Founder and President and Chief Executive of Dangote Industries Limited, Aliko Dangote, has disclosed that his company paid interest rates of up to 40 per cent to local banks while financing the construction of its Obajana Cement plant in Kogi State.

Dangote made the disclosure on Thursday at the 25th annual conference of Women in Management and Business in Lagos, where he encouraged women entrepreneurs to venture into industrial businesses and pursue ambitious investment plans. He used the Obajana story to show the difficulty of building large industrial projects in Nigeria.

Recounting the financial difficulties involved in developing the plant, which is now Dangote Cement flagship facility, he said the company borrowed from local banks when its capital stood at N25 billion. He said the project was initially estimated to cost 1 billion dollars, but faced delays due to infrastructure deficiencies and other operational challenges.

Dangote said the company took on a project of 180 million dollars at a time when banks had N25 billion capital. He said the company wanted to pay within three years, but when the International Finance Corporation used its own financial model, it said the business plan was wrong. The Corporation gave seven years, with no payment in the first two years and payment over five years.

Despite the extended repayment arrangement, Dangote said borrowing from Nigerian banks remained expensive, with interest rates reaching 40 per cent. He said the company was paying combined interest to the local banks, and told the audience that the banks can check the records to confirm the figure.

He said he eventually invited the bankers to dinner six months before the expiration of the 18 month financing arrangement and settled the outstanding loans. He said on the 18th month, six months before the expiry, he invited the bankers to dinner, and at the end of the dinner, he gave everybody their cheque and paid off.

Obajana is now Dangote Cement largest Nigerian factory, with an installed capacity of 16.25 million tonnes per annum across five production lines. Dangote said the experience shows why it is very difficult to industrialise with interest rates at 30 per cent, and why long term finance, infrastructure and patience are critical for manufacturers in Nigeria.