Dangote Cement Factory Contract Setbak Myopic


Farouk Martins Aresa


Nobody in his right sense will ask an astute businessman to trade at a loss. So there were mixed feelings when Dangote announced that he would rather pay the penalty of a postponed joint business venture with his foreign partner than run the cement factory at a loss in Nigeria. He was obviously pissed by the fact that imports became cheaper because of massive importation of cement into the Country to drive down local cement prices going at 2000 naira per bag or more.

Dangote had said his goal was to see the price of cement at reasonable price in Nigeria but the way to do it is to encourage local production which he rightly embarked on. It is very difficult what exactly went wrong through the pages of newspapers but it is no secret that the Government gave import licenses to some other businessmen including Otedola which might have generated some bad blood. In Nigeria we call it bad bele.

Nevertheless, the goal of all the businessmen would have been to increase cement production in Nigeria to enable more people to build and own their houses. Massive import of what we can produce can only be a short term solution but in Nigeria it has become a way of life. The same can be said of finished petroleum products, rice, gari or chicken production. There are some needs that must be within the reach of the Country’s manufacturing base. Cement for shelter is only one of those.

Do we beg Dangote or appeal to his patriotism for the sake of Nigerians to economically ruin himself or adsorb his short term loss while other businessmen take profit to the bank like a bandit?  The history of Nigeria is full of Government subsidies that have never yielded results. Parastatal companies that have been sold at considerable loss to cronies with the hope that they can be run without further assistance, only to fail are too many.

There was a time Dangote and Folawiyo corned the cement factories in Nigeria. We all agree that one or two businessmen can not have monopoly on any product. It would be a disincentive to competition and usually result in higher price as we have seen in the case of cement. Blame Yar’Adua Government for everything but their intention was to bring the price of cement down by importation while we can nurse our own factories into adequate production. Without Dangote cooperation, that mission may fail or take longer to achieve.  

Oops ! By this action we bumped into our vicious circle again. Nobody can argue with Dangote that it is not cheaper to pay compensation of about $65 million to the Chinese Sinoma Company and $200 million to European consortium than the $4 billion loss  he would incur as a result of Yar’Adua massive cement importation. Nigerians, despite our greed for kickbacks, stakeholders of reasonable men and women must have sat down from the Government and private companies’ sides to iron out the effect of cement importation especially in view of the consequences of the suspension of Dangote’s contracts resulting in staggering amount of money and jobs loss.

It will be naïve on our part to think that the Government never made any attempt to address the shortcoming of Dangote Groups and even more so to think that any offer was rejected without consideration. After all, Dangote Group has benefited in the past as importer of some products into the Country including cement. Since we are not witness to these negotiations, we do not know who is pursuing monopoly, greed or kickbacks beyond Nigeria “standard”.

The loss of jobs20and Nigeria’s self-sufficiency in cement production cannot be discarded lightly. If need be, we may have to do the usual break-dance tours: go on learning trips to cement plant projects in joint venture with the same Sinoma Company in South Africa, Uganda, Zambia, Senegal, Equatorial Guinea and Ethiopia. We may want to know why our Nigerian businessmen are more willing to locate and build there but not at home.

Building factory for our manufacturing base require dependable electricity, water, roads and other infrastructure as rightly pointed out by every businessman. Moreover, the Government must be able to protect its manufacturing environment against cheap foreign imports. It is the lack of these basics that increase the cost of products made in Nigeria. Nevertheless, if we have to wait until Nigeria Government can provide all these, there will be no factory in the Country.

In lieu of this lack of infrastructure, the Government has the responsibility to encourage and compensate businesses by tax breaks, provision of land in the form of new villages, educated workforce and if necessary subsidized the wages of entry level employees like the Niger ia Youth Service Corp members and high school student job training programs.

It may be a contradiction when we ask for more subsidies for local rice production with total ban on foreign rice then asks for some tax breaks for local cement manufacturers. There are basic needs of which food is the utmost. Food comes before shelter and while everyone may not be able to build a house, everyone must eat. So if a local cement producer is asking for the same inducement as rice or gari producer that may be a sign of self-indulgence.

In the past, as Ewekoro survived, we saw Asaka Cement and Benue Cement factories succumbed to Government policy of cement importation, while Folawiyo and Dangote were the main beneficiary importers. That is apart from sugar importation. So we cannot blame Dangote today if he does not want to be the victim of that same failed policy.

We spend more time with our fingers pointing blame at one another on failed policies than joining hands working together. We as Nigerians in and out of the Country do well as individuals but we are abysmal failures when it comes to collective actions. We do not trust each other and cannot as long as there are people whose only goal is how they are doing individually, not how well Nigeria as a country is faring.

Most projects need collective action for a country to move forward. We know this and we do it in and with others in their countries. Please do not leave out Nigeria to face the sun like dry fish. Maybe Nigeria should take reassessed Dangote’s loss in the cement factory contract for our long term gain.