Thursday, June 30, 2005

Mega Business in Nigeria

Update: July 24, 2005
Transnational Corporation of Nigeria Plc (referenced in the main post), became a reality with a bang! TransCorp, with investment interests in five core areas, was formally unveiled yesterday with the Federal Government granting it immediate approval to build a $250 million (about N33.25 billion) refinery in Lekki Free Port Zone, Lagos. The facility is projected to refine 400,000 barrels per day (bpd) of crude oil on full capacity, but 150,000 bpd is to be covered under the first phase.

President Olusegun Obasanjo, while launching the company at the State House Banquet Hall, Abuja, also announced other concessions which include a licence to build an Independent Power Plant (IPP) and access to government's cassava report for the construction of a cassava processing facility.

Obasanjo )middle) and the Board of Directors:
Ndi Okereke-Onyuike (chairman), Festus Odimegwu, Aliko Dangote, Jim Ovia, Jacob Mayo Ajekigbe, Funso Lawal, Femi Otedola, Tony Elumelu, Tony Ezenna, Waziri Mohammed, Adegboyega Olulade and Nicholas Okoye.

Read more about Transnational Corporation of Nigeria



Via Business in Africa :
These business operators in the small sectors are the engine that drives any economic revolution, and Nigeria has no scarcity of them. However, some of these Nigerians have become icons and models for enterprise and business pursuit today through the sheer size and influence of their business dealings. They are from the banking, energy, technology, telecommunications, manufacturing and other industry sectors and have distinguished themselves by contextualising the resources they manage and by contributing to growth of entrepreneurial spirit in Nigeria.
Here are some of the showcased entrepreneurs recent transactions:

Dangote’s Obajana Cement: : The International Finance Corporation, the private sector arm of the World Bank Group, is investing $75 million in Obajana Cement Plc to support a greenfield cement project at Obajana in Nigeria’s Kogi state...

Update on Obajana Cement: August 21
"The European Investment Bank, the European Union’s long-term lending institution, has signed loan facilities totalling USD 150 million (EUR 123 million) with Obajana Cement PLC, a subsidiary of Dangote Industries Limited of Nigeria. USD 110 million is guaranteed – for commercial risks only - by Eksport Kredit Fondsen (EKF) of Denmark for USD 70 million and by other international banks, including Fortis Bank, for the remaining USD 40 million."

"These facilities are part of a USD 479 million financing package to Obajana Cement PLC with a consortium of major international and Nigerian financial institutions, including the International Finance Corporation (IFC), Africa Merchant Bank/Banque Belgolaise and Netherlands’ Overseas Development Finance Company (FMO) as well as First Bank of Nigeria PLC in its capacity as arranger of the local banks’ tranche."
Update via Harold Doan and Associates Ltd

Zenon Oil $600 million refinery project**: The President/Chief Execu-tive Officer of Zenon Petroleum and Gas Limted, Mr. Femi Otedola yesterday in Lagos announced that his company has raised $100 million for the setting up of a refinery in the country...

(** Login ID & password = grandiose parlor)

These two are among those tagged the “President Boys”. This cohort of super wealthy individuals with the backing of the presidency recently formed the Transnational Corporation of Nigeria . On the Board of Transcorp are Aliko Dangote, Chairman, Dangote Group; Festus Odimegwu, MD/CEO, Nigerian Breweries Plc; Jim Ovia, MD/CEO, Zenith Bank Plc; Tony Elumelu, MD/CEO, Standard Trust Bank Plc, among others according to BusinessDay .

According to Okereke-Onyiuke, a Board member, said the president brought them together to form an organisation that would provide them in-roads into multi-million businesses within and outside the African continent. "Nigerian products are informally pushed into the African market; the incorporation of Transcorp was therefore informed by the need to formalize the entry of these products into the African markets. The objective is also to adequately empower the Nigerian businessmen to compete effectively with the Asian, Spanish, and European businessmen in these markets."

I can’t explain why I have a strong reservation towards Transcorp. Is it a sound business logic to have a big and well funded entity that can favorably compete (for) and execute mega business undertakings both within and outside the country? On the other hand, what will happen to the small/mid sized businesses? The economy of many industrialized nations particularly the US is fueled by small businesses. So I’m yet to discern what the long-term gain will be for Nigerians…isn’t this just another opportunity to for the bourgeois to line their pockets at the expense of the masses?
Help me out here.