Dangote signs $2.5 billion deal to build fertilizer plant in Ethiopia

Africa’s richest man, Aliko Dangote, has sealed a multibillion-dollar agreement with the Ethiopian government to build a fertilizer plant that could reshape the country’s agriculture-driven economy.

Under the agreement signed in Addis Ababa on Thursday, Dangote will own 60% of the facility, while the remaining 40% will be held by the state-owned Ethiopian Investment Holdings (EIH). The project, estimated at $2.5 billion, will be located in Ethiopia’s eastern Somali region.

Prime Minister Abiy Ahmed described the deal as a landmark for Ethiopia’s food security ambitions. “This project will create jobs locally, ensure a reliable fertilizer supply for our farmers who have long faced challenges, and mark a decisive step in our path to food sovereignty,” he said in a statement.

Boost for Ethiopia’s farm economy 

Agriculture accounts for more than one-third of Ethiopia’s GDP, according to World Bank data, yet the country spends about $1 billion annually importing fertilizers.

• The new plant, which will take about 40 months to complete, is expected to produce 3 million tons of fertilizer annually and will be linked by pipeline to the Calub and Hilala natural gas fields in the southeast.
• EIH noted that the project will significantly cut Ethiopia’s dependence on fertilizer imports, providing a reliable local supply and reducing foreign exchange pressures.
• For Dangote, the deal strengthens his pan-African expansion strategy. He already operates cement businesses in 10 African countries and runs a 3 million-ton fertilizer hub in Nigeria that began operations three years ago.

“This partnership with Ethiopian Investment Holdings represents a pivotal moment in our shared vision to industrialize Africa and achieve food security across the continent,” Dangote said.

What you should know 

Dangote has been active in Ethiopia for over a decade, starting with a cement plant investment. Earlier this year, Dangote announced a $400 million plan to push a second production line at the Mugher cement plant in Ethiopia, a move expected to double the facility’s annual output to 5 million tons.

• The Mugher plant, which began operations in 2015 with an initial capacity of 2.5 million tons per year, has faced major challenges.
• Despite some initial setbacks, Dangote Cement, which operates in 10 African countries, remains committed to expanding its footprint in Ethiopia.
• The Mugher plant is a key part of the company’s strategy to increase its annual cement production capacity across the continent to 55 million tons.
• In 2015, the Dangote Group invested $19 million to add a bagging plant at the Mugher facility, enabling it to produce 120 million bags of cement annually.
• Dangote signs $2.5 billion deal to build fertilizer plant in Ethiopia  - Nairametrics