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Nairaland Forum / Nairaland / General / Business / Cement: Why Only Dangote? (24154 Views)
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Re: Cement: Why Only Dangote? by Obi1kenobi(m): 10:06pm On Apr 29, 2021 |
AllenSpencer: You don't seem to understand how price fixing works among a small cartel of suppliers who dictate terms in a closed market. The funny thing is that Dangote cooperated with Zambian authorities investigating a price fixing scheme hatched up by the 3 leading suppliers of cement in the country (including Dangote and LaFarge Zambia) after they conspired to hike cement prices in Zambia. The other 2 companies were heavily fined, while Dangote who snitched on those companies was simply ordered to reduce its prices. Economic protectionism has handed the overwhelming majority of Nigeria's cement production to just 3 companies. Entry barriers to the sector are very high due to the backwards integration policy mandate for all players in the sector, and systemic advantages Dangote and the other top 2 players have enjoyed with initial import waivers, and forex waivers and tax credits, making it very hard for new players to compete. Due to the protectionist measures (ostensibly to promote local content), demand far outstrips supply and with these 3 companies knowing full well that they control the entire closed market and a government who do not keep them in check, they can conspire to fix prices to the benefit of all 3 players. BUA himself has admitted that the 3 big players make monstrous, easy profits and called for more liberal policies in the sector. If any of the 3 companies decided to crash prices, it would make little difference in their market share, for the simple fact that their installed production capacity would remain the same. Capturing the market with lower prices will only make sense when you can meet local demand and everyone can run to you to buy your product and boycott the price gougers. The bottomline is that the portrayals of Dangote's immense success solely to his capitalistic genius is misguided. He's an oligarch in the model of many Russian and East European billionaires who profited from monopolizing markets after the collapse of communism, and he preys on an underregulated Nigerian market where the government doesn't seem to understand its role in enforcing anti-trust laws that stop predators from abusing their strangle-hold on the local market. These things are in plain sight and they are not hidden. You can read Dangote Cement annual financial reports and compare his profit margins in Nigeria with his vastly smaller profit margins in other African countries where he operates. If the government wants to ban the importation of bulk cement, the least it can do is not allow a small cartel of companies to hold the entire country to ransom with price-gouging. 1 Like |
Re: Cement: Why Only Dangote? by Jsarki: 10:12pm On Apr 29, 2021 |
When you were blessed people normally what your downfall. |
Re: Cement: Why Only Dangote? by 9jaRealist: 8:04am On Apr 30, 2021 |
jmoore: Dangote is from the “wrong” ethnic group... > |
Re: Cement: Why Only Dangote? by 9jaRealist: 8:07am On Apr 30, 2021 |
Obi1kenobi: Tales by the Moonlight... Why don’t you go take similar advantage of the “under regulated” Nigerian market? SMH > |
Re: Cement: Why Only Dangote? by 9jaRealist: 8:10am On Apr 30, 2021 |
omonnakoda: FarahAideed: Bless you both... I have the Naysayers the same question... Why is the competition not undercutting Dangote’s prices?! > |
Re: Cement: Why Only Dangote? by Cromagnon: 5:48pm On May 02, 2021 |
philfearon:Make it affordable how? Why didn't lafarge sell at 1500 Why don't you make your own cement and sell at 1500 |
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