Photograph by Michael Prince/Forbes Collection/Corbis Outline
Six years ago, Aliko Dangote paid a visit to Tanzania, on Africa’s eastern coast, and shared his dream of having an African-run business empire that would manufacture products all over the continent. To assorted government and business leaders, he announced that he was prepared to make an investment of $600 million to build a cement factory in southern Tanzania, alleviating the shortage in that country’s domestic cement supply. The Tanzanians were skeptical. “They didn’t believe us at all. They thought I was one of these ‘Nigerian 4-1-9’ scammers who try to go and scheme people out of their money,” Dangote says. “Or just one of these clever Nigerians who would come and be lying to them.”
The Tanzania story is clearly one Dangote relishes telling—not least because of how it’s turning out. Not long after his visit, his name appeared on a list of the world’s wealthiest people, and the Tanzanians realized they had been negotiating with Africa’s richest man. As founder and chairman of Dangote Group, he’s worth an estimated $16.3 billion, according to the Bloomberg Billionaires Index. “They pieced the two together,” Dangote says, sitting in his expansive Lagos office in late January. The room is so gigantic it appears nearly empty, even with tall plants, a conference table, and a large-screen television. Three months ago, Dangote Cement signed a final agreement there, with plans to produce 3 million tons of cement a year.
Photograph by Jane Hahn for Bloomberg Businessweek
Dangote Cement is Africa’s largest cement manufacturer; the Dangote Group employs 26,000 people in Nigeria alone. The company is constructing cement plants in Ethiopia, Zambia, South Africa, Senegal, Cameroon, the Republic of Congo, and several other African countries. “We want to be predominately in sub-Saharan Africa, and then we will move out of Africa,” he says. He announced plans last fall to construct plants in Iraq and Burma.
Dangote Group also mills flour, processes salt, produces fertilizer and pasta, and has big plans for sugar. The Nigerian sugar refinery, located at the port of Lagos, is the second-largest in the world. “The same revolution that we’ve had in cement, we want to replicate in sugar,” says Dangote, referring to his push to increase domestic production of a legacy import.
Despite being one of the world’s top producers, Nigeria has yet to refine its own oil. Dangote wants to build a $7 billion facility that would annually process 400,000 barrels of petroleum. “When you look at most of what we’re consuming today, these are things that are being imported,” Dangote says. “We want to make sure that our people are self-sufficient in terms of producing more. The market is there for us to take, but the production is not there.”
Because of his success and vision, his partners, friends, and admirers hold Dangote up as the face of the new Nigeria. With corruption on the wane and the economy liberalizing, Nigeria, they say, is safer than ever for foreign investment. And Dangote’s profile does appear to be contributing to greater confidence in the country. Goldman Sachs (GS) included Nigeria in its Next 11 list of the most promising 21st century economies, and Citigroup (C) called it a “3G,” one of its “global growth generators,” countries with growth potential and investment opportunities. Dangote’s critics—who are not hard to find, if reluctant to speak publicly—say he hasn’t created a model for the future but simply found a way to play a still-rigged game better than others.
Dangote, 55, is a household name in Nigeria and is seen as both a son of privilege who benefited from family connections and a striver who has earned his unprecedented wealth. A workaholic—other businessmen gossip that he rarely sleeps and never vacations—he spends about half his time in Nigeria and the rest traveling around the world. He’s married with three adult children.
“He’s charming and humble, but he’s hard to pin down,” says Theresa Okeke, the American director of Lagos’s Civic Centre, a recreational center for the well-to-do. He’s also a favorite among the moneyed set that circulates through the polo and boat clubs and extravagant mansions of Ikoyi and neighboring Victoria Island, enclaves separated by a bridge from the rest of Lagos. (Recently, the French liquor brand Veuve Clicquot said it plans to open an office in Lagos; some upper-class Nigerian families like to hand guests their very own yellow-labeled Champagne bottle at parties.)
Dangote was born in Kano, the largest city in Nigeria’s mostly Muslim north, to a family of prosperous merchants. “I’m from a family that has been in business for a very long time; it’s in our blood,” he says. “But I did not ride on the back of my family to make money. I started everything by myself through hard work and didn’t inherit a dime. The only asset I inherited from my late father [an undisclosed sum of money], I donated to charity.”
Photograph by Jane Hahn for Bloomberg Businessweek
After graduating from Egypt’s Al-Azhar University with a business degree in 1977, he did, however, receive a loan of a little more than $3,000 from his uncle to start a trading enterprise in food staples, including rice and vegetable oil. He made the most of it, and four years later moved into transport, buying trucks and importing goods such as cement. During the first two decades of his career, in the 1980s and ’90s, Nigeria went through a series of military coups and dictators who held a firm grip on the economy. Dangote says that made doing business difficult, but with the election of Olusegun Obasanjo as president in 1999, he saw his chance to become an industrialist. He spent the first half of the 2000s restoring a cement plant in Obajana, north of Lagos, that would become his flagship factory.
When he started cement trading in 1978, Dangote was concerned he would not be able to compete with Lefarge, the French multinational that had been the dominant cement supplier for decades. But he didn’t doubt the market’s potential. Before Dangote Cement, Nigeria was consuming 10 million to 15 million tons of cement every year, while Lefarge was manufacturing less than 1 million tons domestically. The rest was imported. Dangote now has plants across the country producing 20 million tons of cement, and he exports to Ghana. He plans to produce 15 million more in Nigeria by the end of 2014.
Uzoma Nwankwo, managing director and chief executive officer of a private equity fund and Dangote Group’s former director of corporate finance, recalls Dangote coming to see him when Nwankwo was still head of risk at First Bank Nigeria. Dangote was transforming his trading company into a manufacturer and had solicited a loan from the bank, among others. “Because he was going into manufacturing, we could see the potential and had a lot more confidence, but [we] worried if he would have enough money to pursue this dream,” Nwankwo says.
When Nwankwo joined Dangote Group in 2005, the conglomerate was heavily in debt and, at one point, owed more than 50 billion Nigerian naira ($316 million in today’s dollars). “Fifty billion naira in 2005 was a lot of money to owe,” Nwankwo says. “We used to joke that when you see the banks are calling, you just drop the phone. Because they were just going to ask, ‘When are you going to pay us?’ ” Nwankwo says. “But he’s smarter than a lot of people give him credit for.”
According to Nwankwo, Dangote took calculated risks and, unlike other Nigerian entrepreneurs, drove modest cars and sold his own properties in London and the U.S. to underwrite his businesses. Instead of asking for direct loans, he’d take on debt to buy and sell sugar and flour, and then funnel the profits into the Obajana factory. When the banks realized how he was financing his operations, they had already gotten to know him, and Dangote told them they could either help him finish the factory or push him into bankruptcy. They chose the former.
Dangote’s rise has been bolstered by broader improvements in Nigeria’s business environment. Four years ago, in the wake of the global financial crisis, the Nigerian Stock Exchange lost 70 percent of its value, and 10 lending banks failed. Now, insists Oscar Onyema, CEO of the exchange, “the banking industry has really cleaned up.” And while the high profit margins and virtual lack of competition may not last long, Nigeria is attracting investors such as General Electric (GE) and South African supermarket chain Shoprite Holdings.
Nigeria’s economy is expanding 7 percent a year, and its population of 160 million includes a growing middle class. Under the military regimes, a business operating in the country risked being nationalized or subjected to unfair contracts. That’s far less likely today. “The perception of risk is so high, when the actual risk is not as high,” says Mimi Alemayehou, executive vice president of the Overseas Private Investment Corp., a U.S. government agency. “The reforms are not done,” she adds, “but Nigeria is on the right path.” OPIC has helped bring about more private U.S. investments in Nigeria than in any other African country, mainly in financial services, with an increasing number in agriculture. She says it’s critical that the government disclose official assets, publish its annual budget, and generally improve its transparency.
Paul Hinks, CEO of Symbion Power, a U.S. energy company that joined with Tony Elumelu, a Nigerian banker and philanthropist, to take over a Nigerian power plant, says, “At the time I went out there, all the naysayers said, ‘You’re mad. Why would you want to go to Nigeria?’ But doing business in Nigeria is like doing business in America. The volume of talent in Nigeria is just so self-evident, and that’s what got me excited.” Despite the country’s power shortages and infrastructure bottlenecks, he plans to locate Symbion’s African headquarters in Lagos because of the “huge opportunities.”
“There is a policy of free entry and free exit,” Dangote says of Nigeria. “You can come in, and if you don’t like what you’re seeing, you can leave and take out all your profit.” An attractive five-year tax holiday for people building industries also helps. “There are so many benefits that people are not really talking about,” he says. “Of all the places I’ve been to, I’ve never seen a place where you can actually make as much money as you can here.”
Brian Browne, the former U.S. consul-general to Nigeria, has a more jaundiced view of Dangote’s rise. Dangote, he has written, is a harmful anomaly: someone who has received enormous preferential treatment in the form of exclusive import rights and high taxes or bans on imports of the goods he produces. (Browne did not respond to interview requests for this article.) In a 2007 diplomatic cable made public by WikiLeaks last year, Browne wrote of Dangote, “To detractors, he is a predator using connections in a corrupt political economy to tilt the playing field in his favor and sideline potential competition. … Dangote is counted among President Obasanjo’s inner circle of business advisors. It is no coincidence that many products on Nigeria’s import ban lists are items in which Dangote has major interests.” Browne wrote that Obasanjo’s bans on cement, sugar, and rice imports could have been in exchange for Dangote funding the former president’s campaigns. The cable continued: “On one hand, Dangote imports significant amounts of U.S. produce and equipment for his manufacturing ventures. On the other, he has had success blocking trade and investment that might compete with his enterprises.”
One prominent Nigerian business executive, who spoke on the condition of anonymity because he fears Dangote, says the magnate’s strategy has been to find a sector he can dominate and then ruthlessly crush competitors. The executive, who has known Dangote for years, says he’s willing to engage in predatory pricing wars and relies on the fact that his industries are poorly regulated.
Nigeria has no antitrust legislation. One frequently told story relates how Dangote allegedly threatened to pull his money from a bank that was considering lending to his competitor. Newcomers, the executive says, don’t stand a chance. Dangote dismisses such criticism as exaggerated. “Competitors will say anything,” he says. Dangote admits he’s been friendly with past presidents. He serves on current President Goodluck Jonathan’s economic management team, but he denies using his government ties to carry out any wrongdoing. “Government,” he says, “is not really involved in business and has no business in any business.”
Photograph by Akintunde Akinleye/Reuters
Dangote’s friend Bismarck Rewane calls him a “straightforward and honest person.” He and Dangote have been friends for more than 20 years. “As a businessman, he’s highly competitive, and he’s driven,” says Rewane, who heads a macroeconomic and financial consulting firm in Lagos. “He’s desperate to win. He will do everything possible to ensure that he wins—within the constraints of the law.” Rewane paints Dangote as ruthless but moral. “Obviously those who lose out in the battle complain,” he continues. “Is this economy better off for having Aliko Dangote investing and creating capital? Yes. Is this economy stifled by monopolistic tendencies? Yes, but Aliko has moved from having a monopolistic mind-set to that of a very aggressive competitor.”
Nwankwo, Dangote’s former director of corporate finance, agrees. “People say that Dangote told the government to ban cement imports, but instead he saw the supply of limestone here, and the government said, ‘Good idea,’ ” he says. “You can’t tell me that government gave him a handout.” Dangote says that if Nigeria wants its own industrial and manufacturing revolution to flourish, it needs to enact protectionist measures to help domestic industries grow, much as the U.S. did for the corporate and railroad barons of the late 1800s.
Yet it’s difficult to separate Dangote’s calculus of the national interest from his own. Should the government shield domestic sugar producers from foreign competition, as it did cement, the Dangote Group will again be a primary beneficiary. He has sugar plantations totaling 100,000 hectares.
“In Africa, as you’re being successful and doing things right, you’re also creating a lot of enemies,” Dangote says of his detractors, and he’s not shy about making new ones. He’s suing a cement competitor, Cletus Ibeto, over an import duty waiver and tax breaks the latter enjoyed—yet Dangote himself has benefited from a five-year tax holiday for his businesses, a perk few of his rivals have received.
Opportunists abound in transitional economies, and Dangote may well be monopolizing rather than opening up the marketplace. In any case, he shows no sign of slowing down. His investments took a hit in the markets last year but have begun to bounce back. Last October he sold most of his stake in Dangote Flour Mills to South Africa’s Tiger Brands. He says his Bloomberg Billionaires Index rank is fairly accurate, though he has yet to list more of his holdings, which he says would increase his net worth. Dangote plans to sell a 20 percent interest in his cement business on the London Stock Exchange by the end of 2014, pricing it at a value of $35 billion to $40 billion. If he succeeds, the Nigerian businessman will be the world’s most valuable cement producer.