~Tosin Adeoti

In 1838, Carl Knorr (1)recognized a problem with cooking in Germany. People wanted their soups to have certain flavours and would spend hours drying, grinding, boiling vegetables and other spices to add to their meals. So he created the Knorr brand. You recognize the name because you have used a Knorr seasoning cube before. Today, Knorr products are sold in nearly 90 countries around the globe (2).

To get to this level of patronage, the Knorr brand had to innovate and make the gains of simply using a seasoning cube more than the gains of making the seasonings by individuals. At this period, people had more time than money, so to make the purchase of these products attractive, Carl had to invest in creative methods to make the products as cheap as possible. Obviously, the innovation methods worked. In Nigeria today, you can get a cube of Knorr seasoning for as low as N20.

Why is this story important? Because people no longer understand what is meant when we say that while an imperfect system, the market system remains our most effective weapon in fighting poverty.

This correction is important in light of Dangote Group's tacit endorsement of the government's ban on rice importation(3). Calling attention to itself, Dangote says its farmlands in the country will enable Nigeria export rice.

Yet this is not the first time Dangote is supporting the ban of imported products. In the past he had asked for the ban of Tomato. But the peak for me was in the exclusive interview with Financial Times in July 2018(4). He said,

"Nigeria still imports vegetable oil, which makes no sense. Nigeria still imports 4.9m tonnes of wheat, which does not make sense. Nigeria still imports 97 or 98 per cent of the milk that we consume. The government needs to bring out a draconian policy to stop people importing milk, just like they did with cement."

Did your heart skip at the mention of cement? Well, mine did.

Of course it makes no sense to import what we can produce. So the question is, what is stopping us from producing instead of importing. Until those constraints are identified and dealt with, banning would mean making life more difficult for Nigeria.

And this has happened before.

THE CEMENT SAGA...

For some people, the production of cement within the shores of Nigeria is a thing of pride. They point out to a Nigerian producing for Nigerians as the highest form of patriotism. But policies should not be judged by the 'feel good' factor, rather they should be measured by their impact on the people.

It would be recalled that the Nigerian Government in its attempt to boost local production placed a ban on importation of cement in 2001. President Obasanjo seeing that the objectives were not being met lifted the ban in 2007, only for the ban to be placed back again.

Give or take, we have had 18 years to evaluate the impact of the ban. The overwhelming consensus is that Nigerians pay among the highest prices for cement in the world. A quick search on Konga (5) shows a 50kg bag of cement costs $7, while a 2016 World Bank report (6, Page 61) on competition in Africa reveals that the average global cement price is around $3.4. Almost two decades after, Nigerians pay double the global prices for the price of cement.

I hear you retort that it's the tough business environment that has made things, cement inclusive, so expensive. And that would be true for cement if the profit margin is not exorbitant. In 2017, a Bloomberg Intelligence report showed that the average global profit margin for cement companies was 17% (7). For Dangote Group, the profit margin was 42%. That's more than twice. I just checked the result for 2018 and the profit margin has shot up to 64% (.

If conditions are difficult, then the profit margin should shrink, not explode. It goes without saying that it's Nigerians who are paying through their nose when they could easily get the product for much lesser.

This World Bank report, on page 64, shows that Dangote has been granted exclusivity to materials, including limestone used to produce cement.

Nigerians don't understand that when they mention cement production in the country as a pointer to why banning things is good, they are indirectly encouraging a system of exploitation.

Every single time a Nigerian business man tells you Nigeria should ban importation of something without calling out the problems which necessitates importation of that product in the first place, know that they are thinking of enriching themselves at your expense.

THE COST OF EXPENSIVE CEMENT

This importation of cement comes at a price. Housing.

According to the Federal Mortgage Bank of Nigeria (FMBN) (9), Nigeria's present housing deficit in 2019 stands at 22 million. This year, the United Nations called Nigeria's housing crisis the worst in world (10).

If cement is a critical component in building, and the Nigerian market is dominated by Dangote Cement, which has about 70 percent of the market (11), then it is safe to say that Dangote contributes immensely to the housing crisis in Nigeria.

If 80% of Dangote Group's revenue comes from Dangote Cement (12) and Aliko Dangote owns 85% of Dangote Cement (13), then it shows that Aliko is to be fingered in the country's housing challenges.

HOW WE DON'T PRACTISE CAPITALISM

If there's anything capitalism is good for, it is reduction in prices of commodities and services. The richest capitalists in history got their wealth from mass production of goods for the masses. Henry Ford made a car so inexpensive that 3 months of wages became enough for Americans to get a brand new car. You must have seen the image of IBM 5MB hard drive costing $35,000 annually in 1956 (14). Thanks to capitalism and the crashing of prices, you would consider it useless if gifted in this age of cheap smartphones. Everyone involved in making that 5MB Hard drive obsolete became stupendously rich. Capitalism rewards value addition.

It is no longer capitalism when you manipulate a system or collude with the state so you can fleece people off without adding value. That's not capitalism. We have a name for it: Cronyism.

BUT THE CEMENT BAN CREATED JOBS...

But Dangote employs people, you say…

Yes, he does. According to the Company's 2018 Annual Report (15, Page 38), Dangote Cement has 17,447 direct employees. But I have always made the analogy of fuel scarcity to explain the irrationality of this argument. Hundreds of jobs across the country are created during periods of fuel scarcity. Several young men who would otherwise be sitting under the bridge are gainfully employed, moving jerrycans and easing the pains of car owners. So do you think it makes sense to protest for the government to make available regular fuel scarcity episodes?

Of course not. It's the same reason it makes no sense to praise the tens of thousands of jobs created by Dangote Cement cornering the market and making Nigerians pay through their nose when millions of jobs are waiting to be created by allowing geneuine competition in the cement industry and its attendant effect on the construction industry. Think of the businesses and employment waiting to be created if we are to bridge the 22 million housing deficit in Nigeria.

Our situation is dire. More than ever, we need entrepreneurs whose creative insights would unleash the potential in our economy. People like Dangote stand in the way of that.

A few days ago, I finished reading Duncan Clark's :"Alibaba: The House that Jack Ma Built" and just like Ratan Tata, Hugo Boss, Paul Getty and my favorite entrepreneur, John D. Rockefeller, the only way these ones got rich was by making otherwise expensive commodities cheap for the masses. This is the blueprint of capitalism.

If you ban wheat, milk or vegetable oil today, as being advised by Aliko Dangote, the price will simply get beyond the reach of the masses, just like it's happened to rice and cement.

WHY DOES BANNING WORK ELSEWHERE AND NOT IN NIGERIA?

First of all, you don't always need to ban to be competitive in the modern market. Nigeria banned fruit juice imports in 2002 and some analysts have pointed to the growth of the domestic juice production (16) as proof that banning works. However, there are two ways to judge this policy:

1. How competitive will the Nigerian fruit juice market be if we lift the ban today, 17 years later?
2. How strong is our exports?

On question 1, the Nigerian market will not be competitive. Remove the ban today and Nigerians will be attracted to the lesser prices of the foreign fruit juice products.
On question 2, we don't have a strong export market. In fact, Ghana which did not ban imports makes five times more than we do in exports (17).

In other words, the ban has not helped the country improve its domestic production, especially when you realize that while we have banned imported packaged fruit juice, we still import great amounts of juice concentrates (18). Companies import juice concentrates, mix it with water, bottle them up and transport them to the various markets in the country. We have mastered the art of deceiving ourselves.

Import bans don't work in Nigeria because the fundamental reasons why imports are necessary in the first place are still there. The headache of clearing goods at the port is so bad that the country loses $19 billion (5% of GDP) annually from the delays, traffic jams and illegal charges (19). It takes less time to go from Lagos to London (7000km) than to move from Apapa to Ojota (27km). As you know, the challenges of inadequate power and transportation infrastructure are still there. The security hurdles are still high. These all add up to the reasons imports are attractive.

Import ban is not a magic wand or formula. Until what makes import ban work in other countries are in place, businessmen like Dangote who tout import bans as shortcuts to sufficiency in anything are only planning for your pockets.

We have Learnt....dont worry Nigeria and Nigerians will be alright.

Thou art wise, flesh and blood did not reveal this to thou

A master piece analysis!

Very convincing!!

Wish those in decision making can see this!!!

My dad and many others lost their jobs when the makers of Eagle Cement had to leave Nigeria for Dangote. Now cement is the exclusive reserve of the rich, worsening the housing epidemic.

I have never supported Import Ban.

Today beef is so very expensive and when you ask your local meat seller, he tells you 'you never hear say them close border?'.

We are our own problem.

Exactly the point. All they want to do is to monopolize rice production and set the price to high heavens.

Immatex:

A master piece analysis!

Very convincing!!

Wish those in decision making can see this!!!

My dad and many others lost their jobs when the makers of Eagle Cement had to leave Nigeria for Dangote. Now cement is the exclusive reserve of the rich, worsening the housing epidemic.

I have never supported Import Ban.

Today beef is so very expensive and when you ask your local meat seller, he tells you 'you never hear say them close border?'.

We are our own problem.

We have been enslaved by the few rich minority.
I heard they are planning to propound a law to sentence d ordinary Nigerian to death for expressing their frustration about them which they considered as hate speech.
When that bill becomes law, this brilliant analysis up here will be tagged hate speech by those behind the corridors of powers who again are beneficiaries of the sufferings of the common Nigerian.
We have to stand up and fight, put tribe and religion aside, we deserve better ohh.
anytime buhari is ill, he goes to london, all the politicians have money to send their kids abroad to get quality education, but the common man cannot get quality health care, every tin is wrong with the black man and by extension, Nigeria.

I was discussing with a friend today. I told him that having been around different countries with systems that work and comparing those systems to ours down here, it's obvious Nigeria is in deep problem but they don't know it. He disagreed by insisting that Nigerians know the mess we are in but has been blinded by undue sentiments arising from religious, political and tribal affiliations.

I honestly still feel Nigerians don't know the mess we are in. We are like 70 years behind the rest of the world. The interesting part is that as they are geometrically progressing, we seem to be on the reverse geometrically. And you tell me we know the mess we are in?

As much as I think Dangote is individually a very nice person; Dangote and most Nigerian elite businessmen has contributed immensely to this mess because of their greed and covetous nature.

But how could one blame them that much? They didn't make the law; the people in government did.

This brings me to summarize the true Nigerian problems:

1. THE LEADERS.

For obvious reasons, they lack willpower to implement reward and punishment system.

They lack genuine interest to serve.

2. THE LED(masses): They are sleeping.

Op, thanks a lot for bringing clarity to the table. You are a treasure.

I read the epistle and I learnt a new biz trick. The knorr story...thumbs up

Eye opening, God bless you Tosin

Worth reading....thanks OP....Dangote had made more Nigerians poorer than richer....the monopoly of the market is part of the problem......wonder why Ibeto cement didn't survive?

Worth reading

Glistinin:

~Tosin Adeoti

In 1838, Carl Knorr (1)recognized a problem with cooking in Germany. People wanted their soups to have certain flavours and would spend hours drying, grinding, boiling vegetables and other spices to add to their meals. So he created the Knorr brand. You recognize the name because you have used a Knorr seasoning cube before. Today, Knorr products are sold in nearly 90 countries around the globe (2).

To get to this level of patronage, the Knorr brand had to innovate and make the gains of simply using a seasoning cube more than the gains of making the seasonings by individuals. At this period, people had more time than money, so to make the purchase of these products attractive, Carl had to invest in creative methods to make the products as cheap as possible. Obviously, the innovation methods worked. In Nigeria today, you can get a cube of Knorr seasoning for as low as N20.

Why is this story important? Because people no longer understand what is meant when we say that while an imperfect system, the market system remains our most effective weapon in fighting poverty.

This correction is important in light of Dangote Group's tacit endorsement of the government's ban on rice importation(3). Calling attention to itself, Dangote says its farmlands in the country will enable Nigeria export rice.

Yet this is not the first time Dangote is supporting the ban of imported products. In the past he had asked for the ban of Tomato. But the peak for me was in the exclusive interview with Financial Times in July 2018(4). He said,

"Nigeria still imports vegetable oil, which makes no sense. Nigeria still imports 4.9m tonnes of wheat, which does not make sense. Nigeria still imports 97 or 98 per cent of the milk that we consume. The government needs to bring out a draconian policy to stop people importing milk, just like they did with cement."

Did your heart skip at the mention of cement? Well, mine did.

Of course it makes no sense to import what we can produce. So the question is, what is stopping us from producing instead of importing. Until those constraints are identified and dealt with, banning would mean making life more difficult for Nigeria.

And this has happened before.

THE CEMENT SAGA...

For some people, the production of cement within the shores of Nigeria is a thing of pride. They point out to a Nigerian producing for Nigerians as the highest form of patriotism. But policies should not be judged by the 'feel good' factor, rather they should be measured by their impact on the people.

It would be recalled that the Nigerian Government in its attempt to boost local production placed a ban on importation of cement in 2001. President Obasanjo seeing that the objectives were not being met lifted the ban in 2007, only for the ban to be placed back again.

Give or take, we have had 18 years to evaluate the impact of the ban. The overwhelming consensus is that Nigerians pay among the highest prices for cement in the world. A quick search on Konga (5) shows a 50kg bag of cement costs $7, while a 2016 World Bank report (6, Page 61) on competition in Africa reveals that the average global cement price is around $3.4. Almost two decades after, Nigerians pay double the global prices for the price of cement.

I hear you retort that it's the tough business environment that has made things, cement inclusive, so expensive. And that would be true for cement if the profit margin is not exorbitant. In 2017, a Bloomberg Intelligence report showed that the average global profit margin for cement companies was 17% (7). For Dangote Group, the profit margin was 42%. That's more than twice. I just checked the result for 2018 and the profit margin has shot up to 64% (.

If conditions are difficult, then the profit margin should shrink, not explode. It goes without saying that it's Nigerians who are paying through their nose when they could easily get the product for much lesser.

This World Bank report, on page 64, shows that Dangote has been granted exclusivity to materials, including limestone used to produce cement.

Nigerians don't understand that when they mention cement production in the country as a pointer to why banning things is good, they are indirectly encouraging a system of exploitation.

Every single time a Nigerian business man tells you Nigeria should ban importation of something without calling out the problems which necessitates importation of that product in the first place, know that they are thinking of enriching themselves at your expense.

THE COST OF EXPENSIVE CEMENT

This importation of cement comes at a price. Housing.

According to the Federal Mortgage Bank of Nigeria (FMBN) (9), Nigeria's present housing deficit in 2019 stands at 22 million. This year, the United Nations called Nigeria's housing crisis the worst in world (10).

If cement is a critical component in building, and the Nigerian market is dominated by Dangote Cement, which has about 70 percent of the market (11), then it is safe to say that Dangote contributes immensely to the housing crisis in Nigeria.

If 80% of Dangote Group's revenue comes from Dangote Cement (12) and Aliko Dangote owns 85% of Dangote Cement (13), then it shows that Aliko is to be fingered in the country's housing challenges.

HOW WE DON'T PRACTISE CAPITALISM

If there's anything capitalism is good for, it is reduction in prices of commodities and services. The richest capitalists in history got their wealth from mass production of goods for the masses. Henry Ford made a car so inexpensive that 3 months of wages became enough for Americans to get a brand new car. You must have seen the image of IBM 5MB hard drive costing $35,000 annually in 1956 (14). Thanks to capitalism and the crashing of prices, you would consider it useless if gifted in this age of cheap smartphones. Everyone involved in making that 5MB Hard drive obsolete became stupendously rich. Capitalism rewards value addition.

It is no longer capitalism when you manipulate a system or collude with the state so you can fleece people off without adding value. That's not capitalism. We have a name for it: Cronyism.

BUT THE CEMENT BAN CREATED JOBS...

But Dangote employs people, you say…

Yes, he does. According to the Company's 2018 Annual Report (15, Page 38), Dangote Cement has 17,447 direct employees. But I have always made the analogy of fuel scarcity to explain the irrationality of this argument. Hundreds of jobs across the country are created during periods of fuel scarcity. Several young men who would otherwise be sitting under the bridge are gainfully employed, moving jerrycans and easing the pains of car owners. So do you think it makes sense to protest for the government to make available regular fuel scarcity episodes?

Of course not. It's the same reason it makes no sense to praise the tens of thousands of jobs created by Dangote Cement cornering the market and making Nigerians pay through their nose when millions of jobs are waiting to be created by allowing geneuine competition in the cement industry and its attendant effect on the construction industry. Think of the businesses and employment waiting to be created if we are to bridge the 22 million housing deficit in Nigeria.

Our situation is dire. More than ever, we need entrepreneurs whose creative insights would unleash the potential in our economy. People like Dangote stand in the way of that.

A few days ago, I finished reading Duncan Clark's :"Alibaba: The House that Jack Ma Built" and just like Ratan Tata, Hugo Boss, Paul Getty and my favorite entrepreneur, John D. Rockefeller, the only way these ones got rich was by making otherwise expensive commodities cheap for the masses. This is the blueprint of capitalism.

If you ban wheat, milk or vegetable oil today, as being advised by Aliko Dangote, the price will simply get beyond the reach of the masses, just like it's happened to rice and cement.

WHY DOES BANNING WORK ELSEWHERE AND NOT IN NIGERIA?

First of all, you don't always need to ban to be competitive in the modern market. Nigeria banned fruit juice imports in 2002 and some analysts have pointed to the growth of the domestic juice production (16) as proof that banning works. However, there are two ways to judge this policy:

1. How competitive will the Nigerian fruit juice market be if we lift the ban today, 17 years later?
2. How strong is our exports?

On question 1, the Nigerian market will not be competitive. Remove the ban today and Nigerians will be attracted to the lesser prices of the foreign fruit juice products.
On question 2, we don't have a strong export market. In fact, Ghana which did not ban imports makes five times more than we do in exports (17).

In other words, the ban has not helped the country improve its domestic production, especially when you realize that while we have banned imported packaged fruit juice, we still import great amounts of juice concentrates (18). Companies import juice concentrates, mix it with water, bottle them up and transport them to the various markets in the country. We have mastered the art of deceiving ourselves.

Import bans don't work in Nigeria because the fundamental reasons why imports are necessary in the first place are still there. The headache of clearing goods at the port is so bad that the country loses $19 billion (5% of GDP) annually from the delays, traffic jams and illegal charges (19). It takes less time to go from Lagos to London (7000km) than to move from Apapa to Ojota (27km). As you know, the challenges of inadequate power and transportation infrastructure are still there. The security hurdles are still high. These all add up to the reasons imports are attractive.

Import ban is not a magic wand or formula. Until what makes import ban work in other countries are in place, businessmen like Dangote who tout import bans as shortcuts to sufficiency in anything are only planning for your pockets.

The FG has done more harm over the years to Nigerians than all the states put together! Thank you for exposing the fallacies inherent in sloppy arguments advanced for banning imports.

Glistinin:

~Tosin Adeoti ...

But Dangote employs people, you say…

Yes, he does. According to the Company's 2018 Annual Report (15, Page 38), Dangote Cement has 17,447 direct employees. But I have always made the analogy of fuel scarcity to explain the irrationality of this argument. Hundreds of jobs across the country are created during periods of fuel scarcity. Several young men who would otherwise be sitting under the bridge are gainfully employed, moving jerrycans and easing the pains of car owners. So do you think it makes sense to protest for the government to make available regular fuel scarcity episodes?

Of course not. It's the same reason it makes no sense to praise the tens of thousands of jobs created by Dangote Cement cornering the market and making Nigerians pay through their nose when millions of jobs are waiting to be created by allowing geneuine competition in the cement industry and its attendant effect on the construction industry. Think of the businesses and employment waiting to be created if we are to bridge the 22 million housing deficit in Nigeria.

Our situation is dire. More than ever, we need entrepreneurs whose creative insights would unleash the potential in our economy. People like Dangote stand in the way of that...

...If you ban wheat, milk or vegetable oil today, as being advised by Aliko Dangote, the price will simply get beyond the reach of the masses, just like it's happened to rice and cement.

WHY DOES BANNING WORK ELSEWHERE AND NOT IN NIGERIA?

...there are two ways to judge this policy:

1. How competitive will the Nigerian fruit juice market be if we lift the ban today, 17 years later?
2. How strong is our exports?

On question 1, the Nigerian market will not be competitive. Remove the ban today and Nigerians will be attracted to the lesser prices of the foreign fruit juice products.
On question 2, we don't have a strong export market. In fact, Ghana which did not ban imports makes five times more than we do in exports (17).

In other words, the ban has not helped the country improve its domestic production, especially when you realize that while we have banned imported packaged fruit juice, we still import great amounts of juice concentrates (18). Companies import juice concentrates, mix it with water, bottle them up and transport them to the various markets in the country. We have mastered the art of deceiving ourselves...

...Import ban is not a magic wand or formula. Until what makes import ban work in other countries are in place, businessmen like Dangote who tout import bans as shortcuts to sufficiency in anything are only planning for your pockets.

This is very incisive and the authour is daring. It is people like this writer that should be made advisers to the president and govornors. people,like this should also work in govt research agencies.

Bloomberg Intelligence and The World Bank loyalties lie in the west .
Dangote Industries employs and feeds more families than any foreign based companies in Naija with der crooked accounting books and non'existent crude measuring meters. Dem hate to see the day when Dangote refinery is up and running smoothly.
Stay awake patriots.

It all boils down to electricity !
It's called POWER for a reason.

If you ain't got power, you ain't got shiiiii

Importation more often than not means it's wayy cheaper to produce abroad than at home which presently applies to EVERYTHING in Nigeria

It's not that complicated, MTN spends 70% of its running cost buying diesel. If we didn't have the population, they would have packed their bags and vamoosed.

If Dangote had a generator business then I would blame him 1000% but he doesn't

The writer ignored the opportunity costs of his advocated trade liberalization. The issue borders around our ability to sustain the practise. Opening our doors to foreign goods comes with consequences, it means we must have a war chest of foreign reserve and we must keep our exchange rate stable.

There are one of 2 ways to ease pressure on our Exchange rate and our foreign reserves:

1. Increase exports and earn dollars.
2. Import replacement. Produce locally, spend less dollars.

We are a mono product economy, 90% of our foreign exchange earnings comes from crude oil exports. Today, that source is threatened by the global run for cleaner energy. Do we generate enough dollars to fund our import bills. No!.

remembered vividly how cement imports puts so much pressure on our dollar reserves during the Obasanjo era. The singular reason our naira devalued massively in 2016 was because our reserves was depleted to the point that we could not sustain the imports of economic goods.

While his argument that Dangote cement at current price is exploitative, one wonders why Wapco, another cement manufacturer is struggling to stay afloat.

Every developed nation practices one form of protectionism or the other particularly for the economic gains, for example, local rice production is critical to our food security. It is one of our stables. it is a weapon of war , you cannot leave it in the hands of others.

.

At least, it create jobs.

There are actually many reasons why countries sometimes find it expedient import goods that they can make themselves; like when the other trading partner has an absolute or comparative disadvantage in that good's production... International Trade 101.

Ordinary Nigerians don't know that tribalism and religious division are the most potent and effective tools used by our corrupt leaders weaken ordinary Nigerians and stop them from rising up to fight for their rights. They are as wickedly smart as ever to find the fact that common people can't be strong if they are not united. Yet, the ordinary Nigerians are yet to find out that there are no tribes and religions among the few rich but money.

romenna:
We have been enslaved by the few rich minority.
I heard they are planning to propound a law to sentence d ordinary Nigerian to death for expressing their frustration about them which they considered as hate speech.
When that bill becomes law, this brilliant analysis up here will be tagged hate speech by those behind the corridors of powers who again are beneficiaries of the sufferings of the common Nigerian.
We have to stand up and fight, put tribe and religion aside, we deserve better ohh.
anytime buhari is ill, he goes to london, all the politicians have money to send their kids abroad to get quality education, but the common man cannot get quality health care, every tin is wrong with the black man and by extension, Nigeria.

Glistinin:

~Tosin Adeoti

In 1838, Carl Knorr (1)recognized a problem with cooking in Germany. People wanted their soups to have certain flavours and would spend hours drying, grinding, boiling vegetables and other spices to add to their meals. So he created the Knorr brand. You recognize the name because you have used a Knorr seasoning cube before. Today, Knorr products are sold in nearly 90 countries around the globe (2).

To get to this level of patronage, the Knorr brand had to innovate and make the gains of simply using a seasoning cube more than the gains of making the seasonings by individuals. At this period, people had more time than money, so to make the purchase of these products attractive, Carl had to invest in creative methods to make the products as cheap as possible. Obviously, the innovation methods worked. In Nigeria today, you can get a cube of Knorr seasoning for as low as N20.

Why is this story important? Because people no longer understand what is meant when we say that while an imperfect system, the market system remains our most effective weapon in fighting poverty.

This correction is important in light of Dangote Group's tacit endorsement of the government's ban on rice importation(3). Calling attention to itself, Dangote says its farmlands in the country will enable Nigeria export rice.

Yet this is not the first time Dangote is supporting the ban of imported products. In the past he had asked for the ban of Tomato. But the peak for me was in the exclusive interview with Financial Times in July 2018(4). He said,

"Nigeria still imports vegetable oil, which makes no sense. Nigeria still imports 4.9m tonnes of wheat, which does not make sense. Nigeria still imports 97 or 98 per cent of the milk that we consume. The government needs to bring out a draconian policy to stop people importing milk, just like they did with cement."

Did your heart skip at the mention of cement? Well, mine did.

Of course it makes no sense to import what we can produce. So the question is, what is stopping us from producing instead of importing. Until those constraints are identified and dealt with, banning would mean making life more difficult for Nigeria.

And this has happened before.

THE CEMENT SAGA...

For some people, the production of cement within the shores of Nigeria is a thing of pride. They point out to a Nigerian producing for Nigerians as the highest form of patriotism. But policies should not be judged by the 'feel good' factor, rather they should be measured by their impact on the people.

It would be recalled that the Nigerian Government in its attempt to boost local production placed a ban on importation of cement in 2001. President Obasanjo seeing that the objectives were not being met lifted the ban in 2007, only for the ban to be placed back again.

Give or take, we have had 18 years to evaluate the impact of the ban. The overwhelming consensus is that Nigerians pay among the highest prices for cement in the world. A quick search on Konga (5) shows a 50kg bag of cement costs $7, while a 2016 World Bank report (6, Page 61) on competition in Africa reveals that the average global cement price is around $3.4. Almost two decades after, Nigerians pay double the global prices for the price of cement.

I hear you retort that it's the tough business environment that has made things, cement inclusive, so expensive. And that would be true for cement if the profit margin is not exorbitant. In 2017, a Bloomberg Intelligence report showed that the average global profit margin for cement companies was 17% (7). For Dangote Group, the profit margin was 42%. That's more than twice. I just checked the result for 2018 and the profit margin has shot up to 64% (.

If conditions are difficult, then the profit margin should shrink, not explode. It goes without saying that it's Nigerians who are paying through their nose when they could easily get the product for much lesser.

This World Bank report, on page 64, shows that Dangote has been granted exclusivity to materials, including limestone used to produce cement.

Nigerians don't understand that when they mention cement production in the country as a pointer to why banning things is good, they are indirectly encouraging a system of exploitation.

Every single time a Nigerian business man tells you Nigeria should ban importation of something without calling out the problems which necessitates importation of that product in the first place, know that they are thinking of enriching themselves at your expense.

THE COST OF EXPENSIVE CEMENT

This importation of cement comes at a price. Housing.

According to the Federal Mortgage Bank of Nigeria (FMBN) (9), Nigeria's present housing deficit in 2019 stands at 22 million. This year, the United Nations called Nigeria's housing crisis the worst in world (10).

If cement is a critical component in building, and the Nigerian market is dominated by Dangote Cement, which has about 70 percent of the market (11), then it is safe to say that Dangote contributes immensely to the housing crisis in Nigeria.

If 80% of Dangote Group's revenue comes from Dangote Cement (12) and Aliko Dangote owns 85% of Dangote Cement (13), then it shows that Aliko is to be fingered in the country's housing challenges.

HOW WE DON'T PRACTISE CAPITALISM

If there's anything capitalism is good for, it is reduction in prices of commodities and services. The richest capitalists in history got their wealth from mass production of goods for the masses. Henry Ford made a car so inexpensive that 3 months of wages became enough for Americans to get a brand new car. You must have seen the image of IBM 5MB hard drive costing $35,000 annually in 1956 (14). Thanks to capitalism and the crashing of prices, you would consider it useless if gifted in this age of cheap smartphones. Everyone involved in making that 5MB Hard drive obsolete became stupendously rich. Capitalism rewards value addition.

It is no longer capitalism when you manipulate a system or collude with the state so you can fleece people off without adding value. That's not capitalism. We have a name for it: Cronyism.

BUT THE CEMENT BAN CREATED JOBS...

But Dangote employs people, you say…

Yes, he does. According to the Company's 2018 Annual Report (15, Page 38), Dangote Cement has 17,447 direct employees. But I have always made the analogy of fuel scarcity to explain the irrationality of this argument. Hundreds of jobs across the country are created during periods of fuel scarcity. Several young men who would otherwise be sitting under the bridge are gainfully employed, moving jerrycans and easing the pains of car owners. So do you think it makes sense to protest for the government to make available regular fuel scarcity episodes?

Of course not. It's the same reason it makes no sense to praise the tens of thousands of jobs created by Dangote Cement cornering the market and making Nigerians pay through their nose when millions of jobs are waiting to be created by allowing geneuine competition in the cement industry and its attendant effect on the construction industry. Think of the businesses and employment waiting to be created if we are to bridge the 22 million housing deficit in Nigeria.

Our situation is dire. More than ever, we need entrepreneurs whose creative insights would unleash the potential in our economy. People like Dangote stand in the way of that.

A few days ago, I finished reading Duncan Clark's :"Alibaba: The House that Jack Ma Built" and just like Ratan Tata, Hugo Boss, Paul Getty and my favorite entrepreneur, John D. Rockefeller, the only way these ones got rich was by making otherwise expensive commodities cheap for the masses. This is the blueprint of capitalism.

If you ban wheat, milk or vegetable oil today, as being advised by Aliko Dangote, the price will simply get beyond the reach of the masses, just like it's happened to rice and cement.

WHY DOES BANNING WORK ELSEWHERE AND NOT IN NIGERIA?

First of all, you don't always need to ban to be competitive in the modern market. Nigeria banned fruit juice imports in 2002 and some analysts have pointed to the growth of the domestic juice production (16) as proof that banning works. However, there are two ways to judge this policy:

1. How competitive will the Nigerian fruit juice market be if we lift the ban today, 17 years later?
2. How strong is our exports?

On question 1, the Nigerian market will not be competitive. Remove the ban today and Nigerians will be attracted to the lesser prices of the foreign fruit juice products.
On question 2, we don't have a strong export market. In fact, Ghana which did not ban imports makes five times more than we do in exports (17).

In other words, the ban has not helped the country improve its domestic production, especially when you realize that while we have banned imported packaged fruit juice, we still import great amounts of juice concentrates (18). Companies import juice concentrates, mix it with water, bottle them up and transport them to the various markets in the country. We have mastered the art of deceiving ourselves.

Import bans don't work in Nigeria because the fundamental reasons why imports are necessary in the first place are still there. The headache of clearing goods at the port is so bad that the country loses $19 billion (5% of GDP) annually from the delays, traffic jams and illegal charges (19). It takes less time to go from Lagos to London (7000km) than to move from Apapa to Ojota (27km). As you know, the challenges of inadequate power and transportation infrastructure are still there. The security hurdles are still high. These all add up to the reasons imports are attractive.

Import ban is not a magic wand or formula. Until what makes import ban work in other countries are in place, businessmen like Dangote who tout import bans as shortcuts to sufficiency in anything are only planning for your pockets.

Nice writeup. To Buhari, this is story for the gods. o ti kan mi lapa o!

Brother, more than double of jobs he created would have been created if their are no monopolies. A great entrepreneur strives to reduce the cost of that he is producing or offering as a service and not to inflate prices to high heavens. Check out Jack Ma with Alibaba and other great entrepreneurs. This monopolistic pseudo capitalism is telling on Nigerians because capitalism is all about competition and not monopoly.

ZooOga:
Bloomberg Intelligence and The World Bank loyalties lie in the west .
Dangote Industries employs and feeds more families than any foreign based companies in Naija with der crooked accounting books and non'existent crude measuring meters. Dem hate to see the day when Dangote refinery is up and running smoothly.
Stay awake patriots.

You are yet to grasp the crux of the matter of this article seriously. I implore you to read it again so that you will understand.

lagbaja:
The writer ignored the opportunity costs of his advocated trade liberalization. The issue borders around our ability to sustain the practise. Opening our doors to foreign goods comes with consequences, it means we must have a war chest of foreign reserve and we must keep our exchange rate stable.

There are one of 2 ways to ease pressure on our Exchange rate and our foreign reserves:

1. Increase exports and earn dollars.
2. Import replacement. Produce locally, spend less dollars.

We are a mono product economy, 90% of our foreign exchange earnings comes from crude oil exports. Today, that source is threatened by the global run for cleaner energy. Do we generate enough dollars to fund our import bills. No!.

remembered vividly how cement imports puts so much pressure on our dollar reserves during the Obasanjo era. The singular reason our naira devalued massively in 2016 was because our reserves was depleted to the point that we could not sustain the imports of economic goods.

While his argument that Dangote cement at current price is exploitative, one wonders why Wapco, another cement manufacturer is struggling to stay afloat.

Every developed nation practices one form of protectionism or the other particularly for the economic gains, for example, local rice production is critical to our food security. It is one of our stables. it is a weapon of war , you cannot leave it in the hands of others.

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nice