Dangote refinery could propel Nigeria’s GDP to $600bn – Rewane

The Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, has projected that Nigeria’s economy could expand to $600bn by 2030, driven by increased private-sector investment and the multiplier effect of large industrial projects such as the Dangote Petroleum Refinery.

Rewane said the refinery could serve as a major growth pole for the economy, stimulating investment, manufacturing and exports while strengthening the naira and improving Nigeria’s foreign exchange reserves.

He spoke in Abuja during an investor roadshow ahead of the planned initial public offering of the 700,000-barrel-per-day Dangote Refinery and Petrochemicals.

According to a presentation by the economist, Nigeria’s nominal Gross Domestic Product could rise from a 2025 baseline of $278bn to $600bn by 2030, while annual real GDP growth could accelerate from four per cent to between seven and eight per cent.

The projection assumes inflation moderates from 15 per cent to between eight and 10 per cent, non-oil GDP growth rises from between four and five per cent to between seven and eight per cent, and oil production increases from 1.5 million barrels per day to 2.2 million bpd.

Rewane’s presentation also envisaged investment rising from 26 per cent of GDP to 36 per cent, manufacturing growth accelerating from three per cent to between eight and 10 per cent, alongside a significant expansion and improvement in the reliability of energy supply.

Breaking down the projected $600bn economy using the expenditure approach to GDP, the presentation estimated household consumption at $240bn, representing 40 per cent; investment at $216bn or 36 per cent; government consumption at $36bn or six per cent; and net exports at $108bn or 18 per cent.

Rewane said the refinery and other private investments could play an important role in achieving the projections through their multiplier effects on other sectors of the economy.

“What the Dangote refinery is doing is getting into investment and adding that, and that gives you a multiplier effect,” he said.

He added, “If you look at that, let’s project forward what will happen after this investment is completed. This is what it’s going to look like. What was $278bn? It’s going to be about $600bn, and all the variables change.”

Rewane argued that increased investment and net exports would have implications for the foreign exchange market and external reserves.

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“This means the naira gets stronger, the reserves get valuable, and Nigerians begin to enjoy from this private sector-led investment. So the government creates the environment. The private sector invests. International investors come in. Domestic investors come in. African investors come in. And there’s a significant expansion of the economy,” he said.

He compared the potential transformation with the experiences of Vietnam, Mauritius and Rwanda, arguing that investment concentrated in strategic sectors could stimulate growth elsewhere in an economy.

Rewane also stressed the economic advantage of processing crude oil domestically instead of exporting it in raw form.

“If you export one barrel of oil, you get $100 per barrel today. If you do the value add and transform this into a conversion to wealth, you get the equivalent of $200 per barrel,” he said.

He said increased domestic refining could support import substitution, deepen the capital market and reduce Africa’s dependence on refined petroleum products imported from Europe and the Middle East.

Speaking on the proposed IPO, President of the Dangote Group, Aliko Dangote, said the company intended to raise N2.15tn, equivalent to about $1.6bn, to finance the refinery’s expansion programme.

Dangote, whose message was delivered by the Senior Adviser, Special Projects and Strategic Relations to the Group President, Dangote Industries Limited, Fatima Wali-Abdurrahman, said the shares would be offered at N525 each, with a minimum subscription of 10 shares.

“The offer price and minimum subscription level is to allow for wider participation as we want every Nigerian to own a piece of this asset. That is why we have called it The IPO for the People,” he said.

Dangote added that the group was considering listing in about six other African countries as part of its continental expansion strategy.

Earlier, the Chairman of the event, Oluwagbenga Oyebode, said the offer comprised 4.1 billion ordinary shares at N525 per share, with expected net proceeds of about N2.1tn, representing 3.3 per cent of the refinery’s issued capital.

He said the proceeds would be used entirely as growth capital to finance the next phase of the refinery’s expansion rather than repair its balance sheet.