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Dangote and the road ahead – By Olusegun Adeniyi

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Dangote

After the Federal Executive Council (FEC) session last week, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, announced the approval of the proposal for Dangote Construction Company to build a section of the Lokoja-Obajana-Kabba-Ilorin road by concrete. 

It was not only a landmark decision that may change the face of road construction in Nigeria.

It is also a big coup by Alhaji Aliko Dangote who is always several steps ahead of his competitors.

According to Fashola, companies are ordinarily supposed to pay income tax‎, but there are existing policies in the nation’s laws which enable government to consider and give such tax incentives for Dangote to build the road. 

The memo presented to council for consideration seeks to take benefits of tax policies, tax laws for the purpose of using them to drive infrastructure development and renewal. 

So, we presented a proposal by one of the subsidiaries of Dangote group for the construction of a section of Lokoja-Obajana-Kabba-Ilorin road. 

The company proposes to fund the construction of that section of the road in exchange for some tax remissions,’ he said.

As a solution provider, I am not surprised that Fashola is exploring different options for reconstructing our roads and I have no doubt that he will make a huge difference in that sector. 

However, while Dangote may have secured a 30 percent tax benefit, that is not his real intention because what he wants to showcase is that concrete roads are better and cheaper and that they last longer than asphalt roads. 

By that, he is pushing for a model that is now becoming increasingly popular in India and many other countries.

There the authorities now take advantage of cement to build beautiful concrete expressways like the one from Pune to Mumbai.

Interestingly, an unintended but major positive fall-out of the construction of the Obajana-Kabba road, when completed, may be the exposure of the monumental fraud associated with road contracts in Nigeria. 

The 42.5 kilometre road is estimated to cost Dangote Group N11.5 billion, even though it was the sum of N5.24 billion with 30 percent tax concession that has now been approved by FEC based on the 2012 estimate, when the project was first conceived. 

That there is hardly any state in Nigeria today where a kilometer of road is built for less than a billion Naira (the situation is even worse at the federal level).

There will be questions about some of the figures being quoted for such contracts in our country by the time the Obajana-Kabba road is completed.

That, of course, is not the motivation for Dangote who believes that with his intervention on the Obajana-Kabba road, Nigeria may be persuaded by the argument that concrete, as opposed to asphalt, is the way to go as we seek to revamp our dilapidated roads across the country. 

Indeed, the arguments for concrete roads are quite compelling. 

One, they have a long lifespan of between 25 and 40 years and do not require frequent repair or patching, whereas asphalt roads last for between five and 15 years and often require constant patching or resurfacing. 

In fact, given that most of our local contractors like to cut corners, many asphalt roads in Nigeria do not survive beyond three rainy seasons.

Two, concrete roads can support trucks and articulated vehicles carrying heavy loads with less impact than asphalt roads.

While the cost of such roads used to be higher, they are now estimated to be less expensive to construct in addition to the fact that they do not get damaged by the leaking oils from vehicles or by weather conditions like excess rain or extreme heat. 

Three, it is now empirically proven that a vehicle, when run over a concrete road, consumes between 15 to 20 percent less fuel than that on asphalt roads. 

That is essentially because a concrete road does not get deflected under the wheels of loaded trucks.

Four, concrete roads are also more environment friendly since asphalt (bitumen) produces highly polluting gases at the time of melting aside the fact that less fuel consumption by the vehicle running on a concrete road means less pollution. 

Far more significantly, asphalt (bitumen) is produced from a wasting asset (petroleum) whereas concrete (cement) is produced from limestone that is available in abundance.

Despite the foregoing advantages, concrete roads also have their own drawbacks and a major one concerns safety. 

In rainy seasons, vehicles tend to slide thus making them easily susceptible to accident. 

In our kind of environment where motorists hardly obey traffic rules, that is a serious issue. 

There is also the challenge of maintenance. 

In case the concrete road breaks, the whole concrete slab needs to be replaced so the maintenance cost of a concrete road is higher than that of asphalt.

Notwithstanding, in many countries today, concrete roads are being preferred, in part, because of their cost advantage and durability. 

For instance, India, which has the second largest network of roads in the world (4,689,842 kilometres) after the United States (6,586,610 kilometres), built its first concrete road in 1914 (the year of our amalgamation).

Because it remained pot-hole free for about 60 years, that has continued to encourage the trend in the country.

From the foregoing, it is easy to understand the thinking behind the offer to build the Obajana-Kabba road by Dangote who has long moved beyond making money to creating wealth as the first multinational company to grow out of Nigeria. 

The calculation is that having strategically positioned his cement companies in most African countries that would need to develop their infrastructure, and at a time the debate between asphalt and concrete road is gradually shifting in favour of the latter, he stands to reap heavy windfall in years to come.

With Ajaokuta-Kabba road, Dangote intends to present a model. 

If he succeeds and Nigeria and African countries buy into the idea of constructing concrete roads which are cheaper and more durable, that can only be to the eternal advantage of Dangote Cement Plc as Africa’s leading producer.

He has three plants in Nigeria (Gboko, Benue State; Obajana, Kogi State and Ibese in Ogun State).

He has as well operations in 17 other African countries where each of the investments is in hundreds of millions of Dollars: 

Ghana, Ethiopia, Tanzania, Cote d’Ivoire, Senegal, Cameroun, Liberia, South Africa, Kenya, Zambia, Sierra Leone, Congo, Zimbabwe, South Sudan, Chad, Mali and Niger. 

The cement plant in Nepal will make it the 18th country where Dangote operates but the first outside Africa.

I am well aware that you cannot have the kind of wealth available to Dangote and be a saint, especially in our kind of environment. 

But it is also no secret that I am a great admirer of Dangote and that has more to do with his humanity than his wealth which for me does not in any way define the man. 

In any case, unlike most other people, whatever benefits he derives from the system, he invests and ploughs back. 

Therefore, investing his money, time and energy in our country and on the continent where he has put thousands of people to work—with the prospect of becoming a great net importer of foreign exchange to Nigeria in a few years to come—should count for him.

Beyond that, Dangote has also become a catalyst in many areas of our economy.

For instance, a major highlight of the Nigeria Extractive Industries Transparency Initiative (NEITI) 2013 audit report released on Monday is that the Dangote Group alone contributed N15.9 billion.

It represented 53 percent of the total federal government revenue (N33.86 billion) accrued that year from the solid minerals sector. 

While that is a subject for another day, as we seek to reposition our economy, what Dangote has done is to show the way forward in a promising but long neglected sector.

All said, to the extent that the argument currently being canvassed in favour of concrete roads also goes for Nigeria.

That is because the technology of laying bitumen road is fairly simple.

All manner of crooks with political connections are in the business of road construction where they do shoddy jobs as against concrete roads which require significant technical expertise.

I believe that the Dangote option is worth exploring as we seek to revamp our road infrastructure. 

But first, let’s see what he does with that terrible stretch of road from Obajana to Kabba in Kogi State.

That may be a new and very revealing beginning.

The verdict By Olusegun Adeniyi: Email: olusegun.adeniyi@thisdaylive.com

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