by Tunde Leye
In Nigeria, we have billionaires who are worth more than the companies from which they are supposed to derive their wealth. We have people making billions from industries where their wealth does not correlate with the activity that such value should generate. How, for example, should someone make billions from cement without a commensurate building boom across the nation? Cause and effect?
One of the most baffling places to study trends is Nigeria. It is as if our value system doesn’t place a premium on the relationship between a happening and the expected results it is meant to achieve. If this happened in the realm of physical phenomena, we would all be baffled. For example, if I jump off a cliff in Europe, I’ll go crashing down. If I do the same in Nigeria, the result will be the same. Cause and effect, perfectly normal.
Twenty years ago, there were no dollar billionaires in China. As the Chinese economy has grown and boomed, the number of billionaires has increased dramatically. In other words, there is a direct correlation between the number of billionaires and the economic growth in China. In fact, the richest and most economically productive regions in the world typically have the most number of billionaires. Hence, the world’s largest economy, the United States has the most number of billionaires in the world – 492. China’s phenomenal growth too has reflected in its billionaire count. Zero 20 years ago, 122 in 2013 and 152 in 2014, up an impressive 25% from 2013. Brazil is also one of the impressive countries with this kind of growth. The growth of the billionaires’ home economy impacts the wealth of the billionaires. This Forbes report shows how the billionaire count and net-worths in India took a dip as India’s economy did the same.
The most important point to note is that these nations where new billionaires are being minted or where the net-worth of the existing ones is growing, they have created new industries or expanded the scopes of existing industries. Also, it is impossible to make billions in these places without radically affecting the lives of many of the citizens. The billionaires in all these places have impressive networths; but the most impressive thing they build is not their personal wealth but the values of the companies from which they make their billions. They are never worth more than their companies
In Nigeria, we have billionaires who are worth more than the companies from which they are supposed to derive their wealth. We have people making billions from industries where their wealth does not correlate with the activity that such value should generate. How, for example, should someone make billions from cement without a commensurate building boom across the nation? Cause and effect? Billionaires like in the Nigerian case are produced only from a few options. The first is through looting public funds. Those ones are not reckoned with in the international business world and are not worthy of mention in this discourse. The second is the one which we must discuss. The minting of billionaires through protectionist government policies or almost deliberate government ineptitude designed to favor individuals who then leverage this to get exorbitant margins from the Nigerian people. No breakthrough industries are created; the people simply pay higher for goods and services. What this essentially creates is a wealth transfer from the general populace to these billionaires without solving any real problems. So, we for example pay extraordinarily high rent because real estate in Nigerian cities are amongst the most expensive in the world. But the landlords are not charging these exorbitant rents simply out of greed; apart from government ineptitude in the area of getting land, the cost of cement in Nigeria is three times what obtains elsewhere. An analysis of the billionaires our banking industry has produced leads to similar conclusions.
Billionaires like ours cannot survive in serious economies where you have to create real value to make billions. As an illustration, Carlos Slim Helu enjoys not only the same type of government ineptitude and favorable policies that our own Nigerian billionaires do, but his telecommunications company which accounts for 73% of his $69Billion wealth charges one of the highest usage fees in the world. He can do this because he has 90% of the Mexican telecoms market. That clearly sounds like what our own billionaires do here. Get government backed monopolies and then charge us the highest fees in the world. When Helu ventured into the United States with CompUSA acquisition, he ended up selling the company because he couldn’t compete in an environment where the government would give him no undue advantages and where citizens would only pay what was fair for the value you delivered.
We as the Nigerian people need to move away from only celebrating the achievement of stupendous wealth by our billionaires and begin to question the basis of their wealth. We also need to question when public officials begin to make some moves that are touted as defending the Nigerian economy. It might just be possible that all they are defending is the monopolies that generate wealth for our tin billionaires.
—————————–
Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.
was this article an attempt at getting popular with very watery argument? I rated you alot more than this silly write up of yours. how much is your price these days???
FYI – Dangote is doing extremely well outside Nigeria. Cement, sugar etc. Infact he is planning a sugar refinery in brazil (biggest sugar producer in the world)
how much did finding hubby fetch you in nigeria alone? i bet not alot. you and your ilk are local champions whose influence will forever be regional if you keep at pulling down people who make genuine living.
Is it really true OR just an exaggeration ? That cement costs 3 times more here in Nigeria than outside ??
Well said
Good guy. You share my thoughts and opinion. i have never had respect for our so-called billionaire because their wealth is not generic. Take a look at my role models, Steve job and Bill Gate who started their business from the parent garage, add value to people's lives globally and built their businesses into a multibillion dollars empire. Every steps they took in their journey to fortune can be traced. But take a look at our so called billionaires? what a shame!
@Tunji Oginni (Kingston upon Hill)
You seem not to understand the concept of legitimate wealth being of positive impact to the lives and economy of their localities.
Also, you need to get your facts right especially about your example of Richard Branson operating Virgin Nigeria. The truth about Virgin Nigeria was that Virgin Nigeria owed Virgin Brand money and they failed to live up to the agreements signed with the Virgin Brand.
Brilliantly said, Nigerians have become blind to the underlying truths. only focusing on the political nepotism that grew his empire and not the larger economic growth it has subsequently lead to. its big picture thinking vs short term mentality but in our current political and social situation can we really blame haters that are going to hate?lol
Tony Ob Was about to say this but u already did. Richard Branson went into partnership because of the corruption in our country.
Beautiful write-up.
So pathetic the victims, though educated, have been brainwashed. Comments attacking the writer of this article sadden my heart. We have lost our values! Thieves are, sometimes without knowing, sympathetic to other thieves. Most of them have always prayed for the kind of wealth of Dangote; so, they won’t see clearly.
Let me ask someone this: do you think Dangote is the only hardworking, dedicated entrepreneur in this nation…?
Someone even insinuated Adenuga is different. Smh for you. Adenuga is perhaps worse. Go ask those who know him and his brutality.
Olumide Campbell Plus it seems you don't even know how the economy works, you talk about commercial banks not making any impact, well that is because of central bank and ministry of finance policies. Banks are generally risk-averse, it is the job of the government to ensure that the industries you just mentioned are de-risked. That is not the job of a commercial bank. Plus most major projects in Nigeria are financed by the banks so, again I don't get what you're on about.
Olumide Campbell Plus it seems you don't even know how the economy works, you talk about commercial banks not making any impact, well that is because of central bank and ministry of finance policies. Banks are generally risk-averse, it is the job of the government to ensure that the industries you just mentioned are de-risked. That is not the job of a commercial bank. Plus most major projects in Nigeria are financed by the banks so, again I don't get what you're on about.
Olumide Campbell Can you kindly explain what you mean by 'productive sectors' and how they are being run by south africans, chinese and the indians?
Abiola Oluwaseyi Clay No offense but do you even know the meaning of the word monopoly? Plus it seems you don't have any idea of how the cement industry in Nigeria is structured cause it seems to me like you think the government still operates in the cement industry
I just don't understand some comments I have read on here. A lot of people keep talking about Dangote not adding value or solving any problems. I say what is value? Dangote currently employs 22,000 people, not to talk about the other indirect jobs that have been created. Nigeria will soon become a large exporter of cement which will increase our foreign exchange earnings and diversify our export profile. Dangote cement accounts for about a third of the value of the Nigerian Stock Exchange. Nigeria's cement is more expensive because unlike those other countries, a cement manufacturer has to provide all of his own infrastructure. Allowing imports will simply be unfair competition. On account of monopoly, we have to recognize that Dangote cement is currently number 26 in the world, Lafarge is the largest manufacturer of cement in the world and for those who don't know they have a subsidiary in Nigeria and they are also the owners of elephant cement. So I don't see how that compares with what is happening in Mexico with Carlos Slim. If anything Dangote is in a precarious situation because Lafarge can potentially out-invest Dangote. Lafarge is about 20 or so times bigger than Dangote, so the fact that they haven't expanded their capacity in Nigeria is not government protectionism, its because they have decided to focus their investments elsewhere. Anyone that has read up on Dangote would know that every single penny he makes is reinvested in Nigeria.
Someone said I should try and see the positive in this article, how can I when everything said by this writer is false. Attempting to portray a Man in a bad light based on false premises. At the end of the day we can choose to have imports at a cheap price and have no cement industry or we can choose to allow a short-term price increase so as to spur investment and then have a cement industry and cheap cement in the long-run. If you were the leader of Nigeria which would you choose?
Not a bad article. The only problem is that none of these guys sought to become billionaires. They wanted to build an empire and are still building it. You should accept the fact that protectionism is ingenious in itself. Eat or be eaten. Its okay for people to accuse on Dangote, but I give it to the guy. As far back as the early 1980s, this young man sought to become the biggest sugar supplier. Plus the Nigerian economy is gradually booming, which is why we have only 3 billionaires, not 492 like the USA. Finally, the major reason why people are not feeling the economic boom, though sluggish, is because married men and women are increasing the population at an alarming rate of 3-5% per annum, but ignorance makes it difficult for them to check the economy they are introducing their children into…our economy cannot cater for all of us equally. Unfortunate…but it does not take away from the fact that Dangote, Adenuga and a few others are true business gurus.
Your argument clearly ignores the truth of the article. Dangote himself cannot deny fact that he enjoyed and still enjoys undue advantage over his competitors, as stated. He has once aknowledged that the price of cement was too high after which he promised to ensure price reduction. Is there a boom in building construction in Nigeria? The writer presented rational and rational arguments and conclusion. We need a better system.
You say these things like you are in dangote’s head, or you works one-on-one with the man “Dangote himself cannot deny fact that he enjoyed and still enjoys undue advantage over his competitors” What undue advantage is the 5years tax holiday every big entrant enjoy in the system? You need to get your own facts right. Dangote is not the only industry that enjoys this.
Stop spreading your ignorance.
Shameless nigerians that cant even successfully put their family on regular salaries looking for an easy cross to nail your incompetence
Olumide, i read the article very well, and i stand by my earlier comments. Thank you Tunji for throwing more light on this matter.
Elephant cement was doing fine until Dangote came with his business. And Elephant cement wasn't as expensive as the so called Dangote cement…..Dem all thief, acting like they are helping, but making it worse.
Oya oga mr depth, write ya own and put depth na. Billionaires that doesnt make impact or solve any economical issues. Some naija peeps will never seem to amaze me.
Tunji Oginni It is monopoly oga. Why is the government owned cement industry not doing well, why is some of the cement station owned by the government sold to Dagote. Guy, make una dey read well o! no come dey yawn dust for here.
You need to see beyond tribal sentiments here. Abeg read the article again. No one is attacking Dagote.
You need to see beyond tribal sentiments here. Abeg read the article again. No one is attacking Dagote.
would you have been able to give this article more depth, why don't you write a rejoinder and give it more depth as you say,its easy to stand on the fence and call out to workers in the field about where they missed a spot.
The article raises some valid points. It’s absurd that people are so wealthy when the system and industries they claim to derive wealth from are failing. And no one has asked any questions; I’m sure these people worked hard but we ought to ask questions
Stupid article. Dangote sells more Cement (and other products) outside Nigeria than inside Nigeria. His Cement factories in Benue and Kogi are among the biggest in Africa…..His gum factory is the largest in Africa and he exports all over Africa/Middle East…..I personally don’t like the man but that doesn’t mean I’ll accept every false info irrelevant people write about him. …he is thriving in Nigeria atleast, pls where are you thriving?????
God bless you Kelvin. Its amazing how people dont see how watery argument in this article is. Tunde should stick to “finding hubby”- esque-like stuff.
Dangote has major investment in salt, sugar, agrosacks, heard steel, flour etc. dude is doing well for himself while these incompetent journos are looking for an easy cross to nail their failed existence on. #Shame
Tunji Oginni …we can only learn from history, hindsight is 20/20. If you spent some time looking at historical data, you will appreciate the reference to monopolies that are encouraged by the governments of the day. The little competition you see today is as a result of changes in the regime. If an APC government comes in next year, you would most likely see a diff set of monopolies in diff sectors of the economy 'cos of protectionist policies and favoritism, a simple discussion with any of the companies competing with Dangote in cement or sugar will do more to convince you than anything i have to say anyway.
On a lighter note, a good nollywood answer to this post should be "shut up, make your 1st billion, then comeback…." 🙂
@Tunde Ogini try and see the positive aspect of this Article, also get some fact right about Richard Branson, He did not run from Nigeria, Virgin Atlantic is still operating in Nigeria, he went into Partnership with Nigeria Airways(Virgin-Nigeria) that has become history, he could not stand the corruption in the Aviation industry in Nigeria. Richard Branson has no issue with business in Nigeria, the issue is corruption.. and few idiots that are frusting the prospect of the business..
@Tunde Ogini try and see the positive aspect of this Article, also get some fact right about Richard Branson, He did not run from Nigeria, Virgin Atlantic is still operating in Nigeria, he went into Partnership with Nigeria Airways(Virgin-Nigeria) that has become history, he could not stand the corruption in the Aviation industry in Nigeria. Richard Branson has no issue with business in Nigeria, the issue is corruption.. and few idiots that are frusting the prospect of the business..
I absolutely love the comments i have been reading on here…the premise of the above article might not be water-tight as it should be, but it has elicited fantastic and educating comments from intelligent people (leaving aside the tribalistic one tho).
Well, as much as I like the thought process that went into the piece I must say it lacks depth. It only touches the issue on the surface. The cause and effect theory was not convincing. Who knows, maybe Nigeria economic space is peculiar and it might be wrong to compare it with other countries.I believe the writer is not an economis. So when you write about issues in which you are not an authority, you stand the chance of leaving out vital information that would have strengthen your argument. A good point you ve made, but more depth required.
Olumide Campbell Im not talking about 20 years ago, im talking about NOW….we have Ashakacem, Lafarge Wapco, CCNN and dangote. That doesn't seem like a monopoly to me. In Sugar i Know for a fact that we have BUA, Honeygold, Crystal Sugar, confluence Sugar and Dangote as well. So, kindly explain to me how that is a Monopoly. He might be a leader in both the sugar and cement sectors but being a leader doesnt necessarily make you a monopolist.
There you have it Nigerians! Ask questions
Hmmmnnn interesting to know!
Hmmmnnn interesting to know!
I cant believe you have done any research into the Nigerian economy, kindly read about the cement industry in the past 20yrs and you will understand why its a monopoly, you may wish to check out the sugar industry too..you may wish to do a comparative study on the price of cement in other climes too
Really we need to go above tribal sentiments, Dangote was only mentioned because he is the richest of the lot, the article is not about him, but all the billionaires in this economy who are simply ripping Nigerian consumers off because of ineptitude of government and favoritism. Do you remember how expensive it was to own and use a GSM phone 10years ago? do you deny that cement prices in this country are outrageous, do you see any correlation between the prices of real estate and the actual structural value of these houses, what impact have the commercial banks in our manufacturing, agricultural and SME sectors of the economy yet they keep posting billions of naira in earnings every quarter….sis keep the tribal sentiments down, and look at the bigger picture, our billionaires are not adding economic value….period. The productive sectors of this economy are largely managed by outsiders; South Africans, Chinese, Indians etc
This article seems to forget or just simply overlooked some basic things. One, Dangote is NOT a monopolist in the cement, flour or sugar industries he is into and his wealth is based on the value of his companies on the Nigerian stock exchange. So your idea about him being worth more than the value of his companies is just false. Also, his net-worth was calculated by Forbes…..FORBES!!! I don't get what you're on about. Then the whole thesis of your article is just wrong, it can be argued, and I say argued, that he might not thrive outside Nigeria but the same could equally be said about any foreigner trying to set up shop in Nigeria. A whole Richard Branson had to run back after he saw that doing business in Nigeria is difficult. We do not hear of Virgin Nigeria anymore. Whether you like it or not he has added value. We do not import cement anymore, and there is simply no way a NSE-listed cement company will post profits without having sold Cement it's basic logic. So your idea about there being no building boom is equally false, maybe not on the scale of China. Get your facts right before you come on here and spew rubbish.. And Finally, it seems you're mixing things up, the billions he has made over the past years were mostly made on paper and not raw cash. Stock exchange billions!!!
Ever since forbes named Dangote a northerner as one of the worlds billionaires, it has been one hate article after the other from the southern press. This is inspite of the fact that most of Dangotes business concerns are located in the south with beneficiaries mostly southerners. The northern had been written off as backward, illitrates, almajiris, parasites and boko haram, so haters can not live with the fact of international northern billionaire. The other time, i read a write-up by another southerner where boasted that he turned down a consulting job from Dangote unless he brings down the price of cement. All these attacks i fail to understand. That the impacts of the billionaires we have is not felt is because we have just few of them who into production or manufacturing. The rest are stolen government funds and oil rig billionaires whose monies are taken abroad with no investment in nigeria. You also deliberatly overlooked the fact that all countries protect their businesses, so it is not peculiar to nigeria. If today you are patrotic enough to do business in nigeria, you will enjoy the same protection. Business climate is so harsh in nigeria that i have nothing but admiration for those nigerians who despite all odds have continued. Many businesses as you you know had either closed or relocated to another countries because of the almost impossible business enviroment. If we can not commend these resillient business men, we shouldnt maliciously run them down and put the world on notice that these our billionaires thus recognised are fraudulent. Too bad!!!
Okechukwu Ofilispeaks.com Ofili Thanks for sharing this article.
Best article I have read here in longtime
Best article I have read here in longtime
As reluctant as I am to use this illustration, I still beg to be pardoned. Mr Tunde, please super impose this exact article upon another worthy Nigerian billionaire, Mr Adenuga. I am quite certain you will have to reassess the premise of your argument. I am sure about that because GLO is truly an example of the ingenious excellence of a Nigerian mind.
Bogus headline, good body, flawed argument, dogmatic opinion which probably would draw an unsuspecting and unguided eye in. But here mister Tunde,.. (1) Dangote's business tentacles goes beyond Nigeria and he is doing well from all Indication, even outside Africa (2) Dangote's wealth is derived not only from cement but covers – sugar, salt, agrosac, integrated steel and few newbies in the pipeline petrochemical, fertilizer, refinery etc (3) Im compelled to believe your perception of construction sector is poor. This is my field and alot is going on. What im saying is – there is a huge demand for cement and its just right that people buy what is available.
I find it ridiculous that you will blame soaring rent on cement prices…. Camman Tunde, I believe you process information better and should find a better excuse to rant about your landlord's strategic aim of feeding his greed with your monthly allowance.
I used to share your thoughts but i have had to reconsider my stance given alot of factors.
You all shout "monopoly' but then we have Lafarge in Nigeria (The biggest cement manufacturer in the world, they just recently acquired Holcim) you think they dont have the financial muscle to take over African market? Of course they do, but in as much as Africa (Nigeria) is the next investor's toast, the basic ingredient for industrialization is missing – Power, transport, communication
Dangote generates his own power to run all his plants and also transports them. If you expect him not to pass on the cost to the market, then you yourself are an enemy of progress. I cant remember your books selling for free or next to nothing.
You have clearly picked a wrong poster child for your rant – and im tempted to believe this is malicious in every sense of it.
But then what do i know? A prophet is not honored in his own land.