Dangote looks beyond Mugabe

via Dangote looks beyond Mugabe – The Zimbabwe Independent September 4, 2015

AFRICA’S richest man, Nigerian tycoon Aliko Dangote, whose net worth was US$17,5 billion as of yesterday, according to Forbes magazine, is looking well beyond President Robert Mugabe’s rule as he moves to invest billions in cement, power and coal projects at a time most investors are sitting on the fence jittery due to Zimbabwe’s hostile business environment.

Elias Mambo

This comes as it has also emerged Dangote — who is worth more than Zimbabwe’s annual Gross Domestic Product which stands at about US$13,66 billion and about five times its annual budget — has arm-twisted government for exemption from its controversial indigenisation laws spooking investors to secure full ownership of his investments.

Dangote on Monday met Mugabe and his ministers to get the go-ahead and assurances of security of his investments in a country notorious for trampling on the rule of law and property rights.

While investors fear Zimbabwe’s political risk — rooted in the interface between politics and business — and toxic policies, ministers said in private briefings the Nigerian business magnate was coming to Zimbabwe as he was now looking far beyond Mugabe (91), widely seen as on the sunset of his long political career as the country sits on the cusp of a new dispensation.

“Dangote is taking a long term view on Zimbabwe,” a senior government minister who met the Nigerian mogul told the Zimbabwe Independent this week.

“He knows the president (Mugabe), given the perception he is part of the problem, is going to go soon one way or another. He has informed advisors and uses risk assessment firms to analyse the environment and make decisions.”
The Independent has been monitoring Dangote’s behind-the-scenes manoeuvres since July and has information showing how he managed to get a breakthrough.

Dangote’s trip was facilitated by a Nigeria-based Zimbabwean and television personality, Josey Mahachi and her husband Olusegun Babajide Agbeniyi (a television producer).

Mahachi and Agbeniyi — who wedded in 2013 in Harare — have been in the country since July and managed to convince Vice-President Emmerson Mnangagwa, who they engaged privately, to lobby Mugabe to allow Dangote to invest on his terms.

In an interview Mahachi, who is the face of Dstv talkshow programme: Click Africa, said she was facilitating the investment for the love of her country. “You meet people with the potential to invest and because of the love of one’s country one is pushed to sell the investment idea to them. We are happy because something concrete is coming out of our efforts to turn around our economy,” she said adding: “I will be relocating to Zimbabwe to make sure such an investment is protected and handled properly.”

When it comes to investors seeking to navigate turbulent emerging markets and unstable countries like Zimbabwe, their main fears resolve around unexpected and arbitrary changes in government policies detrimental to their investments.

Another minister said: “Investors like Dangote know how to deal with such unstable environments like ours. Even if we have problems, Nigeria is worse from a political risk perspective. I mean there is literally a civil war going on there, with Boko Haram wreaking havoc but then there is oil and investors still go there.

“So Dangote knows there are resources in Zimbabwe and the president (Mugabe) will go, so he is positioning himself. He is an investor with foresight as he wants a head start. Mind you a lot of investors have been coming here to assess the situation; from the United States, Britain, France, Denmark, China, Russia and many other countries. Dangote came to invest here so that he has a first mover advantage. In business that’s very important, not always politics and these succession stories you hear all the time.”

A leading research institute, Oxford Economics risk assessment firm, NKC African Economic, recently added Zimbabwe to its potential conflict zones or flashpoints watch list as the country’s economic situation fast deteriorates, citing Mugabe’s raging succession power struggles as a destabilising factor.

Officials say Dangote had to meet Mugabe and his relevant ministers because most aspects of the government-related policy and procedures are risks beyond his control, for example, granting of mining concessions, licences and permits, taxation, and various contracts to be signed with the government.

“Dangote is mainly concerned with risks related to uncertainties in the government policy and regulation, hence he needed to meet the president, but he is looking beyond the current situation,” one official said.

Even though some senior ruling Zanu PF officials want Mugabe to run for re-election in 2018 until 2023, insiders say he might soon bow out due to health problems or political pressure associated with the current economic meltdown. Mugabe is however known for his stubborn resistance to pressure, although he cannot defy health complications, dotage and frailty.

Government ministers this week said Dangote and his advisors believe this is the most opportune time to enter the Zimbabwe market because the country is moving towards the end of Mugabe’s rule even if they cannot say exactly when that will be.

This reality though is now openly acknowledged in government as Mnangagwa and First Lady Grace Mugabe recently spoke about the situation in Zimbabwe in future-sounding terms looking beyond Mugabe.

Although Zimbabwe has signed investment agreements with Russia and China in recent months after long negotiations, Dangote came to Harare and decided to invest.

Sources that were in the closed door meetings between Mugabe and Dangote said the Nigerian industrialist would be exempted from the controversial indigenisation policy which require foreign investors to surrender at least 51% to locals and remain with 49% or less. “Mugabe told Dangote of the various investment opportunities in Zimbabwe, in agriculture and the mining sectors especially,” a source said. “He then assured him that his investments will be protected as the indigenisation policy will be waived for him. Dangote assured the president that on Monday next week his team which comprises geologists, engineers, lawyers and the chief strategist will be in the country to do feasibility studies as well as paperwork.

“He also said one of his intentions is to construct a plant which will employ close to 1 000 people producing 1,5 million tonnes of cement per year.”

Although China and Russia have signed multi-billion dollar investment deals with Zimbabwe, they have been treading cautiously as they fear their investments could sink in this unstable environment.

Last year in August Chinese leaders told Mugabe in Beijing he needed to resolve his succession problems and ensure leadership renewal, as well as embrace serious reforms to get game-changing investment. The same message was communicated to Mnangagwa when he visited China in July.