Twenty camel-loads of silver

In one month, the Dangote refinery shipped more than 400,000 tonnes of jet fuel to Europe, roughly a fifth of everything the continent imported that month. Not crude. Refined jet fuel, loaded at a jetty in Lekki and burned in aircraft over a continent that has been refining its own fuel for a century.

It is worth sitting with that before the history arrives. For most of the last fifty years the traffic ran the other way: Nigeria exported crude and imported the products made from it.

This piece is not about the refinery. It is about the price.

Alhassan Dantata was the largest groundnut buyer in Kano long before independence. By the 1940s he was buying and selling about 20,000 tons of groundnut a year. He had been buying for the Niger Company since around 1918, through a network of agents and sub-agents he built himself, and by 1922 he was among the wealthiest men in Kano. When the Bank of British West Africa opened a branch in Kano in 1929, he deposited twenty camel-loads of silver coins, the first Kano businessman to use a bank.

Then in 1953 something changed on paper: he became the first Nigerian licensed buying agent for the statutory groundnut board. A contemporary account ranks him more precisely — he rose to be the second in importance among the licensed buying agents of the groundnut board. Second overall, first among Nigerians. The agents ahead of him were European firms.

A licensed buying agent was not a middleman with a stamp. He aggregated a crop from thousands of smallholders, moved it hundreds of miles on transport he owned, stored it, and advanced credit against a harvest in a region with no rural banking. That is real work carrying real risk, and most of the fortune is explained by being one of very few people able to do it at scale.

The board fixed a producer price before each buying season, bought the entire crop through its licensed agents, sold it at the world price, and kept the difference. The board accumulated a surplus of roughly £32 million between 1947 and 1961.

That gap had a stated purpose: bank the surplus in good years, pay it back to farmers in bad ones. In 1962 the policy changed. The surpluses were redirected to development instead — a university, a bank, a textile mill, a hotel. Real institutions, every one of them. None of them a groundnut price.

So the farmer sat permanently on the wrong side of a spread he could not see and could not refuse. That is survivable while the spread is narrow. Then oil arrived, the state stopped needing the revenue, and the producer price was left to erode.

The usual explanation is disease and drought, and both are true. But the economics had already done their work: through the 1960s and early 1970s the board's producer price sat below what Niger Republic was paying across the border. Farmers responded the way farmers respond — they moved the crop across the boundary, or they planted something else.

By the time the crop failed there was diminishing reason to replant it for export. The pyramids were the visible end of a system, and the system had stopped paying at the bottom.

The seven commodity boards were abolished in 1986 under structural adjustment. The IMF's own account of the period credits their abolition with improving the profitability of non-oil exports — which is, read plainly, an account of what the boards had been doing to producer prices for forty years.

It is tempting to make this a story about concentration — that one family still holds the asset. That proves nothing. about 3.3 per cent of the refinery has been offered to the public, with roughly 89 per cent retained, and founder concentration is the base rate for transformational companies everywhere. A viewer who ended there would leave knowing something they had already assumed.

The difference that holds up is narrower and better. Crude is priced by a world market. Refined product leaving that jetty is priced by a world market. If the margin is fat, it is because the refining is cheap, and anyone can check the arithmetic. In 1953 the number was decided in a room, and the man growing the crop could neither see it nor decline it.

That is not a small change. It is most of what a century of institution-building was supposed to deliver.