War Of The Billionaires: Dangote Vs Rabiu: Rivalry Without End

…How Buhari Tipped The Scale

June 13, (THEWILL) – If there are two Nigerian businessmen who touch the day-to-day lives of their compatriots, it has to be Aliko Dangote and Abdul Samad Isyaku Rabiu, both founders and owners of companies that produce everything from edibles (rice, salt, sugar, vegetable oil) to building materials like cement, steel and petrochemical refineries. Both are from Kano state and are scions of parents who were also reputable businessmen.

Dangote Group is a household name in Nigeria and much of the West African sub-region while BUA has its business holdings in Nigeria mainly but also exports to some other neighbouring countries.

Aliko Dangote
Aliko Dangote

As of today, both are buccaneer businessmen billionaires, buccaneer not in the usual sense of sea pirates but being adventurous and sometimes quite reckless in their business pursuit. Above everything else, they are also rivals bent on outdoing, outsmarting one another for dominance in the vast and forever expanding marketplace in the country and Africa.

Rated by Forbes as Africa’s richest man, Dangote’s net worth in the first quarter of 2021 was $16.4 billion. At $4.9 billion, Rabiu’s real time net worth is almost a quarter of his senior colleague and fellow industrialist.

Why are two of the most influential businessmen in Africa at war? Why are these two men who should otherwise be brothers given their natal state, now in a litigious claim in the court?

To answer these questions, it is perhaps necessary to go back in time and exhume from history similar business spats and rivalry between contemporaries who fought battles not only on the pages of newspapers but in the courts.

Sometime in 1879, Thomas Edison invented the light bulb to pioneer a new age of electricity. But there was a problem: how to transmit this new invention to a larger populace, from people in urban areas to the remotest folk in rural settlements.

Unsure of what to do, Edison challenged a young Serbian mathematician and engineer, Nikola Tesla, working in his company, Edison Machine Works to find a solution. The brilliant Serb did. His answer was redesigning his boss’s Direct Current to Alternating Current to transmit high voltage energy over long distances using low current.

Edison was charmed by Tesla’s solution and even called it “splendid” but thought it was impracticable. Certain of his workable solution, Tesla looked to another company, Westinghouse Electric and Manufacturing, where George Westinghouse immediately bought and championed the young engineer’s solution. In no time, Westinghouse had taken over much of electricity transmission in parts of America at the expense of Edison.

Naturally, Edison felt threatened. What to do? Bring down Westinghouse by any means possible. How did he go about it? The imminent execution of a murderer condemned to death by hanging, which was the major form of execution at the time, presented Edison with a golden opportunity to ruin his competitor, Westinghouse, leading to what has been dubbed the War of the Currents.

To cut a long story short, Edison suggested using Alternating Current for future execution of condemned criminals and even carried out public demonstrations on animals proving, once and for good, how awful his rival’s invention was.

The face-off between Dangote and Rabiu has nothing to do with electricity transmission but the same motive of market dominance lies at the heart of it all. If a rival is creeping in on your turf patch by patch, there is every tendency he might corner everything to himself at some point, thereby reducing your market value and returns. Nothing could be more threatening to a businessman with great expectations from a market he had entirely to himself.

Dangote and Rabiu’s enduring rivalry is decades old. People close to the families say their feud dates back to the 80s. Abdul Samad Isyaku Rabiu is the son of foremost Kano merchant, Alhaji Isyaku Rabiu, who made his fortune from trading and manufacturing while Dangote is the son of Mohammed Dangote though he was raised by his maternal grandfather, Sanusi Dantata, the wealthy merchant, following the death of his father.

The Chairman, Bua Group, Alhaji Abdul Samad Rabiu
The Chairman, Bua Group, Alhaji Abdul Samad Rabiu.

Rabiu established the BUA Group in 1988 as a manufacturing, trading and agricultural company eleven years after Dangote launched his company in 1977.

According to multiple sources, Rabiu claims Dangote has managed to attain the successes he has achieved in business because he has been using his connections in government to influence policies that help stifle competition in his favour in order to monopolise trade since the Rabiu family business suffered a great deal when then military head of state, General Muhammadu Buhari, detained and locked up Isyaku Rabiu on allegations of not paying taxes to the federal government.

Dangote has managed his business interest stealthily nurturing it as governments changed hands from military to civilian rule. His big break would come during Olusegun Obasanjo’s eight-year administration when he found favour in Emmanuel Nnamdi Uba popularly known as Andy Uba, a former powerful and influential aide of OBJ as he is commonly called. The leverage helped Dangote dominate and expand his hold in the commodities trade crushing competitors in his path.

Rabiu, who appears to have found favour in the current administration, to Dangote’s chagrin, has been steadily and boldly making inroads into the cement and sugar sector and taking market share and frontally challenging Dangote in the process.

Now referred to as the Sugar War between the businessmen, Kenneth Ehigiator reported in Vanguard of April 9, 2021 how the conglomerates are “locked in a bitter sugar war over production and exportation” of the commodity.

Joined by Flour Mills owner, John Coumantaros, a Greek/ American, Ehigiator wrote that on January 28, 2021, the duo of Dangote and Coumantaros had written to the Minister of Industry, Trade and Investment, Niyi Adebayo, concerning BUA’s refinery in Bundu Free Trade Zone in Port Harcourt “of undermining the National Sugar Master Plan NSMP.”

In a counter charge written on February 11, 2021 to Adebayo, Rabiu took umbrage at the pair’s letter to the minister, describing Dangote as “a monopolist.” In his letter, he said: “in Nigeria and anywhere in the world wherever Dangote is operating in any sector or business, he seeks to muscle out competition through any means necessary” and “this scenario is playing out again in this case.”

“It is, however, strange that his current co-conspirator, John Coumantaros, a Greek/American national, was once a victim of Dangote’s. They are only just acting as friends in connivance because of their interest to push out competition and create a monopoly for themselves.”

Besides, Rabiu responded that the sugar refinery in Port Harcourt has presidential backing, insisting that Dangote and Coumantaros “were calling to question the authority of the President’s power and the diligence of the trade ministry.” Rabiu did not stop there, declaring that “we see this as an affront to the powers of the president and an attempt to undermine Nigeria and its institutions as well as edge out competition, to gain a monopoly that holds the country to ransom.’’

Rabiu would take his case further to the Presidential Villa where he eventually got President Buhari to overturn Ms. Hadiza Bala Usman, the now suspended Managing Director of Nigerian Ports Authority, NPA, who had earlier withdrawn the approval given to BUA for the sugar refinery. Ms. Bala Usman was however suspended from office over an unrelated issue.

Dangote had initially used Ms. Bala Usman, his intimate friend, to try to knock down the BUA sugar refinery until Buhari stepped in.

Most business analysts can tell you off the cuff that one of the most consistent charges levelled against Africa’s richest industrialist is living up to his reputation as a core capitalist and monopolist.

A few days after the president gave the sugar refinery his backing via a directive to the Minister of Industry, Trade and Investment, THEWILL gathered that Dangote frantically sought audience with the president to overturn the approval. He met a brick wall. While the President was in Paris recently at the behest of the President of France, Emmanuel Macron, for urgent talks on economic and security issues, Dangote flew to the French capital hoping to meet with PMB on the BUA refinery issue as well as to plead for the reinstatement of Ms. Bala Usman. He was unsuccessful.

Is Africa’s richest man losing his influence at the presidency? Dangote had enjoyed easy access to multiple Nigerian presidents, from Obasanjo through Umaru Musa Yar’Adua to his successor, Goodluck Jonathan. After all, he contributed billions of naira to their campaigns and, in turn, the former presidents lent him their sympathetic ears.

Another case pending in the court is between Dangote and BUA over the later’s acquisition of mining rights in Okpella, Edo state.

Okpella Cement Factory had been run for years by the Edo State Government, almost always at a loss. BUA successfully bid for and now manages the cement factory with a large deposit of the raw materials – a limestone quarry – within a close radius of the factory itself. Controversy however followed after it emerged that Dangote Group also bought the land on which the limestone deposit is. How come? Dangote and Edo State governor, Godwin Obaseki, are very close friends.

BUA Group thereafter filed a suit and got an injunction against Dangote through its lawyers, insisting that the Dangote Group only has mining rights in Kogi state and not Edo, a border state.

Another instance of the bitter rivalry between these industrialists could be seen in Rabiu’s entry into petrochemicals and hydrocarbon refining.

Just about three years after Dangote started construction of his gigantic 650, 000 bpd petrochemical refinery in Lekki, Lagos, Rabiu, last September, announced BUA’s plan to construct a 200, 000 bpd integrated refinery and petrochemical plant in Akwa Ibom State after signing a technology licensing deal with Jean Sentenac, CEO of French environmentally-friendly hydrocarbon processing company, Axens.

While Dangote’s plant is scheduled to commence full operations in the first quarter of 2022, BUA’s refinery is primed for delivery in 2024.

Dangote and BUA are both blue-chip companies, in the same sector and both enjoy federal import protection. They also both serve a local market with huge demands for cement. The two companies enjoyed preferential treatment during the land border closure when they were reportedly given the permit to export their products while the border closure was still in force.

This controversial treatment impacted significantly on the stock market because their operations obey the fundamental ‘ice’ law of economic development:  Investment, Consumption and Export (ICE). They earned huge money during the period.  With a combined market capitalization of N6.27 trillion (N3.74 trillion and N2.53 trillion), or 31 percent of total market capitalization of N20.23 trillion as of March 2020, Dangote and BUA naturally boosted the stock market.

In its aggressive pursuit of market dominance, Dangote Cement executed a buy-back (of 85.2 million shares) on the NSE in December 2020. The deal, aimed to repurchase 10 per cent of the company’s 17.04 billion issued shares, led to a 9.98 per cent rise in its share price to N230.4.  The shares, which had hit bottom in April, rose to an almost two-year high on news of the share buyback, according to Reuters. One can philosophically say, when Dangote sneezes, the market catches cold.

Notwithstanding their market dominance, Dangote Cement remains one of the most capitalized firms on the Stock Exchange. As of December 31, 2020, Dangote Cement has a market capitalization of N3.65 trillion, while BUA recorded a N2.49 trillion capitalization.

Such is the perennial rivalry between the two business moguls that a commentator bemoaned their ruptured relation in an article published recently. “Discord rattles the beams and eaves of industry and high society,” the writer began, “as Abdul Samad Rabiu and Aliko Dangote engage in a bitter feud. The chairman of BUA and Dangote Group, respectively, disrupt the peace of the industry leaving it shaken and distraught like a guava tree caught in the path of a thunderstorm.”

A healthy competition, so it is said, brings out the best anywhere in the world except in totalitarian regimes. Sports goods giant, Nike, may just sit on its palms if there was no Reebok or Puma to offer a good fight. Likewise Coca Cola if Pepsi Cola didn’t exist. In that light, some now see the rivalry between Dangote Group and BUA portending the best for Nigeria’s economy.

Besides, there are no shortages of former allies, business partners and competitors turned enemies in history. Though it would have been unthinkable in Soviet-era Union of Soviet Socialist Republics, once the Iron Curtain came tumbling down, it quickly opened the way for a free market economy. It also opened the way for spirited competitiveness among its business elite, the oligarchs.

Two of them stand out, Boris Berezovsky and his former business partner, Roman Abramovich. After a long-drawn court case in London, the two parted ways and never met. Berezovsky died in March 2013.

Far away to the west of Moscow and across the Atlantic, two former business partners also had their squabbles over the monopolistic tendencies of one of them, almighty Bill Gates of Microsoft. His accuser was Steve Jobs of Apple. Though they later made up with a prompt financial rescue package by Gates to Apple in its period of crisis, the acrimony tore the friends apart for years.

Described as “genius rivals,” Jobs famously said of Microsoft in a cutting remark in 1996 that “the only problem with Microsoft is they have no taste. They have absolutely no taste. And I don’t mean that in a small way, I mean that in a big way, in the sense that they don’t think of original ideas, and they don’t bring much culture to their products.”

Riled to no end, Gates responded to Jobs’s barbs thusly: “I don’t know why acting like it’s superior. I don’t even get it. If you just want to say, ‘Steve Jobs invented the world, and then the rest of us came along,’ that’s fine.”

Even so, when the time came to bail out Apple with funds, Gates never hesitated. They also made up afterwards.

So will the legendary feud between Dangote and Rabiu come to an amicable resolution at all or will this protracted trade war continue to evade settlement like the Israeli and Palestinian conflict?

Time will tell.