Africa's Richest Man: Oil Is Not The Way Forward

Authored by Irina Slav via,

The richest man in Africa says crude oil prices would do Nigeria a favor if they stay lower for longer.

Last week at the UN General Assembly, Nigerian billionaire Aliko Dangote, whose main business is in cement but also holds interests in agricultural commodities and petrochemicals, said that agriculture - not crude oil - is the way forward for Nigeria, and that Africa “will become the food basket of the world.”

The latest economic data from Dangote’s home country tend to support his view. GDP grew by 0.55 percent in the second quarter of the year, which, although a meager growth rate, was welcomed because it signaled Nigeria’s exit from the recession that it plunged into due to the oil price crash.

The problem with this recovery, according to local economists, is that it was mainly a result of improving international oil prices rather than any actual economic growth at home. The figure, in other words, once again highlighted Nigeria’s reliance on crude oil revenues for its growth prospects.

Yet the country is already taking steps toward diversifying its economy away from the world’s most traded commodity. These steps were, like elsewhere, prompted by the oil price crash, and in Nigeria took the shape of a Zero Oil Agenda. The agenda, approved by President Muhammadu Buhari’s government, aims to wean the country off oil.

Second-quarter export figures suggest that things are moving in the right direction slowly, but hopefully surely. According to the National Bureau of Statistics, Nigerian exports in the second quarter of this year grew by an impressive 73.5 percent on an annual basis. Crude oil accounted for the biggest portion of the exports, at 42.57 percent, with other oil products making up another 21.86 percent.

This leaves less than a third for non-oil exports, but it seems that the government is happy: The head of the Nigerian Export Promotion Council, Olusegun Awolowo, noted that cashew nuts exports alone brought in $40 million (13.5 billion naira) in the second quarter.

The prioritization of agriculture as a greater export revenue stream is in perfect tune with Dangote’s business plans, especially with strong government support for the growth of this stream. The billionaire has $5 billion invested and planned for agricultural projects at home through 2020. Incidentally, he also spent $11 billion on the construction of a 650,000 bpd oil refinery, so it seems that oil does have a place in a diversified portfolio of businesses.

The subject of economic diversification away from oil has grown popular in the last couple of years, for obvious reasons. Yet efforts by major oil producers have shown that it’s easier said than done. Perhaps the biggest challenge to these efforts is the improvement in oil prices – it’s all too easy to slip back into the familiar rut. So, in this sense, Dangote is right: lower oil prices will provide the necessary stimulus to put more effort into diversification.

Nigeria, which was exempted from OPEC’s oil production cut deal, said it is ready to join the pact when its daily output hits 1.8 million barrels. In August, according to OPEC’s secondary sources, this output averaged 1.86 million bpd. Nigerian records put it at 1.74 million bpd. It seems Africa’s second-largest oil producer isn’t willing to relinquish its hold on oil too quickly.


techpriest ACP Wed, 09/27/2017 - 02:31 Permalink

Just something to think about: China has been getting its hands into Africa quite a lot recently - some Chinese kids I know explain that many shows are now talking about how wonderful Africa is, how Chinese people should move there for opportunity, etc.

Any more, I have to ask what the international angle is on anything coming out of Africa.

In reply to by ACP

Rapunzal Tue, 09/26/2017 - 22:55 Permalink

The UN was created by the Rockefellers/Rothschilds, it's the NWO moral arm. But full of corrupt cronies. The UN is helping enslaving the people for the 1%.

NoDebt Tue, 09/26/2017 - 23:05 Permalink

A forward-thinking African?  What is this world coming to?BTW- even a modest 1.8 MBPD is $32 billion a year in revenue @ $50/bbl.  Damned right they're not going to be walking away from that.  My guess is if they could easily double or triple production, that would magically become "the way forward".  There's something limiting their ability to expand production would be my guess. 

ReturnOfDaMac Tue, 09/26/2017 - 23:10 Permalink

Don't sell the food, sell the tools to make the food.  During the gold rush, a few got rich selling gold, but the guy selling the panning, weighing, and digging equipment got fat!

runnymede Tue, 09/26/2017 - 23:17 Permalink

I just got an email from Mr. Dangote asking for my help in moving some funds. If you can't trust a Nigerian, who can you trust? I'm just glad my ship finally came in. 

Expat Wed, 09/27/2017 - 07:19 Permalink

Dangote has not spent $11 billion on his refinery.  He has probably spent $20 million on feasability studies, but the refinery is still in the planning stage. And it will cost over $15 billion if it is even built.