In Nigeria, a Concrete Get-Rich Scheme
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NIGERIA HANDY WITH CEMENT: Aliko Dangote, founder of the Dangote group and friend of several presidents. REUTERS/AKINTUNDE AKINLEYE Africa’s richest man has global ambitions for his cement business. Can he succeed on the world stage? In Nigeria, a concrete get-rich scheme BY TIM CocKS LAGOS, SEPTEMBER 11, 2012 liko Dangote has always liked making things to sell. As a child he boiled up sugar to make sweets he sold around town; these Adays he cooks up limestone in factories that produce millions of tonnes of cement. Dangote’s entrepreneurial skills have helped make him Africa’s rich- est person, with cement plants opened or under construction every- where from Senegal to Ethiopia to South Africa. He dreams of owning the largest cement firm on the planet. By 2015, he hopes, his industrial SPECIAL REPORT 1 NIGERIA ALIKO DANGOTE conglomerate will be worth four times its Foundations of a fortune current estimated $15 billion. “We’ve taken the flag of Nigeria and flag How cement production is shared worldwide. Though Africa’s share is modest, Aliko Dangote dominates there of Africa and put them in places they never expected to be seen,” beams the slightly CHINA EUROPE AFRICA greying, young-faced tycoon sitting in his 57.3% 7.6% 4.7% office in the commercial hub of Lagos. Be- hind him is a map of Africa and a photo- graph of his cement plant in the town of Obajana, set to have a capacity of 13.25 ASIA AMERICAS million tonnes a year by 2015, which would 23.0% 7.1% make it the world’s biggest. But the 55-year-old is not without con- troversy. To some, he is an unassuming man Profits at Dangote Cement Dangote’s estimated net worth: despite whose quiet demeanour stands out in a na- have been rising sharply a dip, he remains Africa’s richest person tion where success is usually marked by talk- $750 ative swagger; to others, he is a monopolist million $15 who uses aggressive tactics and political ties billion to beat competitors. Critics accuse him of using his influence 500 with successive governments to ban imports 10 by his competitors, pushing port authorities to halt rivals’ shipments, and using sharp 250 5 price drops to put them out of business. Dangote admits he has been friends with several recent presidents of Nigeria and has 0 0 enjoyed lucrative tax breaks, though he de- ’08 '09 '10 '11 ’08 '09 '10 '11 '12 nies receiving any special favours. Note: Profit figures converted from Nigerian naira at rate of $1=158 naira However he got there, there is little doubt Source: Cembureau (cement production); The companies (profit after taxes); Forbes (net worth) his success in manufacturing is a rarity in a continent seen as too dependent on exports of raw materials - minerals and cash crops - with no added value. By contrast, the Dan- firm in late 2010, it boosted his estimated with the necessary corporate governance gote Group refines sugar, mills flour, pro- personal wealth five-fold to $13.8 billion, standards. That would be a rare feat for a cesses salt, and produces cement. making him the fastest riser on the Forbes Nigerian company. Guaranty Trust Bank At present only 5 percent of Dangote rich list. After a bad year on the Nigerian and Diamond Bank have secondary listings Cement and 25 percent of his flour and stock market, he is still worth $11.2 billion. in London, but both are too small to make sugar companies are publicly traded; almost Dangote now wants to list 20 percent of the top FTSE index. all of the other shares are held by Dangote. the cement company on the London Stock Born in April 1957 in the northern Ni- His total annual pay cheque isn’t public, but Exchange late next year, at a price that gerian city of Kano, Dangote comes from a Dangote Cement, Dangote Flour Mills and would value it at $35 billion to $40 billion. family of wealthy Muslim merchants. After Dangote Sugar are all hugely profitable. That would make it the world’s top cement demonstrating his early entrepreneurial spirit Dangote Cement’s pretax profit for the firm by market capitalisation, bigger than selling sweets, he headed to Egypt to study first half of 2012 grew by 23 percent to 71.3 Lafarge of France, and surpassing mobile business at Cairo’s Al-Azhar university. billion naira ($443 million). The sugar re- phone operator MTN as Africa’s top stock. In 1977 he borrowed about 500,000 Ni- finer nearly doubled its profits to 8.5 billion Hurdles remain. The tycoon will have to gerian naira from his uncle to trade basic naira over the same period. convince investors and regulators that his foods: cooking oil, sugar, pasta. Four years When Dangote floated the cement personal empire can be a FTSE 100 firm later he bought trucks to start a transport SPECIAL REPORT 2 NIGERIA ALIKO DANGOTE firm and within a decade was importing He’s not in it for the money fortunes blossomed when his close friend bulk goods, including cement. By the time or the opulent lifestyle; he’s in it to Olusegun Obasanjo became president in he turned his hand to manufacturing the win. It’s all like a game to him. 1999, Browne wrote in the cable. stuff - buying a defunct cement plant in Browne could not be reached for comment. 2000 and reviving it - he was a rich man. Bismarck Rewane Obasanjo - whose 1999 election ended Dangote, who married young and has CEO of Financial Derivatives, years of kleptocratic military dictatorship - three daughters - he and his wife are now on his friend Aliko Dangote gave Dangote exclusive import rights to ce- estranged - says he has never been moti- ment, sugar and rice, the cable suggests, in re- vated by wealth. turn for Dangote’s support, including funding “I’m not in it for the money. No, no,” he Obasanjo’s re-election campaign in 2003. says. “I like to run a business that’s success- “It is no coincidence that many products ful ... I’m a very creative person.” He says he Nigeria’s import ban lists are items in which eschews conspicuous consumption. Dangote has major interests,” Browne “I have a very simple life.” wrote. “He has had success in blocking Up to a point. Like many billionaires, he trade and investment that might compete owns a yacht as well as large properties in with his enterprises.” He concluded that Ikoyi, a leafy Lagos suburb, and neighbour- Dangote is “harmful to Nigeria’s interests”. ing Victoria Island, home to Africa’s most Dangote frowned, visibly annoyed, when expensive real estate. Then there’s the pri- Reuters read him the cable during an inter- vate jet, which he says he bought to avoid view. Building relationships with presidents hangers-on who used to book first class is a normal part of being a business leader, tickets on the same flight as him. he said, denying he had used connections to Still, by the standards of Nigeria’s cham- stifle competition. pagne-swigging, sports car-collecting rich, “We’ve been close to almost all the he’s not that extravagant. presidents that have passed,” he said, nam- Old friend Bismarck Rewane, CEO of ing military dictators Muhammadu Buhari, Lagos-based consultancy Financial De- Ibrahim Babangida and the notorious Sani rivatives, remembers a business dinner at Abacha as examples. But, he insists, “we the palm-fringed Eko Hotel in the city. CLOSE FRIEND: Former Nigerian president, have never taken advantage ... and we were When he and Dangote left in Dangote’s Olusegun Obasanjo, granted Aliko Dangote not even always treated fairly.” black Mercedes, hotel staff charged 5,000 exclusive import rights on key products. These days, Dangote’s relationship with Nigerian naira ($32) for parking – exces- REUTERS/RAY STUBBLEBINE presidential power has become symbiotic: sive, but peanuts for a man of Dangote’s presidents need to court him too. wealth. Indignant at the attempted rip- He is on President Goodluck Jonathan’s off, the cement king negotiated it down to “The banks were nervous, but they couldn’t economic management team and the gov- 1,000 naira. stop the money. We were too big to fail.” ernment’s job creation committee, which “He spent a good few minutes doing effectively enables him to help shape trade POLITICAL CONNECTIONS it. I said to him: ‘let’s just go. Our time is and economic policy. Jonathan, who last more valuable than a few thousand naira.’ Dangote’s success has not been without year awarded Dangote Nigeria’s second- But he wouldn’t let it go,” Rewane said of controversy. In a 2007 diplomatic cable highest honour, Grand Commander of the the tycoon. “He smiled afterward. He was that ended up last year on the WikiLeaks Order of the Niger, attended a ceremony so happy he’d got a good deal.” website, the then U.S. Consul General in for the opening of a production line at the Dangote is not always so frugal. Lagos, Brian Browne, wrote: “To detrac- Obajana plant in June. “He dreams big, some might say too big. In tors, he is a predator using connections in a When asked if he would run for president, 2004-5 we owed 80 billion naira (about $500 corrupt political economy to tilt the playing Dangote is adamant: “Never, never. I don’t million),” recalled Uzo Nwankwo, a fund man- field in his favour.” want to go beyond my life ambition ... Most ager who was Dangote Cement’s executive di- Critics say Dangote owes as much to of the presidents, I’ve been giving them ad- rector of corporate finance from 2005 to 2007.