How Naira Devaluation Led to $10 Billion Loss for Aliko Dangote

In just half a year, Aliko Dangote, recognized as Africa’s wealthiest person and the richest Black individual globally, saw his fortune shrink dramatically. From a peak of $23.3 billion at the beginning of 2024, Dangote’s net worth plummeted to $13.8 billion by mid-year. 

This significant drop is largely attributed to the devaluation of the Nigerian naira and downturns in the Nigerian stock market, particularly affecting his major business interests, including Dangote Cement Plc and the ambitious Dangote Oil Refinery.

Dual Financial Challenges Dangote’s financial landscape shifted drastically due to two main factors: the naira’s devaluation and a downturn in his publicly traded companies on the Nigerian Exchange (NGX). 

Initially, Dangote entered 2024 on a high note, gaining $8.17 billion early in the year. However, as the year progressed, his net worth decreased by $9.5 billion, marking a significant reversal from his early gains.

The Naira Devaluation Impact The Nigerian naira experienced a sharp devaluation after reforms introduced by President Bola Tinubu, aimed at eliminating the currency’s fixed exchange rate. 

This policy change resulted in the naira losing over 53% of its value against the dollar. The devaluation affected Dangote directly, especially his holdings in Dangote Cement Plc, where the value of his 86% stake fell from $12.4 billion at the start of the year to just $5.35 billion by June.

Oil and Gas Sector Troubles Dangote’s foray into the oil and gas industry through the Dangote Oil Refinery has encountered significant challenges. Despite plans to commence petrol production for the Nigerian market, the refinery has been unable to operate at full capacity, primarily due to difficulties in securing enough crude oil. 

The refinery, crucial for Dangote’s portfolio, is currently running at just over 50% capacity.

In response, the Nigerian government, under President Tinubu’s direction, has started selling crude oil to the refinery in naira. This strategy is intended to stabilize fuel prices and support the refinery’s operations by allowing it to purchase up to 450,000 barrels of crude oil for domestic use annually.

Positive Trends in the Cement Sector Despite setbacks in the oil sector, Dangote’s cement business continues to thrive. Dangote Cement Plc has seen a substantial 85.1% increase in revenue in the first half of 2024, reaching $1.1 billion. 

This growth is driven by expanding market share across Africa and enhancing operational efficiencies, proving that Dangote’s diversified business interests offer some resilience against economic challenges.