Key points from Dangote’s speech:
- Nigeria has the potential for prosperity through strong domestic industries. Dangote believes Nigeria has the resources and capability to become prosperous by building a robust manufacturing sector.
- Government policy is crucial. He argues that current government policies hinder the growth of manufacturing. He emphasises the need for policies that nurture and protect domestic industries.
- Protection doesn’t mean isolation. Dangote acknowledges the importance of foreign investment but argues for a supportive environment for local businesses first. Protectionist policies should be long-term and create a foundation for attracting foreign investment later.
- Examples of successful protectionist policies. Dangote cites examples from developed countries (US steel industry) and developing countries (Asian economies) where government intervention protected and nurtured domestic industries, leading to success.
- Dangote Cement’s contribution. Dangote highlights his company’s significant tax contributions, exceeding the entire banking sector in 2023. This success, he argues, is a result of past government support for the cement industry.
- Protection doesn’t lead to monopolies. Dangote refutes concerns that protecting domestic industries creates monopolies. He argues it attracts foreign investors who see the success of local businesses.
- Learning from others. Dangote urges Nigeria to learn from successful industrialization policies in both Western and Eastern countries.
Nigeria has the essential resources and potential to attain prosperity through strong domestic industries, emphasises Aliko Dangote, President of Dangote Group. He urges government intervention to protect local industries, asserting that Dangote Cement alone has significantly contributed to government tax revenue. Contrary to fears, protecting industries with strong policies won’t lead to monopolies, he argues.
Speaking as the keynote speaker at the Nigeria Manufacturers’ Summit in Abuja on Tuesday, Dangote addressed a gathering of manufacturers and investors, articulating his belief that Nigeria possesses the necessary resources and potential to achieve prosperity through robust indigenous industries.
He acknowledged various factors contributing to the underperformance of the manufacturing sector, emphasising that government policy and its approach towards investments and investors are crucial. He pointed out that industrial entities differ from trading entities, stressing that the fundamental role of the government should be to promote investments in manufacturing and ensure these investments are nurtured and protected to facilitate growth and sustainability.
“In every economic regime, including the most advanced, investment projects in manufacturing and industrial sectors need time and a conducive environment to mature, build capacity, and scale, to become competitive against those in older and more mature markets.
“But since the mid-1980s, non-industrialised countries and their leaders have been discouraged from protecting and supporting such investments, exposing them to unfair competition from stronger, older competitors in their own internal market, even before the newcomers are commissioned. Yet these same older, bigger players are well supported in their home markets,” he said.
Government Intervention to Protect Domestic Industries
Dangote cited several examples of government intervention to protect industries: the blocked sale of US Steel to Nippon Steel of Japan, the blocked sale of six US port management companies to Dubai Ports World, restrictions on Chinese cranes at US ports, and the US imposition of tariffs such as 100 per cent on Chinese EVs, and 50 per cent on semiconductors, medical products, and solar panels.
He also referenced the restriction of Russian gas supply to Europe, which led European countries to increase coal usage despite opposition to fossil fuels, and the US government’s distribution of $39 billion in subsidies to incentivise local microchip production.
Dangote referred to Asia as having achieved significant levels of industrialisation by pursuing industrial policies where the government played an active role in nurturing and supporting local companies. They subsequently leveraged this success to attract foreign direct investment (FDI) into Free Trade Zones.
He emphasised that government protection of the industry does not solely encompass short- to medium-term regulatory mechanisms such as tax holidays and other incentives, which have their place in industrial policy and should be applied when necessary to mitigate investment challenges.
“I am concerned with a long-term policy framework which ensures that investors can invest with the understanding that the industry will, in the long run, be regarded as a national asset and not just investors’ assets so that when it is threatened, either by external forces or by changes in the environment beyond the control of individual operators, the government will take appropriate action to protect investors and support them to survive the threat.
“Almost all countries did this in response to the COVID threat. Those in the pharmaceutical industry may well remember how India protected and supported its pharmaceutical industry,” he said.
He noted that if such a policy had been adopted in the past, Nigeria would boast a flourishing textile and tyre industry as well as functioning refineries.
“If we had adopted such a policy and government attitude to the textile and tyre industries in the 1980s and early 1990s, perhaps our economy today would still be benefiting from the job creation capacities of these industries. Or if we had adopted this attitude to our refining industry, Nigerians would not today be too anxious about Dangote Refinery,” he stated.
Disputing assertions that protecting domestic industries leads to reduced competitiveness, Dangote argued to the contrary, citing examples such as China, Korea, India, and various other Asian nations. He pointed out that these countries successfully developed into 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 two million tonnes of cement per annum up to 2007. Due to strategic government policies and support, Nigeria has since become Africa’s largest cement producer and exporter, ranking among the top 10 globally in competitiveness.
Benefit of Dangote Cement to Nigeria’s Economy
Dangote highlighted 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 to 2007, Nigeria produced less than two million tonnes of cement per annum. Today we have about 60 million tonnes of production capacity and another nine million under construction. The foundation for this success story was laid by an administration which decided to extend full support and protection to Nigeria’s cement industry.
“Today we are among the 10 most competitive cement producers in the world and the biggest cement producer and cement exporter in Africa. In 2023, Dangote Cement alone paid more taxes into the coffers of the government than the entire banking industry,” he said.
Protecting Industries Will Not Lead to Monopolies
Dangote refuted claims that protecting industries would lead to monopolies, stating that it is common knowledge that foreign investors only come when they see that local investors are also doing well.
“I am convinced that when government policy becomes more supportive and protective, investors will be more willing to collaborate and partner with the government in resolving other challenges such as infrastructure deficits, market instabilities, and macro-economic issues such as inflation and foreign exchange volatilities,” he added.
Reiterating that Nigeria has all it takes to develop and sustain a globally competitive manufacturing sector, Dangote called for a rethinking of the country’s industrialisation policy, by learning from leading countries in the West and the East that are actively protecting their domestic industries.
