Dangote paid up to 40% interest for Obajana
By the AFREEQUE newsroom, based on Punch
Aliko Dangote says Dangote Industries paid up to 40% interest to Nigerian banks to finance construction of the Obajana cement plant in Kogi State. The project, then estimated at $1 billion, also faced delays linked to infrastructure shortfalls, according to Dangote.
Nigerian group Dangote Industries Limited paid interest rates of up to 40% to local banks to finance the construction of its Obajana cement plant in Kogi State, its founder and chief executive Aliko Dangote said in Lagos on Thursday. The project, initially estimated at $180 million, eventually cost about $1 billion, notably because of infrastructure shortfalls.
Dangote explained that his group had not initially planned to build gas pipelines, fuel facilities and a power plant, relying instead on public infrastructure promised by the government. These shortcomings contributed to the project's increased cost and led the company to seek financing from the International Finance Corporation (IFC), the World Bank's private-sector financing arm.
The IFC rejected the proposed three-year repayment plan after examining the project's financial projections. It proposed a seven-year schedule, with no repayments during the first two years followed by five years of repayments, according to Aliko Dangote.
Local financing nevertheless remained costly, with interest reaching 40% at some Nigerian banks, the businessman said at the 25th annual conference of Women in Management and Business. He said the capital of the banks concerned stood at 25 billion naira at the time.
