ALIKO Dangote’s 2015 deal to construct a US$400 million cement plant in Zimbabwe could be dead in the water, after Africa’s richest man approached a South African cement producing company, PPC Ltd, with a takeover proposal, the businessdigest has learnt.
PPC is South Africa’s largest cement producing company with eight manufacturing facilities and three milling depots in South Africa, Botswana and Zimbabwe.
This development comes as it emerged Zimbabwe only attracted US$319 million in foreign direct investment (FDI) inflows last year, a plunge from US$421 million in 2015.
Zimbabwe still lags behind its regional peers such as Mozambique, South Africa and Zambia who registered US$3 billion, US$2,3 billion and US$469 million respectively in FDI inflows last year.
In 2014, the country’s FDI amounted to US$545 million, showing that investment amounts have been decreasing over the last few years.
The Dangote Cement Plc, in a recent statement to the Nigerian Stock Exchange, said it has expressed its interest to the PPC board to buy “the entire share capital. This communication is still at the preliminary stage”, the cement maker said.
In response PPC in a statement confirmed the approach by Dangote to buy PPC.
“The independent board of PPC is considering the indicative proposal and will make a further announcement in due course,” the South African company said.
Sources in the investment sector told businessdigest that Dangote’s interest in buying PPC could derail his cement plant investment plans in Zimbabwe as PPC already has infrastructure in the country.
“It has been two years since Dangote came to Zimbabwe to express his interests in different projects, one of them being to set up a cement plant. We have been told that the delay in the implementation of the different projects is that Africa’s richest man is weighing his options while considering a number of issues,” a government source, who requested anonymity, said.
“Now that Dangote wants to buy PPC, which is already set up, it can only mean that his plans to set up a cement plant in Zimbabwe could be dead in the water.”
According to the 2017 Forbes magazine, Dangote has a net worth of US$12,2 billion and his major sources of wealth are trading in cement, flour, sugar and salt.
Dangote’s team of experts flew into Zimbabwe in 2015 and registered a company, Dangote Cement Zimbabwe.
However, the investment plans are yet to be implemented and the cement plant is still to be built. Dangote was granted an investment licence in September 2015 for projects entailing a cement plant, coal mine and power station.
In the same year, 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 to 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. Zimbabwe ranks lowly on the World Bank Ease of Doing Business index, making it one of the worst investment destinations.