Aliko Dangote: Africa’s richest person

0:00This BBC podcast is supported by ads outside the UK. In business, they say you can have better, cheaper, or faster, but you only get to pick two. What if you could have all three at the same time? That's exactly what Cohere, Thomson Reuters, and Specialized Bikes have since they upgraded to the next generation of the cloud. Oracle Cloud Infrastructure. OCI is the blazing fast platform for your infrastructure, database, application development, and AI needs, where you can run any workload in a high availability, consistently high performance environment and spend less than you would with other clouds.

0:38How is it faster? OCI's block storage gives you more operations per second. Cheaper? OCI costs up to 50 % less for computing, 70 % less for storage, and 80 % less for networking. Better? In test after test, OCI customers report lower latency and higher bandwidth versus other clouds. This is the cloud built for AI and all your biggest workloads. Right now, with zero commitment, try OCI for free. Head to oracle.com slash strategic. That's oracle.com slash strategic. Hey, it's Ryan Reynolds here from Mint Mobile. Now, I was looking for fun ways to tell you that Mint's offer of unlimited premium wireless for$15 a month is back.

1:20So I thought it would be fun if we made$15 bills. But it turns out that's very illegal. So there goes my big idea for the commercial. Give it a try at mintmobile.com slash switch. A upfront payment of$45 for a three-month plan equivalent to$15 per month required. New customer offer for first three months only. Speed slow after 35 gigabytes of networks busy. Taxes and fees extra. See mintmobile.com.

1:54Welcome to Good Bad Billionaire from the BBC World Service. Every episode, we pick a billionaire and we find out how they made their money. Then we judge them. Are they good, bad or just another billionaire? I'm Zing Zing and I'm a journalist, author and podcaster. And I'm Simon Jack. I'm the BBC's business editor. And on this episode, we have someone who is Africa's richest person by quite a long shot. A title he has held for 13 years in a row. He's 67 years old. He's the world's richest black billionaire. And his name is Aliko Dangote. And he made his money as one of those kind of classic industrialists you just don't really hear about anymore.

2:30Yeah, kind of an old fashioned industrial story. He started out trading cement and he made his fortune through sugar, salt, flour and fertilizer. And together, all his companies make up a whopping third of Nigeria's total public market value, which, Simon, I think you should probably explain. OK, so if you think of the American Stock Exchange, the S &P 500, the 500 biggest companies in America, the biggest one of all is Microsoft. That makes up about 7 % of the S &P 500, roughly the same as Apple, which is around 7%. So huge companies, they make up 7%. His companies make up 30 % of the Nigerian Stock Exchange, of the publicly traded Nigerian companies.

3:13So he accounts for an enormous, huge chunk of the market value of Nigeria. And understandably, that's also laid him open to allegations that he monopolises everything, right? Yeah, he's basically got a huge share of very large industries. The Dangote Group is one of the biggest employers on the entire continent of Africa. And we can actually listen to him speaking to the BBC in 2014, discussing his role in developing not just Nigerian, but African industry. You know, nobody will come and develop this economy, but only us. And when we start, the others will see and then they will follow. But if you turn it the reverse, where we will sit down, we expect foreigners to come and develop our economy in Africa, it will never, ever happen.

4:00So we need to take charge. And that's what we've done, actually. And that sense of African self-reliance has made him incredibly popular. That's a message that people really want to hear. And it's paid off for him. he's currently worth around$13 billion. Now, having said that, he does insist on living a relatively simple and unflashy life. So, for instance, he often drives himself between meetings. And if you see him in an interview, I've watched a couple of them. He is a pretty mild-mannered, unflashy guy. There's not much bling about him at all. Although he does indulge sometimes. So he has 25 luxury cars.

4:33He's got a 33-metre yacht, which is named after... That's tiny, 33 metres. Are you kidding? Yeah, that's not very large. It's 100 feet long. Honestly, he's not going to get very far in the billionaire stakes with a 33 metre yacht. No, by billionaire stakes, that's like rowing a pedalo around, right? Yes. He's got private jets for different occasions. And his journey to riches, though, has been helped along the way by some big political players. And that has sometimes left him open to allegations of corruption. But we'll dig into it a bit deeper. Is Aliko Dangotti good, bad or just another billionaire?

5:06Let's go back to the beginning.

5:12So Aliko was born in 1957 in Nigeria's second largest city, Kano, an ancient trading centre in what is predominantly the Muslim north. Yeah, and if you think historically, he was three years old when Nigeria gained independence after over a century of British colonial rule. So his childhood took place in what was quite a tumultuous time for the country. That included the Civil War, which was between 67 to 70, followed by a succession of military dictatorships and brief democratic civilian governments. But Aliko was fortunate he had the stability of a pretty wealthy family on his mother's side.

5:46His great grandfather traded nuts with Western companies in the early 20th century and was actually the richest man in West Africa at the time of his death. This is not a rags to riches story by any means. No, he's definitely not coming from nothing. And Aliko's granddad had actually built on this empire to become the top groundnut trader in Nigeria in the 60s, alongside picking up real estate and haulage businesses. So this is a family that's very well off, actually. And steeped in commerce and trading. When Aliko was just nine years old, his father died. And so he was actually raised by his grandfather.

6:18But at primary school, he showed a very distinct flair for business, which, you know, does actually pop up quite a lot in some of our billionaire stories. So often, so many of them started their entrepreneurial career when they were kids. Yeah, he was buying sweets in bulk and then gave them to other children to sell, delegating, and then taking a cut of their profits. I mean, I don't think I understood what taking a cut of anything meant when I was that age. Yeah, he said, when you're raised by an entrepreneurial parent or grandparent, you pick up that aspiration. It makes you much more aggressive to think that anything is possible.

6:50Again, that's kind of familiar territory, isn't it, for our billionaires? Yeah. And I just want to say, if you're a parent and you realise your child is selling sweets on the playground, they could be the next billionaire. Yeah. In 1977, Eliko graduated from Al-Azhar University in Cairo, Egypt. He got a degree in business studies, of course. And then he joined his uncle, who was running a cement business. This will become very important in Nigeria's larger city, Lagos. Yeah. He said that he squatted in his uncle's office and learned all about cement trading and haulage. And this was the right place, right time to get into the cement business as the Lagos cement market was frenzied following something called the Cement Armada.

7:27A period in history, I must say, I was not familiar with, but it's a fascinating story. Oh, yes. I mean, Cement Armada doesn't exactly scream glamour, but we'll give you a quick primer on exactly what went down. So oil had been discovered in Nigeria in the 1950s. So after the civil war ended in 70, the Nigerian government were basically very enthusiastic to spend some of that oil profit on infrastructure and defence, you know, these big budget projects. So the government ordered 20 million tonnes of cement to be imported within just 12 months. That's a lot of cement. And understandably, it required a lot of ships to come and deliver that cement.

8:04Hence the Armada. Exactly. So there were 420 ships. Oh my gosh, that's a lot of ships queuing for months out of Lagos Harbour. Some of them were anchored. They had to wait up to a year to unload. Some of them just full on sank. And some were even prey to pirates. I must say that doesn't sound like the best organised importing exercise I've ever heard. No, it's a bit like organising a birthday party and telling everyone to turn up at exactly the same time. So all this meant that some of the concrete degraded, the importers who imported it didn't have a usable product. And actually, this event was studied as a key moment of government corruption as these contracts were handed out without any checks and balances.

8:43So it's not just disorganized, it's sort of slightly underhand. The result of the Armada, however, was this huge demand for good concrete that hadn't degraded, that got through the Armada. And it was in this boom that Aliko was starting his career in concrete. Yeah. And just remember, Nigeria in the 1970s was becoming a very vibrant place for a young man. It became the wealthiest country in Africa, thanks to that oil. Over two decades, government revenue had increased from just 200 ,000 naira to 3.7 billion. That is a 1.8 million percent increase. So it is boom time in Nigeria. And Lagos' population doubled in the 1970s.

9:22You know, this nightlife grew to serve the new workers arriving. It became known as a party town. Music and culture was flourishing. So there were domestic sort of stars. You may have heard of Fela Kuti, but also international musicians like Stevie Wonder came along to play. And according to a friend, after working hard all day, Aliko would enjoy some late night house parties. So he knows how to relax. Alisugan Edeniyi, a journalist for All African News website, reported that he was also a gambler. So he said, I've been told that Dangote was so consumed by gambling that he could spend hours without eating just at the gambling table.

9:57So he's picking up a few bad habits. On a trip to Mecca, a politician friend asked Dangote to stop gambling. And that friend was reported to have said, promise me on this holy ground you will never gamble again. That's quite the ultimatum, I would say. Aliko had also seen some of his relatives completely fritter away all their fortunes. So a business associate has also said that Aliko watched another uncle fall from gambling and that it put fear in him. Yeah, so Aliko vowed not to gamble and apparently hasn't done since. So he's a young man in a growing economy with a big, big talent for business.

10:31And after learning a cement trade from his uncle, Aliko decided to start his own company. And he was young. At this point in 1978, only 21. and he asked his granddad, the one who raised him, for a loan to start what he called the Dengote Group. Yeah, he loaned him 500 ,000 naira. In Aliko's own words, 500 ,000 naira at the time sounds small, but I think a Mercedes used to be 5 ,000 naira, so he gave me the money for 100 Mercedes. Quite helpful to give you a sense of the scale of the loan. Definitely, and he didn't spend it on Beamers. He actually used it to buy cement to trade, and he used a truck borrowed from his uncle.

11:06Yeah, he was working seven days a week. He said things moved very, very fast, much more than my expectation. And in fact, instead of paying his grandfather's loan back in three years, he returned it in less than six months. But competition was soon coming because after a few profitable years, everyone was trying to get in on the cement action and the market had become flooded. So he decides to pivot, to diversify. He moved into trading food items like flour, salt, pasta, fish and other soft commodities. So what do you think of this move from a kind of business sense? It makes sense, right? So this is like an old-fashioned industrial conglomerate.

11:44Things like, you know, flour, salt, pasta, cement, fish. These are early stage in the economic development of a country and a society. These are the things will do well. These are the things that people want and they need. Yeah. And if you have lots of different businesses, that's smart because it means you've got a diversified portfolio. so you spread your risk. So it's a smart move because you're protecting yourself basically against risk in different sectors of the economy. But funnily enough, unlike many traders at the time, you'd think that if you wanted to get rich in Nigeria around this time, the obvious thing to get into would be oil, but he didn't do that.

12:18No, he actually felt that as an industry, it was too corrupt. He said, if we'd followed the trend of dealing in oil, it would have tainted our name. People would think, you've made this money because you did a lot of unethical deals in the oil industry. And actually, it was a good strategy not to go into oil because in 1982, oil prices dropped very sharply in Nigeria, thanks to a worldwide oil glut. So he was well out of that one. And then in 1986, his company got what he described as one of the major breaks for us. Nigeria entered the trade liberalisation policy era. Yeah, this is essentially the government introducing incentives to boost non-oil exports.

12:55And again, in an effort to diversify Nigeria's economy and its income away from just oil create greater integration into the world economy to the rest of the continent as well. And at this point, Ali Koh focused his business. He said, instead of importing everything like we used to, we concentrated on a few items, mainly sugar, rice, frozen fish, and we just kept expanding and expanding. That meant importing sugar from Brazil, rice from Thailand. He was selling them locally at a huge markup. And by the early 1990s, Dangote Group was dominating the markets that they traded in. So you could say it's right place, right time.

13:28Or perhaps you make your own luck. There's an old saying that goes, luck is what happens when preparation meets opportunity. That's attributed to Seneca. Well, I'm sure lots of billionaires would like to think that they prepared themselves for the exact right moment to make their fortunes. But I do think some of it is just luck, isn't it? I think so. And some people do admit that. Anyway, he's the right place at the right time and he's making tons of money. Difficult to know exactly how much money he's making because his company was private. So his business was built with seed capital from his family, expanded with profits generated from these sales.

13:58He says at the height of importing, he was making US$10 ,000 in profit a day, which in one year would work out to three and a half million. In his own words, the company was creating an awful lot of cash. He was born rich, remember that? He probably made his own first million in the early 1990s from importing. I think we can comfortably say that in the early 1990s, Aliko is a millionaire. He himself is in his mid-30s.

14:38So

14:43Hey guys, it's Erin Andrews from Calm Down with Erin and Carissa. So when the pressure's on, you remember the people who helped you get this far, whose knowledge guided you and whose care kept you grounded. For me, it was my dad, my mentor, who believed in me when I was just getting started in journalism. A real-life example that showed me when you work with someone who knows a lot and cares even more, you're unstoppable. At Truist, that's exactly how they approach banking. Truist, leaders in banking, unwavering in care. See what knowledge and care can do for you at truest.com slash unstoppable.

15:23In business, they say you can have better, cheaper, or faster, but you only get to pick two. What if you could have all three at the same time? That's exactly what Cohere, Thomson Reuters, and Specialized Bikes have since they upgraded to the next generation of the cloud. Oracle Cloud Infrastructure. OCI is the blazing fast platform for your infrastructure, database, application development, and AI needs. where you can run any workload in a high availability, consistently high performance environment, and spend less than you would with other clouds. How is it faster? OCI's block storage gives you more operations per second.

16:00Cheaper? OCI costs up to 50 % less for computing, 70 % less for storage, and 80 % less for networking. Better? In test after test, OCI customers report lower latency and higher bandwidth versus other clouds. This is the cloud built for AI and all your biggest workloads. Right now, with zero commitment, try OCI for free. Head to oracle.com slash strategic. That's oracle.com slash strategic. Mint is still$15 a month for premium wireless. And if you haven't made the switch yet, here are 15 reasons why you should. One, it's$15 a month. Two, seriously, it's$15 a month. Three, no big contracts. Four, I use it.

16:45Five, my mom uses it. Are you playing me off? That's what's happening, right? Okay. Give it a try at mintmobile.com slash switch. Upfront payment of$45 for three-month plan,$15 per month equivalent required. New customer offer first three months only, then full price plan options available. Taxes and fees extra. See mintmobile.com. Are you a business owner or entrepreneur in need of a fast funding solution? Amerifactors provides fast capital. Call today for a free, no obligation quote at 800-884-FUND. Startups, rapid growth stage or struggling, even with less than perfect credit, including bankruptcies.

17:15In business for over 34 years, thousands of satisfied clients have transformed their cash flow with Amerifactors. Call Amerifactors today at 800-884-FUND. That's 800-884-3863. Or visit amerifactors.com. Aliko is a millionaire thanks to importing into Nigeria, but it's unlikely he will get to a billion that way. Yeah, so how does he get from a million to a billion? After several visits to Brazil from where he'd been importing sugar, he'd begin to see that country change. It became more prosperous thanks to its growth in manufacturing. So after one trip to Brazil in 1995, he resolved to shift his company away from just importing and trading to actually processing and manufacturing stuff in Nigeria.

17:59Right, so just making things. But, you know, it's not like manufacturing was a low-risk kind of endeavour, right? So he had to cope with an ailing power grid, political instability, He was competing with cheap imports coming from Asia. But again, perhaps luckily, history and politics were on his side because during the 1990s, the Nigerian government had begun to privatise state-owned enterprises in an attempt to improve services and take the burden off the government. in the UK during the 1980s there was a big wave of privatisation things like British Gas British Telecom some of the water companies towards the end of the 80s were spun off and the idea was that private capital could come in and take some of the burden also perhaps do it more efficiently than sort of bloated government structures that was the idea anyway and the other thing is is that if you are not responsible for things like you know British Gas or the water companies whatever then when it comes to budget time, when the Chancellor has to decide who to give money to, then, you know, it's going to be very hard for, let's say, a water company to compete with the NHS or education or defence.

19:08So if you give these industries to other people to look after, it simplifies the job of government. That's the argument anyway. That's the argument. And when it comes to working in practice, sometimes, well, as we see in the UK now with some of our own failing water companies, it doesn't always work out so well. But let's follow Aliko in his acquisition spree, because in 1996, he acquires 40 % of the National Salt Company of Nigeria, which was the only salt refining company in West Africa. Like many privatised industries, he's basically inheriting a monopoly. And then in 1997, he bought into the state-owned National Fertiliser Company of Nigeria.

19:44And the Dangotti Group manufacturing grows rapidly. So he builds flour mills, a pasta factory, a sugar refinery. And very quickly, this refinery was producing 90 % of the national demand for sugar. Pretty monopolistic. Understandably, with that growing business success and wealth, he was also becoming an important figure in Nigeria. Yes, in the mid-1990s, a US diplomatic memo reported on his movements. They noted him as a businessman to watch. They drew attention to his houses, not just in Kano and Lagos, but also in London and Atlanta. And according to a State Department cable unearthed by WikiLeaks, the Nigerian government has been very supportive of Dangote.

20:22We know the company at one time or another held exclusive import rights in sugar cement rice using such advantages to do volume business and undercut competitors. And when they say volume business, is that essentially saying that you produce so much volume of it, you can afford to sell it cheap? So I think what that leak is sort of hinting at or saying is that he's getting favourable treatment from government and that allows him a very competitive advantage and means that he can do business on better terms than some of his competitors and use that monopoly to his advantage. Important, however, to say that Aliko completely denies this.

20:57But it was the election of a certain politician that was going to create a billion dollar break for him and create that fortune. Yes, in 1999, he publicly donated to the winning presidential campaign of General Olosugun Obasanjo, the former military ruler and someone Aliko had known for decades. He donated 120 million naira, which was roughly$1.3 million at the time. And he talks openly about how the president helped him supercharge his business from days after the 1999 election. Yeah, he says Obasanjo called me very early in the morning and says, can we meet today? And the new president asked him why Nigeria couldn't produce cement.

21:34instead of having to import it. And Aliko explained that it was more profitable to trade than to produce, basically because of the lack of infrastructure in the company. You need tons of energy to create cement. And Nigeria did not have a very stable electricity grid network or what have you. So those were some of the problems of doing stuff like that in Nigeria. But he didn't suggest, you know, building a new power grid. He suggested that if imports were restricted, production would become worthwhile to businessmen like him. That's an interesting way of doing trade. So basically, if you hamper imports, you will make it more expensive.

22:09You'll make the manufacturing worse. That's not how trade is supposed to work. So Aliko vowed to build one of the world's largest cement plants if the government restricted the flow of cement through the country's ports. So this is clearly a very cosy relationship he's got with the government here. He put up 319 million US dollars of his own money. There was a bank loan of 470 million and that was enough to build a cement factory. and that was led by the World Bank's International Finance Corporation. World Bank is a big international institution which specialises in financing development in countries that need it.

22:45So that is a lot of money. So both for him to invest, it's personally risky, but also a massive loan from banks. So they obviously trusted him to pull off the project. The chief executive of West African Investment Bank said, Aliko, working with him as a banker is extremely challenging. If you don't know his business at an extremely detailed level, you don't stand a chance. He will unravel you in seconds. He doesn't suffer fools gladly. Interesting insight. However, that growing dominance meant that he was facing up to public criticism, especially for buying up all those former state-owned enterprises.

23:17Yes, he's already bought into two. And in 2000, he made a bid to buy the Bennu Cement Company from the Nigerian government. And soon after that, a group that called themselves Swem Collective put out a full-page advert in a Nigerian national paper attacking him for bidding. Yeah, it didn't name him directly, interestingly enough, but it mentioned a wealthy and influential Kano businessman and criticised how his activities have crippling effects on sugar and salt production in the country. And in 2007, just before the President Obasanjo administration came to an end, refineries were sold to a consortium comprising of Dangote and others in what was seen as a fire sale approach.