Dangote calls on government to protect local industry

Dangote Group Chairman Aliko Dangote has advocated for policies aimed at protecting domestic industries and transforming them into homegrown leaders capable of creating jobs and fostering prosperity in the face of current global economic challenges.

The renowned entrepreneur, while delivering a speech on “Rethinking Manufacturing in Nigeria” as a keynote speaker at the Nigerian Manufacturers Summit, told the gathered manufacturers and investors in Abuja that Nigeria has what it takes to achieve prosperity.

Dangote, who noted that there were many factors contributing to the poor performance of the manufacturing sector, stressed that the most important issue requiring attention was government policies and its approach to investments and investors.

He emphasised that industrial and manufacturing entities are different from commercial entities, while expressing his belief that the primary role and responsibility of government should be not only to promote investment and attract investors to the manufacturing sector, but also to ensure that these investments are supported and protected in order to facilitate growth and sustainable development.

“In any economic system, even the most advanced, investment projects in the manufacturing and industrial sectors require time and a favourable environment to mature, build capacity and scale to become competitive with those in older and more mature markets.

“However, since the mid-1980s, non-industrialized countries and their leaders have been discouraged from protecting and supporting such investments and have been forced to expose them to unfair competition from stronger, older competitors in their own domestic markets, even before new players are hired. Yet these same older/larger players are well supported in their domestic markets,” he said.

He cited several examples of government intervention to protect the industry: blocking the sale of American steel to Japanese company Nippon Steel, blocking the sale of six American port management companies to Dubai Ports World, restrictions on Chinese cranes in American ports and the imposition of U.S. tariffs such as 100% on Chinese electric vehicles and 50% on semiconductors, medical products and solar panels.

He also cited the reduction in gas supplies from Russia to Europe, which has prompted European countries to increase their use of coal despite their opposition to fossil fuels, and the fact that the U.S. government has allocated $39 billion in subsidies for local microchip production.

Dangote referred to Asia, which had achieved significant levels of industrialization through industrial policies in which the government played an active role in nurturing and supporting local businesses. They then leveraged that success to attract foreign direct investment (FDI) into free trade zones.

He stressed that government protection of industry does not only encompass short- and medium-term regulatory mechanisms such as tax holidays and other incentives, which have their place in industrial policy and should be used when needed to ease investment challenges.

“I want to see a long-term policy framework that ensures that investors can invest in the knowledge that this industry will be seen as a national asset in the long term, not just as an investor asset, so that when it comes to a threat, whether from external forces or changes in the environment beyond the control of individual operators, the government will take appropriate action to protect investors and support them to weather 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, noting that had such policies been adopted in the past, Nigeria would have bolstered its thriving textile and tyre industries, as well as its functioning refineries.

“If we had adopted this policy and approach of the government towards the textile and tyre industries in the 1980s and early 1990s, perhaps our economy would still be benefiting from the job creation potential of these industries. Or if we had adopted this approach towards our refining industry, Nigerians would not be so concerned about the Dangote refinery today,” he said.

Disputing claims that protecting domestic industries leads to less competitiveness, Dangote argued the opposite, citing examples such as China, Korea, India and various other Asian countries. He stressed that these countries have successfully developed into strong economies and are challenging the established global economic order precisely because they have protected their industries.

He noted that historically, Nigeria had not been competitive in cement production, producing less than 2 million tonnes of cement per year until 2007. He stressed that with strategic government policies and support, Nigeria has since become Africa’s largest cement producer and exporter, ranking among the top ten countries in the world in terms of competitiveness.

Dangote noted that in 2023, Dangote Cement alone contributed more tax revenue to the government than the entire banking sector. “Historically, Nigeria has not been competitive in cement production. Until 2007, Nigeria produced less than 2 million tons of cement per year. We currently have about 60 million tons of production capacity and another 9 million under construction.

The foundation for this success story was laid by the administration, which decided to extend full support and protection to the Nigerian cement industry. Today, we are one of the 10 most competitive cement producers in the world and the largest cement producer and exporter in Africa. In 2023, Dangote Cement alone paid more taxes to the government coffers than the entire banking sector,” he said.

Dangote also dismissed claims that protecting industries would lead to monopoly, stating that it was common knowledge that foreign investors only come in when they see that local investors are also doing well.

“I am confident that as government policies become more supportive and protective, investors will be more willing to cooperate and partner with the government in addressing other issues such as infrastructure deficits, market instability and macroeconomic issues such as inflation and currency volatility,” he added.

Reiterating that Nigeria has what it takes to develop and sustain a globally competitive manufacturing sector, Dangote called for a rethink of its industrialization policies, learning from leading countries in the West and East that are actively protecting their domestic industries. #Dangote calls on govt to protect local industries

We see energy demand rising by 23% by 2045 – OPEC