Dangote Feared Broke; Plans Massive Lay-offs

There are worrying indications that Nigeria’s richest man, Alhaji Aliko Dangote is facing a financial tempest that has pushed the Forbes-listed billionaire on the brink of bankruptcy as his financial empire suffocates under the weight of crumbling debt and mismanagement.

Forbes magazine reported that Aliko Dangote, whose net worth was estimated at $2.5 billion, is in debt to the tune of over $1.7 billion and facing insolvency as the global financial meltdown hits the Nigerian economy. To weather what appears to be the perfect storm, Huhuonline.com has learnt from close sources that the Dangote group of companies will undertake a massive down-sizing exercise that will involve as many as over 3000 lay-offs.

It was unclear when or where the lay-offs will occur, but a senior employee at the Dangote group told Huhuonline.com that the “right-sizing” exercise will cut across the board of companies which include: Dan sugar, Dan salt, Dan Flour, Benue Cement, Chevron Texaco amongst others. The Nigerian cement king was among dozens of to business executives singled out by Nigeria’s central bank, in its published list of recalcitrant debtors, who have been told to pay up or face arrest and possible assets seizure. The Economic and Financial Crimes Commission (EFCC) is also looking into recovering the loans.

Loans related to Dangote-owned companies so far appear to have amounted to hundreds of millions of dollars and counting as Dangote continues to expand his cement operations with new plants in Nigeria as well as South Africa, Ethiopia, Senegal and Zambia. The Dangote group recently signed two agreements worth $228 million with the Chinese group Sinoma International Engineering.

The first contract involves its subsidiary Dangote Industries Senegal SA and covers construction of a new production plant near Dakar with capacity of 3,000 tonnes per day. The deal is worth $144 million. Under the second contract, for the same amount, Dangote Industries Zambia Ltd will build a similarly sized cement plant in Zambia. Along with the second project, roughly another $324 million will be invested in infrastructure, which will be handled by sub-contractors.

Nigerian Central Bank sources told Huhuonline.com that part of this expansion by the Dangote group has been funded with debt financing from Nigerian banks reportedly to the tune of $1 billion and some of these assets may potentially be in trouble. The Dangote group is also interested in minTing ore: in particular it has positioned itself to obtain coal mining permits in Nigeria, according to sources.