This week, we serve you one of the trending issues on social media in the last three weeks. MMS Plus is not the author of this piece that is laden with lessons. We hope that entrepreneurs will learn. We have published with minor editing
Earlier this week, news broke that Aliko Dangote was moving 60 per cent of his family investment to the US.
Two 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, 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 Federal Government 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 crop out or try to change the business rules in his favour using his government connections.
He couldn’t sell *Table 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, Golden penny, etc;*
He couldn’t sell *Tomato paste because of *Derika and other pepper sellers* in the market.
He couldn’t sell *Fruit* juice because of *Chivita, 5-Alive etc.*
Dangote would only do well where Government policy is in his favour and competitors are 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 USD $161million in hard currency direct from the CBN between March and May 2016. This amount was 90 per cent of all the USD sold by CBN within that period.
All other manufacturers – 2,000 of them – got the balance of 10%.
He bought the USD at the official rate of N197/199 while other businesses bought from the black market at N320.
Reuters reported that Dangote made over US$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 Musa Yar’adua, Jonathan Goodluck, and Muhammadu Buhari.
On the day Goodluck, his former paddy 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 paddy.
*But why would such a “successful businessman” be thinking of moving 60 per cent 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 US$17.7 billion.
Right now, it IS US $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 US $8 billion, or less, depending on what happens to his refinery, and what happens in the security milieu?.
*With all the favours:*.
> 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 now activated his Plan B.
Can you blame him?
On another level, his zaddy was Nigeria. Now he has two new zaddies: the US, where his funds will be protected from melting, and Tanzania where Madam President will help him recover the 40 per cent that he lost in the hands of the Nigerian economy.
Those who are in doubt that NNPC funded Dangote Refinery 100 per cent should go and ask Ex Minister of State Petroleum Dr. Ibe Kachikwu who and who got the $ 25 billion contract that he raised alarm on after he returned from vacation. They immediately removed the office of the GMD from his control and later he was forced to resign as the Minister of State for Petroleum.
You want to know who funded the Dangote Refinery, go to the Ministry of Finance and call for Dangote’s file and tell me even if you give a goat in suit the same concession, the same waiver or the same opportunity given to Dangote, tell me if that Goat won’t be the richest being in Africa.
You want to know how the Dangote Refinery was funded, go to Warri Refinery and Kaduna Refinery, find out who was given an exclusive right to lift Low Pour Fuel Oil (LPFO) for a long time. NNPC claimed it was for Dangote Cement Factories. In fact, at a time that of Kaduna Refinery was so exclusive to Dangote that no other marketer was loaded. Every other marketer was referred to Port Harcourt Refinery.