Industry perspective: Aliko Dangote — Dangote Group

Industry perspective: Aliko Dangote — Dangote Group

Dangote reveals the vision that will help it grow fourfold in the next three years.

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One of Africa’s largest manufacturers, Dangote Group has many businesses – food, cement, steel, real estate, telecoms, haulage, port management, oil and gas – united by one purpose: to meet the ‘basic needs’ of Nigerians with local, value-added products and services.

In 2016, group turnover was US$3 billion. CEO Aliko Dangote is predicting fourfold growth over the next three years. In most of its markets, Dangote has a share in excess of 35 percent. It claims 65 percent of the Nigerian sugar market, despite two large competitors, while its flour-milling business is set to process over 1 million tonnes of wheat. Dangote explains this success in one word: quality. “From the start, we knew customers wouldn’t trust our brand,” he says, “because they’ve been used to one brand for over 50 years. So we make sure our quality is the best and we name a very good price”. Would they be prepared for a price war? “We don’t need to crash the price unless someone wants to take us on. Then we’d be ready.”

To guarantee quality – especially in new markets – Dangote invests in its own high-tech equipment, infrastructure and logistics, rather than buying established firms. In Africa, where new technologies don’t reach every country at the same time, the CEO likens buying a company to buying a new home. Take on a business whose facilities are out of date, and you have to work harder to make money. By building from the ground up, you can solve problems before they arise.

“Most assets in Africa are old assets that people sweat to make money,” Dangote says. “When you move in, you see a lot of leaks and burst pipes. Our strategy has been to go in as a greenfield project and build from scratch. We build the company, get into the market, then we compete.”

Dangote can be flexible. At one stage, the company sold its food business Tiger Brands, but bought it back after it floundered. It’s now doing nicely again.

As diverse as the group’s portfolio is, Dangote says: “We never go into a business that we don’t understand. We study the business first, and learn about it until we believe we are competitive, then we invest. With cement, we asked: ‘Can we produce the same quality cement as Lafarge [the biggest rival in Nigeria]? In areas where some competitors have been there for 50 years before us, we’ve taken market share, with no adverts – nothing.”

Dangote’s diversity helps individual business units. There are synergies between its companies that mill flour and make pasta and noodles, just as there are between the firms that grow sugar and make fertilizer.

The Nigerian economy has endured tough times. “The key thing for us,” Dangote says, “is to interact with the government to develop policies that allow the economy to grow. If that happens, we will grow as well.”

Dangote doesn’t expect events such as Brexit to hurt the group. “With our refinery and petrochemical plant, we want to export within West Africa and Central Africa,” he says. “The same with rice – even if we plan to produce five times what we do now, Nigeria will consume it all, or we can export to ECOWAS.”

If anything, Dangote sees opportunities: “Prime Minister May has been very busy trying to find new partners. President Trump is changing a lot of things, such as NAFTA. Eventually Africa will benefit. It offers more advantages going forward.”

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