Obstacles to Business in Nigeria: Addressing the ease of doing business
In recent times, Nigeria’s premier businessman and private sector Magnate, Aliko Dangote, has been surrounded by controversy relating to his $20 billion investment in Dangote Refinery. Although the investment was initially met with positive feedback and generous expectations, there seems to be a budding conflict waging between the famous billionaire and the Federal Government of Nigeria. The dispute has become especially popular ever since the proliferation of a statement by Farouk Ahmed, CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) claiming that the diesel produced by Dangote Industries Limited (DIL) is inferior to those imported from other countries due to the unsafe Sulphur levels existing within the product.
In addition, there has been unease regarding the non-issuance of a production license by the NMDPRA to Dangote Refinery. According to Farouk Ahmed, the reason for this lies behind the incompleteness of the refinery as it is allegedly only 45% complete and cannot be heavily relied on as the sole supplier for the country. Interestingly, in an interview with the Statehouse Media, Farouk alleged that Aliko Dangote had requested that the NMDPRA “suspend all importation of petroleum products …(AGO & Jet-Kero) and direct all marketers to the refinery”. He emphasized that humoring such a request is unhealthy for the nation and the markets in terms of Energy Security and Monopolization.
Dangote’s Defense
In response to the allegations by Farouk Ahmed, Dangote emphasized that a monopoly would not be possible as NNPC had activated their refineries in Port Harcourt, Kaduna and Warri. Hence, to claim that he intends to build a monopoly around the petroleum refining industry is to claim that the alleged NGN 40 billion invested by NNPC into the establishment of their various projects is a waste. His argument remains that if the NNPC refineries are truly in existence, it cannot be possible for his refinery to be a monopoly. He also challenged the regulators of NMDPRA to publicly conduct a test of the oil being produced by his refinery at time of their choosing claiming this his refinery produces the best oil in Nigeria.
In his oration, he highlighted the difficulties of doing business in Nigeria, such as the naira instability, the scarcity of skilled labor during the Covid-19 pandemic, and the delays in construction and operational licenses. According to him, the combination of these challenges led the investment to incur a loss of approximately USD 600 million long before the refinery was fully realized.
Finally, in addition to the operational difficulties of doing business in Nigeria. Dangote briefly discussed the overarching presence of saboteurs alleging the existence of both local and global mafias, he stated during the 31st Afrexim Bank Annual Meeting (AAM) 2024, “..the mafia in oil, they are stronger than the mafia in drugs…”. He had also mentioned earlier, ‘if we knew what we were really getting into (with the refinery), we wouldn’t have started at all.”
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What does this say about the ease of doing business in Nigeria?
The on-going saga between Dangote and the Nigerian government further serves to highlight the importance of fostering an environment that promotes the ease of doing business. It illustrates the different challenges that face entrepreneurs, especially those who are new entrants into various industries. Currently, on the ease of doing business rankings, Nigeria is ranked 131 out of 190 countries in the world; this places it amongst the lower half of countries which have room to improve their business environments.
To combat the difficulty of doing business, it is important for the Nigerian government to invest in improving the socio-economic landscape of Nigeria. Some of the most pressing priorities include fighting against insecurity, creating and enforcing business friendly regulations, improving the supply of power and electricity, investing in education and developing the legal framework and rule of law within the country.
Wrap up
It is clear that there remains a ton of work to do in terms of improving the ease of doing business in Nigeria; and although the controversy surrounding Dangote Refinery is quite popular; his case is a relatively common one. For several months, Nigeria has experienced a large exodus of firms, individuals and businesses who are unable to cope with the unstable nature of the country’s socio-economic environment. Perhaps it is time for all those involved (the federal government, entrepreneurs, and citizens) to take a step back and think about how the circumstances may be improved.
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