Dangote Cement Is Living Dangerously In Its Most Profitable Market & It Could Pay The Price

Dangote Cement, the cement-producing company owned by Africa’s richest man, Aliko Dangote, appears to be living dangerously in Tanzania — its most profitable market in the first half of 2019.

The company is at loggerheads with the Tanzanian government due to its failure to fulfill a regulatory obligation.

Last week, the Nigerian-based cement maker was accused of not filing its operations report with the Tanzania Investment Center (TIC), according to government regulations.

The company was also issued with a 7-day ultimatum, starting from September 30, to comply. But it appears no document has been delivered from the Dangote camp.

And apparently, that’s not the only failing of the company according to Angellah Kairuki, the Minister of State in the Prime Minister’s Office in charge of Investment. She says Dangote Cement has not tendered its operation reports for the past three years.

Dangote Cement is reported to have defended itself by claiming that it is, indeed, preparing the report. But there’s no explanation as to why the company had neglected the mandatory requirement initially.

Kariuki explained that the report is important because it is through it that the TIC and the government would be informed on the company’s project history, plans for expansion, taxes paid, profits, challenges, and recommendations.

According to Kariuki, Dangote Cement had, indeed, been asked to file the report as soon as possible during a recent inspection of its facilities, and henceforth every six months. But so far, the company has failed to heed.

The latest back-and-forth between the company and the Tanzanian government is the latest in a series of squabbles that have ensued between both parties since Dangote Cement kicked off operations in Tanzania five years ago.

Both parties have a somewhat checkered history together. Dangote had previously experienced issues with President John Magufuli’s administration over tax on diesel imports to run its plant and a ban on coal imports from South Africa. At some point last year, the firm suspended its operations, citing technical problems and high production costs.

However, it might be in Dangote’s best interest to bring the ongoing issue to a swift resolution and smoothen relations going forward.

While performance in Nigeria and other key African markets like Ethiopia and South Africa have slowed in recent years, Tanzania has provided Dangote Cement with a strong and viable market.

With a rise in cement demand, driven by the government’s investments in infrastructural projects and increased construction activity, Dangote tripled its market share in Tanzania to 22 percent in H1 2019 from 7 percent last year. And the company wouldn’t want to lose all that business.

Featured Image Courtesy: The News Nigeria