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OUR STRATEGY Although the market had around 136Mta capacity in 2016, we believe this capacity, much of which is ageing and inefficient, could soon be overwhelmed by demand as population growth, increasing urbanisation and rising GDP continue to drive consumption upwards. Our strategy to expand rapidly and serve this growing market began in 2007 when we took the first steps into manufacturing cement in our home country of Nigeria, which is perhaps Africa’s most attractive market for cement. Dangote Cement is well on the way to becoming one of the world’s leading cement companies and certainly the largest in Sub-Saharan Africa, which we believe will be the next big growth market for cement. Sub-Saharan Africa is home to a billion people and has a population growth rate of nearly 3% per year. By 2050, the UN estimates, the region will have a population of more than two billion. Furthermore, SubSaharan Africa is experiencing greater stability, less conflict and economic growth above global averages. The World Bank estimates that Sub-Saharan Africa experienced GDP growth of 3.0% in 2015, slower than the 4.5% recorded the previous year. It forecast subdued growth of 2.5% for 2016, picking up to 3.9% in 2017 and 4.4% in 2018. It attributes this slowdown, compared with higher growth in previous years, to lower oil prices and the ending of the commodity supercycle. Despite the recent slowing of its economies, SubSaharan Africa will need considerable investment in infrastructure and housing as urbanisation increases and economies diversify from dependence on agriculture, minerals and oil towards manufacturing, retailing and services. Increasing personal wealth and the ongoing shift towards younger, more affluent and more mobile populations will also increase demand for property as household occupancy falls. The combination of these drivers will see Sub-Saharan Africa’s demand for cement increase significantly in the coming years, from about 84Mt at present. 26 Annual Report 2016 Benefiting from competitive pricing, tight cost controls and investment incentives in the form of tax holidays, our strong cash generation in Nigeria funded our expansion both inside our home country and beyond its borders into key African markets where we are building new capacity that will serve the needs of Africans for the coming decades. Our entire production base now consists of almost 46Mta of production and import capacity in a total of ten countries spanning Africa, from Senegal to Ethiopia and down to South Africa. The success of our expansion is seen in the rapid gains in market share we achieved across Africa soon after our plants were opened, despite the presence of strong incumbents. When we search for new opportunities we look for several key features in the market: the availability of good limestone from which to make cement; the availability of investment incentives, usually in the form of tax holidays; a large population with a growing economy; access to good transport infrastructure; access to low-cost fuel; a cement deficit; strong commitments to investment in infrastructure and housing; and an industry that is characterised by substantial imports, as well as older, less-efficient, more costly and sub-scale plants. Our strategy in every country is to be the leader on costs, quality and service. We build large, modern, highly efficient plants that combine the latest equipment from Europe, China and beyond to enable us to make higher-quality cement at lower costs, thereby giving us strong competitive advantages.

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