The accusationis and counter accusations go thus:
the Dangote Refinery has not been licensed to operate even as its completion remains around 45%. The quality of its products, especially, the pms is below regional standard, so says the Nigerian government. The government went further to imply that Dangote was angling for monopoly in the fuel market.
The Dangote Group, in reaction, through its President, Aliko Dangote, fired back, asserting that the refinery has been licensed and that, the quality of the fuel meets both national and international standards.
Earlier, Dangote has accused the International Oil Companies (IOCs) of frustrating his efforts to procure crude oil locally for the refinery. And in a fit of anger offered to “to put the 650,000 bpd and $20 billion oil refinery on sale, purportedly to be bought by the NNPC, one of the minor stakeholders. The NNPC allegedly holds about 7.2% equity in the Refinery. The government’s initial desire to hold 20% couldn’t materialise.
More than a refinery matter
Surprisingly, the belligerents in these altercations have been the driving force of the Dangote Refinery, directly or indirectly right from inception. For the government to invest over a billion dollars in equity shows its level of awareness to be more than casual. And not to talk of the volume of forex needed for procurement of machinery, equipment, technical know-how, home-remmitances, fees, royalties, etc, usually associated with complex engineering ventures Yet the government, through its agencies, the NNPC, NMDPRA, and the Office of President, who doubles as the Minister of Petroleum, could not “know” and “monitor” what was happening under its noses.
The location of the refinery at the Lekki enclave in Lagos also speeks volume as to the goodwill of the host government and community. For, Lagos, as it were faces serious land constraints. The shores of the lagoon have to be sandfilled even for housing purposes.
The current president, Bola Ahmed Tinubu (the Lion of Bourdillon) who calls the socioeconomic and political shots in the State, literally “owned” Lagos. It would have been practically impossible to allocate or sell the massive land to Dangote without his tacit concurrence. So, what went wrong? Why would a government under Tinubu undermine a national treasure? The answers may basically lie in politics and, to a lesser extent, the Dangote “business model.” But for sure not his person. Maybe as political strategy, shaking Dangote before 2027 shall get him into the desired corner.
Aliko Dangote, who now presides over 15 business conglomerates under the Dangote Group. The premium brands include the Dangote Cement, the Dangote Sugar, the Dangote Salt and the Flour mills. He is arguably the biggest player in the Sugar, Salt, Cement, and the flour sub sectors of the economy. He is also the biggest employer of labour after the government.
As a “citizen” of Lagos state
Dangote might be a de’jure Northerner from Kano, but in practical sense, a de’facto “Lagos boy.” His business interests and inherent passion to succeed as well as circle of associates, more than justified this assertion.The Otedolas, Wigwes, Elumelus and the Adelekes of Osun stand out as some of the prominent. The site of the Dangote Refinery at Ibeju-Lekki is a stone throw to Otedola’s hometown, Epe. A town where he and his late father and former governor of Lagos State, Sir Michael Otedola, come from. Many have actually accused him of not being too helpful to the North, whatever that means.
Dangote might have enjoyed a tailwind through his family background, but like most highly successful businessmen, the beginnings were full of headwinds. His nascent commodity trade had a lot of run-in with the Port Authorities in the 80s. Aliko’s foray in commercial banking in the late 80s couldn’t endure. He was alleged to have told a story of how he would ride on a motorbike from the port to the island to beat traffic just to address some business calling. The Obasanjo regime gave him and others like Adenuga, Wale Tinubu, Otedola, Emeka Ofor and the likes, a leverage. And since then, he never looked back. Maybe it was those earlier experiences that shaped his business model and strategy, which could be likened to being machiavellian. The Niccolo Machiavelli principle among others is based on the philosophy of “the end justifies the means.” Be it fair or foul!
The contributions
As a typical capitalist, Dangote was ruthless in the hostile acquisition of both public and private ventures in promoting his business interest. The acquisition of Port facilities around Tin Can, which brought
bad blood between him and Abdulsamad of BUA Group. He flexed muscles with Ibeto Cement too. The hostile takeover of Benue Cement Company, Gboko, Savannah Sugar Company, Numan, and Kogi State’s equity in Obajana have all been marked in contention and controversy, but to his credit, he made an unqualified huge success out of all.
The Dangote Group, as a corporate citizen, along with its president/chairman Aliko, had made enormous contributions to the Nigerian economy. The employment opportunities offered by the Dangote Group, put around 100,000 (direct) and millions more, indirectly, have been invaluable. This is expected to double when the Refinery comes on stream fully. The billions paid the government in tax, believed to be in the average region of N200 billion annually, and the conservation of forex. If the Dangote Refinery starts operation at installed capacity, up to 30% of the nation’s annual fuel import bills could be saved. Developments, that impact the fiscal health of economy positively. The Dangote Foundation (1994) has been putting smiles on faces of hundreds of thousands of citizens as well, as part of the Group’s corporate social responsibility (CSR).
Through the Dangote Group, the national economy might have gotten a local impetus in the search for homegrown industrialisation strategy. Globally, too, Dangote should be a source of pride for the nation, not only being the richest in Africa and also the black race.
The sins
Most models of industrialisation and economic transformation are driven by indigenous capacity for innovation and/or adaptation of imported technologies. Or steal the same outrightly if one can. The Dangote industries, unfortunately, could be found wanting in this regard. It is no secret that the technical manpower base across the group is mostly foreign with little succession process. The Phillipinos, Indians, Lebanese, and Europeans constitute the main core. And they have been around for long.
Dangote, however, may not take full blame for this because the education system has systematically failed to produce the relevant and employable manpower locally. The needed machinery and equipment obviously have to be entirely imported, and often time installed on turnkey basis with little provision for R&D, talkless of forging parts locally.
The Dangote industrial productions, like all others, are therefore largely involved in packaging, bottling, cubbing, blending, and milling. A mostly low-tech (technology transfer/acquisition parlance) also foreign dependent model. With the exception of oil refining, of course. In the circumstance, a substantial part of revenue drivable from the sector is paid out in the form of royalty, technical fees, remunerations, spare parts, and foreign training. A case of robbing Peter and paying Paul. Dangote and ilk are what, in the opinion of Leftists, “comprador bourgeoisie,” while Rightists may refer to them as “benevolent economic parasites.” They get richer as the nation’s industrialisation process increasingly becomes foreign dependent, as posited by Economic Dependency theorists like Raul Prebisch and Fernando Cardoso.
Over the last two dedicates, and under the National Privatisation Programme, Dangote was able to acquire such industries as Savannah Sugar Company, Numan, the Benue Cement Company, Gboko, among others. The idea was to them around to serve as import substitution ventures. Other industries so bought out include flour mills and salt. The shrewdness in Dangote saw an opportunity to weigh the cost implications of putting these facilities to full capacity and the the returns that could acrue in importing the products.
The latter seems more attractive, especially basic consumer goods like Sugar. Thus knowing the demand/supply gap between national output of Sugar, Flour, and Salt, Dangote, and counterparts could easily convince arm twisting, and even “blackmail” government to give them licenses and forex support to import shortfalls, to forestall scarcity and concomitant price rises. A good illustration is in the Sugar sub sector where the annual demands average 130 metric tons, while the combined local outputs in the hands of Dangote and others stands at around 1.3 metric tons (ref. NSDC data). Yet Sugar is the second highest food items import of country after wheat.
Given the vagaries of agriculture productions it pays to play around it and also find favour with the National Sugar Development Council (NSDC) to qualify for import licence. The Dangote Sugar infact had cause to employ a retired Executive Secretary of NSDC into management, a development that could be considered unethical in other climes. Similar practices are rife across most of the local industrial concerns in Nigeria.
With enormous wealth at his disposal, Dangote’s influence with government establishments could literally be limitless. Moreso in an ecosystem where corruption (material and moral) had become a way of life. Everyone and anything may have price that only good conscience can sanction actions. Unfortunately good conscience and moral order operate at the bottom of business decisions. The Dangote Group has thus been accused of obtaining undue advantages in its operations. It was figured in the multi billion waivers from FIRS in 2019.
The name of the Group has also come up in the “Emefielegate” regarding forex allocations. Serious crisis and allegations trailed the acquisition of Bcc and even the terms of securing the Obajana land. Some of insinuations may not hold water but they speak to the challenges of impunity and transparency. And the fact that anyone willing to buy his way through can easily do that.
Maintaining and growing one’s fortune under a democratic experiment that is full of cronyism requires big time investors to be apolitical. They have to operate and relate across political devide and cultivate the art of equal patronage.
The build up to the last general elections however presented a new challenge. It was alleged that some members of the “billionaire club” class bet and showed perceptible political preferences even after the usual open equal material support. Dangote’s desire didn’t come to pass. Some competitors snitched on that to the eventual winer, who felt betrayed despite the goodwill extended to Dangote in his backyard to thrive. The die for a pound of flesh was cast as part of the growing sins of Dangote.
The way to go
A part from Aliko Dangote’s sins, his humongous wealth in a society where over 80 % are classified poor could be a source of widespread “envy” that is capable of generating all sorts of “stories.” The government in the circumstance needs to be circumspect in dealing with the situation. This is to avoid throwing away the bath water with the baby.There should therefore be a dialogue to iron out things up. Jeopardising a multi billion dollar venture would not be in Nigeria’s interest at its current sorry level of economic development.
The Dangote issue should be seen as an opportunity to rein in the public servants (retired or serving) to shed light on how a venture of the magnitude of the Dangote Refinery could be embarked up without the necessary licences and built-in quality control system known to government. These gaps and similar ones are pointers to the impunity in governance of Nigeria. It amounts to dereliction of duty that the an incoming president could not be presented with details of the Dangote Refinery from day one, bearing in mind he is the Petroleum Minister. Some things can only happen in Nigeria!
The friction between Dangote and government is symptomatic of the failure of Nigeria’s development model. A model that relies on imported machinery, equipment, technology, expertise and some time semi processed inputs to drive industrialisation. For such a strategy to work the technical and technological absorptive capacity has to form integral part of the model. Short of that both government and Dangote can be easily grounded in the event of external economic sanction. The West actually supported the Dangote Refinery because of its gradual shift from fossil fuel to alternative sources of energy. The Refinery as such shall not be a competition. Other byproducts like fertiliser may sustain in the foreseeable future however.
There is no need to reinvent the wheel but the national technical/ technological capacity to innovate, clone, forge, and carryout researche on improvements should be in place, to domesticate foreign ones sustainably. That’s what Korea, Malaysia, Indonesia, Iran and China have been doing. The process however calls for an effective education system and availability of adequate infrastructure especially, power. The jinx surrounding the revitalisation of the government refineries should also be broken for more fuel to flow in the economy. And above all, getting the security in the country enhanced.
For now, the government is stuck with the current comprador bourgeoisie and benevolent parasitism as they toil to effect a paradigm shift in the approach to economic governance. A national-capacity-based model may hold the key to the “renewed hope.” For, as the naked dance continues, the spectators may not be that amused as they watch with their stomach instead of their hearts or brains.
A.G.Abubakar agbarewa@gmail.com
Leave a Reply