Cement has nearly doubled in price in the last two months, rising from N2500 to N4500 for the standard 50kg bag. We knew it was coming the moment Federal Government panicked and loosened the foreign exchange knot on which it was choking itself.
There are two major cement producers in Nigeria, Dangote Cement, largely owned by Aliko Dangote and BUA Group owned by Abdul Samad Rabiu. Both of them are business moguls from Kano State one from the Isyaku Rabiu family and the other maternally related to the Dantata family.
Dangote controls 65% of the market for cement in Nigeria. It also has 41% of Cameroun and 13% of Ghana.
Cement is a product of no particular significance in any other country in the world except Nigeria. Cement companies all over the world return profits of no more than 5% annually. Not in Nigeria.
Profits from cement production in Nigeria by the two oligarchs scale 40% annually. Cement assumes an oversized importance in Nigeria because two Northern oligarchs have seized it’s production and distribution. The Monopoly enjoyed by these two oligarchs mean that everyone is forced to pay outlandish prices not related to the true value of the products and not comparable to the lower prices paid for it in the rest of the world.
All of us are forced to pay outrageous prices to sustain the myth of Dangote being the richest man in Africa. Yet no one has told us the benefit of having the richest man in Africa from Nigeria.
So while Governments all over the world are enforcing and litigating antitrust laws to break monopolies, the Government of Nigeria is forcing a monopoly on the people in other to make Dangote the richest man in Africa.
Dangote is not rich because of his business acumen or what he produces but because he is a favoured client allowed to poach the finances of the people and Government of Nigeria.
No international rating agency rates him or his companies better than many others, either in management or entrepreneurial accomplishments.
Dangote is rich because he remains a favoured patron of successive Nigerian Governments dominated and as a payback, his businesses are highly leveraged, patronized and protected by Government.
The man is not a business champion and is thus not the richest man in Africa for producing pasta and cement, even as all his products are overpriced. He twists the arms of the Federal Government to sustain a regime of high prices in the products where he enjoys monopolies like cement. He has made no innovations in anything and does not advance society with any new technology.
Dangote built his wealth from two sources: patronage by the Federal Government and control of the foreign exchange “allocations” by the same Federal Government through control of the Central Bank. To take further advantage of both, he deploys these powers to kill every competition, force the enactment of self-serving Government policies and laws and create new ones where there are none.
As the richest man in Africa and being close to the corridors of power in Nigeria, Dangote deploys all the powers of the Federal Government to protect him and his businesses. When the Southern borders were closed for example, Government specifically issued an exception to Dangote trucks.
Aliko Dangote benefits as an entrenched member of the oligarchy since early in the eighties. He was groomed by the Dantata family in the late seventies at WAPA, Kano and early in his business career, was a protégé of the Dantata’s. He has therefore been lucratively located in the business flank of the oligarchy and never directly competes to hold political power. He was self effacing early on, offering no threat to politicians and so was ignored in the contests for political power in Nigeria.
But Aliko Dangote, being a keen eyed businessman and knowing that his business success is tied inexorably to building the right political alliances, has immersed himself so deep in the power dynamics and has over the decades gathered enormous power and influence that no one can ignore him anymore in the political power calculations in Nigeria.
The moniker of “businessman” on Aliko Dangote is deceptive and deflective, removing him from direct responsibility for some of the more damaging policies and practices of Government originating from him, even as he is the main and direct beneficiary of such destructive policies.
For instance, the Federal Government policy of import licensing by the Shagari and later Buhari Governments in the early eighties made Aliko Dangote the major importer of most basic commodities like salt, sugar, rice, cement etc. Import licenses were issued exclusively to him and fellow Northerners, many of whom were not business persons.
These other beneficiaries promptly sold their licenses to Aliko Dangote. The then Minister of Commerce in the Government of General Buhari in 1984 Mahmoud Tukur was so bigoted that he would announce in his office that import licenses were meant for northerners to catch up with Southern businessmen. This skewed practice eventually made Dangote achieve an unheard of monopoly in the importation of major commodities in a rapidly expanding Nigerian consumer market.
Everyone else in the business of importing commodities into Nigeria, particularly the Igbo were forced into smuggling as they could not be “qualified” for import license.
Many fell prey to the draconian laws enacted by Buhari in 1984 like 200% import duty on vehicle imports. Goods ordered by Southern business men before the coming of the Buhari regime were seized at the ports because no one could pay the new import duties.
These seized goods were promptly auctioned off unabashedly to northerners. A young Igbo friend whose containers were seized sold off everything else he owned and migrated to Brazil, cursing on his way that this country will never have peace and Justice.
So many lost their goods and businesses and others suffered seizures and blockade of their imports. Aliko Dangote thereafter became the champion of Apapa and Tin Can island ports in Lagos.
For many decades, Dangote held the exclusive authority to import sugar, salt, rice and many other commodities into the starving Nigerian market. It was foolhardy for any merchant ship with these imports to enter the Nigerian waters or to try to berth at the Nigerian ports.
Many business men were destroyed by officialdom who tried to compete with Dangote in his chosen areas of business. Dangote himself does not believe that he is subject to or should obey laws that negatively affect his dominance.
One popular example was Cletus Ibeto producer of Ibeto cement. Ibeto was forced out of the cement business by Aliko Dangote who quoted policies and laws not known by anybody else and it was only the later kindness and insistence of President Yar’adua that temporarily restored him. President Yar’adua died and Ibeto cement had to flee.
Since we are a nation ruled by men, not by laws, Aliko Dangote has thrived in Nigeria by making himself an exception to every law and every rule. He lives and does his business above every financial and monetary regulation imposed by any Government in Nigeria.
Aliko Dangote does not believe in business competition and thrives by using the Federal Government power and policies to destroy every possible competitor. He has always been supported by northern controlled Governments in this effort.
Dangote has thrived not through holding any patent on scientific discoveries or creating new products, not through creating or improving processes, not through new or improved technologies but through protected trading environment created and sustained for his ascendancy.
Another area of bitterness by other businesses is Dangote’s overwhelming dominance and control of the foreign exchange market.
There are strong rumours and loud whispers of Dangote’s purchase of foreign currencies “Sub Rosa” and at below declared prices.
Every businessman finds ways to beat the competition, sometimes deploying underhand ways but it remains the duty of the state to protect and preserve the competitive business environment. Competition inspires innovation, creativity and brings about lower costs and better products and services. Competition inspires progress for the economy and society.
Dangote’s predatory business practices have been unrestrained and sometimes overwhelms Government itself.
In the pursuit of creating and sustaining a northern business champion, Dangote has been allowed to take hold and dominate Nigeria while gas lighting competition. He has been allowed again and again to seize the Nigerian economic jugular without competition or countervailing protective policies.
The agenda has been for the North to pull every stop to produce a northern business champion without the rigour of beating the competitive environment.
Faced with international competition, the Dangote model will fall as it is not undergirded by the power of a winning idea, by the toughened knowledge and experience of going through a competitive environment.
Gold must pass through fire to win the love and admiration of men. Until he goes through the crucible, Aliko Dangote cannot be a champion of business in Nigeria or anywhere else. He is a creation of privilege, a caricature of progress and never the real deal. He has created nothing new or unique to the world. Put in a truly competitive environment, the Dangote bubble will burst.
For now, he can sell his cement for any price he wants. Someday, Nigeria will find new ways of building houses without cement.