Nigeria must treat local investments as national assets and protect them from unfair competition — Dangote

Dangote Group Chairman, Aliko Dangote, has called on the government to come up with policies that prioritise domestic industries and ensure their prosperity in the face of unfair competition.

The prominent entrepreneur told a gathering of manufacturers and investors in Abuja on Tuesday, while addressing a panel discussion on ‘Rethinking Manufacturing in Nigeria’ as a keynote speaker at the Nigerian Manufacturers Summit, that Nigeria has what it takes to be prosperous.

Dangote stressed that industrial or manufacturing entities are not like commercial entities while expressing his belief that the fundamental role and responsibility of government should be not only to promote investments and attract investors into the manufacturing sector but also to ensure that such investments are nurtured and protected to facilitate growth and sustainability.

“In all economic regimes, including the most advanced, manufacturing and industrial investment projects need time and an enabling environment to mature, build capacity and evolve, in order to become competitive with those in older, more mature markets.

“But since the mid-1980s, non-industrial countries and their leaders have been discouraged from protecting and supporting these investments and forced to expose them to unfair competition from stronger, older competitors in their own domestic markets, even before the new entrants are recruited. Yet these same older, larger players enjoy significant support in their domestic markets,” he said.

The businessman cited several examples of government intervention to protect industries: the blocked sale of American steel to Japanese company Nippon Steel, the blocked sale of six American port management companies to Dubai Ports World, restrictions on Chinese cranes in American ports and the imposition by the United States of customs tariffs such as 100% on Chinese electric vehicles, 50% on semiconductors, medical products and solar panels.

He also cited the restriction of Russian gas supplies to Europe, which has led European countries to increase their use of coal despite opposition to fossil fuels, and the U.S. government’s distribution of $39 billion in subsidies to encourage local production of microchips.

Dangote stressed that Asia had achieved significant levels of industrialization through industrial policies in which the government played an active role in encouraging and supporting local businesses. Countries then leveraged this success to attract foreign direct investment (FDI) into free zones.

He stressed that government protection of industry is not limited to short- and medium-term regulatory mechanisms, such as tax exemptions and other incentives, which have their place in industrial policy and should be applied where necessary to mitigate investment challenges.

“I am concerned about a long-term policy framework that ensures that investors can invest with the knowledge that the industry will in the long run be seen as a national asset and not just an investor asset, so that when it is threatened, either by external forces or changes in the environment beyond the control of individual operators, the government will take appropriate measures to protect investors and help them survive the threat. Almost every country has done this in response to the COVID threat. Those in the pharmaceutical industry may remember how India protected and supported its pharmaceutical industry,” he said, while noting that had such a policy been adopted in the past, Nigeria would have fostered a thriving textile and tyre industry as well as functional refineries.

“If we had adopted such a policy and government attitude towards the textile industry and the tyre industry in the 1980s and early 1990s, perhaps our economy would still be benefiting from the job creation capabilities of those industries today. Or if we had adopted that attitude towards our refining industry, Nigerians would not be too worried about the Dangote refinery today,” he said.

Challenging claims that protecting domestic industries would lead to a decline in competitiveness, Dangote argued otherwise, citing examples such as China, Korea, India and several other Asian countries. He stressed that these countries have managed to become robust economies and posed a challenge to the established global economic order precisely because they protected their industries.

He noted that in the past, Nigeria was not competitive in cement production, producing less than 2 million tonnes of cement per year until 2007. He stressed that through strategic policies and government support, Nigeria has since become the largest cement producer and exporter in Africa, ranking among the top 10 in the world in terms of competitiveness.

Dangote noted that in 2023, Dangote Cement alone contributed more tax revenue to the government than the entire banking sector. “In the past, Nigeria was not competitive in cement production. Up until 2007, Nigeria produced less than 2 million tonnes of cement per year. Today, we have about 60 million tonnes of production capacity and another 9 million under construction. The foundation for this success story was laid by an administration that decided to provide full support and protection to the Nigerian cement industry. Today, we are among the top 10 most competitive cement producers in the world and the largest cement producer and exporter in Africa. In 2023, Dangote Cement alone contributed more tax revenue to the government than the entire banking sector,” he said.

Dangote also refuted allegations that protecting industries would lead to monopoly, saying it is common knowledge that foreign investors only come when they see that local investors are also doing well.

“I am confident that as government policy becomes more supportive and protective, investors will be more willing to collaborate and partner with the government to address other challenges such as infrastructure deficits, market instabilities and macroeconomic issues such as inflation and currency volatility,” he added.

Reiterating that Nigeria has all it takes to develop and sustain a globally competitive manufacturing sector, Dangote called for a rethink of its industrialization policy, taking cues from leading countries in the West and East that are actively protecting their domestic industries.