What is the Dangote Group’s “one oasis” in Nigeria? It is something that is not very visible but without it, the Group will struggle and fade. Yes, within the industrialized conglomerate space in the nation, logistics and broad supply chain efficiency remain catalytic, and continue to position Dangote companies for success. Supply chain is commerce, and without it, the effectiveness of bringing demand and supply to an equilibrium will stall.
Nigeria has limited supply chain platforms since the nation has not built railway systems to enable the movement of goods across the nation. Unlike in the past when it was possible to move Lux, Omo and other Unilever products from Aba to Maiduguri via trains, Nigeria now relies mainly on the road for such .
The railtrack which connected Unilever to the national railtrack has since disappeared in Aba. When the railway system in Nigeria faded, Nigeria’s industrialization and manufacturing lost a beat!
Tekedia Mini-MBA edition 15 (Sept 9 – Dec 7, 2024) has started registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
So, if everything is going on the road, what happens if you do not have trucks? You will struggle. And many companies cannot expand production without the clarity on how they can move the goods. If you are looking for one of the challenges affecting manufacturers, put logistics as one of the top three.
When I was on the Board of a leading logistics company in Nigeria, I saw how farmers who needed trucks, but could not get them, lost their farm produce. Getting access to trucks was a huge pain point in the industry, and it decides winners.
Nigeria has about 100,000 trucks (of any standard) with Dangote Group controlling about 50,000 of them, leaving the rest for everyone to share. With no railway system, everything has to move via roads. So, guaranteeing your supply chain playbook involves closing the ranks on trucks.
So, for Dangote, he has created a sector to make trucks for his empire, and by doing that, he became a platform to power every aspect of the business in a country that does not have a developed supply chain system. The Dangote truck making business may not be listed in the Nigerian stock exchange, but know that without it, the food, cement, etc will fade.
Here is the business lesson: the engine of the empire is logistics and Dangote Sinotruk West Africa is the nucleus for a nationwide operational execution: “Dangote Sinotruk West Africa inaugurated a completely knocked down (CKD) truck assembly plant in Lagos state on Sunday… with the capacity to assemble and produce 10,000 trucks annually.” With this, the competitive advantage widens because you can have a farm, but do you have the trucks to move the produce?
---
Register for Tekedia Mini-MBA (Sept 9 – Dec 7, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.
The bottom line is that commerce is logistics, and without that capacity to distribute whatever you are able to produce, nothing much else happens. Food prices going up is not just a production issue, but what does it cost to move from farms to markets? The major price shift happens in the second phase. Nothing is organized, here, but we are dreaming of AI and how to take over Mars.
Dangote will continue to rule, because many of those who think he’s favoured don’t even understand the challenges, until they move closer and then get dazed by the number of obstacles the paths are littered with.