Monopolistic oligarchies: A story of Dangote of Nigeria and Ambani of India, By Yushau A Shuaib

Examples abound of how nice nations implement insurance policies to assist indigenous industries by way of protectionist measures that give them a aggressive edge in relation to overseas companies. Such international locations accomplish this by way of official preferential concessions, the award of monetary incentives, the creation of pathways for market entry, regulatory backing, and gives of fairness participation. If the system can’t assist indigenous enterprises like Danote, it shouldn’t be seen as demarketing Nigerian manufacturers.

The politics of monopoly and oligarchy are acquainted phenomena in Nigeria and past. Throughout Normal Abacha’s army rule within the Nineteen Nineties, whereas working on the Federal Ministry of Finance, I witnessed first-hand the plight of a retired army officer who had grow to be an entrepreneur. His product was threatened by a competitor who intentionally crashed the value of his good to make that of the retired officer uncompetitive. At the moment, it was suspected that the army authorities was utilizing the competitor to cope with the veteran, who later served in a civilian authorities.

That have made me cautious of monopolistic tendencies, usually resulting in issues concerning the rise of oligarchies. As an illustration, Aliko Dangote’s group of corporations in Nigeria and Mukesh Ambani’s Reliance Industries in India have dominant affect of their respective international locations, elevating issues concerning the long-term results of monopolistic tendencies.

In 2005, the administration of President Olusegun Obasanjo endorsed the formation of the Transnational Company of Nigeria (TCN), later renamed Transcorp. This conglomerate sought to accumulate government-owned belongings and enterprise into numerous sectors of the nationwide economic system.

The founding house owners of Transcorp had been budding oligarchs and personal sector operators who knew tips on how to navigate their methods round authorities in getting no matter they wished. They included billionaires and financiers like Aliko Dangote, Femi Otedola, Jim Ovia, Tony Elumelu, and Festus Odimegwu. Different notable members had been Bernard Longe, Jacobs Moyo Ajekigbe, Otunba Funsho Lawal, Tony Ezeanna, Adegboyega Olulade, and the late pal Waziri Mohammed.

The then Director Normal of the Nigerian Inventory Trade (NSE), Mrs Ndi Okereke-Onyiuke, served because the chairman of the Board of Administrators. On the similar time, her workers member, Nicholas Okoye, was the organisation’s technical secretary and enterprise technique adviser.

In an article in June 2005 titled “President Dangote of Nigeria”, I cautioned Dangote and others concerning the risks of retrogressive monopoly, which weakens authorities rules and kills wholesome competitors. As a substitute, I advised that he and equally inclined personal sector gamers deploy infrastructural amenities and tools to achieve truthful market share relatively than buying public establishments at giveaway costs.

Nevertheless, the next month, in July 2005, President Olusegun Obasanjo formally launched the conglomerate within the Presidential Villa, Abuja. It was, subsequently, not shocking that the mega-firm benefitted immensely from the federal government’s privatisation coverage, because it raised N16 billion by way of personal placement and bought important public belongings. A few of these belongings included a 71 per cent stake in NITEL, the Nicon-Noga Hilton Lodge, a 400,000-barrel per-day refinery concession, and oil blocs for upstream oil and gasoline operations, amongst different nationwide possessions.

Whereas the early promoters of Transcorp later grew to become distinguished advocates for Obasanjo’s third-term agenda, there was an issue surrounding President Obasanjo’s acquisition of 200 million shares of Transcorp by way of a blind belief fund financed by a preferred financial institution.

Nevertheless, for no matter causes, after buying and sharing among the nation’s collective patrimonies, among the founders of Transcorp appeared to have subsequently parted methods.

On his half, Aliko Dangote expanded his companies into manufacturing like Mukesh Ambani, the wealthiest man in India, who’s reputed to have lavished over $800 million on the current wedding ceremony of his son, Anant Ambani, to Radhika Service provider, the daughter of Indian pharma tycoons, Viren and Shaila Service provider.

Whereas Dangote has a flour milling firm that produces wheat flour, pasta, noodles, and different baked merchandise, Ambani’s investments embody shops that function supermarkets and on-line buying and selling platforms.

Equally, moreover his telecommunications firm providing 4G and 5G providers, comprising information and different digital merchandise, Ambani additionally produces movies, tv exhibits, and digital content material by way of his media and leisure firm. He equally operates massive energy technology vegetation and distribution corporations.

Alternatively, Dangote moreover operates fertiliser and cement firms in Nigeria and different African international locations. He has additionally closely invested in agriculture, specializing in producing rice, sugarcane, and tomato paste. As well as, Dangote refines salt and sugar for home consumption and export.

As nonpartisan and detribalised businesspeople, each Dangote and Ambani are beneficiant to completely different political events, spiritual teams, and cultural establishments. In addition they make use of elite graduates from numerous ethnic backgrounds and interact youths in a number of roles of their enterprises.

The large money cow of Ambani is his Reliance Business’s Jamnagar oil refinery, commissioned in 1999, with the capability to provide 668,000 barrels of crude each day, which has since been upgraded to 1,240,000 barrels per day. The refinery has enhanced India’s vitality safety by offering a dependable supply of petroleum merchandise, contributing to the nation’s GDP progress, and turning into a key participant in India’s vitality sector.

When Dangote mooted the thought of constructing an oil refinery, because the Nigerian authorities didn’t revive the prevailing ones or create new ones, many believed he was on the trajectory of receiving the standard incentives he will get from the federal government as certainly one of Nigeria’s most distinguished personal sector gamers.

The success story of Ambani’s refinery is attributed to the energetic assist of the Indian authorities in encouraging investments within the vitality sector by way of assist that features tax incentives, subsidies for importing crude oil, enabling the exportation of refined merchandise, and rest of rules to permit environment friendly operations. The federal government’s financial insurance policies enabled banks and monetary establishments to offer loans and credit score amenities for indigenous initiatives.

With the federal government’s magnanimity to the trade, India’s economic system advantages from Ambani’s refinery, with hundreds of jobs created, infrastructure growth within the host communities, and overseas alternate earnings from exporting refined merchandise. The corporate’s operation additionally reduces dependence on imported refined merchandise whereas producing important income for the federal government by way of taxes, duties, and royalties.

In the meantime, inside only a few months of its operation this yr, the multibillion-dollar Dangote refinery has created hundreds of jobs, immediately and not directly, whereas stimulating financial progress.

While there was pleasure with the expectation that the refinery would improve the home refining capability and scale back reliance on gasoline importation, thus lowering inflationary pressures, the federal government regulators just lately publicly demarketed Dangote petroleum merchandise.

Talking on behalf of the federal government, the Managing Director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Engineer Farouk Ahmed claimed that the standard of merchandise from the Dangote Refinery was inferior, citing a purported greater sulphur content material of the diesel produced.

Claiming that the refinery had not but been issued an operational license, and issues over monopoly and vitality safety, the NMDPRA pushed an argument for the continued importation of petroleum merchandise into the nation.  The administration of the Dangote Refinery has denied the allegations of both producing excessive sulphur content material diesel and an try at turning into a monopoly.

The painful irony is the deliberate demarketing of the Dangote model by his brethren from the North, working as regulators, after Southerners had offered him with an enabling atmosphere for the enterprise that might generate overseas alternate earnings, contribute to Nigeria’s financial diversification, and in the end stabilise the naira. The Northerners want rethinking.

Examples abound of how nice nations implement insurance policies to assist indigenous industries by way of protectionist measures that give them a aggressive edge in relation to overseas companies. Such international locations accomplish this by way of official preferential concessions, the award of monetary incentives, the creation of pathways for market entry, regulatory backing, and gives of fairness participation. If the system can’t assist indigenous enterprises like Danote, it shouldn’t be seen as demarketing Nigerian manufacturers. This may be thought of as sinning towards your self.

Yushau A. Shuaib, an Editor-in-Chief of PRNigeria and Financial Confidential; www.YAShuaib.com, yashuaib@yashuaib.com