In a sign of how difficult it is running a business in Nigeria, the Dangote group announced that over 3.5 million tyres have been stolen from the company. The tyres were stolen over a period of time. Assuming each tyre costs ₦20 thousand naira then the loss amounts to over ₦70 million naira.
Aliko Dangote is known as a shrewd businessman. You don’t become Africa’s richest businessman by being careless.
The group has arrested some drivers and vulcanizers who were in possession of the tyres. This equates to locking the gate after the dog has run away. Most of the tyres will not be recovered. Some have been taken out of the country. It will be cheaper to replace the tyres, than taking the thieves to court.
Some of these challenges are however inescapable. The lack of a functioning and reliable rail system, means goods are trucked across the country. Had the rail system been effective, the Dangote group would need not have to maintain a large fleet of of trucks numbering over 1000.
Going further, the actual loss may be a lot more. The stolen tyres would have to be replaced. Most likely at a cost higher than the tyres stolen. Difficulties accessing foreign exchange means there may be a delay in replacing the tyres. These expenses will raise operating costs. Which reduces the profit and the dividends to be paid to shareholders. Perhaps the Dangote group should outsource its trucking operations.