When Dangote, BUA Take Case To Public Court

When Dangote, BUA Take Case To Public Court

Ameh george

The lingering altercation on who rules the Nigerian, Africa’s biggest economy sugar industry has not seen a respite in a long time despite attempts by various stakeholders to broker a truce between the Dangote and BUA conglomerates.

However, recently, Governor Abdullahi Ganduje of Kano State and Alhaji Aminu Dantata, a prominent northern billionaire who is Mr. Dangote’s uncle seem to have waded into the latest clash between the two Nigeria’s richest men, Aliko Dangote and Abdul Samad Rabiu, who are chairmen of their respective companies over sugar production rights in Nigeria.

Earlier, this medium had reported that the dispute between the duo is over who controls the sugar market in Africa’s biggest economy.

The crux of the controversy seems to rest on the claim and counterclaim from both parties. While Dangote Group accuses their competitor of attempting to appropriate an undue advantage, BUA Group says Dangote Group wants to monopolise the market and manipulate prices, a claim Dangote group denied as false.

In the course of the events, spokesperson to the Kano state governor, Abdullahi Ganduje, Abba Anwar, said in a statement that the Kano Emirate and Kano State Council of Imams have resolved the rift between the two men both of who are Kano indigenes, all thanks to Mr. Dantata’s intervention.

According to Anwar the reconciliation meeting took place at the Kano governor’s lodge in Asokoro, Abuja, on Wednesday, April 14.

At the end of the truce seeking engagement, the warring parties have agreed to work together and ensure sufficient supply of sugar to meet local demand, he said in the statement.

“They all dismissed as allegation that Dangote Group was planning to increase the price of sugar, through pressuring BUA to succumb to the increment. They described that allegation as baseless and lacking any iota of truth”, Anwar furthers.

Recall that Mr. Rabiu, chairman of BUA Group, in a letter to the Minister of Commerce, Trade and Investment, Niyi Adebayo in February had alleged that Dangote Group intended to eliminate his sugar business from competition and establish a monopoly in the sugar trade, going further to say Dangote felt threatened by the potential of BUA Sugar’s Lafiagi and Port Harcourt refineries to “drive the prices of sugar downwards for Nigerians”.

“The two business moguls agreed to work together as brothers for the growth and development of the nation at large. Assuring that, henceforth, there would be no differences that could cause any disharmony between them”, Anwar added.

The Commerce, Trade and Investment Minister, representative of the Kano Emirate, Aminu Agundi, Chairman of the Council of Kano Imams, Muhammad Adam, the chief Imam of Sheikh Ahmadu Tijjani Friday Mosque, Kofar Mata, Kano and the chairman of NEPZA, Adamu Panda, were all part of the truce initiative.

Dangote and Rabiu, Africa’s richest and sixth richest men respectively according to Forbes’s estimate, have had squabbles over compliance concerns relating to the backward integration policy of the Nigerian sugar industry, compounding an already knotty wrangle over the ownership of a cement site in Obu Okpella, Edo State.

Dangote told the Commerce, Trade and Investment Minister, Mr. Adebayo in a letter which is in the public domain, that the establishment of a sugar plant by BUA International Limited in the Port Harcourt free trade zone was out of tune with export laws.

“BUA intends only on importing and refining raw sugar whilst claiming to be investing in developing sugar plantations in order to qualify for quotas to import raw sugar”.

Relations between both men became sour in June 2020 when BUA Cement, where Mr. Rabiu owns the majority interest, got a restraining order against Dangote Cement, also majority-owned by Mr. Dangote, after the police stormed its three sites in Obu Okpella, Edo State.

“BUA takes serious exception to the ludicrous claims by its two major competitors that it aims to circumvent the BIP of the sugar industry – an initiative in which it has invested billions of Naira and is almost nearing completion”, it said in a rejoinder to the sugar policy contravention indictment.

“To thus claim that the BUA PH export focused refinery in an Export Zone will amount to an undermining of the NSMP (National Sugar Master Plan) is false”.

According to Mr. Rabiu, President Muhammadu Buhari had consented to the establishment of the Port Harcourt plant.

If anything, this battle or clash of the titans can only be a good thing for the country, and indeed the continent. America was built by bold industrialists, each vying for dominance. The Korean chaebols (large, conglomerate family-controlled firms) which are now global giants grew huge thanks to fierce competition amongst themselves that pushed them to innovate, be lean and become globally competitive.

The cynics might ask why is Rabiu trying to get a finger into yet another Dangote pie? Rabiu explains that the move represents diversification, especially given the pressure on commodities related to FX and the dollar crunch. But it’s fascinating to understand the two men and their businesses.

The clash in business interests between Dangote and Rabiu has its roots in traditions pre-dating both men’s business careers. Alhaji Aliko Dangote comes from a celebrated lineage of wealthy merchants from the northern commercial capital of Kano.

Abdulsamad Rabiu also has a heritage in commodities trading. His late father, Isyaku Rabiu, was a renowned merchant and industrialist in Kano State in the 1970s and 80s.

But a 1983 military coup under Major-General Muhammadu Buhari overturned the fortunes of the senior Rabiu for his failure to pay for rice imports. In 1988, eleven years after Dangote struck out in business, the young Rabiu made up his mind to change his family fortunes and founded BUA International.

Over 30 years later, the Dangote Group stands out as a leading pan-African brand with interests in commodities, energy and logistics. Its companies have over 30,000 employees and his group represents nearly a quarter of the Nigerian Stock Exchange’s N28 trillion ($75bn) value. Its crown jewel, Dangote Cement, single-handedly boasts a market cap of $14bn and controls 60% of the market.

The ‘challenger’, BUA Group, has interests in cement production, sugar refining, real estate, logistics and port operation. Its largest operation and only publicly listed company, BUA Cement, which came to market earlier this year, has a $3bn market capitalisation and 17.6% market share.

Leveraging its dominance in the market, the Dangote Group has always responded by weaponising pricing to put its competitors out of business.

For example, when BUA Cement started production and reduced prices by about $20/tonne to attract customers, one of the Dangote strategies was to temporarily beat down their prices. Rabiu was unperturbed and instead focused on meeting the demands of underserved markets in the northern region, which eventually earned BUA the title ‘King of the North’.

Their rivalry really intensified under the administration of ex-president Olusegun Obasanjo. Many attribute Dangote’s success to favouritism by the Obasanjo-led administration. It’s true that Dangote benefited from favourable government policy towards certain goods to encourage import substitution, but he was already powerful and his success can be attributed to excellent execution.

Still, accusations are directed towards what is claimed as favouritism towards him – to the detriment of his major rivals – regarding preferential access to foreign exchange and preferential tax arrangements. Between 2010 and 2015, Dangote Cement paid N12bn in taxes, an effective tax rate of just 1%, it is alleged by some.

The BUA chief allegedly wrote a petition to the current President Muhammadu Buhari, detailing how policies of successive governments over the last two decades have ‘unduly’ favoured his kinsman.

But it now seems the gloves are off as the rivalry heats up and the battle for cement supremacy intensifies.

Apart from the generational business interests of both men, favourable government policies have often determined the direction and expansion of their businesses. A backward integration policy introduced under the Obasanjo administration to reduce over dependence on imports created opportunities for each of them to establish operations in key industries – cement, sugar and flour.

Dangote Sugar has a 70% market share. The subsidiary possesses an 800,000 tonnes annual production capacity plant which is the largest sugar refinery in Africa and the third-largest in the world. It is the main supplier to the country’s soft drinks companies, breweries, and confectioners.

But BUA puts up an impressive fight. It broke Dangote’s total grip on the market in 2008 by establishing a plant with an annual capacity of 720,000 tonnes. The facility remains the second-largest in West Africa after the Dangote Sugar Refinery.

Not a few Nigerians have commented on the now rested intense disconnect between BUA and Dangote. While in court of public opinion, some hold that it is a good omen for an aspiring economy which intends to live above personal interest to the overall national interest. But others say the situation has uncovered the selfish nature of many industrialists who are only interested in milking the nation dry through unnecessary incentives at the expense of national concern.

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