NIGERIA INDUSTRIALIZATION

Nigeria: Bitflux Now Official National Broadband Carrier By Henry Ifeanyi, 12 March 2014 Lagos — BITFLUX Communications Limited, winner of the 2.3GHz spectrum license, has paid the $23, 25 million required by Nigeria Communications Commission (NCC) for securing the license. Bitflux won the spectrum bid last month after edging out indigenous telecoms firm Globacom to emerge as the national broadband carrier. Confirming the payment in a statement, NCC's Director Corporate Communications, Tony Ojobo, said Bitflux beat the ten-day deadline fixed for payment. “Bitflux Communications Ltd has paid the sum of $23,251,000.00 being the winning bid at the 2.3 GHz frequency auction of February 19, 2014,” he said. Bitflux had initially made a deposit of $2.3 million as part of conditions to participate in the bid. With full payment made, Bitflux now becomes the sole provider of wholesale wireless broadband to other service providers in the country. The company is expected to interconnect with the Infrastructure Companies (InfraCos) at their Points of Access (PoA), thereby creating an integrated broadband service nationwide to homes and firms. Recently, Bitflux Communications, which is a consortium of three firms, VDT Communications Ltd, Bitcom Systems Ltd and Superflux International Ltd, emerged winner after the second round of auctions, with $23, 25 million to Globacom' $23, 05 million. Other major bidders for the license such as MTN, Airtel, Etisalat and Zinox withdrew their intentions after lawmakers expressed concern over the involved of private-owned companies in the bid process. Having won the bid, the NCC had issued a ten-day deadline within which Bitflux must pay the amount it offered or in the alternative forfeit the license to Glo. -------------------------------------------------------------------------------------- Nigeria, Africa's Growing Economic Powerhouse BY GODLOVE BAINKONG, 6 MARCH 2014 Reports say Nigeria's economy is expected to grow strongly in 2014, with expansion continuing to be driven by high oil prices and robust domestic demand. This is likely to see the Africa's top oil-producing nation dethrone South Africa and become the continent's largest economy in terms of its GDP size. According to projections by economists, the rebasing may see Nigeria's GDP increase to between $384bn (about FCF 183.605 trillion) and $424bn (about FCFA 202.737 trillion), making it Africa's new economic powerhouse. The International Monetary Fund (IMF) projects a 7.4% GDP growth rate for the country this 2014, up from an estimated 6.2% in 2013, despite the instability in the north of the country and oil theft, which act as a drag on the broader economy. Nigeria's economy has been reportedly advancing by an average of 7% a year, compared with South Africa's meagre 3% average. This is probably as a result of its existing fairly strong investment proposition, based on its large population (170 million people), substantial natural resources and strategic position. While foreign investment has in absolute terms long been focused on the oil sector, portfolios are becoming increasingly diversified, moving towards power, agriculture and mining, areas of the economy that have demonstrated a comparative advantage in emerging markets vis-à-vis the West. And this is where Nigeria is drawing its strength. The new-found strength of Nigeria is certainly a wakeup call for Cameroon that has the West African country as its main trade partner in the continent. Most trade between Cameroon and Nigeria takes place along 10 major corridors, both inland and on the coast. Estimates show that Nigeria exports more than 213,000 metric tons of non-oil products to Cameroon. These include cosmetics, household plastics, oranges and other merchandise valued at 769 million USD (about FCFA 367.735 billion) annually. Of these, USD 176 million (about 84.175 billion) is estimated to be products made in Nigeria. Meanwhile, estimates also show that Cameroon exports about 160,000 metric tons of goods annually, with a value of 226 million USD (about FCFA 108.083 billion), of which USD 62 million (about 29,647 billion) comprises products made in Cameroon. Reports say this is more than forty times official estimates given that most of the goods pass through informal ways. The country's growing economic strength coupled with the development of the Bamenda-Ekok-Enugu road corridor offer Cameroon a ready market for aluminum sheets, bush mango, Gnetum (Eru), bananas, plywood and other products that it has the potentials to produce aplenty. While the need for local processing imposes here, it goes without saying that in the face of this, anything short of optimal production by Cameroon would be synonymous with stifling the local economy. --------------------------------------------------------------------------------------------------------------------------------------------------------------- Profit in paradox: Why Dangote’s new oil refinery makes sense for him, and Nigeria Simon Allison Simon AllisonSimon Allison covers Africa for the Daily Maverick, having cut his teeth reporting from Palestine, Somalia and revolutionary Egypt. He loves news and politics, the more convoluted the better. Despite his natural cynicism and occasionally despairing tone, he is an Afro-optimist, and can’t wait to witness and chronicle the continent’s swift development over the next few decades. Africa03 Mar 2014 12:22 (South Africa) Share on twitterShare on facebookShare on emailShare on google_plusone_shareShare on linkedinThere aren’t many people who can raise enough money to build a $9 billion oil refinery in Nigeria. Fortunately, Aliko Dangote is one of them. His new project, when it gets off the ground, could revolutionise the Nigerian economy – and, for the first time, allow oil-rich Nigeria to stop importing all its petrol. By SIMON ALLISON. Nigeria’s oil paradox is one familiar to many African countries, where an abundance of resources often swamps the ability to use these natural gifts effectively. Nations may have massive supplies of oil, iron or gold, but lack the infrastructure and industrial know-how to process or refine these resources. Out go the raw and rough commodities, loaded onto tankers, trucks and planes and exported to far-away shores; in come the refined and finished products—petrol, automobiles and jewellery—imported at a hefty premium. In Nigeria, Africa’s largest oil producer, this paradox is especially pronounced. Nigeria has copious amounts of crude oil. According to the latest available data from OPEC, it produced 1.95m barrels a day (b/d) in 2012, still far less than Saudi Arabia, the world’s largest producer, which pumps out 11.7m b/d. Angola is Africa’s second-largest producer, with 1.5m b/d. Despite the overflowing crude, Nigeria is also the second-largest importer of refined petroleum products in Africa, behind only South Africa, which has little oil or natural gas of its own. Every day on average 350,700 barrels of gasoline, diesel and related products are shipped in to Nigeria, according to OPEC figures. This is an expensive paradox. By the time transport and external refinery costs are counted, the Nigerian government spends hundreds of billions of naira in subsidies to keep prices at the pumps reasonable. It was 888 billion naira ($5.5 billion) in 2012. This year the federal government has budgeted 971 billion naira ($6 billion). Concerned that this kind of spending is unsustainable, the government has occasionally flirted with decreasing the subsidy or removing it entirely. These plans, however, remain enormously unpopular among Nigerians, who see relatively cheap petrol as the major benefit of living in an oil-producing country. Who can blame them? There is little else to show for all that oil wealth. After the subsidy was suspended in January 2013, mass protests around Nigeria forced the government to reinstate it. The obvious solution is for Nigeria to refine its own crude oil. Stripped of transport costs and import duties, the petrol price would surely decrease, allowing government to eventually remove the subsidy altogether. The Nigerian government has tried this solution too. It failed, miserably. With all systems go, the three refineries owned and operated by the state in southern Nigeria’s Port Harcourt and Warri, and Kaduna in the north-west, could be refining 445,000 b/d, which is more than enough to cover Nigeria’s daily needs. It would even allow the country to enter the lucrative business of exporting refined petroleum. This capacity, however, exists only on paper. In practice, a nasty combination of corruption, bureaucracy, inefficiency and chronic disrepair has left the various state-owned refineries operating at just 18% capacity— hence the shortfall that must be made up by imports. Fortunately for Nigeria, this absurd situation could be about to change, thanks to Africa’s richest man, 56-year-old Nigerian businessman Aliko Dangote. With his sprawling concrete and construction empire, Dangote knows better than most that there is profit to be found in paradox. Moreover, he holds the skills, assets and reputation to make it happen. Dangote announced plans in April 2013 to build a new oil refinery in the Olokola Liquefied Natural Gas Free Trade Zone on the Gulf of Guinea coast near Lagos. The refinery, which Dangote hopes to complete by 2016, will cost an estimated $9 billion and produce around 400,000 b/d of petroleum products, comfortably meeting Nigeria’s total demand. At the same time, it will “change the economic and industrial landscape of Nigeria”, according to Doyin Okupe, a special assistant to Nigerian President Goodluck Jonathan. This $9 billion price tag is a huge amount of money for anybody, but Dangote can afford it. The latest Forbes Africa Rich List values his estate at a tidy $20.8 billion, nearly three times larger than that of South African luxury goods mogul Johann Rupert, who is second on the list. Dangote has already pledged $3.5 billion of his Dangote Group equity to the project. Of course, he will not pay the entire sum: his company has already announced a $3.3 billion financing agreement with a syndicate of Nigerian and international banks, led by the UK’s Standard Chartered and Nigeria’s Guaranty Trust. The remainder will be raised later. This loan is significant beyond its monetary value. Giant industrial projects in Africa struggle to attract funding, with foreign investors historically shy of uncertain political climates and unconvinced by Africa’s potential for profit. That international banks are prepared to invest billions of dollars in a complex, long-term project is a positive change and a strong symbol of confidence in the continent’s future and Nigeria’s in particular. In addition, this confidence has the potential to be self-fulfilling. By eventually lowering fuel costs, Dangote’s new refinery will make it cheaper to do business in Nigeria and free up government funds for other development and infrastructure projects. It will also create 85,000 direct and indirect jobs for Nigerians, Mr Dangote claimed in an interview last September. Given Dangote’s track record, any profit the plant makes is likely to be re-invested in Nigeria. This should speed up Nigeria’s economic expansion, which continues to be impressive despite the army’s ongoing and violent confrontation with Islamist militant group Boko Haram in the north. As Africa’s second-largest economy (expected to become its largest in early 2014 when the National Bureau of Statistics releases re- based GDP figures), Nigeria’s economic growth will fuel the continent’s progress. The refining process will yield further tangible and lucrative benefits useful for making other sellable goods. The industrial complex housing the refinery will include plants to produce agricultural fertilisers and polypropylene, used to make plastics. Fertiliser will be a major money maker for Dangote and Nigeria. His project is expected to produce 2.75m metric tonnes of urea and ammonia for the agriculture sector every year. “We’ll also see Nigeria for the first time exporting fertiliser rather than using hard-earned foreign exchange to import fertiliser,” Dangote said. Despite these ringing expectations, a few notes of caution remain. First, refining oil is a notoriously difficult process. Crude oil has to be heated to extreme temperatures until it vaporises and loses its chemical structure, turning into various hydrocarbon gases. These gases are pumped through a special tower. As they rise to the top, they start cooling. As they cool, each condenses at a different temperature corresponding to a specific height. The liquid is then collected and siphoned off. Some of these liquids will be ready for public consumption. Others need to go through additional, even more complex procedures before they become useful. Plenty of room for error resides in all this complexity. Dangote’s refinery will not be immune to the problems that have plagued Nigeria’s existing refineries. It will probably be many years before it is operating at full capacity. The pricing issue is another potential problem. In the early stages of production, massive start-up costs will prevent the new refinery’s petrol from being significantly cheaper than imports. It may even be more expensive. Reports are emerging that Dangote is looking for government subsidies to make sure his final product is competitive initially. Given his close ties to the ruling People’s Democratic Party (PDP), and President Jonathan in particular, Dangote will probably get whatever he needs. Some argue that his proximity to government is an essential ingredient of his business success. So far Mr Jonathan’s administration has been effusive in its praise for the refinery project. Voters, however, are expected to elect a new president in 2015. Thanks to a new opposition coalition, the PDP faces a genuine challenge to its rule for the first time since multiparty democracy resumed in 1999. Will a new administration, if there is one, be as supportive when it comes to financial incentives and in granting the all-important operating permits, without which the refinery would lie dormant? Dangote has already made his bet and placed his money on the table. Either way, it is not a particularly risky gamble. Even Nigerian politicians, not always known for their foresight, would have a hard time arguing against this particular project for one simple reason: everyone—Dangote through immense profits, the Nigerian government through reduced subsidies, and the Nigerian people through eventually cheaper petrol and fertiliser—stands to benefit. DM This article was originally published in Africa in Fact, a monthly magazine published by Good Governance Africa (GGA). GGA is a research and advocacy organisation that works to improve government performance on the continent. -------------------------------------------------------------------------------------- Profit in paradox Africa's largest producer of crude oil is the continents second-biggest importer of petroleum. by Simon Allison Mar 01, 2014 Simon Allison is the Africa correspondent for the Daily Maverick, based in Johannesburg. He has previously reported from Egypt, Palestine and Somalia for the Asia Times and Agence France Presse. He holds a BA from Rhodes University and a master’s degree from the School of Oriental and African Studies in London. Oil tanks Nigeria’s oil paradox is one familiar to many African countries, where an abundance of resources often swamps the ability to use these natural gifts effectively. Nations may have massive supplies of oil, iron or gold, but lack the infrastructure and industrial know-how to process or refine these resources. Out go the raw and rough commodities, loaded onto tankers, trucks and planes and exported to far-away shores; in come the refined and finished products—petrol, automobiles and jewellery—imported at a hefty premium. In Nigeria, Africa’s largest oil producer, this paradox is especially pronounced. Nigeria has copious amounts of crude oil. According to the latest available data from OPEC, it produced 1.95m barrels a day (b/d) in 2012, far less than Saudi Arabia, the world’s largest producer, which pumps out 11.7m b/d. Angola is Africa’s second-largest producer, with 1.5m b/d. Despite the overflowing crude, Nigeria is also the second-largest importer of refined petroleum products in Africa, behind only South Africa, which has little oil or natural gas of its own. Every day on average 350,700 barrels of gasoline, diesel and related products are shipped in to Nigeria, according to OPEC figures. This is an expensive paradox. By the time transport and external refinery costs are counted, the Nigerian government spends hundreds of billions of naira in subsidies to keep prices at the pumps reasonable. It was 888 billion naira ($5.5 billion) in 2012. This year the federal government has budgeted 971 billion naira ($6 billion). Concerned that this kind of spending is unsustainable, the government has occasionally flirted with decreasing the subsidy or removing it entirely. These plans, however, remain enormously unpopular among Nigerians, who see relatively cheap petrol as the major benefit of living in an oil-producing country. Who can blame them? There is little else to show for all that oil wealth. After the subsidy was suspended in January 2013, mass protests around Nigeria forced the government to reinstate it. The obvious solution is for Nigeria to refine its own crude oil. Stripped of transport costs and import duties, the petrol price would surely decrease, allowing government to eventually remove the subsidy altogether. The Nigerian government has tried this solution too. It failed, miserably. With all systems go, the three refineries owned and operated by the state in southern Nigeria’s Port Harcourt and Warri, and Kaduna in the north-west, could be refining 445,000 b/d, which is more than enough to cover Nigeria’s daily needs. It would even allow the country to enter the lucrative business of exporting refined petroleum. This capacity, however, exists only on paper. In practice, a nasty combination of corruption, bureaucracy, inefficiency and chronic disrepair has left the various state-owned refineries operating at just 18% capacity— hence the shortfall that must be made up by imports. Fortunately for Nigeria, this absurd situation could be about to change, thanks to Africa’s richest man, 56-year-old Nigerian businessman Aliko Dangote. With his sprawling concrete and construction empire, Mr Dangote knows better than most that there is profit to be found in paradox. Moreover, he holds the skills, assets and reputation to make it happen.
 Mr Dangote announced plans in April 2013 to build a new oil refinery in the Olokola Liquefied Natural Gas Free Trade Zone on the Gulf of Guinea coast near Lagos. The refinery, which Mr Dangote hopes to complete by 2016, will cost an estimated $9 billion and produce around 400,000 b/d of petroleum products, comfortably meeting Nigeria’s total demand. At the same time, it will “change the economic and industrial landscape of Nigeria”, according to Doyin Okupe, a special assistant to Nigerian President Goodluck Jonathan. This $9 billion price tag is a huge amount of money for anybody, but Mr Dangote can afford it. The latest Forbes Africa Rich List values his estate at a tidy $20.8 billion, nearly three times larger than that of South African luxury goods mogul Johann Rupert, who is second on the list. Mr Dangote has already pledged $3.5 billion of his Dangote Group equity to the project. Of course, he will not pay the entire sum: his company has already announced a $3.3 billion financing agreement with a syndicate of Nigerian and international banks, led by the UK’s Standard Chartered and Nigeria’s Guaranty Trust. The remainder will be raised later. This loan is significant beyond its monetary value. Giant industrial projects in Africa struggle to attract funding, with foreign investors historically shy of uncertain political climates and unconvinced by Africa’s potential for profit. That international banks are prepared to invest billions of dollars in a complex, long-term project is a positive change and a strong symbol of confidence in the continent’s future and Nigeria’s in particular. In addition, this confidence has the potential to be self-fulfilling. By eventually lowering fuel costs, Mr Dangote’s new refinery will make it cheaper to do business in Nigeria and free up government funds for other development and infrastructure projects. It will also create 85,000 direct and indirect jobs for Nigerians, Mr Dangote claimed in an interview last September. Given Mr Dangote’s track record, any profit the plant makes is likely to be re-invested in Nigeria. This should speed up Nigeria’s economic expansion, which continues to be impressive despite the army’s ongoing and violent confrontation with Islamist militant group Boko Haram in the north. As Africa’s second-largest economy (expected to become its largest in early 2014 when the National Bureau of Statistics releases re-based GDP figures), Nigeria’s economic growth will fuel the continent’s progress. The refining process will yield further tangible and lucrative benefits useful for making other sellable goods. The industrial complex housing the refinery will include plants to produce agricultural fertilisers and polypropylene, used to make plastics. Fertiliser will be a major money maker for Mr Dangote and Nigeria. His project is expected to produce 2.75m metric tonnes of urea and ammonia for the agriculture sector every year. “We’ll also see Nigeria for the first time exporting fertiliser rather than using hard-earned foreign exchange to import fertiliser,” Mr Dangote said. Despite these ringing expectations, a few notes of caution remain.
 First, refining oil is a notoriously difficult process. Crude oil has to be heated to extreme temperatures until it vaporises and loses its chemical structure, turning into various hydrocarbon gases. These gases are pumped through a special tower. As they rise to the top, they start cooling. As they cool, each condenses at a different temperature corresponding to a specific height. The liquid is then collected and siphoned off. Some of these liquids will be ready for public consumption. Others need to go through additional, even more complex procedures before they become useful. Plenty of room for error resides in all this complexity. Mr Dangote’s refinery will not be immune to the problems that have plagued Nigeria’s existing refineries. It will probably be many years before it is operating at full capacity. The pricing issue is another potential problem. In the early stages of production, massive start-up costs will prevent the new refinery’s petrol from being significantly cheaper than imports. It may even be more expensive. Reports are emerging that Mr Dangote is looking for government subsidies to make sure his final product is competitive initially. Given his close ties to the ruling People’s Democratic Party (PDP), and President Jonathan in particular, Mr Dangote will probably get whatever he needs. Some argue that his proximity to government is an essential ingredient of his business success. So far Mr Jonathan’s administration has been effusive in its praise for the refinery project. Voters, however, are expected to elect a new president in 2015. Thanks to a new opposition coalition, the PDP faces a genuine challenge to its rule for the first time since multiparty democracy resumed in 1999. Will a new administration, if there is one, be as supportive when it comes to financial incentives and in granting the all-important operating permits, without which the refinery would lie dormant? Mr Dangote has already made his bet and placed his money on the table. It is a gamble without much risk. Even Nigerian politicians, not always known for their foresight, would have a hard time arguing against this particular project for one simple reason: everyone—Mr Dangote through immense profits, the Nigerian government through reduced subsidies, and the Nigerian people through eventually cheaper petrol and fertiliser—stands to benefit. -------------------------------------------------------------------------------------- Nigeria: Dangote to Build U.S.$600 Million Cement Factory in Kenya By Weneso Orogun, 3 March 2014 President of the Dangote Group Alhaji Aliko Dangote has said his conglomerate is planning to build a $600 million cement plant in Kenya. Dangote made the disclosure during the visit of the Kenyan deputy prime minister, William Ruto, to Dangote Cement Obajana plant in Kogi State on Friday. Dangote said the 3 million metric ton factory may start operation within months. He expressed satisfaction with the level of support and partnership from the government of Kenya. The Kenyan deputy prime minister said he was impressed with what he saw at the Obajana factory, considered to be one of the biggest cement factories in the world. He said: "I am now convinced that we are dealing with the right person. I am really impressed with what I have seen here. I am convinced that as soon as the remaining two licences are secured and the company is established, it will create jobs for our people back home. I also want to assure Alhaji Aliko Dangote that Kenya is a peaceful and friendly country to do business." On the entourage of the deputy prime minister were: Kenya's secretary of information and communication Dr Fred Natiang, secretary of industrialization Mr Adam Muhammad, chief of staff to the deputy PM Mr Marrianne Keitanany, director of communication Mr Emmanuel Talam, secretary of policy Mr Peter Karinki, member of parliament Hon. Annah Kenyata and special adviser to the prime minister Mrs Phannie Mogaka. Dangote Cement Plc has three plants in Nigeria. They are the Obajana Cement Plant which produces about 10.25million metric tons, the Ibese plant which produces 6 million metric tons and the Gboko plant which produces about 4 million metric tons. The cement company also has presence in some other African countries like Tanzania, Niger Republic, Ghana, South Africa, Cameroon and Zambia. -------------------------------------------------------------------------------------- Nigeria: 150 Companies to Attend Made-in-Nigeria Exhibition 4 March 2014 The public relations officer in charge of the forthcoming made-in-Nigeria products exhibition, Mrs Ngozi Okwuogu, has urged manufacturers in the country to use the exhibition to showcase their products. Okwuogu made this known in an interview with the News Agency of Nigeria (NAN) in Abuja on Tuesday. She said the Federal Ministry of Information had allocated space to no fewer than 150 exhibitors to showcase their products at the two-day event. The spokesperson urged manufacturers to take advantage of the 2014 exhibition to showcase their products. She said that this would be of great benefit to them and the country given the cosmopolitan nature of the nation's capital. A Nigerian inventor of a made-in-Nigeria food dehydrating machine and traffic light, Mr Reuben Sani, was at the location of the event at radio house, Sani expressed the hope to come in contact with entrepreneurs, who could partner with him in marketing his product. "If I get marketers, I will have to train them on how to maintain the products, "It's actually a very good thing that the ministry is doing by bringing us out here to showcase Nigerian made product. "I strongly believe that if it's well organised, it will be a good platform for us and this will help Nigerians to see talents that abounds in our country and get to appreciate our hand made products," Sani said. An artist, Mrs Esther Doukia, who also spoke to NAN at the radio house, said she had been exploring opportunities for partnership. Doukia, a researcher and an entrepreneur, said she had also been looking for partnership to harness the large deposits of clay available in the country. "I have been able to make clay beads, and I am working on refractory stone, because I have seen that the metal 'charcoal stone' which we have in abundance can be refined. "I am looking out for partners, looking at how to develop and sharpen my products to make them much better for marketing to the public. I see this as part of my effort to add value to the products. "Very well I think it's a well thought out idea, that the ministry is asking us to come out and showcase our product, it's not new, it's an exhibition that has been ongoing annual event. "I think this one comes with a renewed vigour, and for me it's interesting because this coincides with 100 years of Nigeria's existence as the nation marks its centenary. "As a person I felt within myself that if there is a made-in-Nigeria exhibition in this centenary year I'd like to participate, and I will want to see many people come out to see what we have as a nation to motivate our people, especially the youth." (NAN)