Leading businessman and Chairman of Aliko Dangote Foundation, Alhaji Aliko
Dangote has challenged the government to muster the will to provide
critical infrastructure that will make the nation’s environment conducive
to commerce and industry.
Dangote made this appeal while delivering the third Eminent Persons
Business lecture and inauguration of the Aliko Dangote Complex, a N300
million naira ultra-modern building donated to the University of Ibadan,
School of Business, at the Ajibode University extension, Ibadan.
He said his foundation will continue to prioritize education as a means of
raising entrepreneurs that will change the face of the nation’s economy
and lead to real growth and development.
He told his audience comprising of academia, students, royal fathers and
businessmen that Nigeria has got the potential s to be among the most
industrialized countries in the world and required only the right policies
to propel the investors into taking the lead in industrialization efforts.
Delivering his paper titled “Industrialization – Backward Integration as a
strategy for National Development: The Story of the Dangote Group”,
Dangote whose lecture was delivered by Engr. Ahmed Mansur, the Group
Executive Director of the Dangote Industries Limited, stated that for the
nation to breakthrough industrially, the leadership and the people must
have the political will, the courage and perseverance to succeed.
Dangote was of the opinion that backward integration is one of the fine
policies of the government that has helped Nigeria’s economy and that he
had led in this regard as a private sector operator, advising that the
policy could be replicated in other sectors of the economy.
Highlighting the advantages of the backward integration, the business
mogul stated that there would be increased control and efficiency as
companies are better able to control quality and coordinate the delivery
of raw materials or other supplies.
According to him, this level of control allows companies to increase their
supply chain efficiency. Stock outs and over-stocking are better avoided,
raw material supply is better managed, and delivery schedules can be
better guaranteed.
He pointed out that going by his own experience as leading cement producer
using backward integration, there will be cost control as costs can be
better managed all along the production process.
Citing instances of countries that have used backward integration to climb
the industrial ladder key sectors, Dangote said “Several countries have
involved backward integration in some of their industries. Examples
include Brazil, Ghana, Malaysia, Norway, and Russia. China and the United
States of America probably have the most vertically integrated firms given
their size and industrialization focus. This typically start with local
content requirements for extractive industries and then includes
consolidation across product value chains.
“Norway successfully managed the transition from a country with no direct
capabilities in the oil and gas sector on the discovery of oil in the late
1960s to become a competitive producer of a variety of oil field services
and equipment. Today, more than half of the capital inputs used in the
sector are sourced locally, along with 80% of the sector’s operational and
maintenance inputs..
“Similarly, oil and gas firms operating in Brazil were awarded more points
when tendering for contracts if they demonstrated commitment to purchasing
higher shares of goods and services from local Brazilian suppliers.
Specific local content targets were set for onshore projects (70%) and
offshore projects in shallow (51%) or deep (37%) water.”
For Nigeria, Dangote stated that using backward integration was not just
full of bed of roses as Nigerian businesses face major challenges in
developing backward integration.
These according to him include difficulties in obtaining adequate and
reliable energy and power supply; lengthy, costly and politically
sensitive processes of gaining access to land; poor-quality transportation
infrastructure; the high cost of capital; long lead times before backward
integration efforts yield rewards; sensitivity to external shocks and
unforeseen costs;
“Inconsistency of policy implementation; lack of inter-sectoral policy
coordination; inadequacy of knowledge and skills in the workforce; and
lack of foreign exchange. Most of these challenges relate to the poor
quality of the overall business enabling environment, rather than due to
local content policies.”
Nevertheless, he argued that the policy had helped Nigeria in the cement
sector pointing out that as at 2002 before the backward integration policy
“local installed cement production capacity was about 3 million metric
tons per annum (while actual production was under 2 million metric tons).
Cement demand was approximately 9 million metric tonnes per annum and the
supply gap was filled by cement imports. Imported cement accounted for
over 70% of local cement consumption.
“Conservative estimates of the cement import bill as at 2002 placed it at
between US$500 – US$600 million annually. More importantly, it essentially
exported jobs to other countries and exposed the national economy to risk.
Nigeria was one of the largest importers of cement in the world despite
its huge limestone deposits. To build the nation’s capacity in the cement
sector.”
However, with government introducing the policy in 2002. “It restricted
cement imports into Nigeria while the issuance of cement import licenses
were tied to investments in local cement production capacity with strict
monitoring to ensure compliance. Sector specific incentives for the cement
industry, in addition to other more general incentives e.g. tax holidays,
capital allowance etc. were also an important part of the policy.”
According to him, “the impact of the policy was felt within the first
decade of its implementation as Nigeria became self-sufficient in cement
production. Installed cement production capacity that has now grown from 3
million metric tons in 2002 to 44 million metric tons as at December 2017.
The country has successfully transitioned from being a net importer to
self-sufficiency and then to a net exporter since 2017.”
In his remark earlier, Vice-Chancellor of the University of Ibadan, Prof.
Abel Idowu Olayinka thanked Alhaji Dangote for the building describing it
as a legacy that would forever be cherished generation yet unborn and by
the donation, Dangote has become the first largest individual donor to the
university.
He explained that Dangote was to donate N250 million to the university but
they prevailed on him to build the complex rather than giving money and
that the decision has paid off for the university.
Governor Isiaka Ajimobi of Oyo state, who is the Guest of Honour on the
occasion urged Nigerian youths to learn a big lesson from Dangote’s humble
beginning but with hard work has become one of the greatest entrepreneur
in Africa.
The Governor who was represented by the state Commissioner of Education,
Prof. Joseph Adeniyi Olowofela, lamented that most youths of today do not
cherish hard work but want to get rich quick which explained the increase
in social vices in the country
“We need to shift the paradigm shift from the get rich quickly at all cost
to hard work that leads to wealth”, he stated.
The Director of the University of Ibadan, School of Business, Prof. Nike
Osofisan said the institution owed Alhaji Dangote a huge debt because the
complex was more than a building.
She explained “the fully air conditioned complex has 9 lecture theatres,
10 lecturer offices, four Executive Director Offices, One Canteen, 250 KVA
dedicated Transformer, and male and female conveniences”