The $1 billion rice MoU between Dangote and the Federal Government

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By Dele Sobowale

“He gave it for his opinion, that whoever could make two ears of corn or two blades of grass to grow upon a spot where only one grew before, would deserve better of mankind, and do more essential services to his country than the whole race of politicians put together. Jonathan Swift, 1667-1745.

Last week the richest black man in the world, our own Alhaji Aliko Dangote, signed a Memorandum of Understanding, MoU, with the Federal Government of Nigeria for the establishment of a $1 billion integrated rice-producing company in Nigeria.

Granted, it is still just an MoU, signed in an Aso Rock sitting on so many MoUs gathering dust, it would require a 30-ton trailer to evacuate them. Nigerians with any memory should remember the most recent examples: to establish a refinery or several refineries and to establish power plants – all of which should have been operating by now. The problem is, the con men who persuade government and build up our hopes would usually quietly forget the entire idea once the phony publicity had been generated and the media had withdrawn. One hopes this MoU is not heading for the same dusty shelves in the archives.

In the belief that Alhaji Aliko Dangote means business, then the proposal deserves the commendation and the support of all Nigerians. To really win the war on rice importation, which is synonymous with self-sufficiency, we need BIG AND PATIENT capital. That is what has been lacking up till now. Hitherto, all our efforts have been based on naïve optimism and false hope. Now, one man has forced us to face reality and we now have a chance to actually win this war.

For the umpteenth time, let me declare that I was once into integrated rice farming with defunct Haske Rice Mill, situated on Kalambina Road, next to Sokoto Cement, Sokoto. Haske was also an integrated rice-producing organisation. I visited the plant on May 8 of this year for personal reasons and I was sad that the mill closed down shortly after I left in 1990 and had remained closed since then.

The mill, which was established by the President Shehu Shagari administration, along with two others at Makurdi and Badeggi, were designed to have made Nigeria self-sufficient in rice by 1990. The initiative failed because major importers of rice, names withheld, wanted it to fail. It was not in their interest at the time.

The failure of our Rice Policy under Shagari, was repeated when importers, again, ensured the failure of our National Sugar Policy under the administration of military President Ibrahim Babangida. That policy was designed to make Nigeria self-sufficient in sugar production and ethanol – which is a bye-product.

That we are still today not a nation of producers but “a nation of shopkeepers” (apologies to Napoleon Bonaparte, 1769-1821) can be attributed largely to the importers in hot pursuit of their self-interest, legitimately, and complaisant governments at the federal level who allowed narrow private interests to override the national interest at all times. Certainly, given a Lee Kuan Yew, nobody would have been permitted to subvert the national interest for purely personal gain. All our Heads of State succumbed to temptation – both military and civil.  It is still happening even now.

It will be interesting to read the contents of the MoU to find out what concessions have been demanded, and granted, in exchange for the investment to be made. It will also be of interest to know if the concessions granted to Dangote will also be available to any organization willing to invest $1 billion – to ensure a level playing field. The on-going war in the cement sector is a pointer to what can happen when selective concessions are granted in exchange for “God knows what.”

Private organisations are not charitable institutions – even when they “donate generously” during fund raising events. They are merely giving back a fraction of what they gained from the country and they hope to leverage the “donations” to benefit more in the future. Nobody should deceive us about that.

Still the MoU, if it results in the investment of $1 billion (N167 million) is a significant step in the right direction – but it is still a drop in the bucket compared to the investments made by the major rice exporting countries. It will amount to monumental foolishness, a great error of judgment, if we assume that they will give up the Nigerian market so easily. For them, there is too much at stake. For us, there is a lot more at stake.

With declining crude oil revenue, rapidly increasing population, our ability to pay for our food import bill is also taking a dive. Rice remains one of our major imports – despite the existing rice importation policy. Out there, thousands of people depend on Nigeria to consume their rice. Here, millions of Nigerians will continue for quite a while on cheaper imported rice – whether smuggled or not.

Dangote’s integrated rice company will not immediately close the price gap between imports and locally produced rice. It is even possible that a clause in the MoU might authorise the Dangote Mill to import paddy rice for milling locally. Without such a concession, the $1 billion venture will find it difficult to obtain enough paddy rice for its mills.

I should know. When we started operations at Haske Rica Mill, Sokoto, we discovered that the Shagari administration had installed a most modern rice mill, ordered from Japan’s SATAKE, which was capable of processing 10 tons of rice per hour, 24 hours a day and for 300 days straight. All the rice harvested in Nigeria then could not feed this mill alone. But, there were three mills to be fed.

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