The decision by the Central Bank of Nigeria (CBN) to float the naira has wiped $3.7 billion off the wealth of Africa’s richest man, Aliko Dangote according to estimates by Bloomberg. This is based on the significant drop in the dollar equivalent market value of Dangote Cement in which Aliko Dangote owns approximately 90% shares.
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Figures obtained by Money Issues shows that the market value of Dangote on the Nigerian Stock Exchange (NSE) as at 21 June stood at N3.15 trillion. Before the float of the naira, at the CBN pegged exchange rate of N199, the dollar equivalent value of Dangote Cement was $15.84 billion.
But with the float of the naira, which has led it to trade at approximately N284 to the US$ as at 21 June, the dollar equivalent value of Dangote Cement drops to US$11.1 billion, which represents an approximate drop of US$4.7 billion in the value of Nigeria’s biggest listed company. This is $1 billion more than the Bloomberg estimate. Ninety percent of the drop will impact negatively on Aliko Dangote’s networth because of his estimated 90% beneficial ownership of the company.
Forbes put Aliko Dangote’s worth at $15.7 billion in 2015, which made him Africa’s richest person. The next richest person, Johann Rupert had a networth of US$7.4 billion, which means even with the significant drop in Aliko Dangote’s value, he is still likely to remain the richest man in Africa.
But Aliko Dangote may not concerned too much about the drop in its networth as he will concerned about how he will finance its $14 billion petro-chemical plant, which he is currently building in Lagos. The petrochemical plant, which also has 650,000 barrels per day refinery, has been billed to be completed in 2018. But the depreciation in the value of the naira means that the naira cost of building the plant will rise significantly.
Dangote in May signed a $2 billion loan deal with the Industrial Commercial Bank of China Limited to build two more cement plants in Nigeria, Reuters quotes him as saying on 12 April 2016. China Export and Credit Insurance Corporation is also said to be part of the deal.
According to information on Dangote Group’s website, Dangote operates three cement manufacturing plants in Nigeria namely the Obajana Cement Plant, which is the largest cement plant in sub-Saharan Africa with a current capacity of 10.25 million MT and an additional 3.0 million MT planned; the Benue Cement Company Plc with 4.0 million MT of production capacity per annum and a third plant in Ibese, which was commissioned in February 2012, with a capacity of 6.0 million metric tonnes per annum.
Dangote Cement also owns six cement import terminals in Lagos and in Port Harcourt in Nigeria and one in Ghana through which it imports and bags bulk cement. The import terminals in Nigeria have a combined capacity of 6 million MT per annum, while Ghana’s facility has a capacity of 3 million MT per annum. Dangote Cement has also established cement plants in Zambia, Senegal, South Africa, Ethiopia and plans to further expand to other African countries.
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