Dangote to Invest $1 Billion in Nigeria Rice Production

LAGOS (Capital Markets in Africa) – Dangote Group is making a five-year investment of at least $1 billion to grow and process rice in seven Nigerian states, bringing sub-Saharan Africa’s biggest importer of the grain closer to its goal of self-sufficiency.

Dangote Rice Ltd., a unit of the Lagos-based company, plans to increase cultivation of paddy, or raw rice, to 150,000 hectares (371,000 acres) and harvest an annual 1.7 million metric tons by 2019. Most of the output will be grown by medium and smallholder farmers through an “outgrower scheme” that would see Dangote Rice providing equipment and training, project director Robert Coleman said in an emailed response to questions.

“Ultimately, at harvest, Dangote guarantees to buy the farm produce back from the farmers at an agreed/prevailing market price,” Coleman said Tuesday.

New Mills
Nigeria, the continent’s most populous country with 180 million people, imports about 2.1 million tons of rice yearly according to data from the U.S. Department of Agriculture. In a bid to boost its food self-sufficiency, Nigeria capitalized the state-owned Bank of Agriculture Ltd. to lend to farming projects at less than half the commercial rate. It’s also working with the African Development Bank and World Bank to provide staple crop-processing zones with the electricity and roads needed to attract more private-sector money.

The company, which is investing in the northern states of Jigawa, Kano, Zamfara, Niger, Sokoto, Kogi and Adamawa, is also planning to build mills to transform the paddy into an estimated annual 1 million tons of high-quality parboiled rice by 2019. A first set of imported mills is expected to be delivered by early December and be functional by July 2018, Coleman said.

Nigeria spent more than 1 trillion naira ($2.7 billion) importing food in 2015, according to the National Bureau of Statistics. The country, which vies with Angola as the continent’s largest oil producer, is turning to farming as dwindling oil income has driven the economy in 2016 to its first full-year contraction in a quarter century.