Dangote Cement – Cementing a Reputation
You’ve heard of Dangote Cement, they’re the leading manufacturer of cement on the African continent, a multi-national company whose presence is felt across Africa. Their unit in Senegal is only one part of that operation- but it’s a critical part. We learn how Dangote Cement Senegal is turning their business into a talent pool and exemplar for all of Africa.
“We are a unit of a very large group, and we’re perceived as one of the best performing units the group has,” explains Luk Haelterman, the manager of Dangote Cement’s Senegal operations. “Our
objectives are also sustainability through local empowerment, CSR, and environmental.”
It’s an impressive achievement considering the kind of environment that Dangote was entering into when it started doing business in Senegal. When they took the concession in 2007 the market wasn’t yet saturated, but before Dangote was fully operational the market had already reached overcapacity in 2010.
A CROWDED MARKET
Today the firm is operating in a crowded marketplace where the capacity of the industry is outstripping the demand of the market, meaning players in that industry have to work harder than ever for their market share.
There is a market in Senegal for 4.8 million tons of cement, but the cement companies of Senegal have a combined capacity of over 8 million tons, while only exporting around 2 million tons. That maths has meant Dangote has had to be competitive to make use of its own 1.5 million tons capacity.
Fortunately, Dangote was able to benefit from the fact that each of the existing major players already catered to separate markets – one mainly for export and one to the local market, with neither really investing in PR or advertising. This left a niche for Dangote to exploit.
Dangote Cement Senegal is already close to full capacity, which makes up about 18% of Senegal’s total cement manufacturing capacity, supplying about 25% of the local market. That they’ve managed to carve out this much of the market is down to a number of key unique selling points.
“When we started our major selling point was high quality at an acceptable price,” Haelterman says. “When we entered the market, it was characterised by 32.5-grade cement. We supplied 42.5-grade cement at a slightly higher price. Putting up quality gave us a chance to enter the market. Our unique selling point remains the quality of the product, and for the outer provinces it’s also the customer service because we are in the outer provinces delivering ourselves.”
The outer provinces make up a smaller percentage of the market, which makes them less of a priority for the distributors.
“People in the outer provinces have to rely on market players bringing the cement there, and considering the distributors are not very motivated, we provide our own transport,” Haelterman
tells us. “So we provide our own transport fleet. This is different from the approach in other countries where our group companies deliver almost everything themselves, but we only do that in the outer provinces. In high consumption areas, we deliver through distributors to avoid conflicting interests.”
As a relative newcomer to the sector in Senegal, Dangote has gone out of their way to meet the needs of their consumers. “We are the youngest of the three producers here. We came late to the market,” Haelterman admits. “We started early in 2015, we came into an already over-supplied market, so we had to do something different from everyone else.”
This resulted in differentiating themselves not only from the rest of Senegal’s cement market but also from the rest of the Dangote group.
Haelterman explains, “We did something different from what Dangote does in other countries. We concentrated on distributors that we can serve in a short time with a limited number of people,
concentrating on the three regions that are consuming the most. We deliver to the outer provinces ourselves now, but we didn’t do that our first years. We went through the most consuming areas. It meant we had to interest the distributors but there are ways to do that. We grew quickly and made very astonishing progress after only seven or eight months of activity.”
Of course, this didn’t happen by accident, and even before Dangote was active in Senegal, they were making preparations and learning all they could about the country’s cement sector.
“In many ways, we overcame these challenges before we were in operation,” Haelterman explains. “We made a sufficient study of the market before we started operating in the country, and that’s what our strategy is based on.”
Of course, as well as knowledge of the market, Dangote Cement Senegal also needed to build a team of qualified staff who possess the skills the company needed, and not just in Senegal either.
“At the beginning, of course, there were some expats and some recruits who came from competitors,” Haelterman remembers. “That was before we started properly. Now, after the last few years of operation, we’ve replaced a lot of those expats. We had 250 expats when we started, and we’ve been replacing them by recruiting people who we train ourselves. Since our second year, Senegal has acted as a talent schooling for the entire French-speaking Dangote group. We found a lot of people here not just for our factory but for the Dangote group as a whole. We’ve trained a lot of people
here and there’s also turnover in the Group from people retiring.”
It’s clear Haelterman is proud of just how much indigenous talent forms the foundation of Dangote Senegal. “Our management team contains only one expat, and that’s me,” he says. “But we also
have the youngest management team in the whole group. These are all people that we’ve helped through the business. We also have several people who already made it in the Group. The person
who is legally responsible for the whole of French-speaking Africa is from Senegal, the CEO of Zambia came from Senegal.”
Given what they’ve achieved so far, it’s not surprising Dangote Cement Senegal isn’t ready to stop here, crowded marketplace or not.
“We want to grow more, we are touching capacity continuously so we’re looking for new ways to increase our capacity and of course we try also to reduce continuously our cost factors,”
Haelterman says. “Because we are nearly at full capacity, we only look at cost impacts that won’t cost us any capacity. Alternative fuels, for instance. If it damages our output, we won’t do it. We’ll
look for alternatives.”