Dangote car may be in the pipeline: But is Aliko Dangote spreading himself too thin?

The world might not have to wait for Godot, before Dangote car becomes a reality. Aliko Dangote, Africa’s richest man, took the first step in that direction by teaming up with the Bank of Industry and other stakeholders to acquire the Nigerian government’s majority stake in Peugeot Automobile Nigeria (PAN).

Government officials are optimistic that Dangote’s bid for PAN would be accepted. “We have submitted bids for the car maker  with Aliko Dangote on board together with BoI, Kebbi and Kaduna state; we are confident our bid will sail through,”  says Nasir el-Rufai, governor of Kaduna state.

For those who have understudied Dangote, they insist that his latest move is in sync with one of the billionaire’s modus operandi of conquering a sector through the acquisition of a company, and leveraging on its technical know-how to produce Dangote branded goods. To some, the proposed acquisition of PAN is the thin edge of the wedge that would later serve up Dangote cars to consumers in Africa.

This is certainly not beyond the reach of the mogul, as Dangote over the years went from selling goods to manufacturing them, morphing into a visionary industrialist with a Midas touch. “Armed with brains, ambition and a $25 billion war chest, Aliko Dangote has placed his bets on himself,’’ says Mfon Ekene, a public analysts and a blogger.Hence, it appears that Africa’s richest man is bent on cornering every business on the continent, with his fingers in every pie. Already, Dangote Group, now the largest indigenous industrial conglomerate in Sub-Saharan Africa, is spread across almost all the sectors from agriculture to telecommunications. For instance, Dangote Cement, which has subsidiary companies in 12 African countries produces 43.3 million metric tons a year. Dangote also has many companies producing sugar, salt, noodles, pasta, tomato paste, beverages,  iron steel to name a few. Never mind that he has also invested billions of dollars into petroleum refinery and a fertiliser plant in the South west of Nigeria which should start production towards the end of next year.

Indeed, managing an ever expanding conglomerate is no mean feat and there is the possibility, no matter how remote, that diminishing returns might set in? But Sonia Baldeira, a global analyst for Bloomberg Intelligence, in the Building Materials and Construction subsector does not see such happening. Balderira insists that Dangote has been strategic in the management of his conglomerate especially with his cement companies. She observes that though Dangote has the biggest cement company in Africa spanning 12 countries that he only performs the function of a chairman, leaving the day to day running to a knowledge expatriate  CEO. “Mr. Onne Van Der Weijde, a former executive at Holcim, is leading Dangote Cement PLC since February 2015. He has a vast experience and knowledge of the international building materials business, so he is in a position to add value to the company and help in its expansion plan across other countries in Africa.”

Balderira also noted that Dangote Cement has the highest growth rate among industry peers lending colour to the claim that Dangote companies are well managed. “In 2015, it posted a 25 percent  increase in sales, and further growth is likely to come from new capacity planned in Africa through 2019,”  she said, adding “The board is optimistic about 2016, after increasing capacity in Nigeria, South Africa, Zambia, Ethiopia and Tanzania. Sales may gain 19 percent in 2016, based on consensus.”

Just like Balderira, Alaba Olusemore, a financial analyst and managing director, Nesbet Consulting, does not believe that Dangote is spreading himself too thin. The financial analyst maintains that Dangote is only exploiting the immense opportunities available in the African continent, which foreign multinationals had always exploited. In this regard, he applauds Dangote’s diversification into different sectors noting that it reduces the risks of failure. “The secret of Dangote’s business empire is foresight, leadership and strategic management practices,” he says adding “I do not think that Dangote Group is over-expanding or overtrading.”

Adedoyin Soyibo, an economist and former head of Economics department, University of Ibadan wants the billionaire to continue on his expansionary industrial trajectory, insisting that it is good for the African continent. He however called on African government leaders to create a business friendly environment to ensure the successes of Dangote and his ilk. “It will be good if he continues to invest in the industrialization of Africa. Nobody will do it for us,” he says.  The economics professor, also agrees with Olusemore in seeing the benefits of diversification of his empire, amongst which includes reduced risks. “Diversification opens up more vistas of experience and possibility of using experiences across different sectors to shore up performance,” he said.

Though Dangote might have many irons in the fire, experts insist that his empire is on the right trajectory to conquering Africa.