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Despite the dispute over the ownership of Obajana Cement Plant between Dangote Cement Company and the Kogi State Government, there is an urgent need to ensure that the company thrives in the overall interest of the people.
The tussle might have brought to the fore, what many people see as the ways and manners the Dangote Group operates, which has become questionable and a source of concerns to many Nigerians.
The crisis over the ownership of Obajana Cement Plant between Dangote and the Kogi State Government was seen as an unprecedented issue with many people wondering what went wrong during the period of acquisition and why Dangote Group has not been convincing enough about its not ownership of the organisation.
Governor of Kogi State, Yahaya Bello had said that the state government would be ready to negotiate with Dangote Group once the firm was ready to admit that the plant belonged to the state.
Speaking when he presented documents from the report of the Specialised Technical Committee on the Evaluation of the Legality of the Alleged Acquisition of Obajana Cement Company Plc by Dangote Cement Company Limited to back the state’s claim to the ownership of the plant, Yahaya said the decision to seal off the plant followed several petitions by members of the local community over marginalisation by the company.
Bello’s words: “We received several petitions from the general public over this particular subject matter. In the past five to six years, all efforts to sit with the proprietors of the Dangote Conglomerate failed.”
But Dangote Cement Plc, in a statement titled, ‘Illegal Shutdown of Dangote Cement, Obajana Plant,’ and signed by its Group Managing Director, Michel Puchercos, said the armed invaders acted on a resolution of the state House of Assembly on controversial tax claims, which it added that the governor had contradicted when he said the shutdown was due to an alleged invalid acquisition of the company by Dangote Industries Limited.
“In the process of forcefully evicting the workers to enforce the shutdown, the vigilantes shot at 27 of our workers and also destroyed some of the company’s property at the plant. We have taken steps to get the hoodlums apprehended by law enforcement agencies, and we will ensure that full legal action is taken against them.
“While we reiterate that Obajana Cement plant is 100% owned by Dangote Cement PLC, we remain resolute in transforming Africa, while creating sustainable value for our people, communities, investors, and customers,” the statement partly read. The state government, however, accused the cement company of distorting the facts and vowed to recover all accrued dividends from profits made over the years by the Dangote Group, including accrued interests on the same.
The Commissioner for Information, Kingsley Fanwo, in a statement titled, ‘Dangote is distorting facts – Govt,’ said the state had all the relevant documents to prove that the purported acquisition of Obajana (cement plant) by Dangote was null and void.
“We want to assure the good people of Kogi State that, with God on our side, what belongs to the state shall be recovered, including all dividends and interests on profits from inception till date. The Dangote Group is just distorting facts to save its face,” Fanwo added.
An observer said in an opinion on the matter that “Africa’s richest country, state actors always place more premium on politics over governance. What state actors and the governors would like to see at this time is for Dangote Group Chairman, Aliko to donate heavily to the political campaign funds including Kogi’s even after they have closed down one of the major sources of his income.
“This is a time to call on Nigeria’s leader, governing party and the relevant ministries in charge of Trade and Industry to wade in and resolve this crisis before it is too late. One does not need any permission to say that the cement plant in Obajana, which was at inception (2008) with its two lines totalling 5Mta, touted then as the largest cement factory in Sub-Saharan Africa, is too important to be shut down at this time of economic crisis. This is not to say that the Dangote Group should be above the law. This is just an appeal to the authorities in Kogi that they too should not take the laws into their hands.”
While some people are oblivious of the issues at hand and could be tempted to condemn the Kogi State Government “for invading Dangote Cement Factory and stopped them from working,” it is important to refer to what a columnist once said about Dangote and his business; “there is no sugarcoating it: Dangote is the poster child for patrimonial monopoly capitalism in Nigeria.
“Whether you favor or oppose a capitalist trajectory for Nigeria and Africa, patronage capitalism should offend your sensibilities. It is morally, economically, and legally wrong. It distorts Nigeria’s financial and economic terrains. More devastatingly, it amounts to a huge transfer of public wealth to favored businessmen. It is an insidious form of corruption.”
He said further that “the recent revelations of how the Dangote Group has enjoyed privileged, almost exclusive access to government-subsidized foreign exchange to the tune of hundreds of millions of dollars has compelled me to take a second look at my previous endorsement of the Dangote business model.
“Dangote is a reflection of a deeper political and economic dysfunction in Nigeria. This foundational dysfunction makes it possible for oligarchic wealth accumulation to occur, creates a fait accompli of indispensable, monopolistic oligarchs, and then compels a pragmatic observer like me to choose the least objectionable oligarch.
“This is not the first revelation of Dangote being embedded in a cocoon of governmental favors. During the Obasanjo administration, the former president granted a series of import duty waivers and subsidies to the businessman as the latter expanded his investment repertoire into cement production. Under Obasanjo, Dangote’s quest to buy up poorly performing competitors such as Benue Cement was made easy by a friendly government peopled by allies in power.
“The businessman’s desire to establish a virtual monopoly in the cement sector became a reality under that government. His competitors, such as Ibeto Cement, which lacked access to power, languished and hibernated under the weight of the competitive edge granted Dangote by subsidies, waivers, and cheap acquisitions facilitated by his friends in government.
“Dangote lubricated his privileged access to power by donating lavishly to the campaign funds of the then ruling party, the PDP. By so doing, he secured and expanded his access to concessions and breaks that his competitors and business peers could only dream of. He remained in government’s favor for three successive PDP administrations and he continues to enjoy special access to taxpayer subsidized Forex to the detriment of other businessmen and to the peril of Nigeria.”
All these must have played out in the acquisition of Obajana Cement Plant by Dangote Group of Companies.
The deal was said to have been shrouded in secrecy that has now been blown open by the Yahaya Bello-led Government that is insisting that the people of the state must be given what belongs to them.
According to an economic expert, Mr. Tajudeen Oduwale, it is always good to ensure standard in any dealing, adding that Dangote ought to admit that the process of acquiring Obajana Cement Plant was faulty.
His words: “I will not blame Governor Yahaya Bello for the steps he is taking on the matter. Dangote Group of Companies should come out and admit their mistakes as a Daniel has come to judgment.
“Now that the lid has been blown opened, he should allow the matter the state government have its rightful position in the company. The factory belongs to Kogi people and they have the right to get the lion share of the business.”
This was supported by a businessman, Mr. Benson Okechukwu, who advised Alhaji Aliko Dangote and the management of Dangote Group of Companies to rise to the occasion and “stop fighting a lost battle.”
“Why would Dangote Group of Companies claim what does not belong to them. This is a commonwealth of the people of Kogi State, so he should not deny them their right.
“The best thing is for the organisation to go into a round table discussion with the Kogi State Government and seek amicable resolutions of the matter and pay compensation, where necessary,” he said.
Recall that Dangote once had a running battle with Abdulsamad Rabiu, the billionaire Chairman of BUA Group, a cement manufacturer and commodity trading firm.
Rabiu was unsparing in going after Dangote in the wake of published documents detailing the sweet Forex deal the Dangote Group enjoys. Here is Rabiu in his own words:
“It is rather ironic that a similar competitor in the same industry, who incidentally is the market leader, is allocated huge amount of Nigeria’s hard earned and scarce FX from the official market for its operation in Congo. I do not know if there is an official policy to that effect but I was baffled, as were numerous Nigerians, to learn through a publication of FX allocation returns by First Bank of Nigeria in Thisday Newspaper of Tuesday, February 16, 2016 (page 11) of that allocation whilst other operators in the industry have received far less or nothing at all during the same period for verifiable and viable investments within Nigeria. It begs the question, “were other plants by that operator across Africa built with Nigeria’s money?”
Rabiu is of course a competitor to Dangote and probably covets the government-bestowed privileges that Dangote enjoys. But let’s separate the message from the messenger and the motive from the points raised. Rabiu raises several weighty issues regarding the wider implications of the Dangote business model.
The columnist writes further that; “there is nothing wrong with government offering strategic concessions and breaks to certain players in certain strategic sectors of the national economy — sectors with the capacity to solve a strategic or pressing national infrastructural problem or sectors critical to a strategic national product or industry. Incentives of this kind are sometimes necessary to lure risk-taking, well-financed investors into sectors that require significant capital outlays and initial infrastructure beyond the financial ability of the government and other investors.
“Such concessions are usually given to pioneers in a strategic sector, and smart governments do this all the time. I would rather see local investors like Dangote, Rabiu, Femi Otedola, Mike Adenuga, or Tony Elumelu get these kinds of concessions and strategic breaks than expatriate firms. There is nothing wrong with a little economic patriotism. Even in the United States, “buy local” laws and “local contractors” provisions have proliferated across many states as a way of domesticating returns on investment (ROI) and increasing returned value (RV).”
He said further that “While Dangote’s refinery project qualifies as a strategic investment critical to our economic recovery and growth and would thus be a good candidate for certain government breaks, Nigerians are yet to be told the terms, if any, or extent of the government’s commitment to Dangote in exchange for setting up a refinery that would transform the downstream sector of the Nigerian oil industry.”
Recall that the United States described the Dangote Group of Companies’ business strategies as disastrous to the Nigerian economy.
A report published in 2010 on Wikileak’s website said even though Dangote played a major role in Nigeria’s economy, “many products on the country’s import ban list are items in which it has major interests.”
“Although an undiluted success in terms of wealth accumulation, Dangote personifies the duality in Nigeria’s economy,” the American government said while maintaining that the duality “presents a dilemma for country’s economic policy.”
It accused Dangote Group of blocking investment that the company may see as major competitors, noting that “Weighing everything in the balance, we believe the Dangote model is harmful to Nigerian and American interests in the long run.”
The American government further warned, “Unfortunately, the Dangote model will likely be the one most emulated until its beggar-thy-countrymen contradictions become more apparent.”
It is safe to say that the assertion of the U.S. government has been evident in some of the tactics employed by the conglomerate.
Dangote Group faced wide criticisms in the past years over what detractors described as favouritism from the Nigerian government.
The company faced backlashes after it called for a total ban on tomato importation in 2019 when it started its tomato processing subsidiary.
Aliyu Suleiman, a chief strategist at Dangote, suggested the anti-competition approach during a visit by members of the National Assembly’s joint committee on PIB to the company’s project site.
The group proposed that only companies with licences to refine crude oil should import fuel whenever demand surpass available fuel or when a refinery is undergoing maintenance.
The recommendation came at the time Dangote Group was on the verge of completing a 650,000 barrels-per-day refinery in Lagos.
Financial experts, however, said the Dangote refinery should not be allowed to become a monopoly in the manner of the state-run NNPC, although it remained unclear how the conglomerate would be prevented from holding a monopoly if the controversial clause makes it into the PIB.
This is also evident in the reopening of land borders to Dangote Group in November last year, when it was allowed to transport its products to neighbouring West African countries.
Nigeria had shut its land borders in August to give room for the consumption of home-grown products, but the access granted to the company was said to be based on an authorisation issued by the President Muhammadu Buhari-led administration.
A businessman and founder of Stanbic IBTC, Atedo Peterside, faulted the move.
He asserted that it portrayed Nigeria’s economy as favouring only the well-connected.
“Allowing legitimate exporters and importers to move their goods across the border should be a no-brainer,” Mr. Peterside said in a tweet.
“Why refuse everybody else and allow only one company (Dangote)?”
He added, “This is why some of us argue that the Nigerian economy is rigged in favour of a handful of well-connected persons.”
It was also asserted recently that “the Kano-born Dangote was a commodity trader, but he obtained his massive wealth during the regime of President Olusegun Obasanjo who encouraged the sell-off of state-owned corporations, presidential aircraft and government properties to Dangote and other questionable businessmen. Essentially, Dangote’s wealth is the equivalent of 7% of Nigeria’s gross domestic product (GDP).”
It was alleged that Dangote’s style has been to ignore allegations of cement price-fixing, over-inflated IPOs and resale of Broadband licences.
Indeed in the case of Obajana Cement Plant, “it is time for the chicken to go home to roost,” Dangote Group of Company has to capitulate and allow the due process have its way.
