INSIDE AFRICA

Matters seem to be taking a turn for the better in Nigeria, going by the performance on President Yar’Adua during his first 100 days of tenure.

In particular, one can observe a distinct inclination adhere to the rule of law when certain decisions made by the past President were overturned or ignored. There has been a general and widely acknowledged perception amongst the Nigerian business circles that the earlier government favoured certain business houses that promoted monopolistic practices in a self serving manner, often at the cost of people’s interests.

Amongst numerous instances supporting this view, one can recall the obviously illegal deportation in May 2003 of the Vaswani brothers from the country without even according the basic rights of a due process. Given Yar’Adua’s displayed trait of adherence to the law, such a gross violation of justice would seemingly never be possible to achieve in the current scenario.

The cluster of monopolies generated over the last few years in the industry sectors of cement, sugar and other prime commodities face a clear prospect now of rapid disintegration, thanks to Yar’Adua’s bold decisions in the recent weeks. An excellent example if the case of IBETO CEMENT, a factory that was ordered by the President to be reopened recently in the interest of the public and with genuine intentions of removing monopoly in the industry.

1.	The truth is that about 80% of all the cement currently consumed in Nigeria is imported.
2.	It is also pertinent to note that there are only six (6) organisations in Nigeria with the capacity to import or manufacture cement. These are; the Lafarge Group, Dangote Cement, Flour Mills of Nigeria, Eastern Bulkcem (Eagle Cement), Ibeto Cement Company and the Cement Company of Northern Nigeria.
3.	Among these, Dangote has been and remains the biggest importer of bulk cement into Nigeria, thanks to the Federal Government yearly allocation that favours Dangote with a quota of 6.5 million - 9 million MT per annum, against 3.2 million MT per annum shared out among the rest of the other four companies, excluding Ibeto Cement.
4.	Lafarge, a French company, had entered Nigeria some ten years ago, promising to invest heavily in the Nigerian cement industry. A grateful Nigerian government threw our doors open, enabling the company to pick up some very rich assets at rock-bottom prices. Since these concessionary acquisitions, Lafarge has largely been reaping without sowing. Practically none of the expected expansions promised by the company in these plants have been realized.
5.	Instead Lafarge manoeuvred itself into becoming the Lease Manager of the Onigbolo Cement Factory, owned by the governments of the Benin Republic (51%) and Nigeria (43%). Lafarge, which has no single share in this partnership, has become the main beneficiary of that investment. This is achieved through manipulating the loophole that allows Lafarge to import cement duty-free from Benin Republic, which is an ECOWAS member country. The Onigbolo plant has become a clever conduit for cement to be brought in from overseas and laundered through the Onigbolo plant and then pushed into Nigeria, duty free, under cover of the ECOWAS protocol. This is why Lafarge is able to import so much cement into Nigeria from this tiny Benin plant with the claim that the plant is producing at full capacity.
6.	This is especially important because of the fact that there is no evidence that the duty waiver so far enjoyed by Lafarge has translated into lower prices for the Nigerian consumer or substantially the improved welfare for the company’s Nigerian workers.
7.	It is noteworthy that just before he left office, President Obasanjo directed the Bureau of Public Enterprises to transfer to the Dangote group the Federal Government’s shareholding in this tiny Benin Republic Cement plant. Could it be that the La Farge and Dangote monopoly-promoting and strategically mutually beneficial relationship in Nigeria is being exported to the cement plant in the Benin Republic?
8.	A good example of this foreign company’s manipulative ways was, in the recent past, manifested in their success at contriving with President Obasanjo to shut down Ibeto Cement – a setup by the vicious cement cartel of which Lafarge is an important arrowhead.
9.	Dangote Cement, comprising Benue Cement purchased from the Bureau of Public Enterprises in 2001 and still struggling at a meagre production level of 350,000 MT per annum; Obajana new cement plant hurriedly commissioned by President Obasanjo with a claimed capacity of 5 million MT per annum which in reality is producing less than 500,000 MT per annum. Dangote Cement has been in the business of bagging bulk cement since 1995, over 12 years ago, using Nigerian Ports Authority infrastructure and buildings. It was only this year, in May 2007, that Dangote finally commissioned a cement manufacturing plant of its own initiative.
10.	Dangote, Nigeria’s largest importer of bulk cement, has four bagging plants in the country: the Lagos Cement Terminal at Apapa Port, the Aliko Inland Terminal at Lagos, one in Onne/Port Harcourt and one in NPA Area 1 Port Harcourt with a combined production of 3 million MT per annum. With its overriding influence on the Obasanjo regime, Dangote Cement always managed to seize cement import quotas of between 6.5 and 9 million MT per annum. Keeping hold of so much import quota enabled Dangote to limit what was available to other operators. Dangote regulated how much of their cement import quota to use and when to use it and so has successfully been manipulating market prices.
11.	Dangote Cement did not only tyrannize other producers but also succeeded in frightening away would-be new entrants into the cement industry with bogus claims. These claims included wild production and expansion figures that were never met but were accepted by the Obasanjo government as a basis for the issuance of import quotas.
12.	One wonders at the reasons for the company to put the cost of its 5 million MT capacity plant at Obajana at One Billion US dollars, when Ibeto cement is building its own plant of the same capacity for less than 300 million US. Dollars. We believe that the only discernible reason is that Dangote is acting to frighten away prospective investors and thereby reduce competition. More ominously, one would want to know if these claims on plant costs and investment costs would be accepted by the Securities and Exchange Commission without question in giving value to the company’s shares if and when the company decides to go public.
13.	Numerous Chinese businessmen have approached Nigerian investors with offers for turnkey cement projects, at the above-mentioned price and even lower, but the monopolistic trends in the industry have proved too discouraging for these Nigerian investors. Recent efforts by the Yar’Adua government to create a level playing field in the country are most commendable and should be supported by all true patriots.
14.	Flour Mills of Nigeria Plc (Burham), the nation’s second largest importer of bulk cement has only facilities for bagging imported bulk cement, which they have been operating for over twenty-five years without any known operational cement factory in place in Nigeria.
15.	Eastern Bulkcem (Eagle Cement) which has a bagging plant in Port-Harcourt with a capacity of 600,000 MT per annum. The company purchased Nigercem Nkalagu from the BPE and is working hard to reactivate it, despite problems with shareholders and labour. This company also suffered victimization during the Obasanjo era for failing to join in the plot against Ibeto Cement. It was shut down for 9 months and three of its cement vessels were prevented from discharging their cargoes.
16.	Ibeto Cement Company Limited, operating a bagging plant in Port-Harcourt with a production capacity of 1.5 million MT per annum commissioned in July 2005. This plant, erected on virgin mangrove swamp in downstream Port Harcourt reclaimed by Ibeto Cement, was certified by the Federal Ministry of Industry as the best bagging plant in the country. Other operators of bagging plants are utilizing developed NPA facilities. The company is also developing a 5 million MT per annum cement factory in Ebonyi State, in partnership with the government of that state. These two projects were grounded in November 2005 after only four months of the operation of the bagging plant, by the order of the former President, Chief Olusegun Obasanjo, applying an executive fiat that was not supported by any discernible rationale, except for the spurious claim by a foreign company, La Farge, that Ibeto Cement was not supporting government industrialisation efforts by not instantaneously completing a local cement manufacturing factory prior to operating the bagging plant which the Federal Government had given it permission to erect.
17.	This charge was duly debunked by investigations carried out by the Federal Ministry of Industry which found that Ibeto Cement was very seriously engaged in establishing a cement manufacturing plant in Ebonyi State. Based on the findings of the Inter-ministerial Committee (made up of Ministry of Industry, Ministry of Finance, Ministry of Solid Minerals Development, all cement manufacturers and bagging plant operators, Standards Organization of Nigeria), the former Minister of Industry recommended to the President to reopen the Ibeto Cement factory. To the consternation of most operators in the industry, except of course, the monopolists who had instigated President Obasanjo’s earlier decision to close down the factory, this recommendation was turned down by the former President.
18.	For the same people who contrived to shut down Ibeto Cement plant to continue in the same vein in an effort to frustrate the wise decision of President Yar’Adua, made after due process of consultation with all relevant government ministries and agencies, to reopen the plant, is simply unpatriotic and selfish.
19.	They are all better advised to desist from their efforts at eliminating competition by all means and concentrate on making their operations more efficient. This is the sure way to survive competition in Nigeria’s emerging democracy.

One can easily realize the stunning similarities of the IBETO case with that of the Vaswani brothers. It was reported that prior to their baseless deportation, the brothers had finalized a major joint venture with CEMEX a world leader in cement production to set up facilities in Nigeria. This joint venture was presented to the ex-President Obasanjo and had reportedly incorporated the most advanced technologies then prevailing. The Vaswanis had also presented to Obasanjo a joint venture for a sugar refinery in association with the giant multinational TATE & LYLE which was again a largely monopolized product.

It may be recalled that the Vaswani brothers were deported without any charges being filed prior to or even after the event. Rather than being rewarded, were they were punished for their plans to inject significant foreign investment into the country?

Given their international presence in 18 countries and strong relationships with numerous multinationals, the deportation of the brothers created a substantial negative impact on Nigaria’s prospects of attracting foreign investment in its beleaguered industries.

The whole trouble for the Vaswani brothers seems to have started upon these presentations to Obasanjo who seems to have been influenced by the same monopolistic forces that caused issues for IBETO. The IBETO statement is another substantiation of efforts by monopolistic forces in the country to enrich their coffers and destroy any potential for competition.

The government is truly obligated to investigate IBETO’s claims on capacities and misuse of import licenses, and should forthwith engage EFCC or other agencies to thoroughly investigate the production records of these various plants in relation to their import and sales figures.

Further the deportation of the Vaswanis should in all fairness be revoked in order to establish the seriousness of the present government in ensuring a level playing filed for all business houses.

If President Yar’Adua is unyielding in his stated desire to promote fairness for all, Nigeria would benefit immensely indeed from increased indigenous manufacturing and attendant employment and other crucial socio economic parameters.

There finally seems to be light at the end of the tunnel for the Nigerian industry.

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