The Rich(est) Also Cry

The phrase “the rich also cry” can metaphorically relate to the recent challenges faced by Alhaji Aliko Dangote, Africa’s richest man and the founder of Dangote Group which is a large conglomerate involved in various industries including cement, sugar, and oil. Despite his immense wealth and influence, Dangote is currently facing business and personal challenges, illustrating that even the wealthy are not immune to difficulties especially in this part of the world.

According to the Forbes 2024 Billionaires List, Dangote wealth is estimated at of $13.9 billion. Like many global businesses, Dangote’s enterprises have been affected by economic fluctuations, especially in Nigeria where his businesses are heavily concentrated including inflation, foreign exchange shortages, and political instability.

Also, the stock market and commodity prices can be highly volatile. For instance, the prices of cement, a key product of Dangote’s business, has fluctuated significantly due to changes in demand, supply chain issues, and global economic conditions. The global supply chain has faced unprecedented disruptions in recent years, affecting the transportation of goods and raw materials.

Nigeria’s infrastructure, including power supply and transportation networks, often faces problems, which can hinder business operations and efficiency. Operating in multiple industries, Dangote’s businesses are subject to extensive regulatory oversight. Changes in regulations or increased scrutiny can pose challenges. Political instability in Nigeria and other African countries where Dangote operates also create an unpredictable business environment, affecting investments and operations.

Dangote’s most ambitious project, the Dangote Refinery, has faced multiple delays. Initially scheduled to start production years ago, the project has been pushed back several times due to various challenges including funding issues, construction delays, and complex logistics. This has been a significant setback considering the refinery’s potential to transform Nigeria’s oil industry and reduce its dependency on imported refined petroleum products.

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Rumour has it that during the 2023 Presidential election, many of Nigeria’s billionaires and elites including Dangote, pitched their tents with the three main presidential candidates namely, Peter Obi, Atiku Abubakar and Bola Ahmed Tinubu based on who will better deploy economic and fiscal policies to favour their businesses and the country. Though the latter is far reaching.

There are varied accounts about whose presidential campaign bid Dangote supported during the elections and how that singular decision may be responsible for his current business woes. He was the darling of successive governments whose policies and support have helped build his business empire across Nigeria and Africa. However, that has not been the case in recent times.

Dangote’s influence over the Nigerian government seems to be waning and he no longer holds the coveted position as the favourite of a sitting government. For the first time, other business magnates, such as Abdul Samad Rabiu and Tony Elumelu, have gained favour by fully backing President Tinubu during his campaign. “This is the first time the elected government is not particularly aligned with Aliko,” said a senior banker to the Financial Times, noting that this shift has created opportunities for others to assert their influence.

The biggest casualties from this political brouhaha are the Nigerian economy, the average Nigerians and the 650,000 barrels per day Dangote refinery, which has been starved of crude oil by the Nigerian National Petroleum Corporation (NNPC). This lingering stalemate is based on an initial contractual agreement between Dangote and NNPC in the last administration of President Muhammadu Buhari.

Apparently, the NNPC was to invest $2 billion in the Dangote refinery or the equivalent in crude oil which will give NNPC a 20 percent stake in the Dangote refinery. NNPC chose the former in lieu of cash. However, the NNPC has failed to fulfil its own side of the bargain forcing Dangote to cry out to the public or on social media like many of us do when government oppresses us. That age old and tested trick might have worked for Africa’s richest man as the NNPC and Dangote are now back to the negotiation table.

Misery Loves Company

If the number of memes and takes on social media are anything to go by, it is obvious that many Nigerians have welcomed the billionaire to the club of those who suffer in the hands of government due to policy summersaults, lack of proximity to the corridors of power, corruption and many other vices. The question is, will he stay on this side of frustration with Nigeria long enough to feel the people’s pain to make a difference?

While Dangote has been accused of monopolistic practices, he defends his business by attributing his company’s large market share to an effective marketing strategy. He argues that this success is due mainly to access to highly skilled personnel and substantial resources, which enable superior strategizing and market penetration.

A former CBN Governor and Emir of Kano, His Highness Sanusi Lamido Sanusi cautioned against letting our views on forex policies becloud our sense of priorities. According to him, providing dollars for the construction of a refinery is better than giving same to rice importers and indeed almost every other enterprise apart from education and health, given the impact on the macro economy. Furthermore, he argues that relying on a local refinery is far more secure for our energy security than on imports and the current stalemate is as a result of the lucrative subsidy scam that the Dangote refinery will hopefully end.

What Lessons For Us All?

Dangote’s current political woes offer a few lessons for business leaders and entrepreneurs. Perhaps this is a watershed moment for his business empire, or not.

For one, political alignment is fluid and reliance on political favour can be precarious and can rapidly change a business’s standing, underscoring the importance of maintaining flexibility and preparing for varying political climates. Hence, diversifying political alliances and building relationships across the political spectrum to mitigate risks associated with changes in government can help ensure continued influence and support regardless of which party is in power and political winds shift.

Secondly, transparent and ethical business practices can enhance a company’s reputation and resilience. Avoiding overreliance on political connections will reduce the risk of becoming entangled in political controversies. The refinery business, unlimited access to forex, sector monopoly and of course favourable taxation are examples.

Finally, businesses should use their positioning and advantage to influence positive industry-wide reforms that favour not only them but the communities they serve for when the tides are low. These lessons highlight the importance of strategic foresight, adaptability, and a balanced approach to navigating the complex interplay between business and politics.

Dangote’s experience is the lived reality of thousands of individuals and small businesses every day from the stumbling blocks of systems and structures that the regulatory agencies in Nigeria put in the ways of entrepreneurs. Many of these business do not have the connections, monopoly, resources and the agency that Dangote has wielded and continues to wield to navigate the rot, corruption, ineptitude and lack of transparency that currently define our business environment.

Even while doing the right thing and following laid down rules and regulations, Nigerian business owners suffer untold hardship from policymakers, tax agencies and other state apparatus that undermine their businesses. These challenges underscore that wealth and success do not shield individuals or businesses from experiencing significant obstacles and setbacks especially in Nigeria.

One way or the other, if the dysfunction in Nigeria is not addressed, every one of us, rich or poor will at one point or the other “chop breakfast” – a Nigerian parlance for heartbreak.