Forbes: billionaire on the brink?

Forbes: billionaire on the brink?
Published: 20 August 2009

Aliko Dangote, Nigeria’s first billionaire and richest man (net worth: $2.5 billion), has faced down bitter rivals like Femi Otedola, one-time billionaire who fell off Forbes’ billionaires list in late March, and intransigent regulators who slowed the process of taking public his cement company. Now he is up against the biggest threat of all: insolvency as the global recession rocks Nigeria.

On Wednesday, Dangote was one of dozens of executives singled out by Nigeria’s central bank, which has demanded repayment of $4.7 billion of loans from debtors; Otedola is also on the list. Nigeria’s economic and financial crimes commission (EFCC) is also looking into recovering the loans. In fact, the anti-corruption body has been investigating Nigerian banks on charges of potential money laundering, among others, since 2008.

Last week, managers at five of Nigeria’s largest banks – Intercontinental, Oceanic, Afribank, Finbank and Union– were sacked, and government bailout funds extended to the banks to keep them solvent; other bank executives are facing arrest.

Loans related to Dangote-owned entities so far appear to have amounted to as much as $80 million. But his debts could be revealed to be greater in coming days as the central bank continues its investigations into over a dozen additional banks. Over the past year, Dangote has been investing heavily in expanding cement operations with new plants across Nigeria, as well as South Africa and Ethiopia. Part of the expansion has been funded with debt financing reportedly to the tune of $1 billion. Some of these assets may potentially be in trouble.

Government officials gave the debtors a week to settle up or face arrest and asset seizure. Earlier this month, Otedola’s African Petroleum Plc paid the $35 million it owed Access Bank Plc.; he is on the line for up to $100 million more.

Dangote began his career as trader at age 21 with a loan from his uncle; he built his Dangote Group into a conglomerate with interests in sugar, flour milling, salt processing, cement manufacturing, textiles, real estate, and oil and gas. Along the way, Dangote has enjoyed cozy relations with powerful politicians; he was closely linked to Nigeria’s former president Olusegun Obasanjo and sits on varies government and quasi-government bodies. The 52-year-old was recently unanimously elected president of the Nigeria Stock Exchange.