Aliko Dangote lives as you might expect, given he’s the
richest person in Africa and resides in the same country being bullied by the
insidious Boko Haram terrorist group, which finds something noble in kidnapping
village girls. Located on Victoria Island, a wealthy Lagos enclave that has a
moat in the form of a lagoon and the far eastern shores of the Atlantic Ocean,
his mansion comes with all the trimmings: massive black gate, bulletproof
windows, Big Brother video surveillance, guards and a secret entryway. Dangote
is rsanked No. 67 rank on the World’s Billionaires List and his $14.7 billion
fortune is mostly from three majority stakes cement, sugar and flour companies.
THE ROOTS OF DANGOTE’S rise lie 150 miles south of the
Sahara in his hometown of Kano, Nigeria’s second-largest city. A dusty
metropolis, Kano has been a trade center and commercial hub since its
establishment in the 10th century, thanks to its strategic location on the edge
of the vast desert. Egyptian perfumes, incense, inks and mirrors dominated at
first, then leather goods. The camel caravans became lucrative enough to fight
over; wars broke out with neighboring kingdoms. When the British arrived in the
late 1800s, Kano was West Africa’s most important business center.
Under British rule, Sanusi Dantata, Dangote’s grandfather,
grew rich trading commodities like grain oats and rice, and ranked as one of
Kano’s wealthiest citizens. Dantata insisted on personally raising his
grandson–not an unusual arrangement in northern Nigerian culture–and instilled
a businessman’s mind-set in Dangote at a young age. At 8, he turned allowance
into startup capital. “I would use it to buy sweets, and I would give them to
some people to sell, and they would bring me the profit,” Dangote says. “When
you are raised by an entrepreneurial parent or grandparent you pick that
aspiration. It makes you be much more aggressive–to think anything is
possible.”
Dangote, a Muslim, attended AlAzhar University in Cairo and
studied business. After graduation, he asked his grandfather for permission to
move to Lagos. A $500,000 loan from his uncle set up 21-year-old Dangote as a
trader of rice, sugar and cement. He was well capitalized. He imported sugar
from Brazil and rice from Thailand and sold them locally at a huge markup. At
his height, he says, he was pocketing $10,000 in profit a day. “Things were
quite good,” he says. “It allowed us to create an awful lot of cash.”
A 1994 US diplomatic cable singled him out as a businessman
to know in Nigeria and drew attention to his clan’s homes in Kano, Lagos,
London and Atlanta. The State Department report also highlighted the annual
family vacation to the States. A 1995 trip to Brazil convinced him to shift
from trading to manufacturing. Why continue to play middleman when he could
make the stuff in Nigeria instead and pocket even more profit? Dangote Sugar
started in 2000 and quickly expanded the annual production capacity of its
refinery at Lagos’ Apapa Port to 1.44 million tons, enough to satisfy 90% of
national demand. By the time Dangote Sugar debuted on the Nigerian Stock
Exchange in 2007, sales had quadrupled to $450 million. The flour firm, which
began in 1999 and also produces pasta and noodles, followed a similar
trajectory. It began with a single mill, tripled revenue to $270 million,
increased capacity eightfold to 1.5 million tons–then joined Dangote Sugar on
the NSE in 2008, the same year Dangote became the first Nigerian on FORBES’
World’s Billionaires list, at No. 334. In 2005 Dangote secured a $479 million
loan led by the World Bank’s International Finance Corporation–Nigerian banks
didn’t have the ability, or the stomach, to put up the cash alone–and agreed to
plunk down $319 million of his own money to build a cement factory. Dangote
Cement listed on the NSE in 2010 as a $1.3 billion-in-sales company. The three
companies today do a combined $3 billion in revenue; while Dangote Flour
operates at a loss and Dangote Sugar’s net margin falls in line with Brazilian
peer Cosan, the cement company is wildly profitable, with a margin of 52%–about
double that of close competitor LaFarge Africa. The companies retain a
vice-like grip on their industries today, controlling at least half of the
cement and sugar markets and about 25% of flour.
Oil now represents another big play for him, and he’s busy
building a refinery some 40 minutes by car outside central Lagos. Dangote
explains with uncharacteristic glee that the recent drop in prices will
actually make construction easier. His suppliers will be desperate … and easy
pickings. “We will be the only ones around,” he says. “We will carry a big
knife and cut them on prices.”
The refinery, Dangote says, can be profitable even at $50 to
$70 a barrel. Raw crude for the refinery will come from multiple suppliers. If
all goes according to plan, it’ll produce 650,000 barrels a day–a variety of
gas, diesel and jet fuel–and Dangote would basically walk away with a monopoly
on refined oil in the country. The four Nigerian National Petroleum refineries
are viewed as corrupt to the point of nonfunctioning.
To make it happen, Dangote plans to invest some $10 billion
to $11 billion in the project and an adjacent petrochemical plant, with at
least $6.75 billion in debt financing.
He’s a Davos regular, and appeared with Goodluck Jonathan,
Nigeria’s current president, on a panel about investment potential in Africa at
the 2014 World Economic Forum. Even four years ago, he was there making a
familiar pitch: “Don’t give any more aid to Africa,” he said. Invest with local
partners instead. “You will make money, and we’ll make money, and it’s better
for everyone.”
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