NIGERIAN magnate Aliko Dangote’s team of experts which flew into the country on Monday, has registered a company, Dangote Cement Zimbabwe, as he prepares to build an integrated US$400 million cement plant at a location yet to be determined.
His team of geologists is studying geological data which they were given on Tuesday by the Ministry of Mines and Mining Development. The team will determine where the cement plant would be located after that.
This comes as South African-based Zimbabwean businessman Mutumwa Mawere, who at one time had vast interests covering mining, finance, insurance, agriculture, telecoms, real estate and media, warned Dangote that he must tread carefully on Zimbabwe’s explosive economic landscape which he said was a minefield for investors.
He said Zimbabwe was a hostile investment terrain because of personalisation of the state, break down of the rule of law and violation of property rights, among other things.
“It must worry you when your due diligence team has first to meet with the Deputy Chief Cabinet Secretary to consider an investment in a democratic state,” Mawere wrote. “Rule of law and rule by man are two phrases that have different connotations …. Rule of law implies fairness and predicable application whereas rule of man or rule by law implies unfairness, inconsistency and injustice.”
Zimbabwe has for long been accused of trampling on the rule of law, especially after embarking on a chaotic and often violent land grab in 2000, and violating property rights — factors among those blamed for the trickles of foreign direct investment.Mawere’s business empire was seized by government a decade ago, claiming his companies owed state entities.
Mawere cited a recent example involving the Reserve Bank of Zimbabwe and agro-equipment firm Farmtec Spares and Implements, which lost US$2,1 million because the rules were changed to protect the debtor and not the creditor through the controversial Presidential Powers (Temporary Measures) Act.
Farmtec was contracted by the central bank to supply 150 tractors under a quasi-fiscal operation. The RBZ however failed to pay for the tractors received. Mawere said Dangote must not in the end say he was not warned.
However, Dangote, who is also planning to invest in coal mining and power generation, was assured by President Robert Mugabe that his investments would be secure when he visited Zimbabwe a fortnight ago. As a result he dispatched a team of experts this week.
The team comprises two geologists, two lawyers, a Zimbabwean national Rumbidzai Sithole who is the Dangote Group’s corporate strategy specialist, as well as Abdul Mukhtar — the chief strategist.
The team started legal paperwork soon after meeting the deputy chief secretary to the president and cabinet Justin Mupamhanga, on Monday.
Sources close to Dangote said the business tycoon’s priority investment is the construction of a US$400 million integrated cement plant.
He is however planning to venture into power generation and coal mining investments which complement the cement manufacturing process.
“On Monday the team had a meetingwith officials from the ministries of Finance, Mines, Economic Planning, the Environment Management Agency as well as members from the Zimbabwe Investment Authority (Zia),” a source close to the deal revealed.
“The lawyers began preparations for the company registrations which were completed by end of day on Monday and the certificate was issued on Tuesday reflecting the group will trade as Dangote Cement Zimbabwe.
“Dangote has settled for the construction of a cement plant before venturing into other areas such as energy and coal. But it will be an integrated plant because it needs coal and power, hence his interests in those other sectors.”
Also on Monday, Dangote’s geologists met the Mines ministry’s permanent secretary Francis Gudyanga who handed over the country’s geological data sheet which shows areas with abundant limestone deposits.
“The location of the plant will be determined by the availability of quality limestone deposits. The geologists also met with the limestone deposit concession holders who also made their presentations,” said the official.
Sources close to the deal also revealed government had informed Dangote’s team that it does not have limestone deposits, but linked private claim owners with the investor. Dangote’s team met Zia chief executive officer Richard Mbaiwa yesterday to discuss the business tycoon’s investment, including the coal and energy investments which are yet to take shape.
“I will be meeting the team today (Thursday) and get to know what the entire investment is worth,” Mbaiwa said.
Dangote, whose net worth was US$17,5 billion according to Forbes magazine, is moving in to invest at a time most investors are sitting on the fence, jittery due to Zimbabwe’s hostile business environment.
Dangote is worth more than Zimbabwe’s annual Gross Domestic Product which stands at about US$13,66 billion and about five times the country’s paltry US$4 billion annual budget. He managed to arm-twist the investment-desperate government to secure exemption from its controversial indigenisation laws so that he secures full ownership of his investments.
The waiver of the indigenisation policy comes at a time several government officials have called for substantive amendments to the toxic law blamed for capital flight and scarying away investors.