Transcript Slide 1

100 YEARS OF NATIONHOOD–
AN ENTREPRENEUR’S PERSPECTIVE
Being Presentation made by
Alhaji Aliko Dangote, GCON
Guest Speaker at the LCCI Centenary Anniversary Lecture
3rd October 2013
1. Preamble
 A century is a major milestone in the life of any entity – it is
especially significant for a nation like Nigeria which has had its
own fair share of upheavals (colonization, imperialism, civil war,
political strife, communal clashes, religious crisis &more recently insurgency).
 While one can justify some degree of festivity, it is also a good
time to reflect and appraise different aspects of our national life
 Today, I have chosen to reflect on an activity that is of interest to
all of us; one that is as old, if not older than Nigeria itself –
PRIVATE ENTERPRISE.
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2. The Evolving face of Private Enterprise
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Pre Colonial Era (Pre- 1861)
Colonial Era (1861 – 1960)
Early Independence (1960s)
Oil Boom (1970s)
A Rude Awakening (1980s)
Austerity, Structural Adjustment, Deregulation (80’s and 90’s)
Another Oil Boom (2000 to date)
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2.1 Pre - Colonial Era
 Long before the colonial period, “Nigerians” operated
considerable market-oriented economies in such areas as
commerce, agriculture, fishing; smelting, arts & crafts etc.
 Trading centres existed as well as various trade routes.
 By the 19th century Britain had a dominant commercial
presence in West Africa – opening markets for its manufactured goods
and expanding commerce in agricultural raw materials.
 By 1850 there was significant concentration of British trading
interests in Lagos and around the Niger River delta.
Commercial activities by the natives was largely unstructured and informal
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2.2 The Colonial Era
 British administration in Nigeria formally began in 1861, when
Lagos became a crown colony.
 The economy was dominated by Agriculture (production of industrial
raw materials such as cocoa, oil palm, cotton, groundnut & rubber for export
to Britain) and Trade (expansion of markets for finished products of the
colonialists).
 The colonialists were not keen on promoting industrial activities,
in order to protect the market for products from their home
country.
 Entry of foreign trading companies – some of which were
precursors to present day multinationals.
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2.2 The Colonial Era……………………………..….cont’d
 Infrastructure was essentially designed to support the
commercial interest of the colonial masters (rail lines ran North –
South for evacuation of produce &minerals. There was no East - West rail line).
 Entry of Foreign Banks – Standard Bank, Barclays Bank etc.
 The colonial authorities and some foreign firms were also
involved in the mining of minerals such as coal, tin, gold etc.
Indigenous businesses had not developed any significant capacity and commercial activity was
driven by foreign trading companies, foreign banks and later by a few nascent manufacturing
companies (encouraged by the industrial sector pioneer industries schemes of the 1950s)
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2.3 Early Independence
 Agriculture continued as the lifeblood of the economy
(accounting for ~ 65% of GDP and ~70% of exports).
 Cocoa, cotton, groundnuts, oil palm products, and rubber were
the principal export crops in the 1960s (and early 1970s).
 Agriculture largely provided the foreign exchange that was utilised
in importing raw materials, capital & consumer goods; as well as
funding basic infrastructure needs.
 Food security was achieved - not just because peasant farmers
were able to produced enough to feed the entire population (but
also because Nigerians had not yet developed the palate to
consume what they did not produce).
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2.3 Early Independence …………………………….. Cont’d
 Entry of more foreign companies (trading & manufacturing) as
well as the commencement of manufacturing activities by some
erstwhile foreign trading companies.
 The 1st National Development Plan (1962-1968) ensured that the
State participated in economic activities, directly and indirectly.
 Infrastructure (roads, railways, power, water, communication etc)
was not sophisticated or extensive but was quite functional.
Emerging Industrial Sector propelled by government’s direct involvement in productive activity
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2.4 Oil Boom Era (70s)
 Contribution of agriculture to GDP steadily decreased and by the
mid-70s the nation had become a net importer of food.
 Dependence on oil increased and it soon accounted for ~90% of
foreign exchange earnings and ~85% of exports.
 Rapidly increasing revenue and a strong Naira fuelled imports.
 The Nigerian Enterprises Promotion Decree of 1972 and 1977
further provided a concrete basis for government’s extensive
participation in the ownership and management of enterprises.
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2.4 Oil Boom Era (70s)………………………………..….cont’d
 Indigenous private sector was weak /undeveloped and
government simply filled the void.
 Proliferation of public enterprises as Government (Fed & State)
became directly involved in virtually all aspects of the economy.
 Government interest was spread over activities as diverse as
agriculture, energy, mining, banking, insurance, manufacturing,
transport, commerce, hospitality, media, telecommunication etc.
Government intensified its control of the Nigerian economy
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2.5 A Rude Awakening (80s)
 Crude oil prices steadily declined.
 Serious structural problems in the economy began to manifest
(arising from poor management of oil receipts, misplaced
priorities, ill-conceived government policies and poorly executed
projects).
 Economic policies encouraged consumption rather than
production (the economy was consuming what she was not
producing and was therefore very vulnerable to external shocks).
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2.5 A Rude Awakening (80s)…………………. cont’d
 Proceeds from the oil boom had not been used to lay a solid
foundation for economic development and diversification.
 Unproductive public sector investments were a huge drain on the
Treasury.
 A new “business class” had unwittingly been created – one that
was solely dependent on government contracts and was not
engaged in any visible productive activity.
This set the stage for the challenges the private sector had to contend with in the decades ahead
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2.6 Austerity, Structural Adjustment & Guided
Deregulation (80s and 90s)
 Mounting debts and falling real incomes necessitated several
government austerity measures to rein in public spending.
 The Economy slipped into recession in the 1980s.
 Quality of life indicators deteriorated (standard of living was
lower in the mid-1980s than in the 1950s).
 Structural adjustment was aimed at minimizing dependence on
imports, enhance the non-oil export base, deregulation,
commercialization and privatization of SOEs.
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2.6 Austerity, Structural Adjustment & Guided Deregulation
(80s and 90s) …………………………………cont’d
 Several programmes were introduced and institutions established
to organise the informal sector and alleviate poverty.
 The Privatization and Commercialization programme commenced
 Laws promulgated to abolish exchange controls and attract FDI.
Several sectors of the economy were opened up for the first time to the private sector. The
overall impact on the economy was however not as significant as expected because of
macroeconomic instability, policy distortions that encouraged speculation & arbitrage, tensions
in the political environment, inability of financial institutions to support productive activity etc.
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2.7 Another Oil Boom (2000 to date)
 Crude oil prices recovered and progressively rose to as high as
US$147.
 Democratic governance entrenched.
 Improved management of the macro economy (useful lessons
learnt from the past).
 Huge foreign debt burden was negotiated & repaid.
 Major reforms in key sector of the economy (telecoms, power,
pensions, banking, insurance, taxation etc).
 Continuation of the privatization exercise.
The private sector was able to take advantage of many of the opportunities arising from
government’s reform programmes
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3. Profound Changes in the Business Landscape over
the past Century
 The private sector has made in-roads into sectors which at a time
were (inexplicably) regarded as “no-go areas” eg: Electronic
Media, Aviation, Tertiary Education, Port Management etc.
 The private sector has almost completely crowded out
government in sectors where they once actively participated – eg
Print Media, Hospitality, Cement, Breweries, Aviation etc.
 Major public sector monopolies have been broken up – the
enormous capacity of private enterprise is now proudly on display
in the telecoms and cement sectors, and will soon be unleashed on
the recently privatized power sector.
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3. Profound Changes in the Business Landscape over the past
Century..............................................................................cont’d
 Private sector participation is growing in areas such as Fertilizer,
Petrochemicals etc.
 Indigenous entrepreneurs now dominate some sectors that were
at inception controlled by foreign firms/federal and state
governments eg: – Financial Services, Cement, Petroleum
Marketing etc.
 Indigenous firms are also making in roads into the upstream oil &
gas sector.
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3. Profound Changes in the Business Landscape over the past
Century..............................................................................cont’d
 The private sector has achieved self sufficiency in some sectors of
the economy eg- Cement.
 Nigerian firms (in different sectors of the economy) are now
stepping outside their comfort zone and leaving their footprints
across the continent – and beyond.
 Exciting new frontiers have opened up - Entertainment, On-line
retail, Tourism, ICT etc.
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3. Profound Changes in the Business Landscape over the past
Century..............................................................................cont’d
 The Nigerian Financial Sector has also demonstrated its ability to
support big ticket industrial projects - the most recent being the
US$9 billion refinery project by Dangote Group.
Government (past and present) must also take a lot of credit for these achievements which
would not have been possible without the implementation of the right policies and
enactment of appropriate laws
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3. Profound Changes in the Business Landscape over the past
Century..............................................................................cont’d
A quick illustration with the Cement Sector
 Local cement production in 2003 stood at less than 2Mmt
compared to the present industry capacity of ~ 28Mmt.
 Nigeria has moved from being one of the largest cement
importers in the world to a position of self sufficiency in
cement production.
 No single import licence has been granted by the FG in the
past 2 yrs and the country has actually commenced cement
export for the first time in its 100 year history!
 Dangote Cement will commission an additional 10Mmt
capacity in Nigeria by the end of 2014 (we will also invest US
$4.7B over the next 4 yrs to ensure that cement supply stays
ahead of demand).
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3. Profound Changes in the Business Landscape over the past
Century..............................................................................cont’d
A quick illustration with the Cement Sector ….cont’d
 Considerable benefits
have accrued to
cement consumers as
ex-factory prices have
been stable over the
past 5 yrs - because
manufacturers now
have greater capacity
to absorb increases in
input cost (as a result of
the higher volumes they now
produce.)
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4. There is still a long way to go
 Some sectors of the economy have almost been completely
obliterated eg. – Textiles, Tyre Manufacturing etc.
 The Agricultural Sector which guaranteed food security and
contributed significantly to export revenues in the 60s/early 70s
can no longer do so.
 MSMEs are struggling to survive despite numerous government
initiatives.
 Unemployment and under employment are both quite high.
 Long term funding is still very difficult to come by.
 Infrastructure challenges have diminished our competitiveness.
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5. Setting an Agenda for the next decade
For the Private Sector
3 key areas of opportunity immediately come to mind
i. Agriculture

Our massive annual food import bill presents a glaring opportunity for
the private sector. It will help address the issue of food security, provide
raw materials for agro-based industries, create jobs and generate export
revenues.
ii. Education
 The billions of dollars expended annually by Nigerians in foreign
educational institutions is yet another opportunity for the private sector.
iii. Infrastructure
 the private sector should come up with sustainable PPP models for
infrastructure development, maintenance & management.
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5. Setting an Agenda for the next decade………….....…..cont’d
For Government
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Improve the business climate and continuously benchmark our business
environment against “best-in-class” investment destinations.
Implement the recently unveiled Nigeria Industrial Revolution Plan.
Support the new investors in the power sector to ensure they “hit the
ground running” and provide the kind of outcomes Nigerians desire.
Ensure that long term development funding is available, accessible and
affordable.
Decisively address the decay at all levels of our public education system physical infrastructure, curriculum, pedagogy, standards etc.
A workable model needs to be developed that provided good quality
subsidized education but requires students to repay (over time) when they
secure employment (or begin to generate income).
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6. Dangote Group is poised to make its own contribution
………US$ 16 billion investment over the next 4 years !
Our Medium Term Growth Plans (2013 - 2017)
Sector
Capacity
Refinery/ Petrochemicals 400,000 bpd refinery
650,000 mtpa
Cement
55M mtpa
Fertilizer
2.8M mtpa
Sugar
1.5M mtpa refined sugar
Investment
Contribution to
(in US$ billion)
GDP by 2017
(in US$ billion)
9.0
21.8
4.7
8.8
1.6
2.0
1.5
150 kl ethanol
100 mt biocomost
Animal feeds
350MW power
Food Sector
0.3
1.0
(Rice, Palmoline, Seasoning, Tomato
Puree, Salt, Flour, Pasta etc)
Polypropylene bags
T
O
T
A
648M bpa
L
(US $ billion)
0.2
16.0
34.9
Note:
 Our investment in
Agriculture is driven by
our desire to create jobs
for thousands of
Nigerians.
• It will increase our
workforce from its
present level of 26,000
employees to ~750,000
employees
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7. Conclusion
 I look back at the past century with mixed feelings
 a tinge of regret for the lost opportunities and wasted
years; and
 some satisfaction for what we in the private sector have
collectively been able to achieve in spite of the challenges
we have faced
 Nigeria has in spite of its infrastructure challenges been able to
achieve GDP growth rates of 6% - 7%. Now these challenges are
being addressed, I am optimistic that the future is bright and that
we will witness the kind of double digit growth rates recorded by
the Asian Tigers, India and Brazil.
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Thank you for your attention
and
God Bless Nigeria
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