Ibeto’s global foray and Africa’s huge housing deficits
Recently, the airwaves were rife with the heartwarming news of Ibeto cement company limited completing a historic reverse merger with Century Petroleum Corporation, a United States of America publicly traded petroleum exploration and production company. With Ibeto Cement’s acquisition of 70% majority control of Century Petroleum Corp. resulting in the reverse merging of Ibeto Cement’s assets into Century Petroleum, Dr. Cletus M. Ibeto took over the reigns as Chairman of the Board of Directors.
Speaking on the milestone development, an obviously delighted Dr. Ibeto said this is “in line with our collective dreams to place Nigeria in its rightful place in the comity of nations”; and “lauded stakeholders in the historic merger which will improve the level of actualization of the huge Cement business opportunities around Africa.” These include the government, shareholders, investors, and the larger Nigerian society.
One unique factor in this potentially impactful advancement is the vehicle. The two entities’ strategy introduced reverse mergers – a hitherto not so popular approach – into the Nigerian business lexicon. According to Wikipedia, “a reverse takeover or reverse merger takeover (reverse IPO) is the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public. The transaction typically requires reorganization of capitalization of the acquiring company.” Comparatively, reverse mergers can also be quite cost effective and concluded in record time.
Surprisingly, Ibeto’s bold and innovative use of this vehicle was not simply with a local firm in Nigeria or even in Africa but in the very regulatory-stringent United States. This is strong testament to the abounding potentials in today’s global village and economy. The merger of Ibeto cement and Century petroleum bestrides two key sectors of the Nigerian economy: cement as well as petroleum. While it is popular knowledge that latter remains at the core of our national economy, cement is also a key indicator of any economy.
It has long been traditional economic wisdom that the sufficiency of housing or lack therefore in a country is directly proportional to its level of economic development. A report by Morgan Stanley, a United States multinational financial services firm states that “cement consumption per capita tends to rise initially with rising GDP per capita but then falls as countries mature economically.” The country’s construction industry/sector is only 3.2% of the Gross Domestic Product, GDP. Drawing from this fact, World Bank statistics confirm 60% of Nigeria’s estimated population of over 180 million (projected to grow between 3.8% and 4.5% per annum) is caught in the trap of homelessness. Massive urbanization and infrastructural development are thus in the visible horizons. The country is projected to become one of the top twenty economies in the world in eight years time – by 2020.
As it is in Nigeria so in Africa generally: African nations are currently at the low end of cement consumption relative to other emerging economies. With growing populations, it is predicted that consumption of cement in Sub-Saharan Africa will grow by an average of between 7% and 10% year on year over the next two decades. Yet, Nigeria and Senegal are the only two countries in the entire West African sub region that are blessed with limestone deposits in commercial quantities. This industry is thus a major development contributor not only in local housing needs but also as a major foreign exchange earner. We will be the better for encouraging local manufacturers like Ibeto Cement who dare to build Nigeria’s footprint in the global economy.
Plaudits belong to the Federal Government of Nigeria whose national Backward Integration Policy (BIP) on cement and call to increase local production of cement spurred Ibeto Cement Company Limited’s acquisition of the premier Nigeria Cement Company Limited (Nigercem). Nigercem has a plant located in Nkalagu, Ebonyi State. The strategic acquisition of Nigercem is aimed at expediting Ibeto Cement’s local production of cement by resuscitating the Nigercem plant and developing the project as a brand new dry process plant. The Company is also developing another 6,000 Metric Tons Per Day (TPD) Cement plant at Cross River State/Abia State of Nigeria.
Ibeto Cement Company Limited, located in Bundu Ama, Port Harcourt, Rivers State of Nigeria, began cement bagging operations at its bagging terminal in Port Harcourt in 2005. It is an ultra-modern bagging plant with a flat-storage capacity of 50,000 metric tons and a production capacity of 1,500,000 metric tons per annum, which translates to a production capacity of 4,000+ metric tons per day. It has two (2) production lines, each with a capacity of 2, 700 of 5okg bags per hour or designed total production capacity of 5, 400 of 50kg bags per hour. An integral part of this plant facility is a modern purpose-built jetty (Ibeto jetty) that can take in ships of 190+ metres long with sophisticated and state-of-the-art ship unloaders and mounted at the waterfront on the jetty to facilitate discharge of bulk cement from offshore/foreign mother vessels.
From many angles, Ibeto Global points the way forward for us as we trudge the path towards sustainable economic development. Nigerians and Nigerian entities playing in the global market provide a paradigm shift from dependency to partnership and the benefits accruing from increasing the value we bring to the table in the global markets.