When Nations Pay Taxes to Companies!

Every conglomerate in the world has one thing in common: nations and citizens pay them taxes. I have called the phenomenon Conglomerate Tax. If Amazon wants a second headquarters, many American cities ship $billions to it. Boeing until recently was getting $100 million yearly from the state of Washington. In Nigeria, we have Dangote Group which gets many goodies because it is a conglomerate.

But note this: it is a good thing when you have many of such companies, because in the end, the net effects are always positive. Indeed, for all the talks of startups, the reality is that nations need conglomerates because their sizes help them make critical investments. For example, Dangote Refinery can help fix some challenges in the transportation sector through efficient supply of fuel in the economy.

Fascinatingly, a trader may not get the status to tax a nation but an industrialized conglomerate can (better FX, waivers, etc). Why? It is all about accumulating capabilities which then make it possible to define terms which cities and nations must agree to, for you to help them! It happens in all nations. Nigeria’s unique case is that we have few conglomerates to start with, and because of that Conglomerate Tax seems out of phase.

Read more here.

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Comment 1: To grow the numbers of its conglomerates, Nigeria can take a number of actions. Here are three examples of countries that have rapidly grown their conglomerates along with the lessons Nigeria can learn from them:

1. China: China has been able to rapidly grow its conglomerates through various measures such as investing heavily in education, research and development, and infrastructure. Nigeria could follow China’s example by investing in education and infrastructure to create an environment that is conducive for businesses to thrive.

2. South Korea: South Korea has been able to grow its conglomerates by focusing on innovation and technology. The country has invested heavily in research and development and has created incentives for businesses to innovate.

   
3. United States: The United States is another country that has rapidly grown its conglomerates. The U.S. has a strong focus on entrepreneurship and has developed policies and programs that encourage and support new business creation. Nigeria could consider implementing similar policies and programs to support entrepreneurs and small businesses.

The takeaway lesson from these examples is that it takes a multi-faceted approach to grow conglomerates in a country.

Dangote Conglomerate Taxes

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