July 23, 2024
The President of the African Development Bank Group, Akinwumi Adesina, has spoken out in defence of the Dangote Refinery, addressing concerns about potential monopolistic practices.
In a statement shared by businessman Femi Otedola on Tuesday via X, Adesina expressed his shock at the controversy surrounding Dangote’s operations, warning “it is creating bad waves for Nigeria globally.”
According to Otedola’s post, Adesina argued that monopolies often arose in industries with high entry barriers or capital costs, citing railways and large-scale refineries as examples.
He was quoted as saying “Monopoly often exists where there are high barriers to entry or high capital costs. How many individuals or companies can do railways? How many can do refineries of the scale of Dangote Refineries? In a nation that has been importing refined petroleum products for several decades, the abnormal simply became very normal.”
The AfDB President emphasised the significant investment made by Dangote, stating “No smart investor would make a $19.5 billion investment and want it to be undermined by importers.”
He highlighted manufacturing challenges in Nigeria, describing the business environment as fraught with policy uncertainties and reversals.
“To manufacture is extremely expensive and risky. This is even more so in Nigeria, given the very challenging business and economic environment, fraught with policy uncertainties and policy reversals, and where the self-defeating default mode of ‘simply import it’ is always so easily rationalized and chorused to solve any problem,” Adesina said.
Addressing concerns about anti-competitive practices, Adesina said: “Competition is good for everyone. But is Dangote refineries anti-competitive? What is the evidence? Has Dangote Refineries prevented any other company from setting up refineries? Why have others not done so? How come they have not done so for several decades?
“Was it Dangote that held them back? But Dangote refineries surely cannot be asked to ‘compete’ with importers of petroleum products. That is not competition. Let the importers set up local refineries and compete by refining in Nigeria. That is fair and justified competition.”
Adesina stressed the broader economic implications of the refinery, stating: “We cannot and must not undermine, disparage or kill local industries, talk less of one that is of this scale — a jewel of industrialisation in Nigeria. It is more than simply delivering the cheapest product to the market.
“It is about domestic supply security, driving (and yes, protecting) globally competitive industries, maximising forward and backward linkages in the local economy, job creation, reducing forex expenses and shoring up the Naira. We must not be myopic.
“This whole disparaging of Dangote is uncalled for. It is self-defeating. And it is very bad for Nigeria. Who will want to come and invest in a country that disparages and undermines its own largest investor? Investing is tough. Pettiness is easy. It sadly sends a signal that the price for sacrificing for Nigeria is to get sacrificed.”