Emir Muhammadu Sanusi II:
The Dangote Refinery IPO Address

Let me welcome the President of the Dangote Group, Alhaji Aliko Dangote. Although you don't welcome someone to his home. But since he has brought all the way from Lagos and Rivers, Bismarck Rewane, and I've seen Tilly Adebajo, I saw Zuera Yousuf from Niger Republic, and a number of guests who are here, I'd like to welcome you to the city that is the center of commerce.

The city that has produced now the two wealthiest Nigerians from established commercial families in Kano. I'll make my remarks very broad and general because I expect Bismarck Rewane, maybe Tilly Adebajo to go into the details of the IPO and discuss the economy.

I always remind people that for centuries, Kano was the third largest city in Africa after Cairo in Egypt and Fez in Morocco. And Kano grew largely because of commerce. It created the environment that made it the most attractive location in Sub-Saharan Africa during the Trans-Saharan trade.

Our Kurmi market, which you can visit, and I hope those of you who have not visited will visit, was built in the 15th century in the time of the king, Sultan Muhammadu Runfa. And it was the first built-up market in Sub-Saharan Africa.

It is therefore not surprising that we continue to produce these entrepreneurs—the Dangotes, the Dantatas, the Isyaku Rabius, and so on. And these are people who generation after generation have entrepreneurship, risk-taking, hard work, and business in their veins.

I'll speak from personal knowledge and say that the journey to this refinery started in the 1990s. I was a credit risk management officer in UBA (United Bank for Africa). Aliko Dangote was our client. At that time, he was importing and selling as a trader.

And it's an interesting story because at that time, as you know, banks always gave overdrafts, and Aliko wanted to move into manufacturing. And they took our overdraft facility and set up a production base at the ports in Apapa—producing flour, I think, and processing imported cement and bagging it. For those of you who are bankers, you know what happens when you take overdrafts and invest in long-term assets!

The overdraft became sticky, and we kept following for repayment. So one day he sent his treasurer, Alaka, to us, who said we should meet in Apapa. And he showed us the production facilities and said, "We did not steal your money, this is where the money is."

And I was shocked! I said, "Yes, but you have to pay me." He said, "Well, you have to wait. We have put the money in production. This is where your money is. You have to wait." So we were forced to restructure the facility. Because one, the money had not been diverted. So I said, "Why didn't you tell us you were doing production?" He said, "If I told you, would you give me a long-term loan?"

From there, Aliko arranged a meeting with his general manager. I think he was called Mr. Knut. And Mr. Knut at that time had a blueprint developed with McKinsey. And he said:

I'm telling you about a conversation that took place, I think, in 1998. So I was there from the very beginning. So everything you see, from cement to the refinery, has just been one consistent strategy. If you have 200 million people, you have the market. You don't need to go anywhere.

Everybody is coming to Nigeria to sell to us, and one person says: "I am going to produce those goods for this market." Now, will we ever stop driving our cars? Will we stop entering our aircraft? This is a model that is the most sustainable business model you can think of. You have to build a house, you have to eat, you have to drive your car, you have to enter the plane, you have to ride your motorcycle. So when you think of it in terms of the fundamentals and the thought process that has gone through it, this is fundamentally the best business decision you can make.

And everybody was following that path. You'll notice his brother, who is the second richest Nigerian, is also doing the same thing, going into the same model, producing the same things, targeting the same market. It is a proven track record.

The difference is that Aliko was the one who took the first risk. In Hausa, we say that when you go to a river, you wait for someone to cross first; if he does not drown, you also follow. So we're going to see many, many more people try and do this. So from the perspective of an economist, this is precisely what Nigeria has always wanted.

How can we be a country that exports what we do not have and imports what we have? How can you be an oil-producing country and be importing petroleum products? How can you have the agricultural land that we have and be importing food? How can you have the deposits of limestone that we have and be importing cement?

And therefore, beyond business, beyond profits, we have to thank Aliko for what he has brought into the Nigerian economy.

What Aliko has done is disrupt that model. We don't need someone to take our crude to England and France, refine it, and sell it back to us at a profit! We don't. We should refine it here and buy, and also sell to others. We have moved from a country using its foreign exchange to import petroleum products to one that potentially will be earning foreign exchange from being an exporter—not just of crude, but also of refined products.

A few months ago, during the crisis in the Strait of Hormuz, European airlines were buying aviation fuel from the Dangote Refinery. So we have also become a source of geopolitical stability, providing alternatives to the Middle East.

It's something that as Nigerians we should be proud of: that an African is building one of the ten largest refineries in the world, that an African is refining this crude for us and selling to us, and we are no longer dependent on imports. It's the same story with cement.

Now people talk about monopoly. There is no monopoly if a monopoly is not protected by law. Nobody says you cannot set up a refinery. Anybody who wants to build a refinery, anybody who wants to go and look for $22 billion, invest, and go through what Aliko went through—build a refinery, please, you are welcome!

You want to build a cement plant like Obajana? Please come! We want more cement factories. We want the price of cement to come down. Build more refineries! We want more refineries. So let us not be talking about monopoly, monopoly, monopoly. The only reason you have a monopoly is because he's the only one who has taken the risk on Nigeria, and he is entitled to it.

Now when I was in the Central Bank, I used to call—and this was so many years ago—I used to call Aliko Dangote a concentration risk. And it has continued!

Because I remember a presentation they made to the economic management team. At that time, they talked about their cement plants, their refinery plants, their sugar plants, and they said by the time we're through, we will be 60% of Nigeria's manufacturing GDP. To be honest, I think today the Dangote Group is more than 60% of the manufacturing GDP. And it's already getting to about 40% of the Nigerian Stock Exchange.

So if you were to invest in a company, who would you back? You'd have to go to them.

The final comment is on this IPO. Aliko Dangote is from Kano. People in Kano have not been very active. I know that people like Dr. Farouk, they've been preaching this for a long time. We have not been very active participants in the stock market.

And I'm not talking about someone who will buy 5,000 shares and want to sell tomorrow and believe he will get 10,000. No! I'm talking about: you have some money, put it in, leave it there for some time, and just watch your money grow. Forget about it for some time. You'll be surprised in five years what the 10,000 Naira you invest today will be, what the 100,000 Naira you invest will be!

So I would urge all of us to try to begin the process of owning. And if you're going to own, you might as well own in a company that has the right economic fundamentals, a company that is producing. You can see the assets on ground. It is not kalokalo (gambling or illusion). You can see the refinery on the ground. You can see how it is producing. It takes crude, it turns it into refined products, those products go into your cars and your aircraft and they move on, and then it continues!

You can see where your money is going: it's creating jobs direct and indirect; it's producing fertilizer which goes into our agriculture; he has secured his own gas supply; he's at the port; he has access to his own markets. All the economic fundamentals are there.

As he said: invest responsibly. Do not take your children's school fees and put in shares. Do not sell the house that you live in and put in shares. But what you can afford—10,000, 20,000, 30,000—what you can afford to set aside for some time, set it aside. And if you look at the fundamentals of the economy, over time you can be assured that this investment will grow, and you will not regret it.

So, and to be honest, people are buying from all over the country. I speak as the Emir of Kano: I would like my people to be owners of this company. I do not want us to be left behind in the capital markets. I do not want us to be left behind in financial inclusion. So this is the time, and this is the opportunity. I would urge all of you, especially those who are representing unions, talk to your people in our markets—they need to take advantage of this opportunity.

I thank Aliko for thinking of it and giving me a fit to come to Kano. I thank him for changing the date so that I could attend. I would like to say that he wanted Kano to be the very first point—this was his plan—but my own diary did not accommodate, and he kindly changed and moved it to the 17th. So this is how much he values Kano.

And as I have said before, in Hausa, we have a statement: we say, if you're a good person, everybody claims you. We have heard Lagos claim him; I know very soon even Egypt will claim him, America will claim him, but we all know where he comes from. And he has told you: this is his grand homecoming.

We are happy to donate him. We are happy to share him. But please do not take him away from us.

Thank you very much. Thank you.