Industrial Policy and Monopoly Capitalism in Nigeria: Lessons from the Dangote Business Conglomerate

Abstract

CAE working papers can be downloaded free of charge from www.ruc.dk/en/centreafrican-economies © The authors and CAE, Roskilde 2019.The CAE working paper series publishes cutting-edge research on African economies. The working papers present on-going research from the projects and programs based at CAE, as well as the current work of scholars studying African economies from a multi-disciplinary perspective. They encourage the use of heterodox schools of economic thought to examine processes of economic development and the economic challenges that African countries face. Most of all, the working paper series aims to stimulate inter-disciplinary work, showing how breaking down the barriers between disciplines can be necessary and even more fruitful for understanding economic transformation in African countries.

Nigeria's Sugar Master Plan: Ignoring losers from industrial policy can be costly

“…Scholars have examined the strategic targeting of these policies through the lenses of political settlement and clientelism, revealing how ruling elites leverage the policies to confer benefits upon influential groups and members of the ruling coalition, while also positioning them as development strategies (McCulloch et al, 2017;Modebe et al, 2014;Odijie & Onofua, 2020;Usman, 2020). A cornerstone of Nigeria's industrial policy since 1999 has been the BIP, as highlighted by Akinyoade et al (2016) and Itaman and Wolf (2021).…”

“…In the realm of cement production, the BIP implemented in 2002 has successfully propelled Nigeria towards self-sufficiency, fostered the development of an export industry, and facilitated the establishment of Nigerian cement subsidiaries across various African nations (Itaman & Wolf, 2021) The inception of BIP in cement was notably influenced by the rapport between Aliko Dangote and the then-president, whereby Dangote, a financier of the president's re-election, requested policy instatement via a phone call (Odijie & Onofua, 2020). Research indicates that the public contention engendered by the policy, particularly in the form of elevated consumer costs, prompted consideration from the subsequent president in 2008 to modify the policy and revealed attempts by private detractors to undermine it (Odijie & Onofua, 2020).…”

“…A cornerstone of Nigeria's industrial policy since 1999 has been the BIP, as highlighted by Akinyoade et al. (2016) and Itaman and Wolf (2021). Initially, BIP operates as a form of import substitution, wherein import licences for specific products or sectors are limited to a select group of importers who are simultaneously producers.…”

“…In the realm of cement production, the BIP implemented in 2002 has successfully propelled Nigeria towards self‐sufficiency, fostered the development of an export industry, and facilitated the establishment of Nigerian cement subsidiaries across various African nations (Itaman & Wolf, 2021). For instance, Dangote Cement, a pioneering entity in this sector, now boasts a capacity of 32.25 million metric tons annually (MTA) and controls approximately 60% of the Nigerian market (What's driving, 2022).…”

“…While the success of the BIP in cement production cannot be solely ascribed to the public justification and conflict management tactics employed in 2008—given the various pivotal factors that played a part, such as the substantial investments in domestic production spurred by the policy (Ekwueme, 2016) and the increased local demand and consumption (Itaman & Wolf, 2021), among others—it is imperative to note that the mitigation of public censure post‐2008 and the management of some private conflicts significantly buoyed the success of the policy. In numerous sectors where analogous BIPs favouring potent groups were instituted by the government, policy‐makers have often eschewed engaging in crisis management.…”