For a couple of years now, I have been the Chairman and sole member of the Alhaji Putin Haters Club (APHC). I am now tired.
When you are unable to beat them, joining them is not such a disgraceful option.
Today, Alhaji released 2015 (January to December) results for Dangote Cement and they were glorious. Hating this guy is a waste of time — it is his country and you all are merely living in it.
Financial highlights
- Revenue up 25.6% to ₦7B as new plants perform strongly across Africa
- EBITDA up 17.5% to ₦4B at 53.4% margin
- All plants profitable across Africa
- Earnings per share up 15.2% to ₦86
- Dividend up 33.3% to ₦0 per share at 73.7% payout ratio
- Strong cash generation funds dividend and capex, net debt falls to ₦2B (0.78x EBITDA)
But that is not really the interesting part. When you have a look at how they have been doing over the last 6 years, it tells a much better story.
A friend has pulled out the revenues, profit before tax and actual tax paid. I made them into the chart below.
To summarise — Dangote Cement clocked N1.86trillion in revenues over 6 years of which, N1trillion was profits. The company paid N12billion of that in taxes. That is, the effective tax rate (based on actual tax paid) of the company over those 6 years was 1%.
Even if you are turning water into wine, it is doubtful that you will be able to make this kind of profit.
How is he able to get away with paying practically nothing in taxes? Alhaji has turned the use of ‘pioneer status’ into an art form. In the latest results, the company managed to get pioneer status again by extending the Ibese Plant. It seems that every time he builds something, he gets pioneer status for it.
A couple of years ago, I did a comparison between Dangote Cement and other cement manufacturers around the world based on profitability. Alhaji is not their mate. At all. (See the spreadsheet here).
There isn’t much to add to this. These figures are not hidden. They are all publicly available as published by the company. Perhaps the best place to hide something is in plain sight.
What is clear is that Nigerians are paying more than double international prices for cement while Alhaji makes sweet profits and pays no taxes. He also owns 92% of the company meaning that the vast majority of the dividends paid flow to him.
Meanwhile, according to the Medium Term Expenditure Framework (MTEF) document, the Federal Government expects to collect N1.53trillion in company taxes this year. If Alhaji is paying the equivalent of coins, it is safe to say that even a miracle cannot help FIRS hit that figure.
To add insult to injury, Alhaji also gets the choice meat from the fx pot at N199 to $1. Even his erstwhile buddy, Abdulsamad Rabiu came out publicly to complain about his preferential access to forex in this time of scarcity:
It is rather ironic that a similar competitor in the same industry, who incidentally is the market leader, is allocated huge amount of Nigeria’s hard earned and scarce FX from the official market for its operation in Congo. I do not know if there is an official policy to that effect but I was baffled, as were numerous Nigerians, to learn through a publication of FX allocation returns by First Bank of Nigeria in Thisday Newspaper of Tuesday, February 16, 2016 (page 11) of that allocation whilst other operators in the industry have received far less or nothing at all during the same period for verifiable and viable investments within Nigeria.
It begs the question, “were other plants by that operator across Africa built with Nigeria’s money?” how has that impacted the Country’s economy in return? If this is true, then it needs to be checked as we cannot have a situation where Nigerian industries are being shut down, workers are losing their jobs daily and resources badly needed to develop our economy are being taken out of the county to grow other economies to the detriment of ours. If this transactions was done through a “form A” like the publication suggested, then it is just money that has gone out of the country which can be rerouted into the country for other purposes.
It bears repeating — Nigeria is subsidising his expansion across Africa while he enjoys absurd profits in a protected market without paying taxes.
In January, the Central Bank Governor, the biddable Godwin Emefiele, went to tuale at the site of the Dangote Refinery in Lagos. After assuring him of access to subsidised forex, he then delivered the money quote:
our support will encourage more Nigerians to begin to think like the Dangote Group
That’s right. The problem is that you people cannot think. That is why you’re not like Dangote.
Use your head. The man owns the country and you should be grateful that he has not yet started asking you to pay tithes to him.
Feyi Fawehinmi tweets via @DoubleEph
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