Dangote Withdraws Plan to Venture into Steel Following NMDPRA’s Monopoly Allegations

Aliko Dangote, the chairman of Dangote Industries Limited, has announced he is abandoning plans to enter Nigeria’s steel industry, following allegations of monopolistic practices made by Farouk Ahmed, the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

In May, Dangote Industries announced its intention to invest in Nigeria’s steel industry. This move was seen as a potential game-changer for the country, which has long struggled with inadequate steel production despite having substantial raw material reserves. The entry of Dangote into the steel sector promised to boost local production, reduce dependence on imports, and stimulate economic growth.

However, on July 18, Farouk Ahmed alleged that the Dangote refinery produces inferior products – an allegation that has sparked an unexpected and heated reaction from Dangote and the wider Nigerian public.

“The demarketing of a company by a regulator that he is supposed to protect is very unfortunate,” Dangote lamented.

Nigerians widely condemned Ahmed’s remarks, viewing them as an unfair attack on one of the country’s most prominent businesses. Critics argued that the NMDPRA’s statements were not only baseless but also damaging to the reputation of a company that has significantly contributed to Nigeria’s industrialization efforts.

Dangote Industries Limited, under the leadership of Aliko Dangote, has been a cornerstone of Nigeria’s economy. The conglomerate has significantly impacted various sectors, including cement, sugar, and salt. Dangote’s business model, which emphasizes value addition through local raw materials, has been instrumental in driving industrialization and creating jobs in Nigeria.

Dangote, in a media chat with journalists at his refinery in Lagos, described the allegations of monopolistic practices as disheartening and unfounded. He said his company has always operated on a level playing field, competing fairly and adding value to local raw materials.

He also announced that the DIL is backing out of its plan to venture into steel production.

“You know, about doing a new business which we announced, that is, steel. Actually, our board has decided that we shouldn’t do the steel because if we do the steel business, we will be called all sorts of names like monopoly,” Dangote said.

“And then also, imports will be encouraged. So we don’t want to go into that.”

He highlighted that such accusations not only tarnish the company’s image but also discourage investments in vital sectors of the economy.

“Monopoly is when you stop people, you block them through legal means. No, it is a level playing field whereby whatever Dangote was given in cement, for example, other people were given because some of them even got more than us,” he added.

“If you look at all our operations at Dangote (Group), we add value; we take local raw materials and turn them into products, and we sell.

“We have never consciously or unconsciously stopped anybody from doing the same business that we are doing.

“When we first came into cement production, it was only Lafarge that was operating here in Nigeria… Nobody ever called Lafarge a monopoly.”

Withdrawing Amidst Economic Downturn

Dangote’s decision to withdraw the plan to invest in steel production came as a shock to many. The plan was touted as a game changer, especially as Nigeria had invested billions of dollars to revitalize the Ajaokuta Steel plant for years, without fruitful results.

Also, the country is currently grappling with inflation, and foreign exchange shortages – all of which pose significant hurdles for businesses at a time when its economy is spiraling downward. Dangote has been vocal about these issues, urging the government to implement policies that create a conducive environment for industrial growth.

The recent allegation by the government, coupled with the economic challenges, appears to have been the tipping point for Africa’s richest man.

Public Reactions

The announcement of Dangote’s withdrawal from the steel industry has stirred mixed reactions. While some industry stakeholders understand the rationale behind the decision, others express concern over the potential implications for Nigeria’s industrialization goals.

“Honestly, this is sad to see. Nigeria has happened to Dangote. When the foreign firms pulled out, the excuse and defense given was that they could not compete with the vibrant local market. Today, even that “vibrant” local market is complaining about the governments,” economist, Kalu Aja remarked.

The steel industry is critical for infrastructure development, and Dangote’s entry was seen as a significant boost to local capacity.

Many Nigerians have voiced disappointment, fearing that the absence of Dangote’s investment might slow down the progress in the steel sector. There is also a broader concern that regulatory disputes and allegations of monopolistic practices might deter other potential investors from entering the Nigerian market.

“I have posted severally that if the Federal, State, and Local Governments fell asleep, Nigeria’s GDP would double. The government policies and practices in Nigeria are weaknesses, not strengths. Good luck with attracting FDI,” Aja added.

While many believe that Dangote has been enjoying a state-backed monopoly over the years, the recent development has created unwavering empathy for the entrepreneur, especially, considering Nigeria’s current economic headwinds.

“The ongoing extrajudicial destruction of the Dangote business organization by the Tinubu regime is not at all something to celebrate,” journalist David Hundeyin stated.

“The example of Japanese and Korean industrialization shows that a serious government finds ways to integrate entities like Dangote into its national growth plan instead of making enemies out of them and trying to destroy them,” he added.