Dangote: For profit and country

Capitalism is about profit for the capitalist, wherever in the world he could get it. It is also fundamentally about national interest because capitalism is historically a creation of the nation-state. In the United States right now, the world’s biggest and most advanced capitalist economy, economic nationalism in some form has been a stable part […]

Capitalism is about profit for the capitalist, wherever in the world he could get it. It is also fundamentally about national interest because capitalism is historically a creation of the nation-state. In the United States right now, the world’s biggest and most advanced capitalist economy, economic nationalism in some form has been a stable part of American history since its founding: be it tariffs, subsidies or tax breaks for local industry.

For Nigeria, the lesson is that ideological orthodoxy – or rather, naivety – has no place in serious economic statecraft. Capital is free to pursue profit wherever it leads, but profit-making impulses must serve the nation’s strategic interests. This is how, in my view, we here in Nigeria must situate the still-budding capitalism of Alhaji Aliko Dangote, President of the Dangote Group. To do that, however, we must first understand Dangote’s evolution and transformation into Nigeria’s foremost capitalist over the past four decades or so.

Dangote began his business career as a trader importing and selling goods like rice, sugar, flour, textiles, cement and other items that meet the basic needs of Nigerians. Most of the goods he traded in were largely imported, rather than produced locally by factories, farms or industries he owned. In this sense, he was essentially a middleman or what dependency theorists and Marxist political economists of the 1970s used to call “lumpen bourgeoisie”.

By lumpen bourgeoisie, the dependency theorists meant the capitalist class in “dependent” or “peripheral” countries like Nigeria who were not themselves producers of goods or engaged in industrial capitalism, but who rather, made money through import–export trade, speculation and rent-seeking. The critical argument of the theorists was that the “lumpen bourgeoisie” in places like Nigeria, as agents of foreign capital, lacked an adequate local productive base, and therefore were incapable of leading domestic national economic development. Serious capitalist economic development, the theorists concluded, must be rooted in a strong local productive capacity, not tied to the apron strings of foreign capital.

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My argument, however, is that Dangote, perhaps more than other Nigerian capitalist, has successfully outlived this theory, and that his journey, still ongoing, presents Nigeria with a useful model that could be adapted and expanded to build a more viable and enduring capitalist development that aligns strategically with our national economic interests. The current practice of dependence on foreign production across most sectors is no option. Doing that, we must remark, is the role of the state, not of business or the economy itself.

By the early 2000s, when Dangote was already one of the wealthiest Nigerians, his career took a considerable turn from a middleman trader to what political scientists call “oligarch” in the original sense of the term in former communist countries. That is, a new stratum of capitalists taking control of state-owned enterprises. The key shift was former President Obasanjo’s privatisation policy, whereby dozens of “underperforming” state-owned enterprises in several sectors were sold off to a new class of Nigerians who, as the dominant narrative of the day went, would transform them into more viable entities.

The story of that privatisation policy has not yet been fully told by our journalism and academic classes, but for the moment, it is enough to note that more than two-thirds of those previously state-owned enterprises have failed because most of the buyers lack both the capital and the enterprise to turn them around, while the government, hollowed out by corruption and incompetence from within, has lacked the imaginative capacity to guarantee success. The privatisation of the electricity sector in 2011 remains a sore example of this collective national failure at the development of a productive capitalist economy.

Dangote, however, was not just one of the leading beneficiaries of that policy, but also one of its few success stories. Rather than import rice, flour, sugar, fertilizer and cement, he now produces them at manufacturing plants across the country. For Nigeria, the shift from importer to local producer is significant in itself, but it still misses some key elements of a sustainable capitalist development. It is one thing to buy off and successfully run previous state-owned enterprises like Benue Cement (Dangote) or Nicon Hilton (Tony Elumelu). But it is another thing entirely to build them from the scratch on your own. Creating value from the ground up is the hallmark of a serious capitalism of the sort under discussion.

This last point is where Dangote stands now, and why it matters to Nigeria as a whole. The Dangote Refinery project is the man’s first effort at industrial capitalism building from the ground up, and hence completes his transformation to a capitalist in the classical value-creating sense. This is not just because of the massive size of the refinery, which is noteworthy in itself, but precisely because of the element of innovation, of building something from the ground up, or of creating enduring value where there was once none. Warts and all, this is a transition we have not seen in many of Dangote’s businessmen peers.

The refinery also lays bare the extent of organisational and cognitive competences required to build global capitalist projects from the scratch. Completing the refinery required quick personal mastery of lots of technical information on a very complex global industry like oil and gas, sustained problem-solving abilities across multiple fields, and of course, the ability to mobilise people and capital on an extraordinary scale. Above all, it requires the ability to take calculated risks, personal and organisational financial discipline, laser focus on clear objectives and an orientation that is both attuned to the present and the long-term.

All of these are in fact among the top qualities needed in abundance in a productive capitalist nation of the kind we seek. Hence, the more Dangotes we have, the better for Nigeria, all imperfections noted. When we have 200 Dangotes competing and collaborating across various sectors, both they and the country will be better off for it.

Therefore, the task of the Nigerian state is to expand its own capacity to create and sustain more enterprises of this scale in all sectors of the economy and society.

Many commentators have stressed why it is important for the government to support Dangote’s refinery project because of the jobs, taxes and foreign exchange pressures, etc. These observations are correct, and there is also the issue of multiplier effects in terms of expanding Nigeria’s local technical know-how, and the revival of interconnected sectors like petrochemicals, fertilizers, plastics and expansion in transport networks, all of which make the refinery project a strategic national asset. In a world increasingly fractured and uncertain—think Russia vs Europe for just one example—continuing dependence on imported fuel is worse than dangerous folly. It is a direct national security threat.

For me, however, the most important thing is the demonstration effect, which is what I have been trying to argue throughout. Dangote’s transition from trader to oligarch to a complete capitalist should be understood as Nigeria’s transition too because it signals the arrival in Nigeria of a local competence for creating a truly world-class capitalist project that can compete and endure on the global economic stage.

That local competence of this scale is what Nigeria needs to transition into a first-world economy, because it is only when we build, grow and sustain dozens of local but truly world-class enterprises across all sectors, that we can take our place in the world. It means we now have a model of state capacity that can readily transfer to other manufacturing and industrial sectors like large-scale local but global engineering and construction firms, automobiles, aircraft and railways rolling stock, electronics and machine tools enterprises, grid and solar energy corporations and global services companies of all kinds.

A country of 230 million people must have the local capacity for creating and sustaining all of those things, and more, on a global scale. The Dangote Refinery project shows the way. How many Chinese enterprises are operating in Nigeria and in much of the world today which were not there 30 years ago? That is the point. It all started with one success story.