| How you can be bigger than Aliko
Dangote ...The opportunities here are so enormous
By EMERSON GOBERT, JR.
Monday, March 28, 2005
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Dangote
Photo: Sun News Publishing |
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It may not be a wild assumption to say that every Nigerian
has heard of his name because of the impact of his business.
His products are in most homes across the country. Those who
may not use his products would have passed some of his trailers
by the way. He is into export, import, manufacturing, real
estate and philanthropy. All these are rolled together into
what is known as the Dangote Group.
At the helm of its affairs as president and Chief Executive
Officer is an unassuming 48-year-old man named Aliko Dangote.
The focus of his investments is food, clothing and shelter.
The Dangote Group imports 400,000 metric tonnes of sugar annually
which accounts for about 70 per cent of the total requirements
of the country and is a major supplier of the product to the
manufacturers of Coca Cola, Pepsi Cola and Seven-Up in Nigeria.
It imports 200,000 metric tonnes of rice annually just as
the company imports tonnes of cement and fertilizer and building
materials.
Dangote Group also imports fish and owns three big fishing
trawlers chartered for fishing with a 5,000 MT capacity.
The group exports cotton, cocoa, cashew nuts, sesame seed,
ginger and gum Arabic to several countries.
Beginning
Born in Kano, his grand father, the late Alhaji Sanusi Dantata
provided him with a small capital to start his own business,
as was the practice then. He thus started business in Kano
in 1977 trading in commodities and building materials. Alhaji
Aliko Dangote moved to Lagos in June 1977 and continued trading
in cement and commodities. Encouraged by tremendous success
and increase in business activities, he incorporated two companies
in 1981. These and others that followed now make up the conglomerate
known as Dangote Group.
Activities
The group today is involved in diverse forms of manufacturing
with high turnover. Dangote textile and the Nigeria Textiles
Mills Plc, which it acquired, produce over 120,000 meters
of finished textiles daily. The group has a ginnery in Kankawa,
Katsina State with a capacity of 30,000 MT of seeded cotton
annually.
The sugar refinery at Apapa port, Lagos is the largest in
Africa and in size the third largest in the world with an
annual capacity of 700,000 tonnes of refined sugar annually.
It also has another 100,000 tonne-capacity sugar mill at Hadeja
in Jigawa State.
Apart from having substantial investment in the National Salt
Company of Nigeria at Ota, Ogun State, the group has salt
factories at Apapa and Calabar, a polypropylene bagging factory
which produces required bags for its products, over 600 trailers
for efficient distribution network and goods meant for export
can also efficiently be transported to the ports.
A vehicle leasing unit with over 100 fully air-conditioned
commuter buses, is also part of the Dangote Group. It is also
into real estate with luxury flats and high rise complexes
in Ikoyi, Victoria Island, Abuja and Kano. Dangote Foundation
is the philanthropic arm of the group where yearly he spends
millions for worthy causes such as contributions to educational
and healthcare institutions, sinking of boreholes and giving
of scholarships.
The Dangote Group has nationwide staff strength of 12,000
but on completion of on-going projects, it is expected to
hit 22,000.
Alhaji Aliko Dangote’s business success may be influenced
by various factors. He seems to be broad-minded. Unlike some
people, his Personal Assistant is Yoruba while his Head of
Corporate Affairs is a Christian from Delta State.
In this encounter, Dangote talks about his driving force in
business, the factors that have kept him above his contemporaries
in business, his $800 million cement factory at Obajana, Kogi
State and the N14 million mega company, which he and some
industrialists have set up. Perhaps above all, his patriotic
stance is commendable: “If you give me today $5 billion,
I will not invest any abroad, I will invest everything here
in Nigeria. Let us put heads together and work.” He
speaks more on many other issues.
Excerpts:
Some wealthy Nigerians are reluctant to invest in Nigeria
giving such reasons as high cost of doing business, insecurity
of lives and property, dearth of infrastructure, lack of appropriate
legislation and so on. What gives you total confidence in
the Nigerian economy?
We actually believe quite a lot in Nigeria to start with.
We believe there’s nowhere like Nigeria. Not because
we are from Nigeria but because we have seen the opportunities
here and the opportunities are very, very great. No doubt,
Nigeria can become one of the best investment paradise but
it can only be there if we Nigerians invest our money. You
see, it is not easy for us to just sit down and expect foreign
investors to bring their money. They must see us leading first.
They have to see what we Nigerians are doing – whether
we actually believe in Nigeria or not, then they will bring
in their own money. Before Dangote Group, we had this same
thinking. We did textile from 1989 to date yet there were
some few problems with smuggling in textiles; so textile was
not really a business that you can give a very good example
on in Nigeria but other businesses we are doing; you know,
we used to be purely a trading company apart from the textile
business that we had up to 1997. It was that time that we
realized that if we don’t really bring back our money
and invest in Nigeria, these so-called foreigners will not
really come and invest their own money. So we just decided
that, okay, fine, let’s see what we have. We had a dream.
We are actually now actualising our dreams. You know a lot
of people, they have never really gone deep into checking
whether investment is good or bad in Nigeria. It’s just
a perception. They say no! no!! no!!! Armed robbery, this
and that. I don’t want to go to Nigeria or maybe, no,
too much hassle here and there. There’s no this, there’s
no infrastructure. But when you look at the incentives, there
are a lot of incentives which the government has given and
I think it will be very, very unfair if we say no, government
has not really done anything. Maybe, there are other things
that they need to do more in terms of infrastructure but in
terms of good environment to have that sort of business, fine,
yes. In terms of infrastructure, yes, some of them, they are
missing but then also profitability has covered part of that
infrastructure.
Most Nigerian young adults aspiring to go into business see
you as a role model. What are those factors that have kept
you above your contemporaries in business?
Well, I thank God if they see me as a role model. Part of
it is really dedication to work. It’s not that I have
zero private life. No! I try to also mix up with friends over
the weekend. I go for boating. I do a couple of things but
the determination… you see, an entrepreneur has to have
a dream and it is that dream that you try to turn into reality.
The things that I am doing today, if you ask me, how did I
do them? For example, the president said that we want to be
self-sufficient in cement. “Aliko, you have to go and
try to lead because we don’t want to keep allowing people
to bring in cement into the country.” And when we did
our numbers, we said, Eh, this thing is going to cost almost
a billion dollars for us to go and do Obajana, to activate
and increase the capacity of Benue. It’s costing us
over $200 million. Obajana is costing us $800 million, and
we have other projects that we are doing.
If you ask me, Did you really have this money in your own
bank account when you ventured into these projects? I’ll
tell you, no, that we did not really have the money but we
had the ways of making that money. And it is like a dream
what I mentioned to you. You do your numbers and say, fine,
this is my income; this is what I can do. These are the programmes
of my payment and then you roll on.
That is what Nigerians have to do. They can even be bigger
than Aliko Dangote. The whole thing is that you have to really
be very determined. You have to believe that, yes, there’s
a future in this country of ours and I can tell you right
now, I don’t believe we have even started doing anything
in Nigeria because the opportunities are so enormous. I don’t
even know where to start from.
You are a member of the Governing Council of Nigeria Investment
Promotion Commission (NIPC) and recently, NIPC hosted Nigerian
Investment Forum with Commonwealth Business Council (CBC).
At that Forum, President Obasanjo said that “it is no
longer business as usual in Nigeria” while the Forum
Statement said that “Nigeria is in a true process of
change and merits a fresh appraisal by potential investors.”
As a key private sector participant in the economy, are these
statements honest assessment of the Nigerian economy?
Yes! Definitely they are. I honestly concur. They are. Let
me give you an example. The same Obajana that we are building
right now, we are building with our own money but we are looking
for what we call re-financing. Out of almost $800 million
dollars which we are spending there, we are finishing in the
next five, six months; the only loan that we have is just
about ten per cent of that which is from our local banks directly
into the project and the International Finance Corporation
(IFC), part of World Bank, EKF which is a Danish export guarantee
and then you have the FMO and also, you have the European
Investment Bank. They have all given us approvals of which
now they are funding about $400 million. If there is no confidence
or things have not changed, do you think they are going to
look at somebody, a private person or a private company like
ours in Nigeria and lend us up to almost half a billion dollars?
Th whole of LNG which also involves Shell, government, everything
was a billion dollar loan when they started. That they couldn’t
raise. Today, with democracy, they have seen the future and
they understand that things have changed because you are not
the one to rate yourself. It is people from outside that are
supposed to rate you and they have done that rating. They
have all now approved and I know that they are all very happy
and eager to give us the money which we will be drawing in
the next two months maximum and it is a great chance for us
to now go all out and raise $400 million to finance a project.
In fact, we were even arguing. They said, no we should take
the money for ten years. I said no, that we need only seven
years. So that is how much confidence that they have and the
managing director of IFC who is the No. 2 in World Bank came
with a 15-man delegation to Obajana. We took the whole day
and drove from Abuja almost two and half-hours. He took the
whole day, had lunch with us and I returned him to Abuja by
road. I mean he is not a small person. So really, things have
changed. Honestly.
Infrastructural development should be growing faster than
industrial development but the reverse is the case with Nigeria
for now. You invest a lot in power generation for your various
companies. Do you have plans to venture into the power sector?
Nigerians will be a little bit unfair to think that the government
is not doing anything on infrastructure because you see, really,
there is no economy in the world that can grow without power.
Power is key to growth. Forget even about Dangote or Unilever
or whatever because as a person today, your wife, if she is
going to set up a salon, the greatest obstacle is going to
be power. She needs generator and when she has the generator,
if you are operating in Nassarawa State for example or in
Lokoja in Kogi State, you might not be able to find diesel
available to run the generator and to be able to make money.
So you can see that if we have permanent and consistent supply
of power, everything will just fall into line. It is like
if you see a tree and the leaves are drying, you don’t
go down and give water directly to the leaves, you now take
care of the trunk. Once the trunk is okay, those leaves are
going to turn green. It’s just a matter of time. So,
going back to what I have just mentioned on power, when the
president visited our site on the 9th of February, we already
had an excess capacity of power in Obajana to the tune of
249 megawatts which we say fine, if there is an agreement
between us and government, we will run that power and pass
it unto NEPA but then, we realized that NEPA doesn’t
have the transmission line from our area to that place. So,
now we are discussing to see how we can do the whole infrastructure
and supply to Abuja. Mind you Abuja is only consuming 220.
So since we are private people, we know that the power is
important for us to run this huge $800 million investment.
So there’s always going to be power. How are we going
to get our own power? It is not by diesel. No! It’s
by gas. We have to run 90 kilometers length of gas pipeline
to get gas from Ajaokuta into our own area but when we produce
the power, we are going to pass it unto NEPA but we have to
agree on what are going to be the charges and whatever.
That is why my honest advice to the government is that I think
government shouldn’t really worry themselves that much
about investing too much money into NEPA. Government should
allow people to go and generate the power and sell. Look at
GSM. Look at NITEL. That is a sure typical example of things
that government can run and things that individuals can run
and I challenge you or anybody to show me one single project
from the independence of Nigeria that government has set up
and it has run very well to date. There’s no single
one. That’s why His Excellency, the president, quickly
made this U-turn by saying, no! All the companies, he wants
to sell them up. That’s the greatest decision and it
is only a strong leader like him that can make this kind of
decision by saying who can run this thing better go and run
it. Take for instance Benue. It collapsed. As at this week,
we’ve started producing cement.
Savannah Sugar was sort of dead. It was closed down for two
years. For the first time, this year, we are going to produce
about 45 – 50,000 metric tonnes which has never never
been produced in Nigeria by both Savannah and Bacitta. So
you can see that privatization helps quite a lot. It changes
a lot of things. Look at NITEL that has not been privatized.
In this small period of giving somebody to even manage it,
government lost 100 and something billion and it is a staggering
figure. That amount would have assisted us in running most
of our hospitals. Even hospitals, if government can do certain
things, we can have insurance in place or whatever, they can
be even better. I think within this week, as I was told, the
president is going to sign this power bill. Once the power
bill is signed, believe me, you’ll see even 20,000 in
Lagos. It is not impossible because government has done it
before. The president has done this before. He has encouraged
us to build the cement factory. Nigeria consumes ten million
tonnes. Out of ten million, we produce only two million which
makes Nigeria No. 2 in importation of cement, but now by him
asking the private sector to go into cement and produce and
make sure that Nigeria is self-sufficient, now Nigeria, by
end of this year is going to save every year $700 million
in foreign exchange and then, we are going to be self-sufficient
in cement. That same thing can be replicated in power. It
can be replicated on roads so that government now can face
other problems of education, which we have. There are big
problems there. They can face health and you know, this pension
thing is going to affect quite a lot also. So there are many
things that can be done and they don’t really take time.
It’s just that they need to be handed over to private
sector, it is better for everybody. And I want to remind you
of something. Before, Italy used to have change of government
every six months or less; sometimes, three months but the
business was going on.
The president’s economic policies today favour successful
private sector players. What is the assurance of continuity
after 2007?
You see, once you have policies and these policies are well
entrenched… things have changed totally in the world.
You can see easily in Africa, before, somebody will just put
his son by his side. Once he exits, it is not going to be
written but the son will automatically take over. Things are
actually different. Once you entrench the private sector thing
and they grow, nobody can reverse anything. Today, if you
now come, you say the government wants to do cement plant
for example, from where are they going to start? First of
all, are they going to keep starving people to put $800 million
to build the plant? If myself as a private sector, it is going
to take me two and a half years to build it, it is going to
take government ten years: variation from contractors, this
and that; they will not be able to do it. So it is something
that I think he has done quite a lot and mark you, he has
two more years to go. By next year ending, I’m sure
government will not own a single company. So all these clamouring
of politicians trying to be chairman of X or YZ, chairman
of this one, chairman of that one, it won’t be there
anymore because the government will not have a company for
you to aspire to be the chairman. So, if you want to be a
chairman, you should go and set up your own business and own
it. Things are there and they are not going to change and
I don‘t really feel that there’s going to be any
change at all.
How does somebody with N1 million go into a N25 million business
especially with the banks recapitalizing now? And how do we
get Nigerians to invest in Nigeria?
Let’s talk about the recapitalization of the banks first.
I think it is very very important because when you look at
the setting of the banks today, they cannot really fund mega-projects.
They cannot fund big projects and there’s no way Nigeria
can grow without these infrastructural projects. For example,
today, we are talking of Fourth Mainland Bridge, a private
sector person should be able to do that. It is not difficult.
It is not going to cost as much as Obajana. If you do that,
do you know what inflow of traffic Lagos can take additionally?
So that means more business. There is one bank in South Africa,
which is called ABSA. The total market capitalization of ABSA
is more than the whole banks in Nigeria put together, including
assets. You have to look at the population, which is 130 million,
and growing at three per cent average. That’s a huge
market but without these banks supporting the private sector,
the private sector cannot develop. Even if today, you now
go and bring your own money; maybe, you are not in business;
maybe, you are not an entrepreneur, so how do you expect to
invest that your money… Also the banks, as soon as you
have that N25 billion, then you are at a different level.
Then you must change and have what we call project financing,
a division which majority of these banks today don’t
have. A couple of them don’t even know how to appraise
a good project and we businessmen in Nigeria who know we don’t
have the money are scared to take proposal to bank A because
bank A may just look at my proposal, make photocopies, keep
the document and return it to me that sorry, we don’t
have money to fund this project, then next thing, you see
one of their directors doing the same project.
So there’s a lot of mistrust here and there, which I
believe as we go along, things will change. Going back to
how Nigerians will bring their own money, let me tell you
this and I want to really emphasize it that there is nothing
that is going to help Nigeria like Nigerians bringing back
their money but the government too must do more; more in the
sense like this is just an advice, maybe, the president or
National Assembly or His Excellency the president can write
a proposal or a bill allowing people to bring in their own
income. You know, India has done this before. India gave an
amnesty of 12 months that anybody who has money abroad should
bring back the money home; there will not be any questions
asked at all. Once you are an Indian, just bring your money
back home. Now, I know there are laws because of this 9/11
that has happened but a lot of countries are still doing that.
Then you can see people bringing in massive tonnes of money
because sometimes, we keep shouting that we need foreign investors
to come. These foreign investors are not stupid because if
they are stupid, they wouldn’t be where they are. They
are seeing our people who have money in their hands. Why are
we not having these foreign investors coming? Because they
have not seen you bringing your own money. You must bring
your own money to show confidence in that your country. On
the question of insecurity, somebody came from Germany today.
We were talking about this insecurity and he is based in South
Africa. I told him that Nigeria is safer than South Africa.
There are pockets of armed robbery here, armed robbery there.
I’m not saying there are no armed robberies; there are
but in any country in this world that has the population of
Lagos for example, that country has the same armed robbery.
Today, if you go to New York and you go to Bronsat at 1 a.m.
for example, you can’t go and come out clean. You will
be robbed and there are so many things happening. People have
been shot, killed, and all these things over the years but
you see, our own is because sometime really, people want to
keep running us down, they keep talking about this one. I
know that today, in Brazil, I used to go to Brazil a lot,
I used to drive a lot in New York. At night, we don’t
even stop at a traffic light. That’s to show you how
bad it is. We don’t stop at traffic light in Brazil
at night. The same thing in South Africa even during the day.
All these people that are hawking things on the streets, when
you get to a traffic light in Johannesburg, you try quickly
to wind up your window. We don’t do things like that
here in Nigeria. I’m not saying these things are not
there but investment in various sectors is what will remove
these hoodlums off the streets. So far as you keep having
babies, you are not generating more jobs, you will keep having
these number of hoodlums on the streets and I believe very
soon, things will get better. Building is more difficult than
demolition.
You and a handful of other industrialists are setting up the
first mega transnational corporation in Nigeria with an initial
capital base of N14 billion. What’s it all about and
what do Nigerians expect from it?
The mega company is actually to cater for us, for example,
this same company, they have professionals running them. Nothing
stops us from going to bid and ask the government to give
us concession on running Warri refinery, so that the whole
of what we are going to do is that there will be an IPO which
all Nigerians will have their own investment so you can buy
your shares.
Maybe, I will have N500 million shares, you will have 100,
but we are all shareholders. So, if now for example, the government
says, okay, fine, the Port Harcourt refinery should be given
to this particular company, they are not going to raise an
objection that government has favoured Dangote. That same
company will excel faster. If we are chasing something in
South Africa, we will now go to the president and he will
meet his colleague, Thabo Mbeki and explain to him that this
is what this company is all about and he is putting his stamp
to make sure that this company gets that job. So we are not
doing things only here, we will also do things outside Nigeria
and I can tell you that company within the shortest period
of time can be much bigger than the whole companies put together
in the stock exchange; bigger than even our own company and
they can raise more money than what they can raise locally.
Every single Nigerian has the opportunity to go and put in
his money, that is why they call it mega company. I want every
Nigerian to have hope. I can tell you personally with my experience,
I’ve never ever in my life seen a country that is blessed
by God like Nigeria. The only thing is that we are mismatching
things but once we can focus, the sky, is the limit. Don’t
give up hope. India in 1992, their foreign reserve was about
$1.2 billion. Just recently, India reached $133 billion. Every
month, they are going up about seven to eight billion more
and nothing is impossible. Our own is even a hard story to
tell. You look at Reliance of India. In 1960, the owner of
Reliance was a petroleum attendant in a filling station. The
man just died last year, Mr. Ambani. Last year, Reliance did
a turnover of $28.5 billion. They have the biggest refinery
in the world, 665, 000 barrels per day production which is
one and a half time the capacity of all the refineries put
together in Nigeria. That is just one single company in India.
So these things are possible. They can be done.
Dangote group of companies is a very big business empire but
is not quoted at the Nigeria Stock Exchange. Why?
It’s a strategic thing. We have already made the decision
to go into Nigeria Stock Exchange but we have to do it gradually.
All along, from 1997 to date, we have always been running
projects. I will be in project after project so whatever money
we make, we are investing. Yes, there is good cash flow; money
is coming but money is being invested every single day. Obajana
alone, we are spending average of $40 million a month which
means every month, I must work hard to get N5 billion plus
and we have Benue also that we are doing. So it is not the
right time for me to go to the stock market when you are building
and of course, it is a dream that you have otherwise, if you
go, you are going to sell it for nothing. So we must establish
the business. We must show this track record after nurturing
the business to grow. When we reach a certain stage, then
we’ll start selling them one by one. That is one and
that is why we are ready to come with three, which means our
sugar, our flour mill and our salt and our sugar refinery.
But even these ones, when we did the evaluation and all these
things, the three combined together is about 500 billion,
which is quite a lot. If I want to take Obajana to the stock
market, the stock market will not be able to take it. That’s
why we are trying to register both here and London because
London is more liquid market than Nigeria. When you buy our
shares, you should buy them and wait for appreciation. You
are going to make much more money. Maybe, if you buy this
year at N1, in the next two years, you are going to sell at
200,000 for example. So the only way to do that is by us also
going to London stock market so that we don’t have all
this flight by night where they come and invest today, as
soon as the shares are traded, you see everybody trying to
cash in to collect his profit. That is not the kind of investors
that we are looking for. We are looking for people that will
stay with us and also enjoy the income because there are going
to be projections. But by and large, we don’t also want
to keep it as a family business. We want other Nigerians to
also participate in what is happening and we’ll be there
before June.
What is your parting word for Nigerians?
I believe that Nigerians should first of all be grateful to
God that God created them as Nigerians and the hope is there.
Nigeria is going to be much much greater. The potential of
Nigeria is so great. As I told you, as a business person,
I’ve never really seen anything. I know people will
say they are suffering here, they are suffering there; yes,
obviously but when you get to the promised land, you will
appreciate it better because you have suffered for it. I advise
Nigerians that we should all try and live in harmony because
the future of Nigeria is much much greater. Oil is actually
even nothing. If you look at gas that we have, the income
of gas should be much much better in the next three years
than oil but then you look at solid minerals. You look at
agriculture. These are all things that can be much much bigger
than oil. Dubai for example which is United Arab Emirate just
changed from looking at oil, buying $12.5 billion worth of
aircraft because they have seen that tourism will overtake
oil. So, we should also look at something like agriculture
or even solid minerals. With the right investments in solid
minerals, it can overtake oil in the next three, four years
and we don’t have any natural disasters so why don’t
we have hope? The hope is very high. If you give me today
$5 billion, I will not invest any abroad, I will invest everything
here in Nigeria. Let us put hands together and work.
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