Hello everyone, welcome to Corporate Stories by @Nairametrics. This thread is BTU by @BluechipTechNG
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This is our second season for Nairametrics Corporate Stories. If you are just catching this groove for the first time, then you might want to check our first season for some of our blockbusters.
See link nairametrics.com/category/corpo…
See link nairametrics.com/category/corpo…
On this episode of Corporate Stories, we will be telling a story of two confronting billionaires taking on each other in a cyclical wave of crony capitalism, mudslinging, and emotional blackmail. A story of the contrasting rise of two titans of Corporate Nigeria.
The full version of this thread will be published on Nairametrics. Feel free to comment, retweet or contribute in whichever form, so long as it helps to put this story into proper perspective.
1. On a cold afternoon in November 2005, Federal Government operatives, on orders from above, swooped on a busy factory in the oil-rich city of Port Harcourt.
2. They were under instructions to seal off the warehouse whose operations had contravened a government policy which would be pivotal in a brutal race for market share in an industry worth over N1 trillion.
3. At first, the closure appeared to be due to a mix-up between an arm of the Federal Government and the owners of the warehouse. It was expected to be resolved in a matter of days by the billionaire Chairman of the company.
4. Emissaries were despatched to help resolve whatever misunderstanding may have led to this seemingly excessive act by the government.
5. As days turned into weeks and weeks into months, it dawned on the owners of this multi-billion naira conglomerate, based in the Eastern part of Nigeria, that they were dealing with powers that stretched far and beyond the red sands of the South East.
6. Something had to be done to resolve this issue. At stake was not only the reputation of the company but billions of naira worth of inventory that could erode all the wealth that had been built over the years.
7. Flash Back
8. It was January 22, 1966 in the bustling suburb of Nnewi in the then Eastern Nigeria. The country had just witnessed a deadly coup a week earlier and the mood in the country was still tense. But for this household, they had a major decision to make.
9. Cyril, the eldest son was having a chat with his father that would decide the fate of one of his siblings.
10. Cyril and his younger brother, Louis, were getting ready to go back to school but had to deliver a message from their uncle to their father.
11. As the discussion ensued with their dad, their kid brother, Cletus packed his bags getting ready to join his elder brothers in school for the first time.
12. At just 13 years of age, he had eyes set on acquiring a secondary school education. He had just gotten admission into Crusader Secondary School, Isingwu Amachala in Umuahia.
13. Seeing his elder brothers in their uniforms and school bags always got him excited and he couldn’t believe that the day he had been waiting for was finally here.
14. As his elder brother left, his father called him in to break the good news, or so he thought. His Dad, a sturdy Nnewi man, like most at the time had a different approach to fatherhood.
15. Back then and perhaps till date, much was expected from sons just as it had been for their fathers. Responsibility began at an early age and it started by understanding the language of trade – making money.
16. One of the responsibilities of a father was to ensure that his child had a sound education, not in academics but in learning how to make money.
17. Earlier on, Cyril and Louis had already toed the path of academic education and that was enough. Someone had to follow the path of apprenticeship.
18. And so, his father would tell the young Cletus that his destiny was not to start in the four walls of an educational institution, but in the four walls of his uncle’s workshop. His uncle was a mechanic by the name of Sir Lawrence Amazu.
19. Young Cletus protested, cried and even went on a hunger strike, as he could not believe what his father had done to him. Unfortunately, his tears were futile. He soon found himself on his way to Onitsha to begin life as a spare parts trader.
20. Undeterred and still hopelessly hopeful, he arrived at his uncle’s in his school uniform, earning him the nickname “school boy”. His fellow apprentices laughed at the sight; it was unthinkable to them that a young man would even consider
21. choosing the lazy path of academics over the lustrous and respected route of making money as a spare parts trader. Thus began a new chapter in the life of Cletus Madubugwu “Omekannaya” Ibeto.
This is @Nairametrics Corporate Stories BTU by @BluechipTechNG
22. For Cletus Ibeto, the journey to success can often be perceived more as a divine case of providence, rather than pure hard work.
23. In one of his many close shaves, when the young Cletus was drafted to the Civil War as a batsman to a Biafran captain, and was sent to buy food by his boss.
23. Upon returning, Cletus discovered that his fellow Biafran soldiers, including the Captain, had been ambushed by enemies and killed.
25. A few weeks later, he would be drafted again to the battlefront to fight the hard-hitting Nigerian soldiers. Cletus fought hard against the Nigerian soldiers, as he and other brave Biafran soldiers battled against an enemy that was merciless and powerful.
26. As the battle raged on, sounds of mortar and gunshots filled the air but they were not loud enough to silence the cries of death as blood splattered off dying souls into the red earth where infantry soldiers more often than not met their untimely end.
27. As Cletus, the soldier, lay on the ground with a bullet lodged in his lungs, the choice between life and death was once again no longer his to decide.
28. He would survive after spending months in the hospital recuperating, with the prize for his bravery firmly lodged in his lungs. This fortuitous streak in his life would continue to be his weapon as he rolled into the next chapter of his life, post Civil War.
29. It was 1979 and the newly democratically-elected President of Nigeria, by the name of Alhaji Shehu Shagari, had just been elected into power on the back of an anti-corruption crusade.
30. His government was liberal, so some of the hardline policies of the departed military government of Olusegun Obasanjo were abolished.
31. One of the first decisions taken by the Shagari Government was to lift the restriction on imports and exports to and from Nigeria. General Obasanjo had introduced import licenses as a means of reducing reliance on foreign goods.
32. The lift on the policy of import licenses would be the the next major streak of fortuity for Cletus.
33. Not long after Shagari relaxed the restriction on import licenses, he made a drastic U-turn. Oil prices were falling and govt revenues had taken a huge dip. In an apparent haste to stem the tide and shore up revenues, the Shagari Government introduced import licenses again.
34. The decision sent a wave of confusion and uncertainty to importers, leaving them to take a step back as they pondered what next to do.
35. As most of them waited on the sidelines to comprehend the flip-flops, Cletus took advantage and pumped in N3 million to import spare parts into the country.
36. After the Civil War, he had doubled down on his knowledge on trading of spare parts.
37. His uncle and former mentor, Sir Lawrence Amazu would go on to pivot into trading spare parts. Back then, he saw the opportunity to carve a niche for himself in a nascent economy that had just birthed its first set of homegrown middle class workers.
38. Many of them owned cars that needed servicing, repairs and replacement of parts. From fixing their cars, a light bulb moment presented itself when he discovered that there was more value in selling the spare parts of the cars than in servicing or repairing them.
39. With this decision, Sir Amazu would be amongst the pioneers of a trade that has been the bread and butter of hundreds of thousands of young uneducated boys from Nnewi, including the young Cletus.
40. The decision to import spare parts was, as Cletus had become accustomed to, a timely and fortuitous decision. Soon after his goods arrived, the government of Shagari tightened the knot on import licenses, making it nearly impossible for anyone to get it.
41. Historians believe that this was one of the foundations for the massive corruption in the country at the time. The decision could not have been more wonderful for Cletus.
He realised that he was suddenly the only one who had stock of spare parts filled in his warehouse.
He realised that he was suddenly the only one who had stock of spare parts filled in his warehouse.
42. Cletus quickly jacked up prices by 500%, yet it did not deter the multitude of resellers looking to also profit from the artificial scarcity created by the government of the day. In a report, Cletus relived gleefully how pivotal that moment was for him.
43. “We were packing money in cartons.” he remarked. Within two days of the arrival of his containers, he had made about “4 million pounds”
44. A combination of fortuity, government magic and timing had made him an instant millionaire, opening the floodgates for what would become a mega empire at the heart of Eastern Nigeria.
44. About 800 kilometers away from the burgeoning empire of Cletus Ibeto was a 22 year old young man by the name of Aliko Dangote.
46. Aliko had put to work the N500,000 he received from his uncle as startup capital and was settling into business in his newly adopted trading city of Lagos, South West Nigeria.
47. Little did they know that their paths would cross in one of the most riveting tales of rival warfare, reminiscent of that fateful day on the battleground of the nation of Biafra.
This is @Nairametrics Corporate Story BTU by @BluechipTechNG
@Nairametrics @BluechipTechNG 48. It was 1997 and the already powerful billionaire and president of the sprawling Dangote empire, Alhaji Aliko Dangote, was thinking about pivoting his strategy.
@Nairametrics @BluechipTechNG 49. In the past 20 years since he moved to Lagos, he had built a reputation as a fierce competitor and a near monopolist in most of the businesses he owned.
@Nairametrics @BluechipTechNG 50. The young Aliko’s path to riches started with the importation of sugar and rice from Brazil and Thailand respectively. As a young man in the early eighties, Aliko understood the power of monopoly and crony capitalism.
@Nairametrics @BluechipTechNG 51. He quickly secured exclusive importation licenses for sugar, rice, and cement, beating out every competition that stood in his way to market dominance.
@Nairametrics @BluechipTechNG 52. In one unconfirmed story, a rival importer decided to take on Aliko’s dominance in the sugar market and imported tons of sugar into the country.
@Nairametrics @BluechipTechNG 53. On getting wind of this imminent threat, a call was made to those in charge at the Customs, about possible contraband goods making their way into the country.
@Nairametrics @BluechipTechNG 54. The container of sugar remained stuck at the ports for weeks as demurrage accumulate to the dismay of the bewildered contender. As he racked up losses, he received a lifeline from none other than Alhaji, offering to buy his product at less than half the price.
@Nairametrics @BluechipTechNG 55. Such was the palpable fear competitors had against Alhaji that stories of him stifling rivals out of business became folklore among traders, critics, and admirers alike.
@Nairametrics @BluechipTechNG 56. Despite the criticism of the young Alhaji, rivals and critics could not but admire his astute craftsmanship and ability to thrive where others had failed.
@Nairametrics @BluechipTechNG 57. He succeeded where many had failed and ran an empire that dominated the breakfast tables of nearly every Nigerian living in the country.
@Nairametrics @BluechipTechNG 58. In one of his trips to Brazil, Aliko was smacked by a sudden reality. Why continue importing products into Nigeria when he could cut out the middle men and produce same locally in Nigeria?
@Nairametrics @BluechipTechNG 59. In fact, why not import and manufacture at the same time? The thought of this was exciting and he wondered why he had not done this all along. To enjoy total dominance, he had to own the entire value chain, from production to distribution.
@Nairametrics @BluechipTechNG 60. This would give him ample powers to control the pricing, and dictate supply requirements. It was to be his greatest decision ever.
@Nairametrics @BluechipTechNG 61. In the year 2000, Dangote Sugar Refinery commenced business as a subsidiary and sugar division of Dangote Industries Limited. A year later, they commissioned the 600,000mt-capacity sugar refining facility in Apapa, Lagos State, Nigeria.
@Nairametrics @BluechipTechNG 62. Raw material input from the refinery came from the company’s 200,000-hectare sugar plantation, thereby solidifying his business model of owning the entire value chain.
@Nairametrics @BluechipTechNG 63. To support local industries, the newly elected Obasanjo Government, on the advice of his economic team and industrialists like Dangote, introduced protectionist measures that stifled importation.
@Nairametrics @BluechipTechNG 64. The government introduced high tariffs and gave tax breaks to mega traders companies investing in local manufacturing.
@Nairametrics @BluechipTechNG 65. The government did not stop there. Convinced that local manufacturers required a period of tutelage before they could become fully independent producers and meet the demands of consumers, they allowed manufacturers to import the same products that they manufactured.
@Nairametrics @BluechipTechNG 66. The policy, methodically termed backward integration, would become the playbook for Dangote’s next business juggernaut.
@Nairametrics @BluechipTechNG 67. Successive Nigerian governments have tried several policy measures over the years in their bids to diversify the economy and enthrone self sufficiency in the country.
@Nairametrics @BluechipTechNG 68. In the military era, which lasted between 1983 and 1998, billionaires like Cletus Ibeto and Aliko Dangote enjoyed massive government tax cuts and import waivers that guaranteed monopolies in their respective industries.
@Nairametrics @BluechipTechNG 69. But under President Obasanjo’s regime, local business monopolies enjoyed some of the largest import duty waivers ever granted by a government.
@Nairametrics @BluechipTechNG 70. According to one report, President Obasanjo granted import waivers to about 1,843 beneficiaries in 2007 that cost the government over N165 billion in revenue losses.
@Nairametrics @BluechipTechNG 71. Critics of the government cited the need to secure re-election contributions from powerful donors from the private sector as an instigation for the waivers. Some of the beneficiaries included powerful private businesses that controlled swathes of the economy.
@Nairametrics @BluechipTechNG 72. It included the likes of the Redeemed Christian Church of God, Mandarin Hotels, Le Meridien, Federal Palace Hotels, members of the diplomatic corps, companies
@Nairametrics @BluechipTechNG 73. fronting for top government functionaries, Stallion Group (who used it to import rice), and of course the Dangote Group who, report claimed, got as low as 5% as concession for importing sugar.
@Nairametrics @BluechipTechNG 74. In a report in 2011, the Senate had declared that Nigeria lost about “N1.3 trillion to waivers granted on importation of rice and other agricultural commodities between 2011 and 2014.”
@Nairametrics @BluechipTechNG 75. As is typical with successive governments, policy pronouncements are reversed immediately power changes hand.
But for some astute businessmen, 8 years is just about enough to set the stage to own one of the most sought after assets of the Federal Republic of Nigeria.
But for some astute businessmen, 8 years is just about enough to set the stage to own one of the most sought after assets of the Federal Republic of Nigeria.
@Nairametrics @BluechipTechNG We have come to the end of the first part of this Episode of Corporate Stories.
Thanks to @BluechipTechNG for making this possible.
Thanks to @BluechipTechNG for making this possible.
@Nairametrics @BluechipTechNG Special thanks to all of you who have supported and waited patiently for this season.
We love your feedback so do send them coming.
We love your feedback so do send them coming.
@Nairametrics @BluechipTechNG Finally, thanks to the folks at @Nairametrics for putting this together.
Second part of this Episode will be live next week. Thanks and remember to retweet the first tweet of this thread.
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Second part of this Episode will be live next week. Thanks and remember to retweet the first tweet of this thread.
*End*
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