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Me, Obasanjo and Nigeria
By JACOB EDI, Abuja
Saturday, July 07, 2007
•Dangote
Photo By: Sun Publishing
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“The price Nigerians are paying for fuel and diesel is
high because they are paying the price of inefficiency
and corruption within NNPC,” Dangote says.
“They (NNPC) are not efficient. If they are efficient,
then they should produce like India. We are paying for
the inefficiency and corruption. There is corruption
in the industry. It is a known thing.”
The Dangote story, which starts today, is part of the
new focus of The Sun, the Voice of the Nation, a
newspaper group that is moving to a higher plane as
the centre of national discourse on business,
political and social issues.
And, if there is one person whose meteoric forays into
the commanding heights of the nation’s business and at
times, political sectors, are stirring a national
controversy, it is the shrewd corporate mogul, Aliko
Dangote.
To some, he is the voice of business, the leader of
the business community and the epitome of the Nigerian
Dream. But to others and especially his ardent army of
rivals and critics, he is profiting from an
unconscionable political cronyism and simply buying up
the nation’s economic legacies at give-away prices.
His case is made worse by the fact that he is an
unapologetic friend of one of Nigeria’s most disliked
political leaders, former President Olusegun Obasanjo.
In this interview, Dangote opened up not only on the
secrets of his dizzying multi-billion dollar business
successes, he also gave insight into what binds him to
the former President Olusegun Obasanjo.
Being No.1
My story is the story of a man and a brand Nigerians
have come to know, to love and to accept. Nigerians
are investing in us because they believe in us, they
believe in the name Dangote. Apart from believing in
us, we have a track record which we have actually
shown. If you look at all our factories, they have
grown steady and gradually to where we are today. In
all modesty, we can say we have done very well. There
is no business that we are in and we are not No.1. The
worse one that we have, maybe we have a second
position. That in itself is our business strategy. We
aim to dominate our market, to lead in every market
segment. They have all been run efficiently and
professionally by people who really know the business
very well. We have a very good brand name and that is
part of what many people are actually investing in.
They are not really investing in Aliko Dangote only.
They are investing in the Dangote brand. They believe
in my own business acumen but it is not the only thing
that people are investing in. They are investing in
the Dangote brand. Right from the beginning of our
business, we have always been very conscious about
what we give to the consumers. Because once you start
on a wrong footing, that’s it. You’ve missed it. It’s
almost impossible to go back and convince people.
It hasn’t been easy attaining No.1. We haven’t always
started as No.1. Often, we start as a challenger,
taking on a dominant player. Take the case where in
year 2000 we started to enter a market where some
people have been there 40 years before us. And we
still went into the market and we fought our way in to
become No.2. And we are on the verge of getting to
No.1. The product is flour. We fought our way up into
that market using the power of the Dangote brand and
offering quality. Quality customer service and also
the capacity. Because if you don’t have capacity, even
when your market is good, you can’t do much. To meet
capacity, we invested heavily. Apart from investing
heavily, we made sure that our quality is good and
consistent with the former quality when we used to
import flour.
We used to be basically just importers. We were just
importing and then we would market the goods and sell.
In the beginning, we sold cement. Today, we
manufacture cement. Today the best cement in
Nigeria—you can go and take the samples and check—is
coming from our one billion dollar factory at Obajana.
And what we have there is 97 percent local raw
materials. The only thing we lack is the gypsum. Even
this, we buy some of it from Gombe area which we mix
with the foreign ones. But everything is there in one
location. And it is the best cement compared to the
one we are importing from Taiwan, Europe and China.
The real cost in cement is the mining and the power.
Power is a major cost. That is why the profit of a
plant up North and the one down here is not the same.
Because you need a lot of power up North in places
like Ashaka. Ashaka and our own in Obajana is not the
same cost. Even by economies of scale, when you look
at staff strength of Ashaka, the staff strength of
Ashaka is about two-and-half to three times more than
the one we have in Obajana. Even though they produce
750,000 tons and we produce 5million tons. So you can
see the big difference there. Because we have a very
highly automated and most modern factory anywhere. If
you look at our chimney, you would not see anything.
No smoke belching out and polluting the environment.
Nothing. You can eat under the machine. That is how
environmentally friendly we practise. You don’t even
hear the noise. You would think that the factory is
off, but we are producing. You only see the cement
out.
There is nothing extraordinary or mysterious about me.
It’s just that we are very, very shrewd
business-oriented company. Even though I am the CEO,
it’s a collective business. I am not the only one that
really runs the company. There are other good brains,
there are other good brains. Because if I don’t have
the good support, I can be the most entrepreneurial
and talented person but I won’t be able to get to
where we are today. Going forward, we have achieved so
much and I believe in the next three years, by the
time most of the projects stand on ground, we would be
the biggest company in Africa.
Government and I
There is no one in the world who would have
investments and be fighting government. It doesn’t
matter where you are, whether you are in Russia,
whether you are in UK, whether you are in America. You
would not have investments and say, fine, my No.1
enemy is government. Do people who accuse me of being
close to the government of Obasanjo expect me to say
my No.1 enemy is government? It is not possible. There
is no business that has no link with politics. None.
And I challenge anybody to contradict me. Because you
either say to a government in power, “ok, fine I am
for you.” Or “I am against you.” And obviously, a
right thinking business person would say, I am for
you. If you need both the government and the people of
the country, that is what you would do. That is where
the issue of corporate governance and social
responsibility comes in. You are not going to fold
your arms, because you are operating within the
environment. If you are operating within the
environment, why do you want to make the government
your enemy?
As an entrepreneur, you have to always try to advise
the government. You have to tell them that yes, this
is right, this is wrong.
In the modern world, the government does not really
run the economy. It is the private sector that runs
the economy. But there must be a good partnership
between the government and the private sector. If the
private sector and the government are at variance,
then the economy would not move forward. But they need
this cordial relationship to be able to move the
economy forward. And that’s just where we are as a
bridge. If I have this business and I now take a
ministerial appointment, then it is totally a
different ball game. It is not a question of boasting,
our business is real. Real in the sense that yes, we
have cement business for example. The cement business
that we have, every single government that comes in,
we would be friendly with them, because we are
government-friendly. That is No.1. And I believe each
and every company is government-friendly. Let Jim Ovia
go and be the enemy of government and you would see
where Zenith Bank would go. Or UBA. Or First Bank.
Even as conservative as First Bank, let them say they
don’t have anything to do with government and that
they are on their own. Let them be coming out to say
things against the government. And they would reap the
consequence.
Obasanjo and I
Former President Obasanjo and I became closer because
his government is purely for people who would add
value to the economy. If I wasn’t adding value to the
economy, I can assure you that I wouldn’t be as
friendly as I am with Obasanjo. Eighty-five percent of
my relationship with Obasanjo has to do with the
economy of the country. Even when we sit down,
eight-five percent of the time is spent discussing the
economy. How do we move the economy forward? And I
think I have to be really grateful. Let me share my
experience on cement, for example. But for Obasanjo’s
encouragement and push, there is no way Obajana would
have been possible at all. It was his push that made
the difference. I would have made more money importing
cement, because I know my cost, I would pass my cost
on to the consumers. And today, freight rates from
Asia are so high that it is unbelievable. People would
have been paying more than N2,000 per bag for cement,
if we were importing.
Right now, I am at the point of going to have a
meeting with the governor of Ogun State, because we
are going to do twice what we have done in Obajana in
Ogun State, in Sagamu and Igbese. We are actually
going to sign the contract this month, and the
contractor would move to the sites and mobilise the
sites within a period of 90 days. We have had this
project for a while, but now we are doing even four
times what we intended to do before.
Still on Obasanjo, let me tell you something. We have
never, ever done business with anybody in the
government. I don’t like to boast, but let me tell you
something. I was born into money. Both my fathers—from
my mother’s side and also from my father’s side—they
have always had money. So, it’s not that I just came
and picked up something from this thing. But it does
not mean also in the family that everybody would be
rich. I don’t know any of my family member—both from
my mother’s side and my father’s side—that has ever
had a deal with anybody in the government. It is not
only Obasanjo. Even in the society, we don’t have
partners.
For the new cement projects in Ogun State, we are
targeting 10 million tons there. Now the cost of
everything has gone up, even abroad. Cost of
construction has gone up, equipment has gone up by 40
percent, but we think with our experience now from
Obajana, we would do it at about the same cost. So in
Ogun State, we would be investing about $2 billion and
then we would have another $850million also to invest
in Obajana. Because there are some areas like power
where we have excess, like housing, we would just put
a little bit more, the gas pipeline, we are not doing
anymore. So we would spend about $850million to get
10million tons. And our target is to get to 23million
tons as Dangote Group alone, and other people would
have the remaining 5million tons or so. We are going
to put down about 30 to 35 percent of the money. We
would now borrow the remaining 70 percent. We would
borrow mainly from International Finance Corporation
(IFC) which is part of World Bank, we would borrow
also from European Investment Bank (EIB) and we are
also approaching some foreign banks and also the local
banks. So collectively, we would spend that much
amount of money between now and 2010. And mind you, we
have businesses we are running and these businesses
are not small businesses. They are big businesses. And
part of it, we would be able to pay on our own. In the
cement sector, out of the $2.85billion that we have, I
think our own contribution is about $840million which
is about 30 percent. Within our operations we have
that much money to put down for the construction. And
you know it’s over a period of three years. And over
period of three years, our business is generating good
profit and good dividend also. We believe we have the
money and we are going to go ahead with it.
Why I am into giant projects
The challenges of this gigantic projects and its huge
cost running to billions of dollars don’t scare me.
The reason is, if we don’t do it, nobody would come
and do it for us here in Nigeria. Let me explain why
we are investing heavily like this, especially in one
sector, which is cement. As a Nigerian, I want to make
sure that people, wherever you live, unless it is an
awkward and obscure area of the country, I want to see
people buying cement not more than N1,000 per bag. If
I say N1,000 per bag, it means the transportation, the
profitability and whatever people have to make out of,
I shouldn’t sell my cement at not more than N800. I
also want to break that jinx of people saying once
something is up, it would never come down. I think,
with the programme that we have, by 2010, people
should be paying for cement the price they paid in the
year 2000. Some people say, all we do is to re-bag
cement and not manufacture. I laugh.
What I want people to do is to take a trip to Obajana
where daily 300 trucks come out of the factory loaded
with cement. Let the critics come and they would see
that we don’t have the cement coming in, but cement
come out daily. It doesn’t make any commercial sense
for somebody to carry cement dusts and go and pack
them in Obajana. Our quarry is there for people to see
the things we are bringing from the ground. Once you
see that, then you know we are adding value. Obajana
alone is going to save the nation today half a billion
dollars. Maybe today, it doesn’t mean much but
tomorrow if oil drops to $40, then factories like
Obajana are the things that would save Nigeria.
Because, whether we have the oil or we don’t have it,
we must import cement to provide shelter. And cement
is a key product that government must actually give.
Number two: If they say we are bagging sugar, then the
person should pay a visit to our factory in Apapa and
see what kind of sugar we bring in. What we bring in
is raw sugar which is not fit for human consumption.
And we are not the only one that have refineries all
over the world. There are refineries all over the
world and there are two different markets. When you
look at the screen of sugar, there is London No.5,
which is for white sugar and there is New York No.11
which is raw sugar. So raw sugar is different and
white sugar is different. And that is what people
don’t really understand. We get raw sugar, we refine,
and not just refine, we separate sugar and molasses.
If today, you come to our sugar company, you will
discover the business is not just about selling sugar,
it is also about selling molasses. We also have a
byproduct which is also good for the farm. That is the
only product we don’t have much market for.
Sugar story getting sweeter
Today, if we are only bringing sugar to re-bag, why
can’t I go and re-bag in Ghana? Today, I am doubling
my sugar factory to be able to export. Why? Because
European Union has lost the case with the World Trade
Organisation (WTO) that they are taking sugar and
dumping in most of these other countries. And the case
was taken by Brazil and Thailand, and they won the
case. The EU went on appeal and they lost the appeal.
After they lost the appeal, now they were given a
time. That is fine, you cannot export anymore, you are
exporting today, 7.23million tons, henceforth, which
is from the end of 2006, they can only export
1.23million. Which means there is a gap of 6million
tons. This gap of 6million tons is what has now made
us to double our refinery here and capture at least
the African market. This gap is all over the world,
but it is mainly Africa and some Asian countries. The
EU have their main market in Africa, north Africa and
here in Nigeria. We are importing a lot of sugar. The
gap we have within sub-Saharan Africa alone is going
to be about 2million tons. So that is why we are
expanding. We are not fools. It is the main reason why
we are investing heavily to now take our factory to
the biggest in the history of the world, which is
2.5billion tons capacity in one single location.
The West can’t sabotage me because they have been
asked to close down and they are closing their
refineries. Since they are closing down their
refineries, who is going to do the export? We would
not be in that competitive market with them. There is
no competition between us anymore. If we are going to
compete, then it is different. They have converted
most of their farms to something else. But that is
also on another issue all together. Going forward,
there is a shortage of refining capacity. It is like
oil. It is the shortage of that refining capacity that
has been pushing also the price, because of demand.
Demand is there. But for the last 20, 30 years, people
have not been investing in refineries. It’s the same
identical thing we have with sugar. Raw sugar, when
you look at it, it’s cheaper, but the refining
capacity is not there.
People think we are local
People think we only operate in Nigeria. People think
we are just a local, small company. The problem with
Nigerians is that, No.1 we are not noisemakers.
Because of the nature of Nigeria, we try to be as
quiet as possible. We are not loud. And where I come
from, we are not taught to be loud. We are taught to
be just as simple as possible. We shouldn’t blow our
own trumpet. We should allow other people to blow our
trumpet. A footballer doesn’t come out and say I am
good. You go into the field and prove yourself. When
people see what you are doing, then they hail you.
Then they say: “This guy is good.” We don’t go about
shouting on rooftops that we are good. You don’t
market yourself to some extent. You let others do the
marketing. And that’s how we are. People really don’t
understand us, they don’t know where we are heading,
but we are adding a lot of value. We can see the
agitation sometimes of people who wonder over Dangote
this, Dangote that, but people forget that we have
been working for 28 years. Continuously. We have not
relented in the things that we started. Right from the
beginning when we started, we have been working hard.
We know our target, we know where we want to get to.
And if we don’t do it, Nigerians would not participate
in our own economy.
Right now, we are having a discussion with a family in
India to buy over their cement plant. This cement
plant is more than twice that of Obajana. And
hopefully we would succeed in doing that. People
really don’t understand. Once you get to a certain
level, raising money is not going to be difficult for
you. And that is the stage that we are in now. If you
hear we are doing a $4billion project, somebody would
say: Where are you going to get the money from being a
Nigerian? Yes, we would get the money. It is not
hundred percent my own money. The banks believe in my
brain, they believe in my capacity and ability of
doing things and they would come along. When they see
the plan, they would ask: Do you have your 20 or 30
percent? I said yes, I have it. And they give it to
you. And it’s done. They need me also, because without
a good entrepreneur all the money that the banks would
have would become stale. They won’t need the money.
They just don’t give you their money. They have to see
that it’s going to have very good returns. The guy who
is presenting this project knows exactly what he is
talking about. When we presented Obajana cement
project, some of the banks asked: Will this be
possible? Will this concept work? For an entrepreneur,
everything starts from a dream which we turn into
reality.
Lending to the poor
Banks have a critical role to play in any economy.
They serve as mediators in any business transaction.
They assist entrepreneurs with capital. Nigerian banks
have been helping entrepreneurs. I can testify to
that. But one area I am not happy with is the area of
micro-credit—which is borrowing to the poor. The level
we now need to change which is not part of their job
is this micro-credit. Because they don’t have the
expertise and the capacity to manage micro-credit. We
need totally a new, different team to manage
micro-credit which can help the economy a great deal.
Somebody who is in the village, if you give him
N50,000, it would transform his life. And micro-credit
is never really a cheap thing. But it would give you
an opportunity of life to have a capital. If you give
somebody in your village N50,000, he would create
something with it. Nigerians are not lazy naturally.
They are very, very creative, but they don’t have
access to that money. Today, I am talking of big
money. If you had visited me four years ago, I won’t
be talking about this kind of big projects that I am
talking about. Unless you participate, you can’t grow
the economy. And the big difference is that we as
Dangote Group, we have not hidden our money abroad and
just come home and ‘sit down and look.’ We are
properly participating. We don’t expect to carry
everybody along as friends. Definitely you would have
good friends as well as good army of enemies. They
would keep shouting, but their shouting would not
really stop of us from what we are doing.
People have asked why I don’t own a bank like some
wealthy Nigerians who own banks as an extension of
their business, and my answer is that I am not a
professional banker. It is not my core business. My
core business is actually to run industries. I am an
entrepreneur, not a banker. As an entrepreneur you are
better off running your own business than running a
bank. Banking should be for professional bankers. I am
an entrepreneur searching for business opportunities.
What I look for in a business is the viability of the
project and also the population. And then I do my
numbers. I won’t reveal the full secrets but these are
a few of the things that I look for.
Even your enemy can buy
From the start, I have always believed in minding my
own business and not involving myself in business
partnership. Why don’t I like partnership,
particularly in Nigeria? I can tell you
authoritatively that the easiest way to fight is to
have a joint business. Nigerians don’t really
understand partnership. I don’t want somebody now,
when I have partnership with you, your wife would
start telling you: “Aliko has bought a brand new jet.
Are you sure he is not cheating you in your business?”
Because it has happened. You can go privately and ask
some of these bankers. They have put money together
and have created a bank. Ask them: Have you ever had
issues with your partners? They would tell you yes, if
they are sincere. We have overcome this phobia, by
doing our own form of partnership—which is going
public. That is why we have started sharing with
people by going public. And when you go public, even
your own enemy can come and buy shares in your own
company. Nothing stops him from buying shares from
your company. For me, the only exception is the Blue
Star Consortium we formed with friends. In the Blue
Star Consortium, yes we are the majority owners, so we
lead the rest of the team that have trust in us.
That’s what it is. And we are going to create value.
We have created value today in a cement company like
Benue. We have created value in NASCON. We have
created a lot of millionaires in Dangote Sugar. We
have now over 120,000 shareholders. We decided to go
public so that we can actually share the goodies with
the rest of the population. The idea of going public
is also to allow the company to grow. If it is a
question of looking for cheap funds, we would have
approached the banks. Capital market is ultimately
more expensive than loan. When a shareholder puts down
his money, it is more expensive. It is better for you
to go and borrow than for you to raise money through
the capital market. Because, people would be on your
neck. If it is a question of money, then it is better
for me to borrow. All the profits and the dividends
that I am giving away, I would have taken hundred
percent of it without me going to Tinubu Square to
wash my underwear and hang it. Because today, being a
public company, you have to be as open as possible.
Whatever it is, you have to show people that this is
it. Nevertheless, we are going to continue to bring in
the public, we are going to make sure that Nigerians
share from my vision and from the money that we are
making. At the current level, we have not actually
started anything. I can assure you that we have other
companies that would be more profitable by far than
our sugar. As at today, by the grace of God, when you
look at the end of the year, when we have our full
results in sugar, I can guarantee you that our sugar
would be the most profitable company in the country.
Managing the Dangote companies
My companies all operate as separate entities. They
are all on their own. Each company has a board and
their own management. They are all linked to this head
office. What we do here at the head office is to
monitor what they are doing. We have the
responsibility of making sure they perform. Each
company has its own budget and we hold them on to
their budget. There are some things that we have
shared services. Things like legal, human resources,
corporate branding. These are what we have in common.
For example, a company like Obajana which is a billion
dollar investment, since the day we went for the
opening, I have not been there. I haven’t gone back
there. But it is operating, it is giving people their
cement, they are selling and we are counting our money
every day. So I don’t need to be there. But we are
looking at what they are doing. And in areas where
they are going off course, we are pushing them back to
make sure they operate according to the rules and the
regulations. As we grow and move forward, I am putting
up things outside Nigeria. We plan to have a CEO who
would look after the worldwide business, so that
Nigeria would become a branch of the Dangote
multinational company. Right now, we are in the market
looking for a global CEO who would look after Nigeria,
look after Ghana, look after Tanzania, look after
Morocco. And those CEOs of the different countries
will be at par with the CEO of Obajana while they have
a boss. They report to their boss. And the boss has a
board and I would be the chairman of the board.
The global CEO I am looking for need not come from a
cement industry background—though that would be an
advantage. You might come from oil industry, depending
on what you have done. Then we would look at it and
how many years of experience that you have. But then,
we are not doing it on our own. We have an agency
assisting us. And we are also doing headhunting. We
are still talking to some people from the three big
cement companies in the world. So that they would
bring their experience and expertise into our own
system. I do sometimes involve myself in recruitment.
It depends on the position. On the position like the
CEO, after they have made their final list of about
three to four people, then I would get involved to
talk to the person. Because he would also ask me: what
is my vision? What do I want to achieve? He would have
questions for me just as I would have questions for
him. He would interview me and I would interview him.
That is what I expect.
Motivation is critical to the success of every
business. We give performance bonus. And since we are
going public, the staff members would also become
shareholders. And the good thing about making members
of your staff shareholders is that if there is any
connivance or fraud, once the workers realize that
they are also stakeholders, they would blow the
whistle faster, than keeping quiet. Corruption is
something that you keep fighting on a continuous
basis. I am not saying that we don’t have that problem
in the company. We do. All the time you have people
who are always trying to be smart in the company, but
I think going forward, it is the processes that would
help you. Once you have good processes within your own
system, processes of doing the
business—computerization and how things are done and
stages of process—it would minimize those things. But
whether you can eliminate it is almost impossible. It
is true, there is a high degree of fraud in Nigeria,
but one of the things that bothers me more is that
some Nigerians—I am not talking about my company
now—when you invite them to run your business, their
intention is totally different. Even when you ask
someone to write down his own salary and he says
$10million, even when you give him the $10million, he
would use the left hand to collect it and be busy with
the right hand stealing money somewhere. We are very
lucky really. Our top management is extremely good. We
are expanding also at the same time, so that is why we
are very careful of how we employ people. I think,
going forward also, it would reduce these things,
because they too would become stakeholders. I could
give you shares worth N5million which in the next five
years would translate into N100million. Once you look
at the value of these shares of yours, it would not
push you to do things that are not according to the
rules of the game. Because, if I find out and I sack
you, you are going to lose the salary that is worth
more than five, six years of the value. I think,
having the managers to own part of the company is key
to stopping most of these things.
Our company is mixed with foreigners and Nigerians. We
are playing in a bigger field where we don’t have the
expertise to run these mega companies. You obviously
need some help from abroad in terms of expertise. It
is not a black box that has been locked somewhere. You
can really pay and get these top brains to come and
train the Nigerians. And when we train the Nigerians,
I think the way we are going, it would be difficult
for any good manager to leave our company, because he
also has a lot to lose. It’s like some of our staff
that now bought sugar shares. They have made a lot of
money. When we are going to do our cement in future,
we would have now a different scenario. We would have
share options. If I am selling my flour for ten naira,
as my staff member, I would give you at ten naira but
you would pay me in five years. But if you exit within
the five years, you lose the shares. These are the
kind of things that can actually hold somebody—as a
co-owner and co-partner. And not just an employee
without a stake.
As a company we have a management and marketing style.
Our style is very, very simple. It is low profile but
aggressive. We are very aggressive.
Separating men from boys
Managing a company in Nigeria is challenging. Nigeria
is the place to separate the men from the boys. It is
where you separate a good manager from a bad one.
People that are claiming that Nigeria is difficult,
there is no place that is not difficult. Every single
place is difficult. It depends to what degree.
Nigeria, yes, is difficult, but it is also a good
place to invest. You don’t really expect to just come
and play or wake up at 10 o’clock from your house,
come to the office and then close at 2. That’s not the
way to run a business. If the place is not difficult,
then we would have too many people trying to do the
same things. It is a place that I believe has the best
opportunities in the world. It might sound crazy, but
yes, the opportunities in Nigeria, they are extremely
good. They are there. And people can make good money
here in Nigeria. I know there are challenges, but if
you are not a good manager, then you would look for
areas where there are no challenges. Like now, you
would say there is power in Switzerland, everything is
there for you. No armed robbers. Nothing. But how much
profit can you make in Switzerland? How much profit
can you make in Switzerland?
Vision
I am envisioning a company that I think is going to be
the largest manufacturing company in Africa. And we
thought we were going to achieve this in the next ten
years. But now, I think we would achieve that by 2010.
We would be a company that I think would have at least
something like $15billion of turnover. And that is the
minimum acceptable to us. And that is what we would
achieve by the grace of God. It is the minimum we
would get by 2010. I know that people would think that
we are crazy but we would get there. When we started
shouting that we are going to be a very, very big
company soon, peop
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