Dangote Group’s strategic FX moves despite market challenges
By Esther Agbo
In a recent Central Bank of Nigeria (CBN) Retail Dutch Auction, subsidiaries of the Dangote Group secured a substantial $105.33 million in foreign exchange (FX) allocations, a move that underscores the conglomerate’s strategic manoeuvring in an increasingly volatile economic landscape.
This acquisition accounts for approximately 13 percent of the total $876.26 million distributed by the CBN across qualified banks, highlighting the significant role Dangote’s businesses continue to play in Nigeria’s industrial sector.
The FX allocations were facilitated primarily through Zenith Bank, Access Bank, Providus Bank, Union Bank, and Sterling Bank, four of which rank among the top 10 banks in securing FX from the CBN.
These banks were instrumental in ensuring that the Dangote Group could maintain its operational efficiency by enabling the importation of essential raw materials, spare parts, and equipment critical to its diverse industrial operations.
Among the Dangote Group’s subsidiaries, Dangote Sugar Refinery emerged as the largest recipient, securing $87.42 million for the importation of Brazilian raw cane sugar, a key input in its production processes. This included a notable transaction for the import of 16,000 metric tons of raw sugar, valued at $10.96 million.
Dangote Cement PLC, another major player in the group, obtained $9.03 million, primarily for the procurement of spare parts for its cement plant machinery.
Dangote Oil & Gas Company Limited received $5.33 million, with significant portions allocated for the purchase of gasoil and low-pour fuel oil, vital for energy production within its industrial framework. Smaller yet crucial allocations were directed towards other subsidiaries, including Dangote Industries Limited was allocated $2.5 million, Dangote Agro Sacks Limited received $941,600.96, Dangote Sinotruk West Africa Limited, $7,161.50, and Dangote Coal Mines Ltd got $104,568.68, with the funds used largely for importing spare parts essential for various manufacturing and industrial processes.
This latest round of FX acquisitions comes at a challenging time for the Dangote Group, which saw a significant decline in market capitalization in July 2024.
The conglomerate’s listed subsidiaries on the Nigerian Exchange (NGX), Dangote Cement, Dangote Sugar Refinery, and NASCON Allied Industries experienced double-digit share price drops, resulting in a combined market cap loss of approximately N1.21 trillion.
The market downturn also had a notable impact on the personal fortune of Aliko Dangote, Africa’s richest man. His net worth dropped from $14.8 billion at the start of July to $13.6 billion by the month’s end, reflecting a $1.02 trillion hit largely due to declines in the share prices of his publicly quoted companies.
Amid these financial headwinds, the Dangote Group continues to focus on its long-term industrial strategy, leveraging crucial FX allocations to sustain its vast operations.
The Federal Executive Council’s recent approval of a policy to sell crude oil to Dangote Refinery and other upcoming refineries in Naira rather than dollars may further stabilize both fuel prices and the naira-dollar exchange rate, providing some relief and potential upside for the group’s operations in the near future.
