Alhaji Putin and The Nigerian Government: Here We Go Again

Apologies if you do not share my irritation at this madness but this shit makes my blood boil.

I have all the respect in the world for Prof Osinbajo for his intellect and his person. But this Dangote matter is deeply offensive and it speaks to who we are as a country and why we are the way we are. It also tells us why Nigerians instinctively hate ‘capitalism’, something that has been the most powerful anti-poverty system known to man in history.

This brand of whatever it is that is being practiced in Nigeria is NOT capitalism and it is not morally defensible on any level. In many cases, it is economic terrorism against the Nigerian people sanctioned by the Nigerian government itself.

What Is Capitalism?

People often think capitalism is about ‘capital’. No it isn’t. It is knowledge upon knowledge upon knowledge. That is how it improves people’s lives around the world.

My son who is almost 6 years old only knows that toothpaste comes in rubber tubes. It makes sense that way because it is less messy and toothpaste tube can have lots of nice designs on it to make brushing more appealing to children.

But it was not always so. 20 years or so ago, toothpaste regularly came in aluminium tubes. And it had all sorts of problems. Getting out the final 10% of toothpaste in the tube was a headache – by the time you rolled and squeezed it, it would cut open at the sides and could give you cuts if you were not careful. The design on the tube also faded after a while especially if the tube had been stressed to get it all out.

The knowledge of everything wrong with aluminium toothpaste tubes is contained inside rubber tubes today. We arrived at rubber tubes after finding out that aluminium is not the best way to sell it. My son cannot see this but I can.

Even better, as this improvement in toothpaste has happened, its cost has not gone up and millions of people who used to use sticks and herbs to brush their teeth now use toothpaste instead. Toothpaste is now at the point where we can conveniently take it for granted.

The next step in this journey of getting the toothpaste out of the tube perfectly is the development of something known as Liquiglide. You might not know that this problem exists yet, but when the solution arrives on the market, you will appreciate it. A more efficient toothpaste tube will help the toothpaste makers make more money and be able to lower prices in future.

If people think about capitalism in this way, they will come to appreciate it and demand more of it. An iPhone today that costs $750 would have cost $3,000 to put together in 1990. We can now do so much more with our lives because of the way that capitalism improves products and makes life better. We are also more knowledgeable and can pack more of such knowledge into our lives – Prof Ricardo Hausmann makes the point that a bachelor’s degree at Harvard has always taken 4 years to complete for centuries now and yet we know for a fact that people today know far far more than people knew in the 17th century.

Nigeria Turns Things On Its Head

I have written several times about how Aliko Dangote manipulates the media and the government in a way that allows him transfer wealth from the Nigerian people to himself.

The most annoying response I get is when people try to compare him to Rockefeller or the other ‘robber barons’ (who did not rob anybody). The most obvious answer to people who make this ridiculous claim is that Rockefeller, Ford, Carnegie, Walton all made money by bringing prices DOWN – I repeat DOWN. Things that were previously unaffordable to millions of people were made mainstream by these guys. Ford was motivated by a desire to make cars mass market and he was successful. Even when Rockefeller was tried for anti-trust, there was not a single person who made the argument that he was bad for consumers. This was why, after the American government broke up his companies, he got richer – again I repeat, richer. He had created so much value that was locked inside his companies such that if money was his sole motivation, he would definitely have broken himself up before the government did.

What is this thing that we are doing in Nigeria in the name of capitalism?

The Conspiracy To Rob Nigerians

Last year I sat in a session at the World Economic Forum with my mouth wide open in amazement as President Jonathan said ‘Look at Dangote who is the richest man in Africa, without our policies, he would not be as rich today’.

Imagine my surprise at discovering that the Nigerian government had a policy of creating billionaires and I did not know about it.

This is how the Nigerian government helps to guarantee that capitalism will not work in the way that it should. The government might is used to protect rich people against poor people and ensuring that the wealth transfer from poor to rich continues unhindered. I thought we had reached ‘Peak Dangote’ under the last government but with the way things are starting under the Buhari, we are on our way to the same depressing shit.

At no point does anyone in the government stop and ask themselves the question – what does this guy (and his friends) do for the Nigerian economy exactly? Are they a net positive or negative? Further, those who have been expensively educated in Nigeria and abroad, capitulate like a pack of dominoes and toe the Dangote line, ascribing to him what he is patently not. Where questions ought to be asked, praise is given instead. Where capitalism and all the wonderful things it can do to improve lives should be ‘louded’, its evil twin – crony capitalism – is passed off as the real thing. And we wonder why Nigerians continue to reject things that can make their lives better.

‘Posers’

If the Vice-President of the Federal Republic of Nigeria, duly elected by the citizens and consumers of Nigeria thinks it is ok to go all the way to Zambia to commission a Dangote cement plant (a few weeks ago, the CBN governor and sundry others went to Ethiopia to commission another cement plant), then questions, or posers as Nigerians like to call it will suffice

1. Which other country in the world where a lot of construction is going on has a guy who sells cement on their top 5 richest people list?

If you go to Dubai and wait 2 years before going back, you will see a visible difference there in terms of construction. They are using cement to do what cement is supposed to be used for i.e build things that everyone can see. So why don’t they have a ‘cement magnate’ on their rich list?

Same thing goes for China where the pace of building things is frankly breathtaking. Where is the ‘cement magnate’ in China?

What you will find instead is people who add value to cement among the richest people in those countries e.g Emaar, Nakheel, Dalian Wanda. To put it another way – it is like going to a country where a lot of cars are manufactured and the guy selling sand is the richest person in town because sand is used to make glass. There is still so much more value to be added – steel, design, architecture, wood, urban planning, finance etc – to cement before it can be useful to anybody or society.

So why is all the value in Nigeria being captured at this stage?

2. Can Alhaji Dangote build and sell 1,000 houses in Nigeria today? It’s a useful test to carry out. He makes the cement and sells it with obscene margins so why not ask him to build just 1,000 homes in Nigeria today and sell each one at a profit within a year?

I am confident that he cannot pull it off. But I will be happy to be proved wrong

3. All the major infrastructure in Nigeria was built when we were importing cement. All the bridges in Lagos including 3rd Mainland and bridges across the country were built with foreign cement.

The biggest infrastructural achievement of any Nigerian government in my lifetime is Abuja. It was built with imported cement.

So the question is this – since Nigeria started being ‘self sufficient’ in poverty, sorry cement, what has been built with it? It is pointless to have all this cement just ‘for show’ and to stop some imaginary jobs being shipped abroad. Cement is not for drinking garri – it is for building things which cannot be hidden.

4. At the very least – we should be asking how much tax Dangote pays to the country that has given him so much. Things have been banned for him. Policies have been written in his name. Waivers have been granted to him and many other businesses have been ruined for his sake.

So what exactly has Nigeria and Nigerians got out of the deal? Is it the 20,000 jobs he has created (half of which are ‘casual’ staff?). Is that the extent of our ambition as a nation?

The biggest beneficiary of Dangote Cement is Dangote himself. So why is the Nigerian government going to commission his plant for him in a foreign country? What is the business of the people who elected a government to serve them with a man who is making as much money as he can get away with at their expense?

5. What has been the contribution of Dangote Cement to the global body of knowledge of cement manufacturing? Has anyone come to Nigeria to learn how to make cement. Dangote Cement is by FAR the most profitable cement company in the world.

What is the secret sauce? Who has copied it? And why is it that this profitability goes side by side with eye watering cement prices that are padded with margins as high as 70%. What did Dangote Cement invent that brought about these kind of wonderful profits?

 

***

Capitalism is a moral thing, at least to me. It is pointless otherwise. It is a powerful tool to fight the indignity of poverty that consigns people to a miserable existence. Yes, people get rich out of it but they have to do this by giving consumers what they want.

This process breaks down when a pretend capitalist is able to team up with the government in a way that allows him/her to give people what they do not want and make a fortune while at it e.g cement.

The Nigerian government, elected by the people, should stop insulting its citizens with the irritating and ceaseless exaltation of Dangote as the physical manifestation of destiny. Let him make his money, he already has enough of it. But leave the Nigerian government out of it. A new government elected on a change mandate should not be succumbing to the Dangote virus so easily.

What is the worst thing that can happen if Nigeria starts importing cement again? Prices will come down and more things will get built creating thousands of jobs in the process. And Dangote will get poorer.

I know what I will choose if that package was on offer.

FF

*I’ve written this in a lot of irritation and I cannot be bothered to edit for grammar. Any errors are regretted.

 

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29 thoughts on “Alhaji Putin and The Nigerian Government: Here We Go Again

  1. Really do think your irritated state of mind shows if you blog when you’re upset. Sorry, but this case is aggression wrongly directed. Dangote has committed many ‘economic crimes’ against the Nigerian people, most of them well documented, but the VP commissioning the plant is not one. You might argue a plant isn’t big enough to warrant the presence of our VP but criticizing it simply because it is Dangote makes your whole argument rather watery. We must ask questions of his business dealings, but we must be careful lest our best intentions are taken as mere bored rants. And this is what this post has been about.

    1. It is only a non-issue if you think his ABILITY to commit those crimes against the Nigerian people and get away with it is not linked to his ABILITY to get the highest levels of the Nigerian govt to turn up at the commissioning of his factory.

      1. You’re right. I totally think they’re mutually exclusive. That you help commission his factory in Zambia does not prevent you from enacting laws/policies that will address his near monopoly here. Not in my view at least.

      2. MCGBOYE, it seems to me also, that the chances you will enact any such laws/policies to address his near monopoly are very slim, especially if you help to commission his factory in Zambia. volenti non fit injuria – he who voluntarily participates can not turn round to complain of injury from the same act.

      3. FF, you do not seem to realize that Alhaji runs the government.
        Word on the street is that the handwriting was on the wall for Jona the moment he could not count on his support in the run up to the elections. The man makes sure he is on the side of the government of the day.
        Go to customs and find out how little duty his firms pay. I mean the ones that are actually paid not quoted o.
        When making an argument, please do not use Jona to buttress a point. Irrespective of whether the said point is for or against. The man makes the most illogical comments you can hear from a PhD holder. At least dem say Buhatri no get school cert.

    2. But Tolu, his factory in Zambia has nothing to do with his business in Nigeria, no? Your “he who voluntarily participates can not turn round to complain of injury from the same act.” analogy does not apply here – not in the least. I totally support the Nigerian govt providing maximum optical support for Nigerian businessmen investing in other African countries. I also want them to create a level playing field at home which is something they haven’t done in the cement industry.

      1. I don’t know if both factories are connected even though the products and the names of the parent organizations are very similar. I don’t think the VP will be a part of the party in Zambia and then return to Nigeria to make laws that will stifle the kind of process that enabled the organization to dream about doing business in Zambia. About level playing field, I don’t think there should be a ban on importation of cement. Alhaji Putin’s conglomerate is probably larger (as we are made to believe) than the kind of small businesses needing protectionist policies to stimulate growth.

  2. Alh Putin would be like:
    “I have read this with a lot of anger and I cannot be bothered with all this his big grammar. Any fallouts and consequences are regretted”.
    As usual, weldan! Alh. didn’t read your kinda books. Dont expect him to be anything close to what you envisage.

  3. Feyi:

    Dangote became one of “the later in the day funders of Buhari’s electoral victory” – anyone that expected that “it would no longer be business as usual for Dangote under the #Change Govt” was/is simply being intentionally naive – Govt could have changed hands but Dangote remains “the President Emeritus in Nigeria” – go figure.

  4. No need to edit. You have spoken (written) well. Not a single thing you said can be contested. The nation as given to much to a man who has given back next to nothing, when Dangote sold his Cement for N2000 in Nigeria, he sold the same Cement for N1000 in Cameroun.. FF, I cannot add to anything you have said, I can only inform you that I will ‘extract some for general information’.

  5. The tweet in the opening views the issue as “African economic integration in progress”, you call it “crony capitalism”, some economists argue for the welfare enhancing effects of cronyism, bribery etc. I like to see to see numbers with sound and robust economic interpretation. So maybe it is time for a social welfare analysis of Alhaji’s business behaviour.

  6. I do understand Feyi’s irritation. But the chief problem is that the Nigerian consumer has idolized these “crony capitalists” so much that then government itself has come to see them as “partners” in selling and achieving the Nigerian dream. And as long as their funds go into political campaigns, it will be difficult to not play the tune that those who pay the piper dictates. Dangote reminds me of why America passed anti-trust laws, but to the average Nigerian he is the poster-child of how rich you can become. No emphasis whatsoever placed on how many dreams he shatters along the way.

    Sadly Feyi, it looks like it looks like another round of Alhaji Putin and friends, and if our VP cannot see the error of helping a man who has been made rich by the Nigerian government and people export jobs and revenue to Zambia, then what hope have we got?

  7. You won’t believe your man has gotten the Cameroonian government to ban the importation of cement. (http://dailypost.ng/2015/04/13/dangote-taps-into-cement-import-ban-in-cameroon-ramps-up-local-production/)

    1. Cement is cheaper in Cameroon than Nigeria, which is even more annoying when you realise that we are subsidizing his robbery. (http://www.businessincameroon.com/mining/1704-5401-in-2015-dangote-cement-cameroon-seeks-to-nab-30-of-lafarge-s-cement-market)

    2. He is employing the same model used in Nigeria to undercut the competition in Cameroon. The punitive price fluctuations in Nigeria will soon be enjoyed in Cameroon as well. (http://asokoinsight.com/news/price-crisis-persists-cement-enters-2015-1150kg-nigeria/)

    As he rolls out across Africa with this model, it is obvious that he needs to maintain a strangle hold on the Nigerian cement market and price, to gain market share in these new markets and this is my fear. By the way the Ethiopian government banned cement imports in 2012, your man’s market selection is not arbitrary. (http://www.ethiosports.com/2012/03/26/ethiopia-bans-cement-import/)

    1. He is a successful business man. Successive administrations’ (since 1999) struggle to be associated with him suggests he’s been successful due to government patronage/protection and makes one wonder how well he would have performed without the association. I guess this association with every administration is what some aren’t happy about.

  8. You’re really boiled. I can see.

    Always gain one or two from your blog
    Hopefully Prof and prolly his Boss will read it.

  9. Any government in Power… Alhaji Putin said to Baba Buhari last week that if they removed Fuel subsidy that Nigerians will Buy Fuel for #500.00…. They give him waiver for importing Rice, yet rice never get below #8,000.00. ….. I am waiting for Buhari , to kill other competitors and allow only him in the market

  10. In my view, rigidly holding on to ideologies will be harmful to Nigeria. I think that policy makers should remain flexible and pragmatic as they search for what will work for Nigeria. Due to the continual pursuit of growth and maximum profit even when at the expense of the welfare of labor/society, capitalism has ‎a number of drawbacks. Thus, unrestrained capitalism fosters inequality, environmental damage, wars, consumerism, exploitation etc. These adverse effects presently manifest as climate change denial, the multiple American wars, China’s air pollution, and yes, crony capitalism, a biological child of capitalism. On the other hand, the flawed socialist approach has several advantages. These advantages are visible in Cuba, the lone socialist survivor of the Cold War. Socialist Cuba has excelled at biotechnology, sports, health, education, organic agriculture and surprisingly for a small country, military adventure. Western media portrayal of the country as poor fails to highlight their very high HDI, resource barrenness and most importantly, fierce five decade battle against the world’s lone superpower that prints the currency of trade used by the world. 

    On the subject of Dangote, you are spot on. A continued love affair between the new government and the Tycoon is undesirable. I think your presumption of  antipathy for capitalism in Nigeria is inaccurate. From my experience, Nigerians generally regard capitalism as the ideal ideology. That is to be expected in a society schooled by Hollywood and the narrative from the US. That may explain why various governments elevate Dangote, a capitalist, to god like status. 

    Interesting read. What has Putin got to do with the subject?
     

  11. I share the irritation of the writer, Feyi Fawehinmi. More so when I’m privy to such game being schemed in the tomato planting/processing. Dangote’s venture in the agriculture boasts of a tomato processing plant with excessive capacity which forced him to consider planting tomatoes. This he has gained the support of the World Bank, IFC and the Nigerian on his “innocent” agricultural expansion project which though for his personal gains at the expense of Nigerians, would make him ship tomatoes in raw and processed at prices that will crash other people’s businesses yet still exorbitant by all true means.

  12. Finally, I read a fantastic write-up with just about my thoughts on the so called “capitalists” we celebrate in Nigeria.
    But, just like Olisa quizzed, curious to know what Putin has got to do with the title of the post.

  13. Pingback: The Word On The Streets XIV: The Sponsored By Kindness Edition | Agùntáṣǫólò

  14. Pingback: The Word On The Streets XIV: The Sponsored By Kindness Edition – Feyi Fawehinmi | NigeriansTalk

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