Most recently, news broke that Aliko Dangote was moving 60% of his family investment to the US. Few days after, we saw him in Tanzania promising to increase his investment in the country because he wants to support the new president, whose business decisions have been investment friendly. I am happy for him. He has sense.
But as a businessman, I am not sure Dangote is a model. Don’t take my word for it. Let the data speak:
In October 2016, Dansa, Dangote’s fruit juice company packed up because it wasn’t making profit. It closed shop, owing its workers 6 months’ salary.
He also started a $13 million tomato processing plant in March 2016 and closed shop in August 2017, saying it was because of “importation of tomato paste, shortfall in the supply of fresh tomatoes and power failure.” It is funny that they didn’t consider these three factors before commencing.
So they started a tomato farm that will supply fresh tomatoes, and then do some kind of backward integration. After spending $3million to set up a green house, the farm died. It has been starting and stopping since then. No money, no tomatoes, no factory.
In November 2017, it was the turn of Dangote noodles to go under. In his words, they wanted to “focus on pasta and flour.” He sold the noodles factory to his biggest rival, Dufil, makers of Indomie. It was like Coca-Cola buying a Pepsi plant; a business abomination.
Have you ever wondered what happened to Mowa Water Dangote’s bottled water? Well, it went down with Dansa, or soon after.
Then his Dangote Flour was acquired by Olam in 2019. He left the noodles business to concentrate on flour. But even the “commitment to flour” wasn’t enough to stop Dangote Flour from baking and burning.
At the start of the Ramadan fast, Dangote Sugar wrote a petition against BUA Sugar, asking the FG to place trade sanctions on BUA for “undermining the National Sugar Master Plan.” In English, he wanted the FG to tilt the competition in his favour again by grounding BUA. BUA claimed that he was being blackmailed because he refused to hike sugar prices at Ramadan, like Dangote did.
Here is my point: wherever and whenever there is competition, Dangote would either cop out, or tap out, or try to change the business rules in his favour using his government connections. He couldn’t sell water because he was competing with pure water sellers; he couldn’t sell noodles because of Indomie: he couldn’t sell flour because of Honeywell; he couldn’t sell tomato paste because of Derika and other pepper sellers in the market. He couldn’t sell fruit juice because of 5-Alive. Dangote would only do well where the policy was in his favour and competitors were given a bad hand by government regulators.
I read a Reuters report some years ago (and it’s still online) which revealed that at the height of the naira-dollar crisis of 2016, Dangote bought at least $161million in hard currency from the CBN directly within March to May 2016. This was 90% of all the USD that the CBN sold within that period. All other manufacturers – all 2,000 of them – got the balance of 10%. He bought the USD at the official rate of N197/199 while other businesses bought in the black market at N320. Reuters reported that Dangote made over $100 million from this Forex deal.
Dangote has always been the favourite side chic of every government since the return to democracy. In 2003, he was alleged to have part-funded Obasanjo’s re-election campaign when Atiku was doing anyhow. Then he befriended Yar’adua, then Goodluck, then, even Buhari. On the day Goodluck, his former zaddy was licking his wounds from the electoral defeat of 2015, Dangote was alleged to be clinking glasses and performing a lap dance for Buhari, his new zaddy.
But why would such a “successful businessman” be thinking of moving 60% of his family investment to the US, and even adding to his capital investment in Tanzania which is already about $770million? The answer is in Buhari.
In 2015 when this administration took over, Dangote’s net worth was $17.7 billion. Right now, it is $11.1 billion. Meaning that in 6 years of Buhari, he has lost about 40% of his net worth. Project two years forward: what would his net worth be in 2023? My projection is that he might be worth around $8 billion, or less, depending on what happens to his refinery, and what happens in the security mileu.
With all the favours: tax exemptions, special status, Forex allocations, special limestone mining licenses etc, Aliko’s money is still melting like cotton candy on a hot summer afternoon. He has activated his Plan B. Can you blame him?
By: Daniel Bott, Edited by: LeadingReporters