Dangote Donates N.3bn Business School to University of Ibadan …Vows to raise entrepreneurs for nation building

Leading businessman and Chairman of Aliko Dangote Foundation, Alhaji Aliko Dangote, on Wednesday challenged the government to muster the will to provide critical infrastructure that will make Nigeria’s environment conducive to commerce and industry.

Dangote made this appeal while delivering the third Eminent Persons Business lecture and inauguration of the Aliko Dangote Complex, a N300 million ultra-modern building, donated to the University of Ibadan, School of Business, at the Ajibode University extension in Ibadan.

He said his foundation would continue to prioritise education as a means of raising entrepreneurs that would change the face of the country’s economy and lead to real growth and development.

He told his audience comprising of academia, students, royal fathers and businessmen that Nigeria has got the potential to be among the most industrialised countries in the world, and that it requires only the right policies to propel the investors into taking the lead in industrialisation efforts.

Delivering his paper titled: ‘Industrialisation-Backward Integration as a Strategy for National Development: The Story of the Dangote Group’, Dangote whose lecture was delivered by Ahmed Mansur, the Group Executive Director of the Dangote Industries Limited, stated that for Nigeria to breakthrough industrially, the leadership and the people must have the political will, the courage and perseverance to succeed.

Dangote was of the opinion that backward integration is one of the fine policies of the government that has helped Nigeria’s economy, and that he had led in this regard as a private sector operator, advising that the policy could be replicated in other sectors of the economy.

Highlighting the advantages of the backward integration, the business mogul stated that there would be increased control and efficiency as companies are better able to control quality and coordinate the delivery of raw materials or other supplies.

According to him, this level of control allows companies to increase their supply chain efficiency. Stock outs and over-stocking are better avoided, raw material supply is better managed, and delivery schedules can be better guaranteed.

Dangote pointed out that going by his own experience as leading cement producer using backward integration, there would be cost control as costs can be better managed all along the production process.

Citing instances of countries that have used backward integration to climb the industrial ladder key sectors, Dangote said: “Several countries have involved backward integration in some of their industries. Examples are Brazil, Ghana, Malaysia, Norway, and Russia. China and the United States of America probably have the most vertically integrated firms given their size and industrialisation focus. This typically starts with local content requirements for extractive industries and then includes consolidation across product value chains.

“Norway successfully managed the transition from a country with no direct capabilities in the oil and gas sector on the discovery of oil in the late 1960s to become a competitive producer of a variety of oil field services and equipment. Today, more than half of the capital inputs used in the sector are sourced locally, along with 80 percent of the sector’s operational and maintenance inputs.

“Similarly, oil and gas firms operating in Brazil were awarded more points when tendering for contracts if they demonstrated commitment to purchasing higher shares of goods and services from local Brazilian suppliers. Specific local content targets were set for onshore projects (70percent) and offshore projects in shallow (51 percent) or deep (37percent) water.”

For Nigeria, Dangote stated that using backward integration was not a bed of roses as Nigerian businesses face major challenges in developing backward integration.

These, according to him, include difficulties in obtaining adequate and reliable energy and power supply; lengthy, costly and politically sensitive processes of gaining access to land; poor-quality transportation infrastructure; the high cost of capital; long lead times before backward integration efforts yield rewards; sensitivity to external shocks and unforeseen costs;

Nevertheless, he argued that the policy had helped Nigeria in the cement sector, pointing out that as at 2002 before the backward integration policy, “local installed cement production capacity was about three million metric tons per annum (while actual production was under 2two million metric tons). Cement demand was approximately nine million metric tons per annum and the supply gap was filled by cement imports. Imported cement accounted for over 70 percent of local cement consumption. 

In his remark earlier, Vice-Chancellor of the University of Ibadan, Prof. Abel Idowu Olayinka, thanked Dangote for the building which he described as a legacy that would forever be cherished by generation yet unborn and by the donation, Dangote has become the first largest individual donor to the university.

Governor Isiaka Ajimobi of Oyo State, who was the guest of honour of the occasion, urged Nigerian youths to learn a big lesson from Dangote’s humble beginning, that with hard work, he has become one of the greatest entrepreneur in Africa.