News Column

Agric Is Not a Poor Man's Business - Dangote

September 2, 2014

Recently in Abuja, the President of Dangote Group, Aliko Dangote, signed a Memorandum of Understanding (MoU) with the Federal Ministry of Agriculture and Rural Development on his company's investment of $1billion for integrated rice project in five selected states. Dangote, the richest man in Africa, spoke to journalists on what motivated him to venture into rice farming, his dreams and expectations in the agricultural sector as well as his clarion call for other investors to join hands with him to make Nigeria the Continent's powerhouse for food and agriculture. Our Correspondent, Chibuzor Emejor, was there. Excerpts:

Sir, what motivated to venture into rice farming at this period in the nation's life?

We have been pushing for the signing of this agreement in the last three months. The honourable Minister of Agriculture has been on my neck, on continuous basis, he has been asking, when are we going to sign this agreement? Lately, we now have the opportunity of expanding the project. Initially, we wanted to just to invest about $300million in one area, which is Edo State. And now, we have ended up in five states--kebbi, Niger, Jigawa, Edo and Kwara. With this, what we are trying to do is to join hands with the Ministry, apart from making Nigeria self-sufficient in rice, we are also to make sure that Nigeria exports rice. We have no reason not to export rice. Right now, everybody is quite happy in selling a lot of crude oil, but I think that it will be very shameful that the biggest economy in Africa is not self sufficient in what we eat. It is not only the duty of the government to ensure that the country becomes self-sufficient. Government has done its own by giving what it takes for somebody to invest. The climate is conducive, we have the best land, and we have water and the support of the government to protect our investments. Unless, you are not serious, there is no reason why we can not partner with the government to make the dream a reality.

It is not government's work to go into agriculture. But government is facilitating it. Government is providing the support and encouragement, because if the country is totally open for dumping, it will be very bad. With the new rice policy in place, which has been signed by President Goodluck Jonathan, I think, it is only those who are not serious that will continue to import rice. I have seen it happened before. I can assure you that the rice issue will be a success story. The names of the Minister of Agriculture and Minister of State for Agriculture will be written in gold, just below the name of the President who is the Commander -in- Chief.

What gives you impression that you would succeed in this venture?

We have tried a number of things and saw them succeed. Sometimes, when we say we are going to eliminate the importation of food items, majority of Nigerians will say this is not possible. Let me give you an example. In 2002, there was a policy that Nigeria would stop importation of cement. The total production of cement then as of January 2003, was 1.8million tons. After 10 years, when the policy has been in place, today the total production is 28million tons. So we have moved from 1.8million tons to 28million tons. This August alone, we are adding another 9million tons, so we are going to have a total production of 37 million tons just in 10 years. Doing farming is much more easier and cheaper that producing cement. Building the factory alone requires about four years to do. The impact on the society, there is no comparison. The main reason we want to move into agriculture is that the general perception is that there is no money in agriculture. It is also the same perception in the building of industries. People would say that person did it and failed. So they will not do it. There was then, especially during the military era. Then, the policies were not consistent. Right now, there are right policies from government. This has really helped us to invest. Instead of us to go slowly by investing $300million, we have decided to invest $1billion.

How would other farmers benefit from your huge investment in rice?

What we are trying do is to ensure that Dangote Group will not do everything, no. We will make sure that we have out-growers, we will give them training and give them seeds and fertilizers. We will also guarantee to buy their paddy rice and process them. Even the farmers around the areas, we will buy their paddy rice and process them. If we don't encourage them, they are not going to grow rice next year. I think we need to be very careful. In Africa, the taste of the people are changing. Nobody wants to eat the kind of food we ate about 30 years. Everybody wants to eat rice. As soon as you have disposable income, you want to eat rice. So with that, we are going to help quite a lot. We will be able to generate hundreds of thousands of jobs through the food value chain. We will also be able to demonstrate and remove the fear that agriculture is poor man's business, it is not. There is quite a lot of money in it. I used to tell people that about eight years ago, when we were importing sugar. We had imported sugar up to $143 into Nigeria. This dollars into Nigeria would not allow you to make money at all. But last year, we have imported sugar at $3000 per ton. People are not looking at these issues. They are not projecting. For example, by 2020, which is about five and half years from now, the population of the country will be over 200million.If we are going to be over 200million, how do we really feed this population? We are going to get stuck one day, if we do intensify efforts in food production. What we are doing here is great.

The President through his ministers are doing great job. It is great for all of us. This will also reduce a lot of tension and unemployment. There are so many graduates who don't have jobs, but through agriculture, there will several jobs for them. Agriculture is a chained disciplines of jobs for graduates. Even if such graduates do not want to farm, they can become traders of farm produce. In so doing, food items will be cheaper. It will conserve our foreign exchange. I keep telling people that if we sort out two sectors in Nigeria, that is Power and agriculture sectors, will make Nigeria's GDP to be growing at the double digits on a yearly basis. I think we need to support the government.

Have you taken time to weigh the risks inherent in agriculture, particularly in rice farming?

Government is not really in business. Their only business is to facilitate it. We, the entrepreneurs have to take the risk to invest in the sector. In fact, every thing we do in life is a risk. It is a risk coming to this place. It is also risk going back to our destinations. Going into your bed is equally a risk, anything can happen. But this investment is a calculated risk. I think, for us as Dangote Group, it is not only the money we are going to make, it will help to bring in other people who have been shying away from agriculture. Honestly, I want to congratulate the two honourable Ministers of Agriculture for bringing this agreement into fruition. It will bring a lot of progress. We will definitely disappoint the doubters.

This what exactly what happened when the Cement Policy came in. Everybody said it was not possible for Nigeria to stop importing cement. I was really bold at that time. We did not even know that we were going to invest heavily in cement production. The former President Olusegun Obasanjo called me and asked what are going to do to end importation of cement? I told him unless you have a policy, none of us will agree to stop importing cement, because it is more profitable to import than to produce locally. But when you are importing, what you are doing is that you are importing poverty and exporting jobs to other countries. When the former President told people who wanted to import to do backward integration, and he would give a quarter of what is needed for importation. With that, we were able to invest. And that has actually helped us, not only to build huge company there, that is the largest company in West Africa, it also translated to producing massive cement production. It has taken us to where we are today. In the next two and half years, we will be producing 62 million tons of cement. So in rice, we expect to see those kinds of things. This is going to work. We have tested before.

With this investment in rice production, would you assure Nigerians that locally produced rice will be cheaper than imported rice in a few years from now?

The materials needed will be sourced locally. Urea and ammonia for fertilizer will be produced locally. They are almost hundred per cent gas and nitrogen. So it should be much cheaper because the gas is also cheaper than the imported one. We too, will start doing the same process of dumping in other countries. Definitely, the prices of rice will come down. God forbid, if there is devaluation of currency in the next 10 years, honestly we don't expect it to remain at $150 per a dollar. The Kano rice will not change because everything must have been sourced locally, the fertilizer is local, even the insecticides, we will be able to produce them locally. You have no excuse in terms of linking dollar rate with the price of locally produced rice. By making the country self-sufficient, we will be exporting. People don't understand, when you export ,you have to export lower than your local market. That is what people don't understand, we call it the process of dumping. Because it is like airline business today, if you have an aircraft with 100 seats, all your calculations will be within 100 seats. When you go and book on-line, you will even get a cheaper price of 50 per cent. That's why, when you capture the 60 per cent, the remaining 40 seats, you give them at half price to make gain because you already have a fixed cost. In essence, what I am saying is that today, Nigeria, should be able to feed other West African countries and the price of rice will definitely go down.

Do you think that right policies have been put in place by the government to support commercial rice production visa-vis the export of rice to other countries?

You will be very shocked on how this policy is going to work. There was not any robust policy earlier before now, I guess that was why people were making noise. They were just talking about rice, rice. But nobody was really investing. It was just all cosmetic talk. But right now, I am sure you have seen a lot of progress. When they brought cement policy, other people were sitting by the side. I am trying to encourage them to please quickly come in before the train leaves the station. I know what I am saying. What will happened at the end of the day is that if they don't come in, may be in the next four or five years, somebody will start raising hand and say, Dangote has monopoly in rice. So let them not come and start saying that. We have been given the same opportunity now. As a matter of fact, we are even coming in late. In fact, other people have come in the last three years or so, but I know that they have been doing so many talks here and there.

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Source: AllAfrica

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