If prognoses of the Nigerian economy go undistorted until the end of this decade, Alhaji Aliko Dangote will not only remain the richest person on the African continent but is also positioned to be the major factor to take into consideration when the government is formulating policies.
Already, the Dangote conglomerate is a defining player in the consumer goods industry, agro-allied products, port management, transportation and logistics, as well as business development. The company, through its subsidiaries, also operates in areas of real estate, telecommunication, steel, oil and gas, poly products, cement, and packaging.
Some analysts estimate that the Dangote group controls more than half of Nigeria’s commodity market. The group’s stranglehold is on cement, flour, pasta, salt, and sugar markets.
Dangote Cement is already the biggest quoted company in West Africa and the only Nigerian company on Forbes Global 2000 Companies. Its stock is almost half of the value of the Nigerian Exchange (NGX).
Given that Dangote has averaged a growth rate of over 20 percent in the past few years if we employ the Rule of 70, which states that a variable growing at x rate would double every 70/x years, this means that Dangote’s stock value may double in 2023. In other words, his stock is set to eclipse the Nigerian stock exchange in the near future.
That’s not all. Dangote has said he will take charge of diversifying the Nigerian economy. With the business mogul’s current speed to wealth creation and diversified investment interests, he’s already diversifying the economy, which is good news for Nigeria.
With his foray into the refinery business, tipped to come on board sometime in 2022, Dangote is poised to take Lion’s share of Nigeria’s N3 trillion ($7.2 billion) per annum PMS market, N854 billion ($2bn) diesel market, excluding the N300 per liter cost of aviation fuel, the N316 per liter cost of kerosene and the many associated products that come out of refining crude oil.
To put things into perspective, in 2019, Nigeria spent approximately 32.5 percent of its $48 billion import bill on petroleum products. That was $15.4 billion.
With the falling demand for crude oil on the international market owing to a progressive global shift from fossil fuel, Dangote may become the major buyer of Nigeria’s crude oil, which will be enough to supply the local market, but also add value to the naira by exporting the refined product to regional giants.
As Dangote himself put it, “in five years’ time, half of Nigeria’s crude oil will be refined and exported rather than exporting crude that creates jobs elsewhere.”
Adding Dangote’s venture into the petroleum industry mix, it is estimated that Dangote could be one of the single largest employers of labor in Nigeria, after the government. This is certainly no mean feat.
No doubt, no other indigenous investor has contributed to growing this economy as much as Dangote has. In terms of investments, unlike many others, Dangote has demonstrated belief in the Nigerian project by investing and reinvesting time and again in the Nigerian economy.
However, with the tycoon’s inexorable ascent to wealth and power, some economic watchers have expressed fear that the group may begin to enjoy some monopsony of sorts. For example, when Dangote Refinery comes on board, the four government-owned refineries, which have proven to be grossly inefficient over the decades will not compete with the much more cost-effective and efficient Dangote Refinery and will have to fold up or be subsumed by Dangote. On the other hand, Dangote may decide to use price as a weapon to push the refineries out of the market or acquire them.
With the global focus receding from the use of fossil fuel as an energy source, Dangote will likely become the major buyer of Nigeria’s oil. When that development plays out, he may be in a vantage position to arm-twist the government to buy on favorable terms. By then, the federal government may depend on him as its major buyer.
There is no doubt that as Dangote continues to expand his business empire, the externality consequences of his business operations will continue to grow and permeate many aspects of Nigerians’ social and economic life. The question that many are grappling with is the government’s ability to regulate and control such a behemoth. Especially in a developing economy characterized by pervasive institutional voids and government failures, the dangers of a Frankensteinian future – where government inadvertently creates something that would eventually engulf it – are rife.
Advanced economies like the US and EU haven’t had an easy time enforcing antitrust laws, despite having the best of both human and institutional capabilities to deal with such realities. Sadly, there seems to be no means at the disposal of the federal government to turn back this tide.
This recalls the origin of anti-trust regulations, which in the early part of the 20th century created such a political upheaval that it took only what one may consider a random event in the death of a US president to solve. There were the fears that Trusts or large corporations would impose monopolistic prices to defraud consumers and drive small, independent companies out. By 1904, 318 trusts – including those in railroads, local transit, and the banking industry – controlled two-fifths of the US’ industrial output.
As Dr. Bongo Adi, faculty member of Lagos Business School puts it, “With Dangote’s dominance of critical sectors of our economy, it is just a matter of time before every aspect of the economy comes under its looming shadow. The implications of such a colossal monopolistic economic structure for a developing economy with weak regulatory infrastructure as well as weak institutions will challenge students of political economy.
“One thing is certain however, Dangote’s emergence would reshape the contours of the economic system built on competitive markets in the developing world. However, it is pertinent to know that monopoly has never been an efficient economic structure for allocating resources. We agree that a discriminating monopolist can achieve the same system of allocation as the competitive market, but the discriminating monopolist is just a theoretical ideal, never realisable in practice.”
But the Dangote Group has done nothing that contravenes the playing field of the Nigerian economic space. In fact, Aliko Dangote would right-fit the description of a ‘patriotpreneur’, a word coined by the Alvin Report to define a person who invests his resources for the development of his nation.
After all, how does one begin to reckon with a corporate organization that employs 700,000 Nigerians, N250 million value added tax (VAT) per day, N37 billion on cement, apart from his many other investment interests.
No doubt, the Dangote Group is a force for good on the Nigerian economy. Dangote has essentially become a shining example of patriotpreneurship that deserves the emulation of other well-endowed businesspeople.
It behooves government also to create the right environment that would produce more Dangotes for national prosperity and usher in more competition from her businesspeople.