Aliko Dangote, chair of Nigeria’s Dangote Group, has revived plans to invest in Zimbabwe after years of frustration over bribe demands and tight state control of electricity tariffs, clinching an agreement for a $1bn package spanning cement, fuel and power.

Under the proposal, Dangote Group would build a sub-regional pipeline from the port of Walvis Bay to Harare, a distance of about 2,200km, to transport petroleum products into landlocked Zimbabwe, according to people who attended a recent meeting in the capital.

The conglomerate is also looking at fertiliser manufacturing, power generation and a cement plant to serve the local and regional market, the same people say.

Dangote has been eyeing Zimbabwe for nearly a decade. He first visited in 2015, meeting then vice-president Emmerson Mnangagwa, who took power two years later after the military removed Robert Mugabe.

At the time, Dangote was interested in building a coal-fired power station.

Stabilising the economy

A second visit in 2018 again ended without a deal. People briefed on those talks say some officials pressed for bribes and Harare refused to offer firm guarantees on electricity tariffs.

Speaking to reporters in Harare after the latest agreement was confirmed, Dangote said Mnangagwa’s administration had now “passed the examination”.

“Now the government is solid. There is a lot of transparency,” he said, adding that policy efforts to stabilise the economy had given him the confidence to proceed.

For some economists, the deal is a rare vote of confidence in a country still battling chronic power shortages and a fragile currency regime.

Paison Tazvivinga, an economist based in Pretoria, says Dangote’s decision signals that some investors are prepared to take a long-term bet on Zimbabwe.

“It shows that they take note of the current operating environment, and that there is some optimism that they can bring in their money and earn a return just like any investor would expect,” he says.

For a landlocked country, diversifying its access to different markets is a paramount strategic objective

Stevenson Dhlamini, a Bulawayo-based economist and senior lecturer at the National University of Science and Technology, argues that for an industrialist whose projects run for decades, the key issue is not today’s costs but the credibility of the policy framework.

“What appears to have changed is the emergence of a more centralised and streamlined framework for strategic projects.

“The current administration has a clear and stated imperative to attract foundational, nation-building investment to signal a new economic era,” he says.

From false starts to a pipeline gamble

Dangote’s first foray in 2015 focused on the Sengwa coal fields, where he planned a 2,800MW power plant.

RioZim, a local mining company, had put the coal resource up for development, and Black Rhino Group, an infrastructure investment arm backed by US private equity firm Blackstone, helped bring Dangote to the table.

Talks collapsed over two sticking points. Harare kept tight control over electricity prices and resisted any move to let Dangote charge tariffs in US dollars.

The government also declined to offer guarantees that coal from Sengwa could be exported to Dangote’s cement plant in Ndola, in neighbouring Zambia.

Zimbabwe needs around 2,000MW of power, meaning that, on paper, a fully realised Sengwa project could have eliminated load-shedding and provided surplus electricity.

Supporters of the project say its failure left a large gap in the country’s energy mix; no investor has since moved ahead at Sengwa and the coal fields remain idle.

The latest deal comes as Harare tries to bed down its new currency, Zimbabwe Gold, known as ZiG, which it wants to become the sole legal tender by 2030.

That ambition has unsettled many businesses, which remain wary after past bouts of hyperinflation and abrupt policy shifts.

People familiar with the talks say currency guarantees are likely to have been central to Dangote’s renewed interest.

Political win, if it happens

Freeman Munisi Mateko, a Zimbabwean economist and researcher based in South Africa, says that if the projects are delivered, they will represent a significant political and economic win for Mnangagwa’s government.

“If it is delivered, the oil pipeline and other investments like fertiliser manufacturing will create jobs in a country with high unemployment,” he says.

Tazvivinga argues that the mere fact that Dangote is prepared to commit capital sends an important signal.

“We need to lure more investors by improving our operating environment. Let us have systems and controls in place that give confidence to investors,” he says, adding that expanding electricity generation capacity and upgrading roads will be key to attracting further capital.

Zimbabwe’s construction boom, driven in part by state infrastructure projects, has left local cement producers struggling to keep pace with demand.

A Dangote plant, if it goes ahead, would add capacity in a market that often relies on imports.

Zimbabwe already has one fuel pipeline, Feruka, which runs from the Mozambican port of Beira to Harare.

However, it has been dogged by vandalism and was not built to tap directly into any oil fields.

Harare has in recent years shown growing interest in developing a second pipeline to turn Zimbabwe into a regional fuel hub.

The line proposed by Dangote from Walvis Bay would be designed to handle products refined from Namibia’s emerging offshore oil resources.

“For a landlocked country, diversifying its access to different markets is a paramount strategic objective,” says Dhlamini.

Ministers at the meeting with Dangote included foreign minister Amon Murwira and finance minister Mthuli Ncube, alongside senior Zimbabwean business executives.

After leaving Harare, Dangote travelled to Zambia to meet President Hakainde Hichilema.

Dangote Group has already invested more than $500m in a cement plant in Ndola, which includes a 30MW captive power plant – an example of the vertically integrated industrial footprint it now hopes to replicate in Zimbabwe.