Nigeria as a Country is an Economic system administered through a democratic political system. Nigeria needs more Entrepreneurs to solve her numerous Economic challenges.One man who has been outstanding in taking risks to fix Nigeria economic challenges is Africa’s Richest Man – Alhaji Aliko Dangote.
Aliko Dangote, GCON is a Nigerian businessman and industrialist. He is best known as the founder, chairman, and CEO of the Dangote Group, the largest industrial conglomerate in West Africa. Forbes said his wealth is estimated to be around $14.2 billion based on the latest reports released in 2022 Aliko Dangote, Africa’s richest person, founded and chairs Dangote Cement, the continent’s largest cement producer.He owns 85% of publicly-traded Dangote Cement through a holding company. Dangote Cement has the capacity to produce 48.6 million metric tons annually and has operations in 10 countries across Africa.
After many years in development, Dangote’s fertilizer plant in Nigeria began operations in March 2022.Dangote Refinery has been under construction since 2016 and is expected to be one of the world’s largest oil refineries once complete.The Dangote Refinery Complex is a 650000 Barrels per days Refinery with additional Petrochemical and Fertilizer plants.It can generate about 5000 direct employment per shift and another 15000 indirect employment through support staffs and contractors.The Petrochemical will support Plastics and automobile industries and Textile in Africa.
Dangote’s $2bn petrochemical plant is to position Nigeria as polypropylene hub in Africa.According to Dangote , the plant would produce polypropylene strategically, to cater to the demands of the growing plastic processing downstream industries, not only in Africa but in other parts of the world.The 900,000-metric-tons-per-annum capacity plant, built alongside the 650,000 barrels per day Dangote Petroleum Refinery, would boost Nigeria’s non-oil export earnings and ensure petroleum products’ sufficiency.
The Fertilizer plant will support Agriculture in Africa.The fertilizer factory sits on 500 hectares (1,235 acres) of land on the outskirts of Lagos and has a capacity to produce 3 million metric tons of urea yearly, making it the second largest plant in the world, Dangote said.In fact what Dangote is trying to do is to position Nigeria to become what Russia is to European economy in terms of energy and commodity supplies. Nigeria will conserve forex from Crude Oil sales then earn more through exports of Petrochemical Fertilizers and Refined Petroleum products to West Africa markets.
Why would Benin Togo Ghana Senegal and Mali import Petrol from Middle east when Nigeria is closer? The multiplier effect of Dangote Refinery is very enormous should be supported by all Nigerians.Nigerians must add value to our Petroleum products before exporting. It is more profitable than exporting Crude Oil.Wealth in any economy is created by organizing Capital, Human and material resources. Dangote has done very well in this regard towards building Nigeria economy through his strategic investments in Mining, Downstream petroleum Industry and Telecommunication infrastructure.Dangote deserves every support from Federal Government like the International Oil Companies have enjoyed in Nigeria since 1960.
Looking at Market dynamics, Pump price of Petrol will be cheaper if Dangote Refinery starts producing refined petroleum products.The crude Oil will be transported from Focardos or Escravos Terminal in Delta state to Lekki via a Submarine pipeline. Government can sell the additional 650000 barrels of crude to Dangote Refinery below International market rate, if OPEC quotas has been fulfilled via exports.If the alternative imported Petrol lands at N510 pump price today then Dangote petrol should be selling at N280 to N300 because the transport cost and other margins and importation levies has been removed. Nigerians will also gain as demand pressure is reduced on the Forex market.The opportunity Cost of importation of PMB is more important than the pump price of PMS supplied by Dangote Refinery. So we should appreciate also the opportunity cost savings to Nigerians if Dangote refinery starts operations.
On CBN FOREX allocation to Dangote Refinery. Dangote and BUA Refineries are currently the most critical investments that will support our Naira to regain value hence have a positive impact on other sectors that need Forex. Dangote Refinery will free up US Dollars on the Forex market for other sectors. It will also earn additional Forex to support Nigeria economy.Finance and Economics issues requires logical analysis.We must analyze the economic value chains of Dangote Business Model to conclude if Dangote was unduly favored with preferential allocation of Forex.
Building a National Economy requires a deliberate and strategic approach.FOREX should be allocated based on expected impact on the economy not on the basis of fairness to those applying for Forex. Any Nigerian Investor that takes risk like Dangote to invests in Nigeria deserves to get some incentives from Government.A review of investment in Nigeria cement Industry.Dangote, BUA , Larfarge has kept the cost of cement relatively cheaper compare to what the price will be if Nigerians had continued to import cement at the current exchange rate and International crude oil price Dangote Cement Group is a PLC so Nigerians are also benefiting from the wealth creation through their equity holdings in Dangote Cement Group.
I think Nigerians that condemn Dangote’s business model and partnership with Government do not understand that any responsible Government should be willing to offer her private sector Investors an incentive as a support for taking the risks to build the economy for the wellbeing of citizens.It is actually a partnership between the capitalists from the organized private sector like Dangote and Government that is needed to build Nigeria’s economy while Politicians administer law and order and provide security and economic policies for Capitalism to thrive. Capitalism is what solves economic problems and can lift majority of the Nigerians from poverty. More privatization of Productive Assets in Nigeria will reduce corruption in the public sector and the negative consequences on our economy.
Dangote as a Billionaire does not have $14.2 Billon staked in the Bank ready for spending. This equity represents ownership of Assets domiciled in Nigeria and Africa. Dangote’s Assets are tangible and located in Nigeria, creating jobs for Nigerians. Therefore, Dangote is helping to Develop Nigeria and reduce poverty in Africa by creating local economic values and jobs.Dangote deserves our support while we should extend the same support to others like him.
Other sectors that required private sector Investments and Government support to develop are: Electricity, Power Generation, Railway Infrastructure Steel and Heavy Industries Automobile and Allied Industries Textile and allied Industries.
Let us unite and support indigenous private sector investors to build a Nigeria of our dream.
Engr Attoh Pascal, An Entrepreneur and Finance Expert based in Asaba, Delta State July 1st 2023
contact: pascalattoh@gmail.com
