Dangote Cement PLC, controlled by Africa’s richest man, Aliko Dangote, said it might 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,” Dangote Executive Director Edwin Devakumar said in an interview at the company’s headquarters in Lagos, Nigeria’s commercial hub, last week.
The cement maker will write to the federal government this week to ask it to intervene and will consider shutting the plant in Mugher, about 90 kilometers (56 miles) north of Addis Ababa, as a “last option” if this fails, he said. The company listed Ethiopia as one of its three “key” markets, along with Nigeria and South Africa, in a presentation in May.
But that statement doesn’t hold a drop of water for some region’s official.
There’s “no intention to displace any investment,” so long as Dangote is “working by the laws and regulations in our region and country,” Tekele Uma, head of Oromia’s transport authority, said by phone. “If anyone’s complaining about Oromia, we’re ready to talk with them. Any investment can come. Any investment can go.”
Motuma Mekassa, Ethiopia’s minister of mining, petroleum and natural gas, said on the phone he wasn’t aware of an attempt by Dangote to reach his office. An official at the federal ministry said Dangote should make an approach through “appropriate channels,” as opposed to through the media, asking for his name to be withheld, citing the sensitivity of the issue.
The Ethiopian government is searching for ways to reduce youth unemployment after violent protests by Oromo communities over alleged land dispossession, political marginalization and repression led the government to declare a state of emergency last year.
Dangote Cement was among several businesses attacked during the unrest. The protests triggered a 20 percent slump in foreign investment to $1.2 billion in the six months through December compared with the same period a year earlier, according to the government.
Foreign Investment in Ethiopia Slumps after Business Attacks
The order to outsource mining is “a violation of our rights because the government has given us a mining license,’’ said Devakumar, who was Dangote Cement’s chief executive officer until 2015. “If I don’t have limestone and additives my cement plant is useless.”
Mr. Lemma Megersa, President of the Oromia region earlier announced that it is committed to taking firm action to tackle the challenges domestic investors encounter at various levels.