The Little-Known $15 Billion Empire Of Africa's Richest Man.
After I enter, a butler motions to a sitting room overlooking a patio and a blue-tiled pool. The three-story fortress is shielded from the 90-degree heat by powerful air-conditioners (themselves presumably shielded from Nigeria’s notoriously unreliable electric grid by diesel generators). Dangote, round-faced with a trimmed graying mustache, appears from upstairs dressed in khakis and a casual blue button-down. The 57-year-old can seem miscast in the role of industrial titan, often speaking so softly that he mumbles.
As breakfast arrives by the platterful, including plantains, smoked chicken in red sauce, diced sweet potatoes, white fish and sausage, he sticks to coy conversation. Whether about his country’s fraught presidential election (“It’s going to be tough for both parties”) or his cement company’s long-delayed overseas listing (“Maybe next year”), he has little to say.
On one subject, though, he is always articulate. “Nigeria is one of the best-kept secrets,” Dangote says. “A lot of foreigners are not investing because they’re waiting for the right time. There is no right time.”
Nigeria does provide fertile opportunity for vast wealth. As evidence, look no further than Dangote’s No. 67 rank on the World’s Billionaires List and his $14.7 billion fortune–mostly from three majority stakes in publicly traded cement, sugar and flour companies. And he doesn’t arrive here alone. In another dramatic sign of his country’s emergence, Nigeria has overtaken South Africa on FORBES’ 50 Richest in Africa ranking. Thirteen Nigerians earned spots in 2014, including a trio of new billionaires.
Dangote and these other Nigerians power Africa’s largest economy. The drop in crude prices prompted the oil-rich country’s stock index to plunge 40% last year, taking Dangote’s net worth down in lockstep–no surprise, since his companies account for almost a third of the nation’s benchmark index (his $10.3 billion drop in net worth was the world’s largest last year). But the underlying fundamentals are strong. From 2010 to 2013, Nigerian GDP expanded by an average of 5% a year. (It now totals some $500 billion, or a third larger than South Africa.) Even with the oil glut, forecasters believe this year’s growth will top 5%. In fact, according to a widely cited Citigroup C +0.58% report, economists expect Nigeria to have among the fastest average annual GDP growth in the world between 2010 and 2050.
There are other reasons for international interest as well. In the shadow of rising Islamic militancy, which has destabilized the Middle East and now threatens to do the same to parts of Africa, President Obama recently issued an executive order tasking U.S. business executives with strengthening trade ties to sub-Saharan Africa (the council includes heavy hitters from Wal-Mart, G.E. and McKinsey). Prior to that, in May 2014, he dispatched Penny Pritzker to Nigeria, the first visit by a Commerce Secretary in two decades. America’s foreign direct investment in Nigeria reached a continent-leading $8.2 billion in 2012, the last year for which statistics are available. Overall U.S.-Nigerian trade was $9.8 billion last year. Nigeria sells far less oil to America these days–it exported $2 billion of the black stuff last year as the U.S.’ tenth-largest supplier–so most of that trade comes through other goods and services.
Keeping Nigeria successful is critical. The country is already Africa’s most populous, with more than 170 million people, and that figure will swell to 210 million by 2020. By 2050 Nigeria is forecast to overtake the United States (440 million to 400 million). Yet a majority of the people subsist on less than $1.25 a day. About half are illiterate; most are very young (the country’s median age is 18.3). And 50% of rural Nigeria lacks access to clean drinking water. It’s hard to imagine the government coming to grips with it all, even if oil prices recover. Nigeria consistently ranks in the bottom quarter of the most corrupt countries in the world, according to Transparency International, and is proving a feckless pursuer of the Boko Haram thugs terrorizing the northeast.
All of which makes Dangote–well connected, wildly wealthy and ready to do business–an increasingly important player on the world stage. “Anyone doing business in Africa,” says David Rubenstein, the cofounder of the Carlyle Group and a fellow billionaire, “knows Dangote.”
THE ROOTS OF DANGOTE’S rise lie 150 miles south of the Sahara in his hometown of Kano, Nigeria’s second-largest city. A dusty metropolis, Kano has been a trade center and commercial hub since its establishment in the 10th century, thanks to its strategic location on the edge of the vast desert. Egyptian perfumes, incense, inks and mirrors dominated at first, then leather goods. The camel caravans became lucrative enough to fight over; wars broke out with neighboring kingdoms. When the British arrived in the late 1800s, Kano was West Africa’s most important business center.
Under British rule, Sanusi Dantata, Dangote’s grandfather, grew rich trading commodities like grain oats and rice, and ranked as one of Kano’s wealthiest citizens. Dantata insisted on personally raising his grandson–not an unusual arrangement in northern Nigerian culture–and instilled a businessman’s mind-set in Dangote at a young age. At 8, he turned allowance into startup capital. “I would use it to buy sweets, and I would give them to some people to sell, and they would bring me the profit,” Dangote says. “When you are raised by an entrepreneurial parent or grandparent you pick that aspiration. It makes you be much more aggressive–to think anything is possible.”
The country was growing up, too. Post-colonial instability, including countless coups and a civil war in the 1960s, was eclipsed by an oil boom in the 1970s. During that decade, the economy grew 18% annually, with many of the spoils going to well-connected elites. Despite the explosion of revenue, the World Bank still considered Nigeria–along with countries such as Bangladesh, Ethiopia, Chad and Mali–as “low income,” a candidate for international aid.
Dangote, a Muslim, attended AlAzhar University in Cairo and studied business. After graduation, he asked his grandfather for permission to move to Lagos. A $500,000 loan from his uncle set up 21-year-old Dangote as a trader of rice, sugar and cement.
He was well capitalized and a naturally talented trader. He imported sugar from Brazil and rice from Thailand and sold them locally at a huge markup. At his height, he says, he was pocketing $10,000 in profit a day. “Things were quite good,” he says. “It allowed us to create an awful lot of cash.”
He also worked the politicians. According to a State Department cable unearthed by WikiLeaks, Dangote “held exclusive import rights in sugar, cement, and rice, using such advantages to do volume business and undercut competitors.” Dangote flatly denies this.
Dangote’s success landed him firmly on America’s radar. A 1994 diplomatic cable singled him out as a businessman to know in Nigeria and drew attention to his clan’s homes in Kano, Lagos, London and Atlanta. The State Department report also highlighted the annual family vacation to the States.
A 1995 trip to Brazil convinced him to shift from trading to manufacturing. Why continue to play middleman when he could make the stuff in Nigeria instead and pocket even more profit? His resolve was strengthened in 1999, when Nigeria held its first democratic presidential election in six years, choosing a bespectacled former military ruler and chicken farmer named Olusegun Obasanjo, whom Dangote had known since 1981. As a key part of his platform, Obasanjo pledged to protect and promote domestic industry.
Dangote Cement operates ten plants, including the largest in Africa, supplying 53% of the total Nigerian market.
Obasanjo, reelected in 2003, worked overtime to ensure that any Dangote challenger who entered the market did so with a significant handicap. At the time Dangote’s sugar and flour companies went public, raw sugar was taxed 12 times less than refined sugar, wheat 6 times less than flour. Dangote Cement prospered from restrictive licenses. The companies retain a vice-like grip on their industries today, controlling at least half of the cement and sugar markets and about 25% of flour. “When Obasanjo took over, he took guys with him,” says a Nigerian belonging to the country’s overlapping circle of business and political elites. “He gave them a leg up.”
Last August, as the Islamic State overran northern Iraq and Boko Haram was declaring its own caliphate in Nigeria, the White House held a U.S.-Africa trade summit in Washington, D.C. A highlight was the announcement of a $5 billion fund backed by Wall Street billionaire Steve Schwarzman’s Blackstone Group–and Dangote. They plan to invest in infrastructure companies throughout sub-Saharan Africa. “We can do well as investors, and the countries will do well,” Schwarzman says. “We’re aware that operating in Africa isn’t as easy as many other places. You have to have a very strong local partner, and we were lucky enough to find Aliko. He’s done a remarkable job.”
Rubenstein, of the Carlyle Group, sought out Dangote as well when raising money for his firm’s first sub-Sahara-focused fund in 2012. Dangote ultimately invested in the $700 million fund. “His name carries a great deal of weight,” Rubenstein says. “If you say he’s an investor with you, that carries a lot of weight. He’s helped us.” The Carlyle fund has so far invested in five companies, including a $147 million deal last November for Nigeria-based Diamond Bank, a retail lender.
It’s all part of Dangote’s fast-rising international profile. He’s a Davos regular, and appeared with Goodluck Jonathan, Nigeria’s current president, on a panel about investment potential in Africa at the 2014 World Economic Forum. Even four years ago, he was there making a familiar pitch: “Don’t give any more aid to Africa,” he said. Invest with local partners instead. “You will make money, and we’ll make money, and it’s better for everyone.”
But it is not in Dangote’s nature to rely on others to prosper. Mostly, he relies on himself. He trusts few others with real power at his companies, often making decisions with little more than gut feeling, says a former top executive. “Ultimately all the decisions sit with the boss, Dangote, rather than the senior management,” the executive says.
Self-reliance and a supremely healthy ego blend seamlessly into a cult of personality at Dangote’s firms. Portraits of him hang on the walls. The average Dangote employee seems to virtually worship him. “I’m going to be a big man, I’m going to be the next Dangote,” a lab technician at the one of the cement plants says over and over again until his sentiment is recorded on paper. A lieutenant warns that Dangote will walk out of a meeting if it starts even a minute late.
But Dangote is hardly the hermetic workaholic (“I don’t think I’ll ever retire”) he puts on. “He attends more parties than anyone I know,” says Jim Ovia, a banker and close friend. One Sunday last month found Dangote on his yacht–christened Mariya after his mother–and then flying to Geneva on Monday to see his grandchildren. Later that week he met first with the French general counsel and then with Davido, Nigeria’s biggest pop star.
Another recent social call: breakfast with former president Obasanjo, then onto Abuja to meet the current president. Dangote has good reason to keep up with Jonathan, whose government still enforces Obasanjo-era high tariffs on imports that compete with Dangote’s key products. Indeed, the State Department has come to see Dangote as completely inseparable from the Nigerian government. “But without him a lot of people wouldn’t have jobs,” says a former U.S. diplomat in Africa. “And Nigeria would be weaker.”
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