Africa's richest man $1.4 billion highway in return for tax credits

Nigerian billionaire Aliko Dangote's conglomerate has started work on a ₦1.83 trillion ($1.37 billion) highway in central Nigeria under a federal program that lets companies build public roads and recover the cost through tax credits.

Niger State Governor Mohammed Umaru Bago flagged off the reconstruction and dualization of the 401-kilometer Lambata-Bida-Mokwa-Makera-Kontagora road on Tuesday in Bida, standing in for President Bola Tinubu, according to a statement from Nigeria's Ministry of Information. The Dangote Group is financing the work through the federal government's tax credit scheme, Works Minister David Umahi said at the ceremony.

The highway will be built in continuously reinforced concrete pavement rather than asphalt. Umahi described the method as long-lasting and resistant to climate damage. Construction will start at four locations at once to speed up the work, officials said at the event. No completion date was given.

How the deal came about

The Federal Executive Council, Nigeria's cabinet, approved the project on June 29, rescoping about 400.9 kilometers of federal road and handing it to the Dangote Group at a cost of ₦1.8325 trillion ($1.38 billion). The approval replaced a contract awarded in 2022 that Umahi said the previous contractor had failed to deliver.

"Mr President said we should allow Dangote, who has major investments along that corridor, to do it," Umahi told reporters after the cabinet meeting. Speaking about the condition of the existing road, he said: "We lost a lot of people there."

Mansur Ahmed, a special adviser to the president of the Dangote Group, said at the flag-off that the group's investment in roads across Nigeria now exceeds ₦5 trillion ($3.75 billion). He said the new highway would create jobs and open up communities along the route, and pointed to the group's rice mill under construction at Wushishi, also in Niger State.

Akin Alabi, who chairs the House of Representatives committee on works, described the highway as a key corridor linking Nigeria's north and south and pledged that lawmakers would monitor the project.

Roads for tax

The tax credit program dates to Executive Order 7, which former President Muhammadu Buhari signed in 2019. Under the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme, a company pays to build or repair an approved federal road and then offsets the cost against its future company income tax. Recovery is capped at 50% of a company's annual tax bill, rising to 100% in areas the president designates as economically disadvantaged. Unused credits can be carried forward.

Dangote Industries was among the six companies named to build roads when the scheme was launched. Dangote Cement received tax credit certificates for the Apapa-Oworonshoki-Ojota road in Lagos and the Lokoja-Obajana-Kabba road, which serves its Obajana cement plant in Kogi State. In 2021, the cabinet approved ₦309.9 billion ($232.7 million) of concrete road contracts for the group covering five roads in Borno, Kaduna, Lagos and Ogun states.

At the flag-off, Umahi said about 5,500 kilometers of federal road projects are underway in Nigeria's North Central zone, more than 1,000 kilometers of them in Niger State. He credited the removal of Nigeria's fuel subsidy with freeing up money for infrastructure.

Dangote, Africa's richest person, controls cement, sugar, fertilizer and salt businesses and the 650,000-barrel-a-day oil refinery near Lagos. The refinery is now selling shares to the public in a ₦2.15 trillion ($1.61 billion) initial public offering that is due to close on Oct. 27.