Nigeria: Dangote Fertilizer Boosts Productivity and Saves Billions of Dollars in Capital Flight
The importance of agriculture in Nigeria’s economy cannot be overstated. Agriculture and livestock are the main means of subsistence for more than 70% of households in a country that has once again become Africa’s largest economy.
Agriculture contributed 29.94% to nominal gross domestic product in the third quarter of 2021, according to the National Bureau of Statistics (NBS). This figure is significantly higher than the 7.49% coming from the oil sector during the same period.
However, the country’s promising agricultural potential has not been fully exploited. In all likelihood, low fertilizer use remains a major factor explaining low agricultural productivity in Nigeria.
Nigerian farmers need fertilizer to redeem the country’s depleted farmland and avert a looming food crisis in the country. The commissioning of Dangote Fertilizer Limited was seen as a timely intervention in this space, and it is expected to boost agricultural productivity and save the country from spending billions of dollars on importing fertilizers from overseas.
The Dangote Fertilizer plant started production in June 2021, with a capacity of three million tons per year, was ranked as the largest project in the history of the fertilizer industry worldwide.
Africa is expected to experience the highest growth rate in fertilizer demand in the medium term, given the large expanse of arable land and great potential for agricultural growth in the coming decade.
Current consumption of urea in Nigeria is one million tons per year. The country has a very low use of fertilizer per hectare resulting in very low crop yield. Target of 50 kg fertilizer consumption per hectare in SSA countries; currently Nigeria is close to 20 kg per hectare only. There is therefore huge scope for reaching the 50 kg target, although it is well below the global average of 140 kg per hectare.
By 2030, the population of Nigeria is expected to reach over 262 million, which would lead to a huge increase in food consumption. Estimates indicate that about five million tons of fertilizers are needed annually in Nigeria over the next five to seven years, broken down into 3.5 million tons of urea and 1.5 million tons of NPK.
With the Nigerian population expected to reach 262 million by 2030 and 398 million by 2050, it is no wonder that Dangote Industries Limited, as the true leader in the Nigerian business space, has taken the initiative to actualize a vision where Nigeria will be self-sufficient by supporting its own food consumption.
It was noted that Dangote Fertilizer will help Nigeria retain $125 million in import substitution and provide $625 million from exports of products from the fertilizer plant.
Dangote Fertilizer Boosts Productivity Growth
In what industry observers have described as an important step to liberalize the fertilizer market and further improve agricultural production, Dangote Group Chairman Aliko Dangote said the plant, with a production capacity of three million metric tons per year of urea, has been ranked as the largest project in the entire fertilizer industry in the world.
Addressing key bankers, including the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, who were on hand to witness the start of production, Dangote said, “The first phase of the project, the cost of which is estimated at $2.5 billion, is to manufacture 3 mmtpa of urea per year. This capacity will then be expanded to produce multiple grades of fertilizer to meet the specific soil, crop and climate requirements of the African continent. »
According to Dangote, the fertilizer plant would make Nigeria the largest urea exporting country in sub-Saharan Africa and the largest producer of polypropylene and polyethylene.
The fertilizer complex consists of ammonia and urea plants with associated facilities and infrastructure, to produce 3 MMTPA urea. The complex includes: 2 ammonia plants of 2,200 MTPD based on Halder Topsoe technology, 2 molten urea plants of 4,000 MTPD based on Snamprogetti technology and 2 urea granulation plants of 4,000 MTPD based on Uhde technology. Dangote made the disclosure during the final inspection tour of the facility by Central Bank (CBN) Governor Godwin Emefiele on June 4, 2021 in Lagos.
Dangote said: “The three million tonnes of urea are certified and licensed by all regulatory authorities in Nigeria. We have obtained all licenses from the National Security Adviser, Ministry of Agriculture, Organization Standards Authority of Nigeria (SON), NAFDAC and all other authorities.
The company, he pointed out, was planning to saturate the market with urea and having already collected the database of farmers, would also provide adequate training to farmers on the best application of urea, saying that “our main interest is to saturate the local market”. will help support agricultural activities, which will ensure food security. »
Dangote praised Emefiele and the CEOs of the banks for being there to ensure the success of the factories, adding that the time has come for the country to move away from selling crude oil in favor of value-added petroleum products.
He urged them to mainly target gas-based industries so that the country’s economy can improve and earn a lot of dollars. “We must consider transforming the country’s industrial capacity by earning dollars and at the same time doing what we call import substitution,” Dangote noted.
Speaking on the occasion, Emefiele pointed out that Nigeria has the potential to export at least 3.5 million metric tons of urea to different parts of the world.
“Nigeria requires between one million and 1.5 million metric tons of urea to meet local demand, so we have the potential to export at least three to four million metric tons of urea to different parts of the world. With this latest development, Nigeria has become one of the leading producers of urea in the world. To me, this is a story that no one would have believed would happen in Nigeria.
“Nigeria now ranks among the top urea producing countries in the world. For me, this is a story that no one would have thought was happening in Nigeria,” he said.
“The mechanical commissioning of the petrochemical and refinery plant will commence by the end of the first quarter of next year. Dangote is committed to having the mechanical completion completed by the end of this year and we expect the refinery to be completed by the end of next year in the first quarter of next year,” he said.
Speaking on behalf of the bankers, Group Managing Director of Access Bank Plc, Mr. Herbert Wigwe, expressed his joy for the support they have given Dangote to establish a world-class manufacturing business in Nigeria.
“There was a lot of skepticism along the way as we moved forward; can this project be completed, are we sure we have the right funding models and all that.
“Today we saw the urea produced, we bagged it and we saw it loaded onto trucks, and by Monday it will be in our markets. very important for Nigeria and Africa,” said Wigwe.
For his part, the President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, said the Dangote fertilizer plant will boost productivity growth in Nigeria, adding that prices will come down and quality will improve.
The AfDB boss, who revealed this during a visit to Dangote fertilizer and petrochemical plants, said the petrochemical plant will save Nigeria $9 billion a year in imports.
“One of the things I admire the most about Alhaji Dangote is that he really believes in Nigeria and Africa and invests his money in Nigeria and Africa.
“Dangote is quite an inspiring and visionary business leader and for anyone who has done what I have seen here, I think that person deserves world class congratulations. Africa’s growth.
“With this project, we see an acceleration of how to reduce imports, have an exit on export; a development of the value chain and how to be competitive regionally and globally. I am completely blown away by this that I have seen here today because this project will reverse the huge amount that the nation is spending on foreign currency,” he pointed out.
He added that “when you look at how much we import, that’s about $57 billion of different products and we only export about $50.4 billion, so we have to balance that with about $7 billion.
“Talking to them here they showed us that they can have a domestic market of around $11 billion and that’s an amazing market so that’s huge for Nigeria and even for Africa as a continent”.
Regarding the fertilizer complex, Adesina said, “It will boost productivity growth in Nigeria, prices will come down and quality will also improve.”
Dangote Fertilizer Community Development Initiatives
Dangote Fertilizer has also shown commitment to the holistic development of its host communities and local institutions. The company has executed comprehensive and robust community development initiatives in partnership with host communities. Some of these initiatives are also designed to mitigate the project’s impact on these communities while improving the operational effectiveness of the DFL. Some of these notable initiatives include; Water, Sanitation and Hygiene (WASH) Initiative, Farmer Livelihood Support Program, Education Support Initiative, Scholarships, Scholarships, School Infrastructure Support, Youth Development, Institutional Strengthening and project disclosure meetings.
The Dangote Fertilizer Plant is the largest granulated urea fertilizer complex in Africa. The factory occupies 500 hectares of land in the Lekki Free Trade Zone, Lagos, Nigeria.
The capacity will then be expanded to produce multiple grades of fertilizer to meet the specific soil, crop and climate requirements of the African continent. Fertilizers are essential for agro-industry in Africa. Dangote Fertilizer would surely make Africa self-sufficient in food production and a net exporter of food to the world.