Aliko Dangote faces toughest political challenge despite opening Nigeria refinery

After years of delay and cost overruns, the 650,000 barrels a day refinery in Nigeria owned by Africa’s richest man, Aliko Dangote, processed crude oil for the first time this month, marking the first operational step for a project he has dubbed a “game changer” for the country.

The $20bn facility on the outskirts of the commercial capital Lagos produced diesel and aviation fuel, said the Dangote Group.

Petrol production has not yet begun and the plant’s products are not expected on the market for some time, although the company said a fortnight ago it expected to win regulatory approval “this month” to begin selling them.

If it becomes fully operational, the refinery could process half of Nigeria’s daily oil output.

Yet what should be a moment of pride for the country’s most important industrialist is being overshadowed by a raid on his headquarters as part of a graft probe into the central bank, which poses the biggest test yet of his staying power after enjoying political favour for more than two decades.

“Someone clearly has an axe to grind with him,” said a senior member of the ruling All Progressives Congress party. “No agency in this country would raid Dangote’s offices if they did not feel they had the backing of someone very powerful.”

Such a move would have been unthinkable only a few months ago under former president Muhammadu Buhari, with whom he enjoyed excellent relations.

Yet this month agents of Nigeria’s independent anti-corruption watchdog, the Economic and Financial Crimes Commission, raided the Dangote Group’s Lagos office.

Ostensibly part of a sprawling investigation into alleged mismanagement of foreign exchange allocations by a former central bank chief, Dangote’s company characterised the EFCC agents’ visit as a ploy designed to cause “unwarranted embarrassment”.

Such is Dangote’s reach and influence that he is feted across much of the continent by presidents and prime ministers. In Nigeria, his native country and biggest market for his key products — cement, flour and sugar — he is known as a well-connected operator with presidents on speed dial.

Worth more than $15bn, according to Bloomberg, Dangote has enjoyed cosy relationships with Nigerian leaders. They considered him a champion of domestic industry as the country’s largest employer outside of the federal government and one of the country’s highest taxpayers. Dangote Cement, his empire’s crown jewel, is one of the largest publicly traded companies on the Nigerian bourse. This week it became the first company on the Nigerian Stock Exchange to reach a market capitalisation of N10tn ($11bn).

A special investigator appointed by Bola Tinubu, Nigeria’s president since May, to look into Godwin Emefiele’s nine-year tenure as governor of the Central Bank of Nigeria alleged that a contentious multiple exchange rate operated by the former bank chief benefited certain industries. Emefiele, who was removed from his post in June, has denied the allegations.

Under Emefiele, the central bank kept the naira artificially overvalued against the dollar and restricted access to the greenback on official channels, doling out forex to favoured individuals and corporations. The idea, in theory, was to provide cheap forex to critical industries to boost domestic production.

The EFCC has asked 52 companies to provide documents from 2014 on their forex allocations, but only Dangote’s enterprise has been publicly raided in relation to the probe. The Dangote Group has said it was not aware of any “accusations of wrongdoing” against any of its constituent companies.

The company said in a statement it secured approval from the central bank between 2010 and 2018 to source $3.8bn to fund its expansion across Africa.

“We wish to re-emphasise that foreign exchange for these projects were sourced strictly from [the] interbank foreign exchange market in compliance with the CBN approvals,” the statement said.

The episode marks perhaps the most difficult moment for Dangote and his companies. It is not unusual in Nigeria after a change in the political landscape for old favourites to suddenly face pressure, but Dangote was supposed to be different.

The thinking, according to multiple sources, was that Tinubu and his allies felt Dangote was not sufficiently supportive during last year’s bruising presidential campaign.

A presidential spokesperson dismissed the characterisation of political revenge as “beer parlour gossip”, saying “the EFCC has some measure of autonomy and was not and never instructed by President Tinubu to go on the raid”.

But the spokesperson added: “No organisation should be too big to be probed. No sacred cow in Tinubu’s Nigeria.”

Over the course of a long career that has seen many competitors view him as a ruthless government-favoured monopolist, Dangote has been accused of underhanded tactics. Most recently, the BUA Group, Nigeria’s second-largest cement producer, accused Dangote of using state organs to intimidate the company in the past. Dangote has denied those allegations.

It is instructive that in Nigeria’s clubby world of business, no mogul has come out publicly in Dangote’s defence in connection to the raid.

But he has garnered support from the Manufacturers Association of Nigeria, a lobby group, which denounced the “Gestapo-style invasion” of his offices and warned it would harm the economy.

“This news has gone around the world and many, including would-be investors, would be taken aback,” the lobby said. “This may not be the best way to show that Nigeria is committed to good corporate governance.”

The Dangote Group declined to comment for this article. The industrialist refused to be drawn on his relationship with Tinubu in a Financial Times interview last year.

“For the first time in his career, there is a government in place that’s hostile to him,” said Cheta Nwanze, partner at the Lagos-based SBM Intelligence company.

It is unclear what happens next. The EFCC has not acknowledged it raided Dangote’s offices and investigations in Nigeria often take months, if not years.

“They’ll be afraid of taking out the biggest guy in the room because that looks a bit like Jack Ma and it’ll spook the same foreign investors this government has said it wants,” said Nwanze, referring to the Chinese government’s crackdown on the Alibaba founder.

How far any government crackdown on Dangote’s business goes is likely to be tempered by the acknowledgment of his importance. “There’s such a thing as ‘too big to fail’,” said the senior APC member. “Even if he has fallen out with the president, he is still a key participant in the private sector.”