At the age of 21, Aliko Dangote borrowed $3,000 from his uncle to import and sell agricultural commodities in Nigeria, his native country.
His business venture quickly became a success, and as a result, he managed to repay the entire loan within three months of starting operations.
For the ninth time in a row, Dangote was the richest man in Africa in 2020, with an estimated net worth of $10.1 billion.
The business empire he began to build more than three decades ago, Dangote Group, is one of the largest private-sector employers in Nigeria as well as the most valuable conglomerate in West Africa.
Dangote’s business interests encompass many industries, including oil and gas, consumer goods, and manufacturing. About 80% of his conglomerate’s revenue comes from Dangote Cement. According to Forbes magazine, the subsidiary produces 44 million metric tons of cement every year and operates in 10 African countries. Dangote also owns the world’s third-largest sugar refinery, and together, all of his publicly traded companies make up a quarter of the market capitalization of the Nigerian Stock Exchange.
Aliko Dangote turned a local commodities trading businesses into a multibillion-dollar corporation. Here’s how he did it.
Early Life and Education of the Richest African
Born in 1957, Dangote grew up in an entrepreneurial household in Kano State, Nigeria. He was raised Muslim and lived an upper-class life. Dangote’s grandfather, Sanusi Dantata, was once named one of the wealthiest people living in Kano. He made his fortune selling commodities like oats and rice. Dantata became Dangote’s guardian in 1965 after the death of his father.
Having spent much of his childhood with his grandfather, Dangote quickly became interested in the world of business, once saying, “I can remember when I was in primary school, I would go and buy cartons of sweets [sugar boxes] and I would start selling them just to make money. I was so interested in business, even at that time.”
At age 21, Dangote graduated from Egypt’s Al-Azhar University, considered one of Islam’s most prestigious universities. It was there the budding entrepreneur furthered his education in business.
An Empire Is Born
After graduating from college in 1977, Dangote managed to convince his uncle to lend him money to start a business. The funds from the loan allowed him to import soft commodities at wholesale prices from international suppliers. Two of his main imports were rice from Thailand and sugar from Brazil. He then sold those items in small quantities to consumers in his village at a lucrative markup. The venture quickly became successful and turned into a cash cow. In an interview with Forbes, Dangote claims that on his best days, he was realizing a daily net profit of $10,000. That allowed him to repay his uncle in only three months.
Cutting Out the Middleman
In 1997, Dangote realized that acting as a middleman was a very costly endeavor, so he built a plant to produce what he had been importing and selling for the previous 20 years: pasta, sugar, salt, and flour. Around the same time, Dangote was awarded a state-owned cement company. Dangote significantly expanded the operations of the company in 2005 by constructing a multimillion-dollar manufacturing plant. The construction was financed with $319 million of Dangote’s own money in addition to a $479 million loan from the International Finance Corporation, a sister organization of The World Bank.
Each of his manufacturing divisions has since been separated into publicly traded companies: Dangote Sugar Refinery PLC., National Salt Company of Nigeria PLC., Dangote Flour Mills PLC., and Dangote Cements PLC.
Expanding the Empire
Dangote has always reinvested the majority of his profits back into his businesses–one reason the company has grown so much since inception. During an interview with Al Jazeera News, Aliko Dangote explained, ‘‘We [Dangote Group] are not doing like other Africans who keep most of their money in the bank. We do not keep money in the bank. We fully invest whatever we have and we keep on investing. (sic)’’
Unlike many wealthy Nigerians who made their fortune in oil, Dangote initially chose to go down a different path, but he has since entered the oil and gas industry. In an effort to put some of his cash reserves to work, Dangote purchased an oil refinery in Lagos in 2007. He hopes the refinery, which is scheduled to be at full capacity by the end of 2020, will significantly reduce Nigeria’s reliance on international suppliers for oil and gas. The $10 billion refinery in Nigeria is expected to produce 650,000 barrels of oil per day.
The Bottom Line
Aliko Dangote’s journey to fortune is not a rags-to-riches story. He came from a wealthy family that was able to provide financial assistance to start his business. Over the years, Dangote has expanded into new business segments, including telecommunications, real estate, and steel manufacturing. Today his holding company, Dangote Group, is the largest conglomerate in West Africa. His title as “richest man in Africa” seems only to be one he’ll hold for years to come.
July 4, 2020