In June this year, we attended the Africa CEO Forum in Kigali. The event, which brought together business leaders, policymakers, and innovators from across the continent not only discussed the future of African enterprise, but it also explored issues around exceptional and result oriented leadership on the continent.
This is a critical area for many organisations in the region since their sustainability and scalability is linked to leadership.
Nigeria, as one of the world's largest oil producers faces a paradoxical challenge. Crude oil, discovered in Nigeria in 1956, is now the backbone of the country’s economy, with petroleum exports accounting for approximately 90 percent of the country’s total exports.
Nigeria is currently the second-largest oil producer in Africa and a member of Opec. But the country still relies heavily on imported refined petroleum products to meet domestic demand, with over 80 percent of the demand being met via imports.
In 2020, Nigeria imported $7.75 billion of refined petroleum products, becoming the world’s 17th largest importer of refined petroleum and one of the highest in Africa.
The unfortunate reality of huge imports of refined products has significant disadvantages including foreign exchange depletion and inflationary pressures.
A refinery was the silver bullet that would solve the negative economic impacts of the dire situation hence the vision for the The Dangote Oil Refinery.
During the forum, Mr Aliko Dangote talked of his journey in developing the world's largest oil refinery project in Nigeria.
This achievement not only highlights exceptional leadership but also underscores the immense potential within Africa to address its challenges and drive economic growth.
Mr Dangote narrated the numerous hurdles encountered during the project's development. These included securing financing, navigating complex regulatory environments, sourcing, and transporting materials, and overcoming massive logistical obstacles.
The journey to establish the Dangote Oil Refinery was no walk in the park. It spanned over seven years and cost $20 billion according to an article published by the Financial Times.
Just to put this into perspective, the project cost is almost 20 percent of Kenya’s GDP and was fraught with a myriad of challenges.
To start the project, Dangote had to secure the necessary funding at the scale required. Despite the compelling vision to solve a massive problem, he had to convince financiers that the returns would be worth the high risks.
The regulatory risk landscape further posed its own set of challenges, necessitating continuous engagement with government agencies to facilitate project progression.
He talked of the many logistical challenges and complexities which almost derailed the project as the scale of the refinery demanded the importation of massive equipment and materials and yet there was no single existing port that could accommodate the equipment required.
According to him, the team had to construct a fit for purpose port with the required extensive infrastructure to get them to the construction site for assembly and eventual commissioning.
But despite these challenges, the Dangote Oil refinery came to be and is poised to deliver substantial benefits to Nigeria and the broader African continent.
Once fully operational, the refinery is expected to save Nigeria up to $23 billion annually in foreign exchange by reducing the need to import refined petroleum products.
This equates to approximately 46 percent of the average annual imports into Nigeria over the past decade. And the refinery capacity can now process up to 650,000 barrels per day (more than enough to meet local demand).
The project has the potential of saving massive foreign exchange needs and will also help in stabilising Nigeria’s currency, reduce inflation, and improve the overall economic health of the country.
Moreover, the refinery will create an estimated 250,000 jobs when fully operational, both directly and indirectly, boosting local employment and stimulating economic activity.
The increased availability of refined products will also support various industries, driving further industrialisation and economic diversification.
The project also highlights the significant role that private enterprise can play in driving economic transformation and improving the lives of millions.
This is not just an industrial achievement, but an inspiring beacon of hope for the entire continent. Africa is indeed a land of wonderful opportunity, and the success of the Dangote Oil Refinery reinforces the idea that exceptional leadership is indeed possible on the continent.
The success of the Dangote Oil Refinery is a testament to Mr Dangote's exceptional leadership and unwavering determination.
His vision to create the largest oil refinery in the world was driven by a deep-seated desire to contribute to his country's development and address one of its most pressing economic challenges.
His story exemplifies the power of visionary leadership and the potential for African entrepreneurs to tackle large-scale challenges. It underscores the importance of dreaming big and pursuing those dreams with relentless determination.
The refinery represents a significant step towards energy self-sufficiency for Africa. By increasing local refining capacity, African countries can reduce their dependence on foreign refineries, enhance their energy security, and retain more value within their economies.
This shift will empower African nations to harness their natural resources more effectively and leverage them for sustainable development. Africa salutes you Mr. Dangote for being a shining example of resilient entrepreneurship to solve the greatest problems in Africa. May, many more emulate you.
Dr Caesar Mwangi, is the Executive Dean of Strathmore University Business School.
Cartel B. Matabaro, Entrepreneur; Research Assistant & Consultant, Strathmore University Business School.
