The richest man in Africa and the Chief Executive of Dangote Group, Aliko Dangote, on Wednesday urged the federal government to use its population growth for economic growth.
He wondered why the country relegated local content while relying heavily on importation.
Dangote, who was represented by the Group Executive Director at the company, Ahmed Mansur, spoke on the topic, ‘Industrialisation – Backward integration as a strategy for national development: The Story of the Dangote Group’, during the inauguration ceremony of the University of Ibadan Business School Complex.
He said Nigeria spent over N1.5 trillion annually on food importation, stressing that it put a heavy pressure on Nigeria’s foreign exchange. He explained that up to 80 percent of the inputs in most manufacturing processes in Nigeria still relied on imported components, while noting that Dangote’s backward integration policy had birthed economic advantage for the country.
“With an enviable population and natural resources, not many countries have the advantages that Nigeria offers to manufacturers. Corporations, like Dangote Industries that long ago embarked on backward integration are now starting to reap the benefits.
“Backward integration is when a business exerts control over sources of raw materials or other business that are part of the overall manufacturing process. For example, a cement trader becomes backwards integrated when he takes ownership or control of bagging, cement grinding, and limestone mining.
“It increases control and efficiency because companies are able to control quality and coordinate the delivery of raw materials or other supplies. Costs control, competitive advantages, diversification of talent and competencies are some of the other advantages of backward integration.
“It is ever more important to consolidate and build on these fragile gains. The Nigerian Customs and border services need to effectively check illegal imports and under declaration of duties and levies. State governments need to be more efficient at facilitating land acquisition for large scale developments.
“Policy focus and choice of sector are critical to the success of backward integration, import substitution and local content policies. The importance of technological learning, transfer of know-how, and skills upgrading cannot be overstated and this is one area where our universities can play a bigger and better role than they currently do,” he noted.