How Aliko Dangote Almost Lost Everything

Aliko Dangote, a Nigerian business magnate has built a business empire that spans several industries under its diversified conglomerate Dangote Group with interests in several sectors, including cement, sugar, flour, salt, and other products.

Despite Dangote’s success in the global business landscape with an estimated net worth of $13.5 billion according to Forbes, the richest man in Africa has faced several challenges throughout his career which has caused significant impact on his businesses.

Let’s look at the circumstances surrounding how Dangote almost lost everything and some measures he took to stand afloat.

His biggest loss in 2014

Towards the end of 2014, Dangote faced one of his biggest challenges when a fall in the world price of oil caused the Nigerian naira to devalue sharply. The plunge in the oil price as well as the dwindling dollar reserves which led to the Naira slump coupled with falling stock prices.

Dangote, who is the biggest loser among several other richest Nigerians has over $7.8 billion erased out of his fortune. The Nigerian Stock Exchange which had several blue-chip stocks listed on it including Dangote Cement was affected by fall in oil prices, Central Bank regulatory headwinds, amongst others which put naira-denominated assets including equities at risk.

The impact of the devaluation was felt across his businesses, Dangote who was worth $25 billion at the time was worth $17.2 billion after the plunge.

Lessons from how he bounced back

Dangote’s experience from the several challenges comes with some lessons. One of the most important is the importance of diversification. Dangote Group has diversified into  different sectors which made it able to spread its risk and reduce its exposure to any one market or product.

For instance, aside from Dangote Cement, the conglomerate also has other products such as flour, salt, sugar, amongst others which helped the company rescue its risk exposure.

The importance of resilience in his business is also worthy of note on how Dangote was able to restore its losses. Dangote’s ability to weather the crisis was due in part to his willingness to make tough decisions and adapt to changing circumstances.

Possible threats in the future 

Changes or fluctuations in market demand or could be a threat, thus, affecting the profitability of his products.  Dangote once mentioned collapsing commodity prices, infrastructure gap and power shortages as major determinants which could affect his company’s profitability.

The incessant political instability in several Africa countries is also one of the possible threats the business magnate could face which could create risks for his investments or partnerships in other sectors of interest in the country and beyond.

One other challenges the company should look at for which also generally affects African businesses is the weak rule of law, corruption and low inter-trade rates