Nigerian billionaire Aliko Dangote says he paid 40% interest on cement plant loans

Nigerian billionaire Aliko Dangote said his company paid Nigerian banks interest of up to 40% on the loans it took to build the Obajana cement plant, a project whose cost climbed from $180 million to about $1 billion.

Dangote, the founder and chief executive of Dangote Industries Ltd., said the cost rose because the site in Kogi State, in central Nigeria, lacked basic infrastructure and because of the high interest rates charged by local lenders.

Obajana is the largest of Dangote Cement Plc's plants. Dangote Cement is his biggest listed company, and he owns about 86.8% of it, mostly through Dangote Industries.

Borrowing costs

Dangote has made the cost of money a running theme this year. In September he said Nigeria could not industrialize with interest rates of about 30% and an unreliable power supply. At the 25th WIMBIZ conference for women in business in Lagos on Nov. 5, he again recalled the strain of financing Obajana and said high bank rates had slowed the company's growth at the time. That was the speech in which he said he goes to work "waiting for trouble to come" each morning.

Stadium meetings

Dangote has also said his oil refinery will need far bigger venues for its shareholder meetings once it lists. "This one, we'll be stadium. I'm sure 70,000 people will gather for that annual general meeting," he said in September, as the refinery's share sale opened. "If we are not running it well, they should blast us and tell us what to do."

He said at the time that he did not mind his stake being diluted and wanted ordinary Nigerians to own the company. "This is my main mission: to make sure that, yes, we democratise this share and give it to normal people," he said.

Dangote Petroleum Refinery and Petrochemicals FZE offered 4.1 billion new shares at ₦525 each, seeking about ₦2.15 trillion ($1.58 billion). Orders reached about ₦6.4 trillion ($4.7 billion) when the offer closed on Oct. 27, from investors in 120 countries. The shares are expected to begin trading on the Nigerian Exchange in December, which at the offer price would value the refinery at about ₦65.2 trillion ($47.8 billion).

Dangote, 69, has a net worth of $55.4 billion, according to Forbes. He built Dangote Group from a Lagos commodities trading business into a manufacturer of cement, sugar, fertilizer and refined fuel.

Figures were converted at ₦1,365 to the dollar.