How Did Aliko Dangote’s Net Worth Drop by $1.2 Billion in 2024?

In 2024, Aliko Dangote, a name synonymous with wealth in Africa, faced a significant financial downturn.  Known for his expansive business empire, including a $20 billion refinery in Nigeria’s business hub, Dangote saw his wealth decrease sharply by $1.2 billion. 

This setback came amidst a tumultuous year for the Nigerian economy, marked by a sharp decline in the naira and a dip in equity values. Here are the multifaceted reasons behind this decline and how it impacts a titan of industry known for his Midas touch.

The naira’s depreciation

The Nigerian naira experienced one of its most challenging years, impacting businesses and investors across the board, including Dangote. 

The currency’s value fell drastically after the government decided to liberalize the foreign exchange policy in an attempt to invigorate the economy. This move, although intended to stabilize financial operations, led to a significant devaluation of the naira, diminishing the value of Dangote’s massive holdings pegged to the local currency. 

The devaluation meant that the local currency earnings of Dangote’s companies bought fewer dollars on the international market, stressing his operations which rely heavily on imports and foreign technology.

Equity fluctuations

Alongside the naira’s woes, Dangote’s wealth was also affected by a moderation in the value of his equity holdings. 

Bloomberg data highlighted that despite remaining Africa’s richest person and the only Nigerian in the top 500 global billionaires, his ranking dropped to 145th. 

His major companies, such as Dangote Cement, encountered market fluctuations. While these companies are pillars of the Nigerian economy, the broader economic instability meant lower stock values and investor confidence, leading to a decrease in his overall net worth.

Foreign exchange and merger Setbacks

2024 wasn’t just about currency devaluation for Dangote. His companies faced significant foreign exchange losses, notably a $1.07 billion hit in the previous year, which continued to affect their financial health. 

Additionally, a crucial blow came when the Securities and Exchange Commission denied a strategic merger request involving Dangote Sugar Refinery and NASCON Allied Industries. 

This denial blocked a potential pathway to recovery, limiting his ability to consolidate his holdings and streamline operations amidst economic turbulence.

Future strategies and economic realignment

Despite these financial setbacks, Dangote is not standing still. His company, Dangote Industries Limited, plans to revolutionize its approach by reducing dependency on local markets. 

The intention is to shift a significant portion of his business to generate revenue through foreign exchange. 

This includes plans to sell a portion of the oil refinery and reduce his stake in the cement business, aiming to diversify revenue sources and stabilize the financial foundation of his enterprises. 

This strategic pivot is expected to safeguard his holdings against local economic shocks, aiming for a more globally integrated business model.