maker, with a 36 per cent market share, reported a net profit of $5.5 million, down from $10.03 million a year ago. Its chairman Hakan Gurdal said the drop in profit resulted from the lower prices in an increasingly competitive market that saw the firm’s revenue drop by 16 per cent to $52.57 million.

“The market situation remains challenging, but we will continue to work to maintain our market leadership. We are now implementing strict cost controls to reduce the cost of sales and administrative expenses,” Mr Gurdal said.

Last month, Dangote announced that it would start using its own gas-powered plant in Tanzania this month to reduce its reliance on diesel generators for electrical power which had seen its operations costs increase. This means that the firm’s costs will drop significantly, probably affording it further price cuts, to the detriment of its competitors.

Even as the other firms complained of high production costs, Dangote’s Mtwara plant increased volumes by at least 64 per cent in the first half of 2017, pushing the six-month sales to more than 400,000 tonnes, despite the losses incurred in its operations costs.

“The factory is still reliant on diesel generators which results in net income losses that weigh on our operations outside of Nigeria. However, we expect to have gas turbines installed by September, which will immediately bring the plant into profitability,” the firm said.

Mr Dangote has used his Ethiopian and Tanzanian plants to gain a foothold in the regional cement industry. His targeting of the consumers with low-cost cement, which is 20 to 40 per cent cheaper than other locally produced products, drove down retail prices in a market where they had remained static for close to a decade. It has since gained a 23 per cent market share after its 2015 opening of its three-million-tonne-per annum plant in Mtwara.

For ARM, losses have now forced it back to the drawing board as it seeks a new round of fundraising to steady its business, probably through selling a stake to a new investor in the short term.

ARM’s Tanzania business has remained uncompetitive as cement prices there have been declining, with the current levels of $66 per tonne, from a high of $105 in 2016.

Strategic investor

The Tanzania business accounted for 29.3 per cent of ARM’s total sales and income in 2016 but also contributed 65 per cent of the loss before tax.

“Our plan is to sell our non-cement business, which is the fertiliser plant in this case, take short term shareholder loans and bring on board a strategic long-term investor. We are doing this to restore the value which has been eroded because of our Tanzanian operations,” Mr Paunrana said.

In September 2016, the firm received $140 million investment from CDC Group, to reduce the long term debt which has been escalating over the years. As at December, its debt halved halved to $126.17 million from $232.53 million in 2015, However, the firm is looking to add more debt to ease near-term repayment obligations.

Analysts at Genghis say that they expect cement firms in the region to continue performing below par as the production cost remain high in Tanzania and Kenya, due to a ban of imported coal in Tanzania.

“We are confident that challenges relating to supply of coal will come off from the second half of this year due to the new two coal mines in Tanzania. Other challenges relate to electricity supply , but this is expected to level off, though at a slower pace, as the government installs new transmission lines,” analysts at Genghis said.

Nigeria: H1’17 Corporate Performance – Tier-1 Banks Drive Up Combined Revenue to N5.2 Trn

By Nkiruka Nnorom

Full results of leading companies quoted on the Nigeria Stock Exchange, NSE, in the first half of 2017, H1’17, point to real recovery in corporate performance reflecting positive developments in the economic environment within the period. Financial analysts say second half would be even more impressive, if the positive macroeconomic environment is sustained.

The final reports 94 leading companies show they recorded N5.27 trillion in revenue in H1’17, a 20.3 per cent increase compared to N4.38 trillion posted in the corresponding period of 2016, while their profit before tax, PBT, rose to N960.5 billion from N598.1 billion, representing 60.6 per cent increase.

The banking sector by the virtue of release of the results of the four tier-1 banks and the three others, outpaced other sectors, accounting for N2.59 trillion or 49.2 per cent of the overall turnover and N456.24 billion, representing 48 per cent of the overall profit before tax of the 94 companies.

But a two-part analysis by Financial Vanguard indicated that the tier-1 banks (comprising First Bank, United Bank for Africa, Zenith Bank, Guaranty Trust Bank and Access Bank) with a combined H1’17 earnings of N1.353 trillion, drove up the revenue profile of the 94 companies with the five banks accounting for 25.7 percent of the 94 companies’ combined revenue. Also, while the five tier-1 banks had combined revenue growth rate of 31.1 percent, the rest of the companies numbering 89 had a combined revenue growth rate of 17 percent.

However, though the tier-1 banks dominated the size of the combined profits of the 94 companies, the PBT growth rate of the 89 companies at 85.8 percent was diminished by tier-1 banks’ PBT growth at 28.5 percent.

The combined PBT of the tier-1 banks at N338.46 billion accounted for over 35.2 percent of the combined PBT of the 94 companies which stood at N960.5 billion.

Companies subdue inflation

Nevertheless, the leading companies’ revenue and profit performances subdued inflation rate and outshined the gross domestic product, GDP, within the period.

Inflation trended lower throughout H1’17 recording a six-month average of 17.23 percent while the percent and 60.6 percent respectively.

A recovering GDP figure for quarter two, Q2’17, grew by 0.55 per cent year-on-year in real terms, while it was negative in Q1’17.

The H1’17 corporate results, according to business analysts, revalidate recent macroeconomic performance indicators, which were all in positive territories.

The growth in the companies’ fortune also confirmed the expansion in economic activities as reflected in the Central Bank of Nigeria, CBN, Purchasing Managers Index, PMI, which has been robust for five consecutive months to August, 2017.

The August manufacturing sector PMI expanded to 53.6 per cent, while the non-manufacturing sector composite PMI expanded for the fourth consecutive month to 54.1 per cent.

The report revealed that out of the 34 sectors surveyed, 27 sub-sectors experienced expansion in activities, while seven sectors experienced contraction.

Analysts’ positions

However, investment experts are of the opinion that the worst may not be over yet despite the exit of the country from recession. They said that businesses still have inflationary pressure to deal with and called on the government to work on further bringing down inflation to ease the attendant challenge to business entities.

“That we are out of recession and the economy is doing well is a welcome development for business interest, which means that income to the businesses is going to increase now that the income to the economy has started and more income and make more profit,” said Mr. David Adonri, Managing Director/CEO, Highcap Securities,

He, however, said that Nigerians, including businesses would still be groaning as their income would still be eroded by inflation.

“The country has been experiencing stagflation and stagflation has two legs – recession and inflation. Now the country has come out of recession, but we still have high inflation rate challenging the economy. So, what we have achieved so far is inflationary growth, whereas the objective of any good economy is to achieve non-inflationary growth. So, the challenge that is still there is to bring down inflation to a single digit.

“So, the next challenge is to manage the economy in a such a manner that inflation would start declining and if possible, get to single digit level where the economy will enjoy non-inflationary growth,” he declared.

According to Johnson Chukwu, Managing Director/CEO, Cowry Asset Management, the growth being witnessed in the economy is sublime coming from one sector – the oil and gas sector.

“I think we would have subdued optimism going forward. The economy has rebound from a negative to a positive growth, but growth is very sublime coming from one sector. The agriculture and manufacturing sectors are growing at a slower rate and trade has not turned positive, but given that the sector that lubricates every other sector, which is the oil sector, is now profitable, one is hoping that the trickledown effect of that recovery will be felt in every other sector. So, it is going to be a kind of subdued optimism for businesses in the remaining part of the year,” he added.

Corporate Results

Breakdown of the corporate results showed that pharmaceutical sector, which enjoyed huge investors’ patronage on the stock exchange during the period, came tops in terms of percentage growth in revenue, recording 77 per cent growth to N11.84 billion from N6.69 billion in H1’16.

This was followed by the consumer goods sector, which rose by 64.2 per cent to N364.82 billion from N222.21 billion, while the agriculture sector came third with 58.6 per cent increase to N31.14 billion from N19.64 billion 2016.

However, the banking sector led revenue in absolute terms with the revenue of the 14 banks reviewed rising to N2.59 trillion from N2.04 trillion, a 27 per cent growth. The banking sector also accounted for 49.2 per cent of the total turnover for the period.

The oil and gas sector came second, recording N701.44 billion revenue in H1’17 against N532.87 billion posted in the same period in 2016, thus representing 31.6 per cent growth. The sector, therefore, accounted for 13.3 per cent of the overall turnover.

Industrial goods sector placed third, polling N584.05 billion in revenue, 52.3 per cent increase compared to N383.61 billion and accounted for 11.8 per cent of the total turnover of all the companies.

Profitability Positions

The consumer goods sector, which recorded subdued profitability in 2016 due, mainly, to rising cost of raw material sourcing and high cost of other manufacturing inputs occasioned by forex scarcity during the period, came tops in terms of percentage growth in PBT in H1’17. The sector achieved huge 352.9 per cent growth to N63.875 billion in H1’17 against N14.105 billion in H1’16.

The industrial goods sector ranked second, with 189.7 per cent increase in pre-tax profit to N281.67 billion from N97.22 billion, while conglomerates sector, which ended H1’16 in negative profit position due to the same forex reason above, came third with 168.1 per cent growth. The sector’s PBT went up to N5.29 billion against -N7.77 billion loss before tax in 2016. The three sectors significantly out-performed inflation during the period under review.

Again, the banking sector outpaced others to lead profitability in absolute terms. At the end of the review period, the sector raked in N456.24 billion pre-tax profit compared to N370.64 billion in H1’16. This means that the 15 banks represent controlled 48 per cent (nearly half) of the combined pre-tax profit of the 94 leading companies in the NSE reviewed.

The industrial goods sector followed, posting N281.67 billion PBT against N122.57 billion in 2016, thereby accounting for 29.3 per cent of the overall PBT of all the companies.

The consumer goods sector was the third as the sector achieved N63.88 billion pre-tax profit in H1’17 against N14.11 billion in H1’16 and accounted for 6.7 per cent of the total PBT recorded by the companies in the half year period.

Sectoral analysis

The banking sector, propelled by earning positions of Zenith Bank Plc, Ecobank Transnational Incorporated, Access Bank Plc, Stanbic IBTC Holdings Plc and UBA Plc, led others with N2.59 trillion revenue position.

Zenith Bank led other banks analysed in the sector, posting 77.1 per cent growth in revenue at N380.44 billion up from N214.81 billion in H1’16. This accounted for 14.7 per cent of the sector’s earnings. Access Bank and ETI placed second with 41.5 per cent revenue growth each. Access Bank recorded N246.58 billion against N174.01 billion in 2016, while ETI recorded revenue of N386.89 billion against N273.45 billion.

Access and ETI contributed 9.5 per cent and 15 per cent to the sector’s total earnings respectively.

Stanbic IBTC was the next as it recorded 36.3 per cent revenue growth to N97.2 billion from N71.32 billion, representing 3.7 per cent of the sector’s turnover. UBA ranked fifth, achieving N222.7 billion turnover, which represents 34.5 per cent increase compared to N165.6 billion posted in 2016 and accounted for 8.5 per cent of the sector’s turnover.

Stanbic IBTC emerged the sector leader in percentage growth in profitability, followed by Zenith Bank Plc, Fidelity Bank Plc and UBA Plc in the second, third and fourth positions respectively as the sector posted N456.24 billion PBT during the period.

Stanbic IBTC’s PBT grew by 86 per cent to N29.17 billion from N15.68 billion, thereby contributing just 6.4 per cent to the sector’s profitability. Zenith Bank followed with 74.2 per cent increase, rising to N92.18 billion from N52.91 billion and accounted for 20.2 per cent of the sector’s PBT. Fidelity Bank placed third with 66.7 per cent PBT growth to N10.22 billion from N6.13 billion, but accounted for mere 2.2 per cent of the banking sector’s profitability. UBA was the next with 65.5 per cent PBT growth to N57.53 billion from N34.76 billion, which represents 12.6 per cent of the banking sector’s profitability.

However, GT Bank Plc, which recorded N101.1 billion pre-tax profit, emerged the major contributor to the sector’s pre-tax profit in real term, contributing 22.2 per cent to the PBT.

Oil & Gas sector

The oil and gas sector, driven by improvement in earnings position of counters like Oando Plc, BOC Gases, Total Nigeria Plc and MRS Oil, recorded 31 per cent overall sector revenue growth at N701.44 billion against N532.87 billion in 2016. This shows 13.3 per cent of the total 94 companies’ turnover.

The sector recorded N7.014 billion pre-tax profit against N55.312 billion loss before tax in H1’16, representing 112.68 per cent growth. This represents 0.7 per cent of the total pre-tax profit of the 94 companies for the period.

Oando Plc led other companies analysed in the sector, rising by 129.8 per cent to close the period at N266.98 billion in comparison to N116.24 billion in the corresponding period. The company accounted for 38.1 per cent of the sector’s total turnover.

BOC Gases followed with a 77 per cent growth to N1.21 billion from N926.61 million achieved in H1’16. The company, however, accounted for mere 0.2 per cent of the sector’s turnover. MRS Oil Plc placed third, rising by 16.2 per cent to N62.48 billion from N53.78 billion and accounted for nine per cent of the sector’s turnover volume.

BOC Gases towered above others in terms of profitability. The company’s pre-tax profit rose by 496 to N199.40 million from N33.45 million in H1’16 and accounted for 2.8 per cent of the oil and gas sector’s PBT. It was followed by Caverton Offshore Group Plc with 1400 percent growth to N938.03 million from -N2.40 million loss position, while Forte Oil Plc placed third with 10.3 per cent growth to N4.74 billion from N4.26 billion PBT recorded in H1′ 2016.

Industrial goods sector

The industrial goods sector, driven by Dangote Cement, Lafarge Africa and Cement Company of Northern Nigeria, CCNN, posted N584.05 billion turnover, which represented 11.1 per cent of the 94 companies’ total turnover.

The sector recorded N281.67 billion pre-tax profit, thereby, accounting for 29.3 per cent of the total profit of the companies reviewed. Dangote Cement, which led in the sector, posted N412.68 billion revenue and N115.58 billion pre-tax profit.

The company showed leadership, controlling 70.7 per cent and 41.03 per cent of the sector’s turnover and PBT figures respectively. Lafarge Africa emerged second in the sector with N154.84 billion turnover, which represents 26.5 per cent of the sector’s turnover. Its pre-tax profit, however, stood at N18.16 billion, a mere 6.4 per cent of the sector’s profit, while CCNN was the next with N8.51 billion and N968.57 million turnover and profit before tax respectively. CCNN contributed 1.5 per cent and mere 0.3 per cent to the sector’s turnover and pre-tax profit respectively.

Consumer goods sector

The consumer goods sector posted N364.82 billion revenue and N63.875 billion in profit before tax, representing seven per cent and 6.7 per cent of the 94 companies’ total turnover and profit respectively. Analysts are of the opinion that the sector and some other manufacturing interests are beginning to enjoy the benefit of new CBN forex policy and improvement in macro-economic environment.

Nestle Nigeria Plc stood above others both in terms of revenue and profit position. Nestle during the period under review posted N121.92 billion revenue and N24.46 billion profit before tax, representing 33.4 per cent and 38.5 per cent of the sector’s turnover and pre-tax profit respectively. Dangote Sugar Refinery, DSR, came second with N118.68 billion revenue, representing 32.5 per cent contribution to the sector’s turnover. Its pre-tax profit stood at N25.61 billion, a 40.1 per cent of the sector’s profit. Dangote Flourmills Plc with N64.86 billion revenue emerged third company in the consumer goods sector. This accounted for 17.8 per cent of the sector’s turnover. Its profit before tax at N8.80 billion represents 13.8 per cent of the sector’s profit.

Insurance sector

The sector recorded the highest number of filers as a total of 23 insurers have already filed their H1′ 17 result, a marked departure from the usual practice where majority of the companies were non-compliant. The sector pooled N169.684 billion revenue and N30.684 billion pre-tax profit for the during. This represents 3.2 per cent and 3.2 per cent of the 94 companies’ turnover and profitability respectively. Unity Kapital Plc led with N21.98 billion turnover, representing 13 per cent of the sector’s turnover, while its pre-tax profit stood at N2.61 billion, accounting for 8.5 per cent of the sector’s profit. Axamansard Insurance came second with N17.95 billion revenue and N2.32 billion profit before tax. This accounted for 10.6 per cent and 7.6 per cent of the sector’s revenue and pre-tax profit. Continental Reinsurance with N15.19 billion revenue came third in the sector, contributing nine per cent to the turnover. Its profit before tax for the review period stood at N3.11 billion, representing 10.14 per cent of the sector’s pre-tax position.

Outlook

According to United Capital Plc, “The improvements observed in first quarter 2017, Q1’17 and second quarter 2017, Q2’17, were predicated on the resilience of the agriculture sector, increased crude oil production, amid the relative peace in the Niger Delta region, an aggressive drive to stimulate the economy via an expansive spending and borrowing plan and the adoption of a market friendly foreign exchange, FX rate regime (the I&E window). In our opinion, if the pace of policy pronouncement and implementation is sustained, the worst may be over”.

The investment banking house observed that five consecutive month of improvement in manufacturing PMI supports its position that the pace of output expansion in H2’17 will be stronger than witnessed in H1’17 as the market friendly policy reforms implemented in Q2’17 are expected to take full effect on the economy.

Alhaji Ola Yusuf, Managing Director/CEO, Trust Yield Securities, said that given the improvement already seen in the economy, the remaining part of the year would be good for businesses as they would make profit and declare more dividend for their investors.

“Once the environment is positive, then it means that things will turn out better and it will be reflected in companies results,” he said.

Cowry Assets Management analysts, in their H1’17 review of the economy, stressed that though improvement in the seasonal and structural factors would lead to a year-on-year moderation in both household and business input costs, but the risk to the outlook would be increased public sector spending for the 2017 fiscal year which will tend to drive up general price level.

Nigeria: Dangote Promises to Power Outage in Kano

Photo: The Guardian

Aliko Dangote.

By Jonathan Eze

Dangote Group has signed a Memoranda of Understanding (MoU) with the Kano State Government for the proposed 100MW Dangote-Black Rhino Solar Power Plant.

The formal agreement for the project, which is to be sited at Zakirai, in Gabasawa Local Government Area of the state, took place thursday, at the office of Secretary to the State Government (SSG), Alhaji Usman Alhaji, in Kano.

Dangote said the MoU was another milestone in the evolving partnership between Dangote Group and the state government in their determination to bring about the much needed improvement in the economy of the country.

He described the situation of decadence in the power sector, which resulted in decline of the status of Kano, a once vibrant industrial and commercial city in the past three decades as sad.

Represented by the Group’s Executive Director, Mr. Mansur Ahmed, Aliko, said it is incumbent, and necessary for the benefit of the people of Kano and the entire nation to restore the economy’s vibrancy.

He decried the power challenges which have continued to militate against industrialisation and economic development in the state, saying “As we all know Kano’s pre-eminent status as a great centre of commerce in the sub-Saharan region for almost two centuries has sadly declined.

“It is an open secret that the gross inadequacy of supply of reliable and affordable electricity is one of the critical challenges facing the state’s economy. This project will, on completion, add 100MW to the state’s electricity supply and is fully in line with our group’s strong commitment to contribute to the reinvigoration of the state’s economic potential and over all national development”. The President/CE, Dangote Group further said.

The power plant which is a state-of- the- art renewable energy plant will be fully financed, jointly by Dangote Industries Ltd and its global strategic partner, Black Rhino Group, and promises to convert abundant energy of the sun into high quality clean electricity with no deleterious impact on our nation’s economy.

Signing the MoU on behalf of the State Government, the SSG, Alhaji Usman Alhaji, indicated that the momentous event displayed the sacrifice of Aliko Dangote, a son of the soil, for the people of the ancient city of Kano, and indeed, the nation in its struggle to move its economy forward.

He said prior to the signing ceremony, his office had performed another strategic ceremony, the distribution of vehicles to various security agents to enhance security of the state.

“The security concern is all part of effort of Kano State government to secure the state and its investments, such as the Dangote-Black Rhino project,” Alhaji disclosed.

He expressed gratitude to Dangote for making Kano proud and said all hands will be on deck towards seeing to completion of the desired project in good time.

Cement Firms Plan Massive Expansion Amid Slim Profits

Photo: The New Times

Cimerwa factory (file photo).

By Allan Olingo

These are turbulent times for cement manufacturers in the region as stiff competition from cheap imports continues with slower demand in the housing and construction sector to keep profits stagnant.

On Wednesday, ARM Cement posted a net loss of $28 million for the year ended December 2016. The firm, is ranked East Africa’s second-biggest cement producer and has operations in Tanzania, saw revenue drop to $127.9 million compared with $147.3 million the previous year. The dip was blamed on increased competition and lower cement prices in Tanzania.

“The Tanzania business environment continued to worsen during the year. While electricity supply normalised, the government ban on coal imports in favour of local procurement not only increased manufacturing costs but also impacted negatively on capacity utilisation of the 4,000 tonnes per day clinker plant at Tanga due to chronic undersupply,” ARM said.

The Tanzania cement sector has seen massive disruption following the entry of Dangote Cement, whose discount pricing unsettled the large cement players, stiffening competition and cutting margins in the local and regional cement market.

The new entrant, owned by Africa’s richest man, Aliko Dangote used his Ethiopian and Tanzania plants to gain a foothold in the regional cement industry. Dangote’s targeting of consumers with cement that is 20 to 40 per cent cheaper than the locally produced product, began to drive retail prices downward in a market where they have remained static for close to a decade.

Dangote has since garnered a 23 per cent market share after the 2015 opening of its three million-tonne per annum plant in Mtwara.

The firm has seen revenue from its East and Southern African investment rise from $54.5 million in 2015 to $82.2 million in the last six months of 2016 supported by its Ethiopia and Tanzania operations, driving the combined regional profit to $3.43 million.

Its production capacity from 922,000 tonnes last year to 1.6 million tonnes in the six months ending June 2016.

Overcapacity

Other firms operating in Tanzania also saw their margins drop as a result of the price wars and overcapacity. Tanzania Portland Cement, that trades under the Twiga brand, saw its profits decline by 29 per cent to $17.62 million from $24.88 million due to revenue decline and assets impairment.

Tanga Cement Company Ltd, that sells the Simba brand, saw its net profit halved to $1.85 million from $3.63 million a year earlier. It put down its reduced fortunes to the extensive capital expansion of its new integrated production line last year.

Kenya proved to be ARM’s saving grace, buoyed by a rise in construction and housing growth, that saw production and sales volumes go up 10 per cent even as prices remained stable.

Bamburi, the region’s largest cement firm, and part of the Lafarge Group saw its margins for last year remain flat. It blamed falling demand in domestic and regional markets as well as rising competition.

The firm’s net profit last year stood at $58.9 million, a 0.3 per cent rise over the profit recorded in 2015. Turnover dipped from $392 million the previous year to $380 million in 2016.

“The group turnover for the year was slightly below 2015 against the backdrop of a competitive operating environment in Kenya and Uganda. Overall, there was a marginal reduction in volumes of intra-Africa exports and intense competition, particularly in the individual home builder segment, impacting prices in some markets,” Bamburi said in a statement.

Export potential

It added that mega infrastructure projects in Rwanda and Uganda lifted its sales.

Despite the bleak outlook, some of the firms are still pushing on with expansion plans even at the risk of having idle capacity as volumes decline. Currently, the estimated plant utilisation rate is 61.7 per cent. However, Dyer & Blair Investment Bank predicts that this will fall to 45.4 per cent by the end of next year.

This effectively casts doubt about the effectiveness of these expansions. Kenya accounts for 53.2 per cent of the 21.1 million-tonne installed capacity in East Africa.

Tanzania has an annual installed capacity of 8.3 million tonnes against the current annual demand of 4.3 million tonnes.

ARM said it is contemplating completion of its Athi River grinding plant expansion. It is expected to increase its Kenya capacity by 650,000 tonnes a year. Bamburi has also talked of plans to increase capacity in Uganda and Kenya in projects that will be completed next year.

It has already announced a $9.02 million expansion of its Nairobi plant that should see it double its capacity to 2.3 million tonnes annually.

Dangote Cement on the other hand has pushed back its entry into Kenya to 2021, while it reviews its manufacturing plan to build two plants in the country instead of one but with a capacity of three million tonnes of cement per annum.

“Kenya is high on our priority list and we plan to build two plants of 1.5 million tonnes per annum each, near Nairobi and Mombasa, to serve the local market. We hope to be operational in Kenya by 2020/21. We also believe there is potential to export cement from Ethiopia to Somalia and South Sudan, despite the distances involved,” the company said in its financial report.

In a previous interview, Dangote Cement chief executive officer Onne Van der Weijde said that they were taking a more measured approach to the rollout of new capacity across the region.

Nigeria: Kano Govt Signs Health Basket MOU With Gates, Dangote Foundations

By Sani Tukur

Kano State Government, Bill and Melinda Gates Foundation and Dangote Foundation, on Wednesday signed the Kano Health Basket Memorandum of Understanding, MoU, to boost health care interventions in the state.

The Health Basket is a funding mechanism initiated as part of the state government’s decision to revitalize its health sector.

The basket is funded by the two foundations and the state government that pool resources to support the implementation of programmes aimed at strengthening child health and other health interventions from 2017 – 2021.

The two foundations were encouraged to enter into the new MoU with Kano state government based on the success recorded in the tripartite agreement between them on strengthening routine immunisation, which was carried out between 2012 and 2016.

Speaking during the ceremony held through a video conference at Africa House, Government House, Kano, the state governor, Abdullahi Ganduje, said his administration “would release N350 million into the basket, as part of efforts to address maternal mortality and child related health challenges in the state”.

He said his administration had recently completed two abandoned hospitals and supplied them with modern equipment as part of moves to bring health care services closer to the citizenry.

He thanked Bill and Melinda Gates Foundation, Dangote Foundation as was well as the World Health Organisation, WHO, and other donor agencies for their sustained support.

In his comments, the Co-chair, Bill and Melinda Gates Foundation, Bill Gates, who spoke from Seattle, Washington, urged the state government to focus on accountability in managing the funds released for the programme, reiterating the need for media review reports, which he said would guide all the parties towards achieving the desired success.

Mr. Gates assured that his foundation was determined to eradicate polio and other related diseases in Nigeria, Africa and the world in general through partnership with governments.

On his part, Aliko Dangote thanked the Gates Foundation for its commitment to polio eradication and commended the efforts of traditional rulers and other relevant bodies in fighting the scourge.

In his contribution, Kano state Commissioner for Health, Kabiru Getso, highlighted that for 2017, the two foundations ‎would contribute 40 per cent each to the programme, while the state government would contribute 20 per cent.

He said the state government would gradually increase its contribution, to enable it take full ownership of the programme in the future.‎

The video conference also featured presentation of the 2016 end-year report for Routine Immunization system strengthening for Yobe state, with contributions from the state governor, Ibrahim Geidam, and the state Commissioner for Health, Muhammad Kukawa.

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