The Rise and Rise of Africa’s Richest Man

Aliko Dangote made his fortune by gambling on Africa’s future, repeatedly. For the Nigerian entrepreneur, that gamble has paid off spectacularly. He’s now Africa’s richest man, and the money just keeps rolling in. What’s he doing right?

Posted on 06/22/14
By Simon Allison | Via Daily Maverick
Aliko Dangote, President and Chief Executive Officer, Dangote Group, Nigeria, during the African Fellowship Program with Young Global Leaders announcement at the World Economic Forum on Africa 2011 held in Cape Town, South Africa. (Photo by World Economic Forum, Creative Commons License)
Aliko Dangote, President and Chief Executive Officer, Dangote Group, Nigeria, during the African Fellowship Program with Young Global Leaders announcement at the World Economic Forum on Africa 2011 held in Cape Town, South Africa. (Photo by World Economic Forum, Creative Commons License)

At age 57, Aliko Dangote is Africa’s richest man, and by quite some margin. Forbes estimates his net worth to be $20.8 billion; the wealth of his nearest competitor, South Africa’s Johann Rupert, is valued at $7.9 billion. Dangote is known as a softly spoken workaholic, with all the trappings of wealth, including the luxury yacht and the private plane.

 

But it is not the size of his fortune that matters. More important is how he made it—not through resource extraction or milking state coffers, but by gambling repeatedly on the future of both Nigeria and Africa. The risk has paid off, spectacularly, making Dangote a living embodiment of the “Africa rising” narrative, and his company one of the key drivers of Africa’s economic development.

 

It all started in 1977, when 21-year-old Dangote—fresh from a business degree from Egypt’s Al-Azhar University—begged his uncle for a 500,000 Nigerian naira loan (then worth about $325,000). Dangote’s family were wealthy Muslims from northern Nigeria. His father Mohammed was a prosperous commodities trader, but the real money was made by his maternal grandfather, Alhaji Sanusi Dantata, whose groundnut empire made him the wealthiest man in West Africa. Dantata’s son, Abdulkadir, was the uncle who gave Dangote his first start in business—and, before his death in 2012, was also one of the richest men in Nigeria.

 

Dangote could have gone into business with either his father or his uncle. Instead, he chose to strike out on his own, using the loan to start a general trading company, importing bulk commodities like sugar and rice. Business was good, but he soon discovered a gap in the market: why was Nigeria importing sugar when it could be producing its own? Why was the country bringing in expensive cement when it sits atop one of the world’s largest lime deposits?

 

The answers to these questions—conflict, corruption, incapacity, uncertainty—lie at the heart of Africa’s decades of stunted development. Dangote, however, was undeterred and resolved to move into manufacturing: first salt, then flour and sugar and then cement, which turned out to be the really big money-spinner.

 

Dangote’s philosophy is known as “backward integration”. Backward integration is when a company acquires its own raw materials or component suppliers. In Nigeria it means import substitution: it encourages Nigerians to make their own materials instead of using foreign supplies and equipment. This stimulates the economy through more employment and investment, keeping Nigerian money in Nigeria.

 

Thanks largely to Dangote’s success in the cement sector, backward integration has become official government policy, included as a central plank of President Goodluck Jonathan’s Nigeria Industrial Revolution Plan, which was introduced last February.

 

 Click here to read complete article at Daily Maverick

Simon Allison covers Africa for the Daily Maverick, having cut his teeth reporting from Palestine, Somalia and revolutionary Egypt. He loves news and politics, the more convoluted the better. Despite his natural cynicism and occasionally despairing tone, he is an Afro-optimist, and can’t wait to witness and chronicle the continent’s swift development over the next few decades.

 

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