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Me, Obasanjo and Nigeria

Posted by By JACOB EDI, Abuja on 2007/07/07 | Views: 2547 |

Me, Obasanjo and Nigeria

"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.

"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 nationís 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 nationís economic legacies at give-away prices.

His case is made worse by the fact that he is an unapologetic friend of one of Nigeriaís 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, thatís it. Youíve missed it. Itís almost impossible to go back and convince people.
It hasnít been easy attaining No.1. We havenít 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 donít have capacity, even when your market is good, you canít 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 Nigeriaóyou can go and take the samples and checkóis 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 donít 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. Itís just that we are very, very shrewd business-oriented company. Even though I am the CEO, itís 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 donít have the good support, I can be the most entrepreneurial and talented person but I wonít 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 doesnít 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 thatís 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 donít 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 wasnít adding value to the economy, I can assure you that I wouldnít 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 Obasanjoís 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 donít like to boast, but let me tell you something. I was born into money. Both my fathersófrom my motherís side and also from my fatherís sideóthey have always had money. So, itís 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 donít know any of my family memberóboth from my motherís side and my fatherís sideóthat has ever had a deal with anybody in the government. It is not only Obasanjo. Even in the society, we donít 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 itís 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 donít scare me. The reason is, if we donít 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 shouldnít 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 donít have the cement coming in, but cement come out daily. It doesnít 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 doesnít 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 donít 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 donít 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 donít have much market for.

Sugar story getting sweeter
Today, if we are only bringing sugar to re-bag, why canít 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 canít 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. Itís the same identical thing we have with sugar. Raw sugar, when you look at it, itís 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 shouldnít blow our own trumpet. We should allow other people to blow our trumpet. A footballer doesnít 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 donít go about shouting on rooftops that we are good. You donít market yourself to some extent. You let others do the marketing. And thatís how we are. People really donít understand us, they donít 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 donít 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 donít 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 itís done. They need me also, because without a good entrepreneur all the money that the banks would have would become stale. They wonít need the money. They just donít give you their money. They have to see that itís 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-creditówhich 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 donít 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 donít have access to that money. Today, I am talking of big money. If you had visited me four years ago, I wonít be talking about this kind of big projects that I am talking about. Unless you participate, you canít 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 Ďsit down and look.í We are properly participating. We donít 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 donít 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 wonít 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 donít I like partnership, particularly in Nigeria? I can tell you authoritatively that the easiest way to fight is to have a joint business. Nigerians donít really understand partnership. I donít 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 partnershipówhich 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. Thatís 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 havenít 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 donít 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 backgroundóthough 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 donít 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 businessócomputerization and how things are done and stages of processóit 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 NigeriansóI am not talking about my company nowówhen 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 donít 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. Itís 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 somebodyóas 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 donít really expect to just come and play or wake up at 10 oíclock from your house, come to the office and then close at 2. Thatís 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?

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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