The Rise Of Aliko Dangote: 4 Quick Facts About How He Made His Billions
Aliko Dangote needs no introduction anywhere in the world. He is the golden boy of African business. For the past three years, he has repeatedly been the only black African to appear on Forbes’ list of worlds’ most powerful.
His net worth is an estimated 13.1 billion dollars, about 4.7 trillion naira.
In the 2018 list released by Forbes on Wednesday, Dangote was ranked 66th out of 75 most powerful people on the planet, ahead of United States Vice President Mike Pence.
Dangote’s success is all too common but as an Investopedia article pointed out, “Aliko Dangote's journey to fortune is not some rags to riches story. He came from a wealthy family that was able to provide financial assistance to start his business”
His story is nonetheless inspiring and if you are wondering what path he took that you may emulate, here are 4 quick facts about how the Africa’s richest man made his fortune.
1. He Borrowed Money To Start Importation Business:
*Rice importation (file photo)
Dangote started out as a trader importing soft agricultural commodities from overseas and reselling in Nigeria.
His business journey started in 1977 at age 21 after he graduated from Egypt's Al-Azhar University, one of Islam’s prestigious universities.
Dangote managed to convince his uncle, Sanusi Dantata, who was Africa’s richest man at the time, to lend him 500,000 naira to start a business.
Dangote used the funds from the loan to import soft commodities at wholesale prices from international suppliers. Two of his main imports were rice from Thailand and sugar from Brazil.
He then sold those items in small quantities, and at a lucrative markup, to consumers in Nigeria. The venture quickly became successful and turned into a cash cow.
Dangote claims that on some of his best days, he was realizing a daily net profit of about 3.5 million naira. That allowed him to repay his uncle in only three months.
2. Dangote Ventured Into Manufacturing:
*Cement manufacturing in a Dangote cement factory
For 20 years, Dangote acted as a middleman between his Asian and South American manufacturers and Nigerian consumers. It was told that he realized that acting as a middleman was a costly endeavour, so he decided to end his importation business.
Instead, he decided to implement an import substitution strategy by building manufacturing plants to manufacture pasta, sugar, salt and flour.
It was around this time that he ventured into cement manufacturing. His interest in cement manufacturing later became a major turning point for the Dangote brand. In 2005, Dangote significantly expanded the operations of the cement business by constructing a multimillion-dollar manufacturing plant.
The construction was financed with $319 million of Dangote's own money in addition to a $479 million loan from the World Bank affiliate, International Finance Corporation.
Today, the cement business is one of Dangote’s biggest cash cows and has rapidly expanded across Africa including Ethiopia, Senegal, Congo, Cameroon, South Africa, Ghana, Sierra Leone, Zambia and Tanzania.
3. Dangote’s Fortunes Also Flow From Stock Market:
*Dangote makes fortunes from listing his companies on Nigeria Stock Exchange
Dangote made the smart decision of taking his companies public.
You see, each of his manufacturing divisions has since been separated into different publicly traded companies. Dangote Sugar Refinery Plc., for example, was listed on the Nigerian Stock Exchange in 2007. Dangote subsequently took his salt, flour and cement segments public. Those businesses became the National Salt Company of Nigeria Plc., Dangote Flour Mills Plc., and Dangote Cements Plc., respectively.
Each of these companies is now valued at hundreds of millions of dollars.
4. Dangote Continuously Re-invests His Profits:
*The Dangote refinery that is being built in Lagos
There is this joke about a Dangote Republic when Nigerians would probably sleep in a house built with Dangote cement, eat his pasta, drink his table water, buy a car from his company (he recently invested in Peugeot Automobile Nigeria) and fuel it with a petrol produced by his refinery (Dangote refinery in Lagos is expected to come on stream before the end of 2018) and drive it on his concrete road.
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This is because Dangote continuously re-invests a huge chuck of profits from his business into other businesses. He is continuously looking for new areas to invest in.
During an interview with Al Jazeera News, he explained, “We [Dangote Group] are not doing like other Africans who keep most of their money in the bank. We do not keep money in bank. We fully invest whatever we have, and we keep on investing.’’
His entry into the oil and gas sector is a perfect example of his re-investment strategy. To put some of his cash reserves to work, Dangote purchased an oil refinery in Lagos in 2007. He hopes that the refinery will significantly reduce Nigeria's reliance on petrol imports. The plant is expected to produce half a million barrels of oil a day.
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