How Nigeria intends to finally defeat poverty

A Nigerian billionaire has launched a massive project to alleviate rural poverty in Africa’s most populous country. By creating many new jobs, the project could bring peace to war-torn regions – but only if those in power play along.

“If you think small, you will remain small in life,” says Aliko Dangote. That’s why he does the exact opposite. And, by doing so, Dangote has become the richest man in Africa. The multi-billionaire from Nigeria has built up the Dangote Group, the largest industrial conglomerate in West Africa. And Dangote wants nothing less than to help his country – home to the largest economy in Africa – speed up on its journey out of poverty. As part of these efforts, Africa’s largest refinery, which was planned and built with the help of the World Bank, is supposed to enter into operation. “To date, 40 percent of Nigeria’s foreign currency is spent on oil imports. You export jobs and create poverty in Nigeria, so that’s what we are stopping,” Dangote has promised his fellow Nigerians.

In the future, Nigeria’s government could spend about USD 7.5 billion each year on other things. As things now stand, Africa’s largest producer of crude oil actually imports petrol and then sells it at subsidised prices. However, many in the government and in the oil business fear that Dangote, who has a reputation for firm determination, might be able to establish a huge monopoly.

Some USD 12 billion have already been invested in the massive complex, which is part of the planned poverty-fighting campaign and located in a special industrial area near Lagos called the Lekki Free Zone. Plans call for the refinery to finally enter into operation in early 2021 after construction delays allegedly due to the pandemic. However, experts are sceptical about whether this deadline can be met.

Moreover, the refinery is supposed to meet the entire demand for “Made in Nigeria” plastic in this country of 190 million people. Built nearby will also be a fertilizer plant with an annual capacity of 3 million tonnes and a price tag of USD 5 billion. “The real backbone of the Nigerian economy is agriculture. We have more arable land than China, and we can tap into our vast land and produce what we need. But not without fertilizer,” the billionaire often repeats like a mantra.

And time is running short. The birth rate stands at 5.5 children per woman. At present, the population of roughly 200 million is growing by roughly 5 million each year, and the UN has predicted that over 400 million people will live in Nigeria by 2050. That would put Nigeria in third place in the ranking of the world’s most populous countries, below India and China and above even the United States. However, according to the World Poverty Clock, 48% of Nigeria’s population – meaning about 95 million people – still lives below the poverty line of USD 1.90 a day.

In order to be able to build the massive industrial complexes, a new port had to be constructed, as none of Nigeria’s existing terminals was big enough to handle the logistics needed for projects of this scale. Dangote has also had to build his own power plant to cover their electricity needs as well as a new production facility for industrial gases, as there wasn’t one in the entire country before. He is also assembling trucks as part of a joint venture with China.

After the oil sector, agriculture plays the most important role in Nigeria’s economy and accounts for well over half of the jobs. Most of these workers are small farmers. To date, agriculture, forestry and fisheries have made up about 20 percent of the country’s gross domestic product, which amounts to roughly USD 446 billion. Nevertheless, Nigeria is still unable to meet its own food-related needs. This has prompted the government to encourage private investment, including from abroad. Thus, there is great potential for foreign investors in food processing, the sale of new and used farm machinery, and the construction of warehouses and silos.

However, major obstacles to agricultural modernisation still exist in the form of a lack of funding, massive shortages of electricity in rural areas, and the low level of education among farmers. Nevertheless, international companies such as Germany’s Bayer CropScience or the US agricultural machinery giant John Deere have been increasingly active in the market for some time. Given the very tight budgetary situation resulting from plummeting oil revenues, government agencies will probably have to relay even more on private investors – such as for the operation of toll roads, bridges, railway lines, power plants and waste-disposal systems. The country has been hard hit by the fall in oil prices, as the oil sector accounts for approximately 20 percent of GDP, 65 percent of budget revenues, and 95 percent of foreign exchange earnings.

What’s more, the country also faces other major challenges: For example, corruption, and terror are commonplace, Nigeria has a reputation for being expensive and risky as an investment location, and costs for rent and electricity are some of the highest in the world.

But young and well-educated Nigerians, in particular, are not deterred by these factors. Lagos, the former capital and current home to roughly 14 million people, is the economic centre of West Africa and has the third-largest economy among African cities. In addition to the oil reserves, massive cultural diversity – there are more than 250 distinct ethnic groups – is one of the main drivers of innovation in the country. What’s more, Lagos has also grown famous worldwide for its vibrant entrepreneurial and start-up scene in “Yabacon Valley”, with companies such as Sendcash or AtaraPay, and the city is considered the “place to be” for the young and ambitious from sub-Saharan Africa.

Ernst-August Ginten