Alhaji Dr. Aliko Dangote, President, Dangote Group |
Registered in Tanzania as Dangote
Industries, the plant will primarily serve the domestic market. It will also be
able to serve local export markets by sea. A fall-out of the Tanzania’s
impressive economic performance in recent years is the strong demand in the
real estate sector that has in turn reflected in growing cement consumption.
It is that need, among others, that
Dangote Industries will help to meet in Tanzania. In so doing, Dangote will be
providing a livelihood for tens of thousands of Tanzanians both directly as
employees and indirectly as trade distributors, resellers and sundry other
partners. It will also provide considerable taxation and other revenue to
government. In gradually entrenching a reputation as an authentic multinational
corporation, Dangote can be said to be following a trail that was blazed by a
handful of ambitious Nigerian companies, notably banks over the last 20 years.
The multinational corporation, to a
large extent, epitomizes the nexus between risk, profit and opportunity in a
capitalist world. Having reasoned that a certain country somewhere might
portend an opportunity, it does the requisite diligence and where it determines
that the odds are reasonably in its favour, proceeds to commit resources –
capital, manpower, time – towards investing in such a country. It invests in
the country in the expectation of reward; namely, profit.
Ironically, it would seem that once
these multinational corporations have confronted the risks that one must face
in investing in Nigeria and thereafter made the requisite investment, the
country appears to seek every means by which to deprive them as much as
possible, of the profits that are the legitimate reward for investment.
One widespread approach is spurious
and multiple taxations, where different levels of government – federal, state
and local – seek the payment of the same taxes from a single multinational
corporation. One example is Right of Way,
which is supposed to be under the purview of the federal government but which
state governments and even the occasional local government have been known to
demand payment for. In a most notorious situation, the Federal Inland Waterways Authority has demanded Right of Way
payment to the tune of hundreds of millions of Naira from telecom companies for
laying fibre optic cables on bridges on federal highways.
The recent case of Stanbic IBTC Bank
is yet another manifestation of short-term thinking on the part of government
functionaries charged with making and implementing policy. Owing to the banking
consolidation tsunami that began some years ago, what used to be IBTC-Chartered
Bank and Regent Bank, had merged and come to be known as IBTC Chartered Bank.
Thereafter, a bigger multinational
bank, South Africa-headquartered Standard
Bank, came calling, offering the then local bank the advantage of an
opportunity to play in the big league, with access to a bigger chunk of
international capital. Then it backed this up with capital injection. News
reports at the time indicated that Standard Bank might have injected more than
USD500 million into the country in the process of acquiring majority
shareholding in the firm, which now came to be known as Stanbic IBTC Bank.
Accordingly, the erstwhile local
bank assumes a new identity and gradually consolidates its presence locally. In
addition, using its expanded international connections, by courtesy of its new
multinational status, it taps into sundry big dollar deals in different sectors
of the economy. It also begins to play big in the retail banking space among
others.
Then the moment of reckoning comes.
It needs to pay “franchise fees” to its parent company for the use of the
collective resources, both tangible and intangible, of the entire multinational
organisation. Lo and behold, government functionaries in Nigeria say it cannot
do that. What right has it to pay foreigners for a service, banking, that
Nigerians can provide, our enraged government functionaries ask.
The turn of events again brings to
the fore, the question of whether key functionaries in government including
those who bear responsibility to draw up and implement key economic policies
are in tune with the overall big picture and purpose of government. Franchise
fees are standard practice among multinationals. There is no doubt that Dangote
Industries in Tanzania will have to remit franchise fees or management fees to
the Dangote Group back home in Nigeria, in due course. Franchise fees, however,
should be too inconsequential in the scale of affairs to be the bone of
contention.
We will be ashamed on Tanzania’s
behalf if in a few years’ time, we read news reports of altercations between
Tanzania’s government functionaries and Dangote Industries, Tanzania, on
account of unwillingness by Tanzania to allow the local subsidiary pay its
parent the requisite franchise fees. This would sign-post short-term thinking
and a poor understanding by Tanzania’s government operatives of the dynamics of
economic growth and development, for what is of greater value is the economic
multiplier which Dangote Industries is stimulating in Tanzania, not the
franchise fees it will pay to its parent, Dangote Group, in the future.
Government functionaries, therefore,
need to better understand and appreciate the profit imperative especially as it
pertains to widespread economic growth and development. Doing this should mean
that a lot of the artificial road blocks that are put in the way of
multinational corporations operating in Nigeria will be dismantled. (guardian)
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