The key is let’s have a trade agenda relevant to where we know exactly what we are getting out of it or what we want to get out of it.
Engineer Ahmed Mansur, the new president of the Manufacturers Association of Nigeria (MAN) and Executive Director at Dangote Group, recently got the mandate of the African Union Commission to chair a high -powered committee to midwife an Africa Manufacturers Association (AMA).
He spoke to Daily Sun in Cairo, Egypt on the sidelines of the recently concluded first Intra-Africa Trade Fair (IATF) on the task ahead of his committee and the African continent.
Lessons learnt in various sectors you’ve have traversed
It’s been very interesting, sometimes a bit frustrating and sometimes inspiring. As you said, l started from the mid sector, that’s the academic sector, moved to the business sector then to the public sector and the private sector. Later I went back to the public sector and then back to the private sector again. It’s been quite interesting seeing the various facets and dimensions of the Nigerian economy and politics and to see all the great opportunities we have missed and the great potential we are yet to realise.
Insight on some missed opportunities
We can recall that in the early 1980s and the late 90s, we started this exercise of envisioning a new Nigeria with what we call Vision 2010 which started in 2006/2007 and looked at Nigeria in the medium term, setting 2010 as a sort of target. It was a tremendous opportunity to begin a transformation process, to begin a nation building process. And many Nigerians across all sectors and all facets of Nigeria participated.
I remember there were probably close to 300 participants on that exercise led by very seniors public and private sector technocrats and over period of about a year the team, deliberated on every aspect on Nigeria politics and economy and came back with a vision for Nigeria which addressed most of the key issues Nigerians are still facing. Unfortunately, that was the first missed opportunity because the vision document was completed in 1997 and handed over to the head of state then I think Abubakar Abusalam. But he had a one year stint and was busy really organising the transition so obviously he didn’t have much time. But then, when the new government settled down, we don’t know what happened, apparently the documents was just laid aside and so we missed a great opportunity to begin a nation building process that I think by now would have placed us well close to the target destination and would be looking to build a united democratic harmonious nation driven in terms of economy by the private sector, with the public sector acting as the facilitator and the enabler. I think if we had done that by now we would have had a great economy. Certainly that vision is still the vision and that’s the missed opportunity I’m talking about.
We’ve tried other things, we’ve tried NEEDS, Vision 2020, and now we are trying the ERGP – Economic Recovery and Growth Plan. Now the interesting thing to me is that all these exercises are subsequent exercises and they all find their roots and to a large extent they are inspirations from that Vision 2020.
Major challenges of Nigeria’s private sector operators
The greatest challenge for Dangote and indeed the business sector generally and certainly the investing public is that our economy is still not sufficiently conducive for rapid private sector investment. To me, the public sector plays too much of dominant roles in economic liaison and many of the efforts being made to move the economy forward, and to create opportunities for growth particularly growth that is inclusive tend to be stunted by the fact that the public sector seems to lead and control the process. And it seems that to embrace the process there is not enough room for the private sector to operate and to really exploit the private sector capacity and initiative.
How government policy impacted Nigeria’s manufacturers and advice for moving forward
The manufacturing sector in particular derives the greatest benefit from three perspectives. First from continuing investment on infrastructure like road, rail, telecoms all these of course services are so vital to efficient manufacturing particularly efficient business in manufacturing. Infrastructural services are so vital to successful investment and so we look at the budget and see how much will be going into infrastructure and then we can say we are moving in the right direction.
The second perspective is the other end of our business. We produce to sell, so we want to see actions being taking by government which puts more money in the hands of the individual because if you increase the buying power, then off course our market will grow.
The third element is to look at the monetary policies and the fiscal policies and see how to they adapt or aid our business. Take monetary policy for instance, stability in exchange rate is very good because , for many reasons our manufacturing centres are heavily dependent on imported inputs, raw materials, components, spare parts, machinery, everything. A huge dependency on importation and therefore we want to make sure that the foreign exchange is available because you have to buy dollars to be able to import your input and spear part and you cant always put a price. So every time the dollars goes up it means our import cost increases. And because we may not have the capacity to increase our prices so profitability diminishes. So any budget that introduces new structures on foreign exchange will be negative but any budget that puts more money in the hands on the population will be positive so that’s the sort of thing we are looking at in any budget. Of course we are not just looking at the cost but we are also looking at the specifics because some of those constraints are more urgent than others . Let me give you a good example . Today if you look at the total expenditure on infrastructure we want to see significant progress on the rail and the road distribution on the reports because those are the things that create the biggest impediment to the success of our operations. There are several structures in which the Manufacturers Association of Nigeria want improved so every time we have that opportunity to engage government we sound it laud.
As you are aware the Ministry of National Planning just engaged in consultations at various levels in the formulation of development policies . So to answer your question yes we are engaging the government, we are engaging the National Assembly and we hope that in the last budget to be concluded made tremendous progress in terms of increasing investment on the infrastructure side and we hope that this budget will be sustained on the investment side.
How Dangote broke through constraints to emerge stronger
To be honest I think we have to admit that Dangote Group particularly the Chief Executive . is a unique businessman because where most people see challenges he sees opportunities and unlike many investors he is not held back by a sense of impairment. He moves despite the challenges, he invest despite what other investors will see as monumental incapacities to investment and I think that why he has uniquely been able to do a lot of the things he has been doing whether you’re looking at it from the point of identifying areas to invest or going ahead to scale out even when others are pulling back and we have seen it in most of his initiatives and investments.
Why Nigeria is struggling to build infrastructure
Well, I wish I had the answer to that but actually we are all asking the same question. Nigeria has the potential, the capacity, and the resources to build as big or bigger facilities like what you are seeing in Cairo. But you know this kind of thing requires vision and requires sustained strong leadership and I think also it does require a fairly stable political environment. I believe that, yes you have raised the issues of corruption, corruption is there but frankly if we have stability and the visionary leadership, its much much easier to deal with corruption.
We have seen it dealt with in other countries. Indonesia used to be more corrupt than any country in the world but it is now really moving very rapidly. So it is possible to do that. I think clearly what we need is stability in the environment, stability in socio-political environment. I also think we need sustained visionary leadership and I think Nigerians often place politics above everything and unfortunately that sometimes tends to give us a lot of problems. A situation where we go one step forward two steps back cannot move any country forward. So one can say frankly that there’s absolutely no reason why Nigeria cannot build this kind of structures or even more. Perhaps with time and maturity of the politics of sort, some stability in the political space we should be able to build such things.
Benefits we got from IATF
Like you said what opportunities does this create, I think for Nigeria if and once we are able to recognize that this kind of cross border and international trade does require that each country should really understand what it wants to get out of it and to prepare itself right to focus on those opportunities that it can create for its own economy and also to make sure that it works with its business sector, with the private sector to ensure that those opportunities are realized. Because at the end of the day trade does not happen between countries, it happens between businesses and between people.
For such countries, the role of the government is to facilitate, to enable, and to create conducive environment where trade happens and that means ensuring your legal and regulatory environment is trade friendly. That also means that operatives of the economy, your regulators and administrators understand their role and play that role well. There is a strong partnership or collaboration between the business sector and public sector aim of achieving the goals of the economy particularly with regards to trading with other countries and I think that is what many of us have been arguing in regards to the African Continental free trading agreements that we need to prepare ourselves for it. We need to understand what we going into, what opportunities exist, what risks exist because there are no opportunities without risk and therefore we need to be prepared to be in a position to mitigate the risk and to exploit the opportunities.
Competitors reaction in countries you operate
Let me start this way, we are happy where we see opportunities to invest in other foreign countries or to ßtrade with partners in other countries and we see tremendous opportunities in this because if we take cement as an example cement, so that i can link it up with his question. This is the area that we have built significant competence and ability to produce high quality cement at very low price.
We know that the base element, the basic input for cement is limestone. We are aware that limestone, the good Lord in his own wisdom did not distribute it to all countries so there are some countries that have and some that don’t have it and Nigeria has tremendous amount of limestone deposit and we are using that to create the largest cement industry in Africa. Today I believe we are about 45 to 49 billions metric tonnes we are the largest African producer of cement. And so naturally if the system works, if the trade in relationship works, It will work to our advantage, it also gives us the opportunity to invest in our country so apart form free trade, we also want to see an environment for easier investment so that we can go and invest in those countries that we see opportunities and limestone and they have demands which is not being met. So this openness creates a lot of opportunities for us in that spectrum. However, I think the point you made is that out of the legacy of colonialism that certain countries have taken control of some of our sister countries in Africa and their business sectors, their industrial sectors have taken over the factors of production and that if they are producing products, that those countries should only buy from them . And that explains the reason that even as we try to invest in other countries, we see a lot of push back most of which is generated by these competitors who are not essentially if you like indigenous investors and its not that we are worried about the competition. What we are concerned about is when certain incentives are allowed through this businesses or when hurdles are placed in our way to exploiting those opportunities and I mean this is why we keep saying that if African contract of free trade agreements works the, first focus of our government must be to ensure we have a regulatory environment that is fair and equitable, we have a regulatory environment that works based on agreed rules of the game not based on some unfriendly business practices and I think that’s one of the core requirement for effective free trade. Now there are others, obviously infrastructure where the lack good transport infrastructure makes trade to suffer because the cost of your product is simply raised significantly high and this is common across the region.
Transport infrastructure in the whole of Africa is extremely important and it aids a huge cost to products delivered. There are people who think up to about 30 or even about 35 percent additional cost borne by African businessmen within their organizations arise from transportation so one of the concerns again has to be with infrastructure .Its okay if you have fairly regulated environment and people come and establish, invest in businesses and develop projects, we can forfeit. But when products are produced outside of the country and brought into the county as either repackaged or renamed then you may have a problem with dumping.
Dumping is when somebody has huge capacity and that capacity meets all their internal needs and yet there is excess, they can sell the excess at any price because the margin of cost to them becomes extremely small and such excesses can be exported and transported into the country for a company which now competes to the disadvantage of local producers. These are some of the issues I think the people putting together this African free trade area arrangement must tackle and to some extent they are doing it because one of the ways to address this is through the Rule of Origin which means that if something is produced in your country at least 60 or 70 per cent of the inputs must come from your country then you can regard it as coming from that country . But where it is only the last 5per cent packaging then of course it wont be considered under the rule of Origin and will not be subject to the structure of intra Africa trading.
How is Dangote helping other organizations in Africa to grow
Nobody goes out to grow his competitor. That is certain. But yet we are happy to create opportunities for up and coming small businesses and that is why we are very supportive of the small and medium scale enterprises so that they can also grow because if they grow then we make our own business easier and then we can now focus and not have to do a lot of the small things that others can do. Yes we are very committed to working with the small and medium industry sector to provide strong linkages between the small medium industry sector and the large industrial sector and this is something that also government ought to do more seriously. There are some institutions that have been established to support and several others in export import businesses but I think this needs to be strengthened and the whole process I think needs to be coordinated and be driven if not by at least with the predominant interest of the privates sector and I think this is something that has to happen even more if this free trade is going to succeed because a lot of people complain that a lot of the intra Africa trade is informal. This is certainly true in the West Africa zone but I feel that people who trade informally do so because the constraint of formal trade is beyond them so they will not be able to break through all the barriers and so they do it the small way. So if you can create an environment where even in the small trade of labor it is easy for somebody to go and register his business, go and get all the documentation he needs, … certification for instance you cannot trade across your border unless you are able to get assurance that your product is safe but to go get that … certificate for the small business, it is something that can kill the business. This is what people call enabling business environment that has to be given significant boost. Thank God the government has setup a committee PEBEC (The Presidential Enabling Business Environment Council) and it is trying off course in the economy and again our problem has always been sustainability; you’ll start something and then there’s a change of government and leadership and it is jettisoned.
How African countries can compete with China, Russia
In principles and in practice, trade cannot work that way. You cannot say i just want trade within this region, I don’t want from outside Africa.Trade takes place across all borders. Today, of the total African trade volume only 15 18percent is actually intra-Africa, which means its trade between African nations, that is if it is up the informal trade.. So 82 – 85 percent is trade beyond continent and that cannot be changed in few a years, it will take years and it is taking other countries the same time of year.
Europe is taking about 67percent inter European trade but it has taking about 400 years or at least much longer to grow that kind of trade and it will happen. But i think the key, the import from outside the continent is not on an evenly … This is a country that has grown huge capacity and are operating on marginal cost that literally blocks holding this meeting. So if you are not careful, if you don’t prepare, you may have serious dumping.
When the Chinese come to Africa that they want to commit with relations they come with their own agenda, when the Europeans come they come with their own agenda, when the Americans come they come with their own agenda. But the question today is what is our own agenda? So my perspective is that even as we are discussing intra Africa trade, Africa and specific African nations ought also to be developing agenda for trading with other countries. We are currently depending on 80 – 85percent on trade with countries across continents . But we should have an agenda which aims to reduce this to 60, 45per cent and we will take specific measures or introduce specific policies to move our economy in that direction. I think if we do that over time we will be able to grow Africa to Africa trade. Because clearly we do need products from China, we do need products from Europe and we do need products from America and we need to sell them our products too. Now you can’t trade in one continent and so clearly the key is let’s have a trade agenda relevant to where we know exactly what we are getting out of it or what we want to get out of it.
Dangote’s experiences on free movement of goods and persons, across Africa
You know indeed Aliko Dangote in particular has been probably the most loudest opponent of this arrangement whereby African countries don’t seem to allow ease of movement even at levels that is obvious will be of advantage to both countries. I think it is obvious he has made a lot of progress because even this visa on arrival used to be inexistent, if you want to go to Kenya or Zimbabwe you will spend three weeks looking for visa, today at least thank God you drop that … and now you pay the 25 or 50 dollars to get the visa, it’s a move and so I think that we are yet to get there and it not just movement of people, it is also movement of talents and human capacity because if its just for a visit, that might be you want to visit for one week or two weeks that’s fine you can afford to wait for the business…but if you try to go and get a job in another country you will see the hurdles we are talking about . This is even in regard to movement of people and if we are going to really integrate our economies we have to allow movement of talents across the border easy because particularly if you are investing in a country outside your own you would want the opportunity at east at some level to be able to make some of your own people to go there so that you can transfer whatever experiences and knowledge that you need. But its even worse with regard to goods because even if you take West Africa even with the ECOWAS liberalization trade scheme which allows us to move goods without too much hustle, what we know is that today if we are moving goods across our countries from Nigeria to Benin Republic, to Togo, to Ghana the headache is enormous and most of this headache is not because the rules of the game are set to create headache but because the people who execute those rules, who implement those decisions unfortunately see themselves in totally different light.
The regulators are men of our country that see themselves more as gatekeepers rather than enabler and facilitators. But in trade and investment, the role of the government is to nurture, facilitate, encourage businesses . Unfortunately you go to look for that visa or that permit to establish your business you’ll find out the regulators tend to see themselves as gatekeepers; why do you want to go in. So that’s the kind of attitudinal change that has to happen if trade and investment is to flow across Africa. If you travel around the Europe you can pass six borders without knowing that you’ve passed any border all you need is your ID card or your small chip, you’ll just put it against the little window and you pass.