Nigeria to the rescue
I read it at about 3am today, 12th October 2017. It's now about 5am, and I haven't been able to sleep since. So I've decided to write down the thoughts that have kept me awake.
Firstly I will give highlights of the article. Then I will comment.
1. 90% of the networth of Africa's richest man, Aliko Dangote, comes from his cement business.
2. Dangote Cement controls 65% of Nigeria's entire cement market.
3. In 2013, Dangote Cement had the highest profit margins of any cement producer on earth - 52%. China's Anhui Cunch Cement came in second - at 17.8%.
4. In 2015, average profit margins of cement producers worldwide was 17.2%. Same 2015, Dangote Cement *reported* a profit of 42.3%.
5. In June 2016, the World Bank reported that cement prices in Africa averaged $9.57 per 50kg bag while the world was paying $3.25 (about one third of what Africans pay)
6. How has Dangote Cement been able to retain such a huge market share at such excessively high prices and profit margins? Simple answer. The Nigerian Government.
7. How? Through:
A. Preferential policy making and market protectionism. (Example. Government granted Dangote exclusive mining license for limestone and other cement additives for 90 years)
B. Preferential foreign exchange allocation at preferential rates from the Central Bank of Nigeria.
C. Preferential tax breaks (Example. Between 2010 and 2015, Dangote Cement earned $6billion in profits and paid $72million in taxes. That is, about 1%)
D. Preferential regulation by government agencies (Example. In 2014, the Standards Organization of Nigeria attempted to eliminate the 32.5 grade of cement from the Nigerian market, to replace it with 42.5 grade, produced by Dangote Cement)
1. Through high level collusion, 192 million Nigerians are paying about 3 times what they should be paying for a commodity as basic as cement.
2. In return, Dangote Cement is providing 10,000 (ten thousand) jobs to these 192 million Nigerians
3. This is another prime example of Government colluding with the private sector to rip off millions of already poor Nigerians.
4. Levelling the playing field for all players would attract and increase competition and innovation, and hence drastically reduce the price of cement in Nigeria - saving millions of poor Nigerians loads of money to deploy to other needs and helping to solve Nigeria's housing deficit (who is starting to approach crisis levels). The onus to achieve this is on Government.
5. Nigeria's huge population can be leveraged, and ought be leveraged (especially through economies of scale and strategic purchasing) to drive down prices of everyday goods that the everyday Nigerian consumes. Again, Government can set policies to drive this.
6. Successive Nigerian governments have continually shown that it is against the people. This government has not shown itself to be any different. There is still time to change however.
7. Perhaps more disillusioning than governments drive to rape the people is the attitude of the Nigerian elite. The average Nigerian elite will read this and wish to become another Dangote - to collude with government to further rip Nigerians off some more. Sadly, organized religion also largely belongs to this group.
8. At the end of the day however, it's a losing battle for all who suppress the people. The voice of the people will be heard one day.
As Bob Marley would sing....."you can fool some people some times, but you can't fool all the people all time"
And as the prophet Isaiah says from the first sentence of his 10th book...."Woe to those who make unjust laws....who issue oppressive decrees....to deprive the poor....and rob the fatherless....what will you do on the day of reckoning....to whom will you run for help?"
As surely as the sun rises, the day of the Nigerian people will come.