- Title: NIGERIA: Nigeria, a concrete get-rich scheme
- Date: 11th September 2012
- Summary: FAMILY PHOTOGRAPH ON THE DESK
- Embargoed: 26th September 2012 13:00
- Keywords:
- Location: Nigeria
- Country: Nigeria
- Topics: Business,Industry
- Reuters ID: LVA2DSE2XOHOHOCZBVPE2U7K1T94
- Story Text: Aliko Dangote's entrepreneurial skills have helped make him Africa's richest person, with cement plants opened or under construction everywhere from Senegal to Ethiopia to South Africa.
He dreams of owning the largest cement firm on the planet.
By 2015, he hopes, his industrial conglomerate will be worth four times its current estimated 15 billion US dollars.
When Dangote floated the cement firm in late 2010, it boosted his estimated personal wealth five-fold to 13.8 billion dollars, making him the fastest riser on the Forbes rich list.
Dangote, whose personal fortune is now 11.2 billion dollars after a bad year on Nigeria's stock market, takes great pride in having blazed a different trail.
"Things are changing, if you look at other areas, before, normally, you know especially in Nigeria, Nigerians look more or less into oil and gas you know because oil and gas really messed us up big time, in the sense that people have actually dropped agriculture, they've dropped almost everything," he said.
Dangote now wants to list 20 percent of the cement company on the London Stock Exchange late next year, at a price that would value it at 35 billion to 40 billion US dollars.
That would make it the world's top cement firm by market capitalization, bigger than Lafarge of France, and surpassing mobile phone operator MTN as Africa's top stock.
"The real target is for us to see what value can we add and pay back to this country of ours that we call Nigeria and also the continent of ours that we call Africa and the only way to do this is by trying to make sure that you stay where you believe you can add a lot of value in business; at least so far we've been taking the flag on Nigeria and the flag of Africa to put in places that they were never ever expected to be seen," he said.
But the 55-year-old is not without controversy.
To some, he is an unassuming man whose quiet demeanour stands out in a nation where success is usually marked by talkative swagger; to others, he is a monopolist who uses aggressive tactics and political ties to beat competitors.
Critics accuse him of using his influence with successive governments to ban imports by his competitors, pushing port authorities to halt rivals' shipments, and using sharp price drops to put them out of business.
Dangote admits he has been friends with several recent presidents of Nigeria and has enjoyed lucrative tax breaks, though he denies receiving any special favors.
However he got there, there is little doubt his success in manufacturing is a rarity in a continent seen as too dependent on exports of raw materials; minerals and cash crops with no added value.
By contrast, the Dangote Group refines sugar, mills flour, processes salt, and produces cement.
Bismarck Rewane, friend to Dangote and Chief Executive Officer of Lagos based consultancy firm, Financial Derivatives; who has known the tycoon for more than 20 years said Dangote plays to win.
"Aliko is a highly driven extremely competitive and passionate individual. When committed to a cause, he will do anything to win, he wants to win every game, he wants to win every bet, he wants to win every project," Bismarck said.
Born in April 1957 in the northern Nigerian city of Kano, Dangote comes from a family of wealthy Muslim merchants.
After demonstrating his early entrepreneurial spirit selling sweets, he headed to Egypt to study business at Cairo's Al-Azhar university.
In 1977, he borrowed about 500,000 Nigerian naira (3,185 dollars) from his uncle to trade basic foods; cooking oil, sugar and pasta.
Four years later, he bought trucks to start a transport firm and within a decade was importing bulk goods, including cement.
By the time he turned his hand to manufacturing the stuff, buying a defunct cement plant in 2000 and reviving it, he was a rich man.
Uzo Nwankwo, a fund manager who was Dangote's executive Director of corporate finance from 2005 to 2007 said Dangote has the skill and resilience to pursue winning ventures, but he also works hard.
"As a business man, he is very savvy, he understands his business, he also understands the economy and the relationship between politics and business," he said.
"As an employer, he works like he does, the man is a workaholic, he works basically 24 hours a day. When I used to work with him, it was the same thing, you travel, you come back same day, you go to London, you leave London that same day, finish your meeting and you're back; he hates to travel during the day because he thinks it's a waste of your time so he likes to travel at night, get there in the morning, do your business and basically come back so he's on his toes and he doesn't demand from you what he doesn't do," he said.
Analysts say the speed at which Dangote is building his pan-African empire is risky, citing project delays and management issues as their greatest concerns.
In a report in May, Renaissance Capital warned that his factories may struggle to get the gas supply they need, which would lower projected margins.
Another worry is that Dangote's success in a corrupt, closed economy like Nigeria may not be easily reproduced in countries with a more level playing field.
But Dangote is not losing any sleep over his critics.
"Well you see, if condition even becomes tight, the biggest difference that we have is actually we are not highly leverage, as a matter of fact, we try as much as possible to use our own money to do most of these projects even if we borrow money, today, we'll only borrow money temporarily before we replace that money with our own cash-flow," he said.
Supporters say Dangote demonstrates that Nigeria can succeed internationally in sectors besides fossil fuel extraction or online fraud, and that Africa can succeed in industry without having to rely on foreign investment from the West or China.
With an annual turnover of 2.5 billion dollars, the Dangote Group contributes nearly 1 percent of the GDP of Africa's second biggest economy, and employs 23,000 people in a country with massive unemployment. - Copyright Holder: REUTERS
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