The Power of Monopoly: Assessing Dangote’s Dominance in African Industries

Aliko Dangote’s dominance in African industries has made him one of the wealthiest individuals on the continent, but it has also raised questions about the potential consequences of his monopoly. 

As the founder and chairman of Dangote Group, a conglomerate with interests in cement, sugar, flour, salt, and other industries, Dangote control a significant share of the market in many of these sectors, giving him a near-monopolistic position.

While some persons argue that Dangote’s investments have led to significant job creation, infrastructural development and economic growth, others have raised questions that the concentration of power in the hands of one man can generate abuse and lack of accountability. In this article, we will examine the implications of Dangote’s near-monopolistic control of cement, sugar and floor. Let’s dive in.

How Dangote Conquered Africa’s cement industry

Dangote Cement became Africa’s leading cement producer with operations in 10 African countries by defeating competitors like Lafarge Africa, Holcim, HeildelbergCement, Jidong, Siam, and Cemex. Dangote who has more financial resources than Lafarge Africa prioritised investment in new production capacity and expanding its distribution network. This is evident in Dangote’s employment of Lafarge’s former Group Managing Director/Chief Executive Officer (GMD/CEO) Michel Pucheros, a few days after his resignation.

Lafarge WAPCO brand had before the arrival of Dangote, dominated the manufacturing of cement in Nigeria and Africa. But when Dangote cement emerged and assumed a market capitalisation of 65 per cent, Lafarge had to share the remaining 35 per cent share of the market with BUA and Ibeto.

Despite Lafarge’s strategies, Dangote’s close affinity with the government has strengthened his dominance in cement. While companies like Lafarge, and Holcim battle with huge taxes Dangote enjoys tax breaks, subsidies and access to land at preferential rates. 

Dangote’s near monopolistic position stifles competition and hampers the growth of other players in the industry. When there are few competitors in a market, it becomes extremely difficult for new businesses to enter the market. Consequently, this can lead to less innovation and lower quality of products and services.

The implications of Dangote’s monopoly in Africa’s sugar industry 

It will interest you to know that Dangote Sugar is the number one supplier of sugar in Sub-Saharan Africa. With a 1.44MT per annum sugar refining capacity, Dangote defeated competitors like Savannah Sugar Company. Dangote acquired Savannah Sugar Company Limited to enhance production capacity and consequently raise its market dominance. 

The acquisition bequeathed Savannah’s 32,000 hectares of land available for the cultivation of sugarcane to Dangote. Dangote’s new monopolistic control gives him undue influence over the Nigerian economy. What this means is, Dangote could use his influence to lobby for government policies that will strengthen his market dominance. While these policies may benefit Dangote and his company, they will toughen the business environment for other businesses and further hinder competition.

It is also pertinent to state that Dangote’s unchecked monopoly can also put the welfare of consumers at risk. 

Is Dangote’s dominance good for Africa?

Dangote’s critics argue that his monopoly gives him the ability to set prices at his discretion. This could make it difficult for small competitors who are struggling to survive. It can also push them out of the market. They also argue that his dominance could reduce innovation and consumers’ choices, and lead to a lack of market dynamics. 

On the flip side, sponsors and supporters of Dangote’s dominance preach that his position provides opportunities for economies of scale. This is because his economies of scale can lead to lower production costs and more affordable products for consumers. They also claim that Dangote’s success inspires other African entrepreneurs.