October 20, 2017

Dispute weary Dangote threatens to close Ethiopian plant

Ethiopia might lose one of its biggest foreign investors in cement production, Dangote Cement, if authorities in the country’s Oromia State do not rescind the decree forcing producers to hand over control of stakes of their businesses to the local young people for free, according to news agency,  Bloomberg.

If Oromia’s East Shewa Zone administration sticks to its guns, Dangote Cement, which is owned by one of Africa’s richest man, Aliko Dangote, has said that it might have not option, but close its Ethiopian business.

The East Shew Zone administration has told Dangote to outsource its outsource its pumice, sand and clay mines to youth groups or be responsible for “any problems” that may arise.

According to Bloomberg, the state Oromia State views the transfer of jobs in pumice production as a way of easing unrest and quell unrest.

On the other hand, Edwin Devakumar, Executive Director, Dangote Cement, views complying with the directive as a move that will lead to total breakdown of its business.

If ever it happens, the loss of Dangote will be a massive setback for Ethiopia’s efforts to attract foreign direct investment. Dangote is one of the biggest investors in Africa with interests on the continent estimated at over 10 billion US dollars.

Dangote’s Cement plant is located in Mugher, about 90km’s north of Addis Ababa.

Dangote Cement, controlled by Africa’s richest man, Aliko Dangote, said it may shut its operations in Ethiopia if authorities in the central state of Oromia don’t reverse an order to cement makers to hand over control of some parts of their businesses to local young people.

Oromia state’s East Shewa Zone administration wants the Nigerian company to outsource its pumice, sand and clay mines to youth groups or be responsible for “any problems” that may arise, according to a letter from the authority to Dangote that was seen by Bloomberg and verified with a representative of East Shewa’s administration.

The regional government sees the transfer of jobs in pumice production as a way to ease youth unemployment and quell unrest, according to the document.

Any mismanagement of mining infrastructure including buildings and excavators could “lead to total breakdown of our business,” said Edwin Devakumar, Executive Director, Dangote Cement.

The cement maker will write to the federal government this week to ask for intervention in the matter and will consider shutting the plant in Mugher, about 90km’s north of Addis Ababa, as a “last option” if this fails, he said.

But Oromia state remains unapologetic, at least according to comments from the state’s representative.

“There’s “no intention to displace any investment” so long as Dangote is working by the laws and regulations in our region and country can come. Any investment can go,” said Tekele Uma, head of Oromia’s transport authority.

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