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Sunday, December 4, 2022

Seizure Of Obajana Cement Plant And The Message It Passes To Investors

Recently, the Obajana Cement Plant powered by the Dangote Industries, the biggest in Nigeria was shut down by the Kogi State government, over allegations that the purchase of the plant was flawed.

This has once again sent disturbing signals to the global community, especially as it has to do with investments, mergers, and acquisitions.

Aliko Dangote the businessman and President of the Group has demonstrated a remarkable commitment to investing in Nigeria, and the Obajana Cement plant is one of them.

The forceful closure of the plant which has provided jobs to the youth, revenue to the Kogi State government, and infrastructure for the people is an unfortunate chapter in Nigeria’s polity.

At a time that the continent of Africa is fast-tracking the ‘AFCFTA’ which is the Free Trade Agreement Area, designed to boost industrialization, trade, and development the actions of the Kogi state government are shocking.


For the benefit of the doubt, Nigeria is a democratic state, and where there are issues of concern around the operations of a multinational in a state.

There are four reasons why the recent action of the Kogi state government on the Obajana Cement plant, speaks to the effect of signaling to investors.

  • Ease of Doing Business
    Part of the role of government at the federal, state, or local government level is providing an enabling environment for businesses to thrive.
    The actions of Kogi State undermine this and create a hostile environment for businesses.
  • Investment Promotion
    Nigeria is doing well in the area of attracting foreign direct investments, which was below $500m in Q2,2022. This current action could create additional shocks for potential foreign investors, who will be worried at the treatment meted out to a major domestic investor.
  • Sanctity of Contracts
    It will raise the fundamental question of how Nigeria regards the sanctity of contracts and engagements.
    If there are issues like the Manufacturers Association of Nigeria raised, then the best way to approach it is going through the courts. The laws of engagement should be respected without which investors will develop cold feet for investing in Nigeria.
  • Security of Assets
    Prior to this incident, Kogi State was highly rated for security whether for assets or communities. With reports that people were shot during the forceful closure, efforts must be made by the government to resolve the issues amicably and bring back stability to the state.

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