By this coming fourth quarter of 2018, Dangote Cement Plc would have finalised plans to begin the exportation of about 3mnt of clinker per annum to Ghana, Ivory Coast, and Cameron. This volume represents about 17% of the company’s current production capacity.
Yvonne Mhango, a Malawian Economist with the Sub-Saharan Africa at Renaissance Capital, disclosed this in a research paper titled Africa: Intra-regional trade –A function of diverse exports. According to her, this development would enable Dangote Cement to take advantage of the African Continental Free Trade Area, and by so doing contribute to the improvement of intra-regional trade within the ECOWAS region.
The African Continental Free Trade Area was recently signed by forty-four (44) African countries, with the commitment to remove tariffs from 90% of imports. This is important considering the fact that intra-regional trade in Africa stands at 20%, sharply contrasting from the 62% prevalent rate in developed regions of the world.
In West Africa, Dangote Cement Plc currently exports Nigerian cement by road to Ghana and Togo but in small quantities, 6 percent of its total Nigerian production. Dangote Cement is on track to start exporting 3mnt pa of clinker (17 per cent of its Nigerian production) through Port Harcourt and Apapa in Nigeria from Q4, 2018. The company plans to export this clinker to Ghana, Cameroon and Cote d’Ivoire. This implies upside for intra-regional trade in ECOWAS. -Yvonne Mhango
Why this is important
Increased exportation of Dangote Cement to other African countries will improve the company’s overall profit, and by extension increase shareholders’ chances of earning higher dividends. The company recently declared a 16% revenue increase for the first quarter of 2018 ended March 31st. The company’s revenue grew from ₦208 billion in Q1 2017 to 2018: ₦242 billion in Q1, 2018.
Meanwhile, Nigeria also stands to earn improved foreign exchange, which will, in turn, contribute to overall economic growth.
Dangote Cement Plc is a subsidiary of Dangote Group. The company was founded in 1992 and is one of the biggest cement producers in the country. The company is currently trading at N246.60 in today’s session on the NSE.