Opinion

From Cementing Poverty To Oiling Its Wheels ?

Published

4 months ago

June 9, 2023

President Bola Ahmad Tinubu

Hamisu Hadejia,PhD

Endowed with vast deposits of limestones, ‘why would Nigeria be spending millions of dollars importing cement from abroad?’. This was the question that agitated the mind of Nigeria’s former president Olusegun Obasanjo (OBJ) in the early 2000s, leading to the former president summoning the major cement importer at the time, Mr Aliko Dangote, to brainstorm on sorting out the puzzle.

A policy seeking to incentivise cement importers to start local cement manufacture, known as the backward integration policy (BIP), was consequently introduced in 2002, following the private conversations between OBJ and Dangote.

As a sectoral industrial policy, the BIP made the grant of cement import licenses conditional on cement importers demonstrating concrete commitment to set up local cement producing factories. The strategy was to phase out, before completely banning, cement importation when local factories could produce enough to replace imports—a strategy known in economics as ‘import substitution policy’.

Among other incentives, the BIP ensured the sales of foreign exchange (dollars) to cement entrepreneurs especially Dangote at the official rate. For example, in a Reuters report, Dangote was said to have secured $161 million at the official exchange rate (of between 197 to 199 NGN per 1 USD) from the Central Bank of Nigeria (CBN) between March and May 2016. If Dangote were to (and he could without any accountability) re-sell this $161 million foreign exchange award in the currency black market, he would have made a profit of $100 million (£68 million) without lifting a finger. Thus, effectively, what this means is that just in a couple of months, the Nigerian government had subsidized Dangote to the tune of $100 million US dollars with taxpayers’ money, under the guise of supporting ‘strategic’ businesses.

Not only that, VAT/custom duty waivers on imported cement making equipment, credit guarantees, and a cumulative tax holidays of seven years were granted to Dangote Cement Companies (DCC).

Government’s support to infant firms, industries or entrepreneurs is not a new phenomenon in nations’ industrialization processes. Economists such as Alexandre Hamilton (1757-1804), Friedrich List (1789-1846), and contemporary ones like Ha-Joon Chang and Eric Reinert, have documented evidence confirming that these kinds of supports or state-business relations were instrumental to the industrialization of almost all industrialized nations of Europe, North America, and East Asia. However, the state-business relations in Nigeria especially in the cement industry deserves some critical reflections and re-evaluations for social welfare considerations.

THE PROS OF THE BIP

Within a little over a decade, the BIP succeeded in replacing cement imports with local production in Nigeria leading to the complete ban on importation of cement in 2012. Hence, government officials and industry players have never failed to flaunt the BIP policy as a national feat all patriotic Nigerians should celebrate. The bases for this conclusion are three: One, the policy has made Nigeria self-sufficient in cement production; two, it has created jobs opportunities; three, it saves Nigeria foreign exchange which, at the peak of import in 2008, was $304 million. While these ‘successes’ have been belaboured time and again, Nigerians have been deliberately left in the dark as to the costs of these achievements, which include, but are not limited to, the disproportionately lavish state incentives to cement investors as adumbrated above.

THE CONS OF THE BIP

The ban on cement imports and the dominance of a single player in Dangote gave rise to a monopoly, now duopoly, in the cement industry. Latching on to the opportunity, Dangote has used every trick in the book to initially eliminate competition (e.g., the case of Clestus Ibeto), charge exorbitant prices, and pay the state less than its due in taxes. Any evidence for these claims? Yes, there are plenty! For a start, it is a fact that the Nigerian cement consumers now buy a 50kg bag of cement at almost $10 (official rate). This is outrageously higher than what obtains in other markets including in many African countries, to some of which Dangote merely exports the clinkers he processes in Nigeria using Nigeria’s limestones for final processing and sales in those countries at prices lower than he sells in Nigeria! In fact, compared to its price in Nigeria, a 50kg bag of cement costs lower in China ($2.96), Malaysia ($2.3), India ($3.84), Kenya ($5.56), Zambia ($6.45), Egypt ($2.88), South Africa ($5.88), and Ghana ($7.0).

Also, some evidence suggests that the Nigerian state does not get actual value for the lavish incentives it splashes on Dangote. In the DCC’s 2016 annual report (p.139) for example, the company’s own independent auditors have pointed out that the company’s directors had made an ‘assumption’ about the pioneer statuses of different lines of productions at Ibese and Obajana factories. Without this ‘assumption’, the auditors concluded that:
“..an additional tax charge of N64.4 billion (2015: N40.0 billion) would have been incurred by the company if this assumption was not made in determining the tax liability.”

So, while the Nigerian state has subsidised Dangote generously, such efforts do not appear to have yielded benefits for both the state (which is not paid what is due to her in taxes) and Nigerian cement consumers (who buy cement at over 300% price differentials compared to other consumers elsewhere).

Moreover, with the cement manufacturing process being highly mechanised, the much-vaunted jobs created by the transformation of the industry is, in the final analysis, not worth the costs incurred from subsidization and the expensive cement prices Nigerians pay. For instance, the entire cement industry currently employs only around 30,000 workers directly, and most of these workers are truck drivers. Hence, it does not make any economic sense for Nigeria to, in a bid to keep a few thousand Nigerians in employment, sacrifice national housing needs/infrastructural development by forcing millions of Nigerians to pay extortionary cement prices. Dangote and other players in the industry cannot of course claim credit for the indirect jobs in the downstream retail segment of the industry because such jobs have been there and would still remain regardless of whether cement in produced locally or imported.

But how has Dangote managed to ‘cement’ his cake and eat it? The answer to this crucial question lies in understanding the nature of two domains of relations, that is: The Dangote-government relations as well as his public or civil society management relations.

Dangote-state relations took off in earnest towards the end of the OBJ first term, that is around the time the BIP was introduced. In his book, ‘The Accidental Public Servant’, Mallam Nasir El-Rufai, explained that Dangote came close to the OBJ government after the former president had fallen out with his powerful vice and major Peoples Democratic Party (PDP) financier at the time, Atiku Abubakar. Consequently, according to El-Rufai, “Obasanjo had to resort to raising money from other sources and that was how Aliko Dangote came into prominence in the government.”

A document from the US embassy in Nigeria leaked by Wikileaks would later reveal that “Dangote purportedly contributed 200 million naira (about $1.5 million at the time) to Obasanjo’s first term election campaign, and in 2003 at least another 1 billion naira (about USD 7.5millio) for the second term. Dangote is a known contributor to the PDP party.” The cable therefore concluded that, ‘it is no coincidence that many products on Nigeria’s import ban lists are items in which Dangote has major interests.’ Former President Yar’Adua of blessed memory saw through this kind of Dangote’s much-vaunted ‘entrepreneurial acumen’ and moved to free poor Nigerian cement consumers from the monopolistic exploitation before the cold hands of death cut him short. Ever since, the business continues with successive regimes securely holding the cement cash cow by the horns for Africa’s ‘entrepreneurial guru’ to milk in exchange for God knows what.

It is instructive to point out here that across the globe, investment in the cement industry takes between 20-30 years to deliver returns. However, in Dangote’s case, returns were delivered in less than a decade. To be clear, no one should begrudge Dangote his fundamental economic right to capital accumulation, however, such private economic right should also not be enjoyed at the social cost of denying Nigerians their fundamental right to housing through extortionary pricing of a product that their own state subsidizes, disproportionate to the social benefits for that matter.

Also, across the globe, profit margins in cement companies range between 30-40%, yet, in Nigeria it is up to 63%! This is because a couple of Nigerians gifted with ‘entrepreneurial acumen’ have the wherewithal to ‘lobby’ state officials to protect the market for them to charge whatever price they fancy. In a paper, Richard Itaman and Christina Wolf calculated that between 1999 and 2010, when cement import was severely restricted before its eventual ban, the Nigerian cement consumers, on average, lost N19.63 billion (that is, around $51.4 million in 2021 USD/Naira value) per year because of buying cement at exorbitant prices compared to the rest of the world. In fact, during the same period, Richard and Christina observed that cement prices had progressively increased by up to 300%.

In addition to ‘lobbying’ the political leadership, Dangote, as investigations by Michael Odijie and Anthony Onofua reveal, ensures the extraction of massive rents in the industry without any opposition from any quarters through his patron-clientelist relations with, and alleged infiltration of, trade/labour union and public/civil society organizations. The authors observed that Dangote generously ‘donate’ to the activities of these civil society groups with a view to ‘promoting the [BIP] policy as a major success.’. The authors stated that he installed his allies in the leadership of critical trade organizations such as the Manufacturers’ Association of Nigeria (MAN). Incessant ‘donations’ and yearly ‘gifts’ to such organizations as the National Association of Block Moulders of Nigeria and Trade Union Congress have also been attributed to silencing the voices of comrades who were hitherto vehement campaigners against extortionary cement pricing. Michael and Anthony have also observed trends in the co-optation of the media to popularise the narrative that local cement manufacturing is a collective national ‘success’.

THE WAY FORWARD

The new administration of President Bola Tinubu will do well by moving in the interest of impoverished Nigerians to address this cement issue decisively. Nigeria should not continue to protect a couple of producers at the expense of millions of Nigerian cement consumers. According to former minister of finance, Mrs Zainab Ahmed, ‘the Federal Government will require about $100 billion annually for the next 30 years to effectively tackle Nigeria’s infrastructure challenges.’ Also, the United Nations remarked that “Nigeria’s housing sector is in a complete crisis”. Undoubtedly, a critical part of addressing these challenges/crises is by making cement prices affordable to Nigerians. How can this be done? In my view, since the cement producers have been protected and subsidized for longer and larger than necessary, it is time for the cement market to be completely liberalized to allow for imports. This will facilitate competition which will beat prices down and ease the excruciating economic hardship of Nigerians. This is elementary economics. Even if local manufacturers who have been mollycoddled for over a decade fail to compete, so be it! The social benefits of suspending the long imports ban far outweigh the largely private benefits of sustaining it. The benefits of promoting indigenous private capital accumulation or keeping less than 30,000 largely truck-drivers’ jobs are not worth making millions of Nigerians homeless in their own fatherland. So, President Tinubu has a choice to make between appeasing a couple of capitalists/cronyists or salvaging millions of poor Nigerians who have no roof over their heads.
Dangote’s refinery: Like cement, like oil?
In celebrating the construction/commissioning of “world’s largest single-train petroleum refinery” without asking some critical questions, we, Nigerians, appear to have given in more to our sentiment than to our rationality. According to the Central Bank of Nigeria (CBN)’s governor, Mr Godwin Emefiele, who according to Dangote “moved mountains to ensure the success of [his refinery] project”, the apex bank ensured the availability of foreign exchange to Dangote to pay for equipment imported for his $19.5 billion refinery. What amounts of this scarce foreign exchange was sold to Dangote? What other monetary and fiscal incentives have been provided to the entrepreneur for the refinery project, and under what terms and conditions? Will all imports of refined oil and assorted products henceforth be banned for Dangote to enjoy another monopoly status in the oil industry, like he does in cement with all its concomitant consequences? Is the 20% Nigerian National Petroleum Corporation (NNPC)’s stakes in Dangote’s refinery a bait, decoy, or marriage of convenience to attract state patronage for profiteering business as usual?
Hamisu Hadejia (PhD)

Opinion

Emotional Farewell: Staff Bid Adieu to Departing Executive at FCTA

Published

2 days ago

September 30, 2023

Nigerian Tracker

By Bala Ibrahim.

In Arabic, the name Najeeb means the Distinguished, the Noble or the Outstanding. The Arabic dictionary says if you’re seeking a name with inherent star power, Najeeb will make for a lovely fit. It is the masculine respelling of the Arabic favorite, Najib, which stands for the Distinguished.

Yesterday, Friday, 29/09/2023, I had reason to write on one of the 21 Chief Executives at the Federal Capital Territory Administration, FCDA, that was relieved of his duty by Minister Nyesom Wike. As of the time of writing the article, I hadn’t any inkling about his name or the company he headed. Within minutes of the release of my article, responses came in torrents, giving the name, the agency he headed, his state of origin and an addendum, spelling out his personal qualities which people admire. These include honesty, generosity, courage and selflessness. His name was given as Najeeb, Najeeb Abdulsalam, whose sojourn as the Managing Director of the Abuja Urban Mass Transit Company, AUMTC, was cut short by the Minister of the FCT, barely three months on the saddle. I was made to understand that Najeeb came from Danbatta, in my native Kano state. In short, Najeeb Abdulsalam was described by many as a man of noble character. The encomiums were so encouraging that they gave me the justification for this follow up article.

For starters, I must make it very clear that the mission of the article is not in any way meant to support Najeeb for reasons of nepotism, not at all. I wrote without even knowing his name or where he came from. I was only touched by the show of uncommon support, solidarity and the sincere sentiments from those he led, alongside the testimonials of those that know him.

His staffers’ account gave the picture of an Officer and a Gentleman, with commitment to discharging correctly, the work he was assigned. Some of the staff that served under him were even volunteering to go with him, should the Government refuse to reverse the termination of his appointment. It is not surprising, because the name Najeeb is meant to go with a certain degree of nobility. Indeed I know some Najeebs, and truly all of them are noble and outstanding. One of the testimonies I received about Najeeb Abdulsalam is thus:

“I can proudly say that I was part of the overwhelming success he recorded during his 3 months+ long tenure at the agency. A friend and a business associate of mine financed the supply of spare parts and supervised the repairs of 37 number buses of the agency. The repairs are almost concluded with about 5 more buses to go out of the Lot. I managed the whole transaction on behalf of my friend. If merit was a yardstick for appointment into public office, Najib would have received a merit award instead of having himself unceremoniously sacked from office by the HMoFCT Bar. Nyesom Wike”.

Another one says: “Individuals like this should be fished out by the leadership of Government and celebrated to serve as an encouragement for others to perform well, Najeeb is highly disciplined and upright individual that I know, being a former Local Government Chairman twice”.

If the society sees traits like integrity, honesty, courage, loyalty and fortitude as the virtues of good behavior or character, then people like Najeeb Abdulsalam should be among the cardinals of the system. Three out of the 8 point agenda of President Tinubu are, Job creation, Adherence to the rule of law and the Fight against corruption. With people like Najeeb Abdulsalam at work, I see Asiwaju’s ambition as a fait accompli.

The Abuja Urban Mass Transport Company Limited (AUMTCO), where Najeeb Abdulsalam was heading up till last week, was established by the then Ministry of Federal Capital Territory, which had a change of name to the Federal Capital Territory Administration (FCTA) in 1984, as Abuja Bus Service (ABS). It later mutated to Abuja Urban Mass Transport Company Limited, AUMTC. The ambition is to implement an environmentally friendly and sustainable Urban public transport system in the FCT, for effective, comfortable, safe, regular, efficient and affordable transport service delivery. The company has had a sizable turnover of chief executives, who served for years at various times, but according to insiders, non came near Najeeb Abdulsalam in performance. And he was only there for three months.

On his first day in office as the Minister of the FCT, Bars. Nyesom Wike promised to restore the national capital’s master plan by cleaning up the metropolis, instilling orderliness and ensuring infrastructural reforms, which were destroyed by decades of corruption, incompetence, carelessness and impunity. If the Minister is serious about matching words with action, people like Najeeb Abdulsalam should not be removed from the saddle.

Najeeb’s antecedents have given Kano state additional magnificence, especially when put alongside the recent story of Auwalu Salisu, the 22-year-old commercial tricycle operator in Kano, who returned the sum of N15 million, forgotten by a Chadian commuter in his tricycle.

The Minister of State in the FCT, Mariya Mahmoud Bunkure is an indigene of Kano. She must rise up to the challenge, by waking up to smell the coffee. The country needs people with integrity to manage it. And in Najeeb Abdulsalam, I see a glimpse of such noble-mindedness.

Opinion

Kano State Education In 100 Days-Muazzam

Published

3 days ago

September 28, 2023

Nigerian Tracker

Governor Abba Kabir Yusuf

Let me begin by refreshing our memory with the popular saying of the African Independence Revolutionary Nelson Mandela who said, “Education is the most powerful weapon which you can use to change the world.” This is a clear testimony that any nation which wants to progress and have an independent life must make education its priority in governance.

This important reason is what led Engr. Rabiu Musa Kwankaso’s Administration in the years 1999-2003 and 2011-2015 to introduce a primary school pupil feeding program, providing them with free uniforms, canceling school fees, introducing the payment of SSCE fees to Secondary School Students, establishing State Universities, and offering overseas scholarships to outstanding indigent students to study in different disciplines. Today, many of these students have recorded tremendous achievements and are contributing their best to the state, Nigeria, and overseas.

His Excellency Engr. Abba Kabir Yusuf promised during his campaigns that he would continue from where his Leader Engr. Rabiu Musa Kwankwaso left off. Education was made a priority in his blueprint, being the first, second, and third agenda items. This was stated by H.E Engr. Rabiu Musa Kwankwaso several times and was reiterated in the RMK 2023 Blueprint, page 3: “Education is a public good, we shall ensure, through the correct reforms and investment, that all our schools provide the appropriate quality education to our citizens…”

The first assignment of Engr. Abba Kabir on education was in primary education. He conducted a special investigation on AGILE, a program that supports girls’ child education. He selected 19 LGAs for the program and disbursed the sum of N917 million to benefit 45,850 female students. Unfortunately, this World Bank-supported project didn’t receive the required attention and results until now. One may inquire from 23/6/2023, when the program was launched until today, about how many female children are enrolled in school, especially in rural communitiesThe results would be certainly amazing.

Secondary school students in Kano State are in joyful moments after the Executive Governor of Kano State paid their NECO fees. The previous APC administration had abandoned the examination fees of 55,000 students, but they turned a deaf ear towards the end of their administration. To save the students from this quagmire, the Kano State Government ordered the release of N1 billion to ensure they were eligible for the examination. It might interest you to know that 11 boarding schools were abandoned in the past administration, and N79,284,538 million was released for their renovation and reopening during the 5th State Executive Council.

On 23/8/2023, the Executive Governor of Kano State, Engr. Abba Kabir Yusuf, approved the payment of N700 million to 7000 Kano indigent students at Bayero University, Kano. He also approved the renovation of pedestrian bridges at Bayero University, Kano, Sa’adatu Rimi University, Kano, and Aminu Kano College of Islamic and Legal Studies, Kano, which were abandoned since 2015. We have another great effort where 131 Kano indigent students have been approved to travel overseas for a Master’s Scholarship Program sponsored by the Kano State Government.

This is a clear indication that the Education Sector has been made a priority in the first 100 days under the Leadership of the NNPP in Kano State. During the past APC administration, releasing funds for the Education Sector to cater to its immediate needs was not easy. They were more inclined to demolish school structures to transform them into shops, plazas, event centers, or recreational facilities. This behavior drove donor agencies and organizations to neighboring states like Katsina and Jigawa State to fulfill their charitable gestures.

We have reason to thank the Almighty Allah for these wonderful and generous gestures. We believe and hope that the first year of H.E Abba Kabir Yusuf’s administration will bring back the lost glories in the education sector in Kano State, Northern Nigeria, and the country at large, In Shaa Allah (God willing).

Ibrahim Mu’azzam Senator SSA Public Affairs to the Kano State Governor

Opinion

(Opinion)ON, NAJA’ATU & KPEROOGI: THE ILLOGICALITY OF THEIR LOGIC

Published

4 days ago

September 28, 2023

Nigerian Tracker

In my piece of August 23rd, 2023 titled “Blackmail Against Judiciary and Threat to Kano’s Security”, I brought to the fore the position of Kano State Governor, Abba Kabir Yusuf, owing to comments on Radio made by his Broadcast Media Aide, Abdullahi tanko Galadanchi. From those comments, the Governor counted on nothing to achieve victory, other than bribing the Honourable Judges of the Tribunal. This position was further affirmed by a leaked audio attributed to a Political Mobilization Aide for Kano South, who advised the Secretary to the State Government to ensure that all funds are channelled to procuring favourable judgement, even if to the detriment of the state, he emphasised. The Secretary to the State Government also, in his speech to mark 100 days of the government in office, attributed the administration’s failure to fulfil some of its promises to paucity of funds caused by enormous expenditure related to the proceedings of the Election Petition. Summarily, the administration has in its dwarfed wisdom, stylishly legitimised efforts to procure judgement through emotional blackmail, all of these came on the back of threats to lives of Tribunal Judges, and threats of making Kano a field of cultivation of lifeless bodies through anarchy and banditry.The administration of Abba Kabir Yusuf is indeed always clever by half; I predicted the ouster of some appointees that outwardly made heated, inciting or compromising statements, however in its narrow foresight, the government sacked only two out of numerous appointees that danced to an obviously authorised drum and song. We saw the Secretary to the State Government on video, accompanied by some Commissioners, threatening fire and brimstone, saying unambiguously in Hausa that “duk wanda ya taba mana zabe a Kano, sai dai uwarsa ta haifi wani”. This is the worst form of debasement that government has ever been brought to in the history of Kano State. The most senior appointed official of government threatening lives of Honourable Judges is indeed worrisome to every sane mind. Of course, tens of appointees followed suit thereafter, expressing intentions to wreck unprecedented havoc in the event of an unfavourable judgement, one after the other, we listened as they clawed at imaginary straws and have continued to sank even lower into abyss. In the case of self-acclaimed rufflers of feathers, Kperoogi and Naja’atu, it is funny that they missed the threats to lives of Honourable Judges and did not pay attention to government officials threats to make Kano worse than a banditry-torn Zamfara and Katsina; rather they only found their sense and logic in seeking a court to defend the indefensible and become father Christmas by granting Abba and NNPP that which they did not ask of the Court. Their illogical logic did not cause them to realise that APC in its petition raised numerous issues around non-compliance, and the NNPP even after its poor defence (due mainly to its complicity in the matter), failed to file any counter against the APC to cause us to have to defend the lawfulness of our votes. Yet, Kperoogi and Naja’atu believe that the court should have fed Abba & NNPP in their mouths, since Kwankwaso has made that a birth-right of theirs. In her comments, Naja’atu also exclaimed that if elections were to hold in Kano today, Abba would win by a landslide; this same woman not too long ago said the same of Atiku Abubakar, and we all recall how badly he was trounced in her home state of Kano.One would imagine that Kwankwaso, Abba & NNPP would have learnt a lesson or two from the irreparable damage the recent loss in court has caused them. Unfortunately, Abba through his mouthpiece, Bature, has come out to claim that the Honourable Judges might have been made to give judgement under duress. This speaks volumes of the failure of the Abba administration to see what is placed right before them, right in front of their noses. The Honourable Judges in their submissions have outrightly made clear the reasons why they chose to pronounce judgement via zoom, and it is the fault of none but those who demonstrated an uncultured, recalcitrant and violent tendency by threatening lives of judges and peace of the entire state, in the event of a loss. Let me do Abba and Bature a favour of asking them to read page 226 of the judgement, and frankly undertake an introspection exercise before engaging the public on such a matter again. Since I know you both may still be in slow recovery from the reality check dished by the Tribunal, I will assist you with some of the painfully piercing lines; “I use this opportunity to condemn the gang of Red Cap wearers… I am in no doubt that the security Agencies know and are aware of those who removed their eyes from their case and put it on the Judiciary. They are also aware of those who extended the threat further by declaring that THEY WILL KILL THE JUDGES. THIS THREAT MUST NOT BE SWEPT UNDE