Dangote Got A Fistful Of Dollars In Nigerian Currency Squeeze

As Nigeria grapples with a foreign exchange crisis, one person stands out in the scramble to obtain hard currency: Aliko Dangote, Africa’s richest man.

When the government restricted the supply of dollars in June 2015 to prop up the value of the Nigerian naira, firms owned by Dangote landed a healthy share of dollars available at the cheap official rate, a study by Reuters shows.

Reuters examined foreign currency transactions made during an 11-week period in March to May this year. Over that time, Dangote businesses were able to buy at least $161 million in hard currency from the central bank. That was around nine percent of all the hard currency the bank sold over the period.
In a single week in March, one dollar in every eight went to Dangote companies. There is not enough data to see how that stacks up with the companies’ share of foreign trade.

Compared with buying dollars on the more expensive unofficial market, though, Dangote companies benefited to the tune of about $100 million.

The wrangling for dollars highlights Dangote’s pivotal role as Africa’s biggest economy tries to diversify away from oil.

Over the past year, Nigeria pegged its currency, the naira, to the U.S. dollar at an official rate of 197-199 naira. The central bank doled out dollars at the official rate to companies it deemed strategic to the Nigerian economy. Until June 20, when the bank abandoned the peg, anyone else had to pay a lot more on the black market.

Small businesses complained that the foreign exchange restrictions were forcing them out of business. Frank Jacobs, president of the Manufacturers’ Association of Nigeria, said that the majority of manufacturers – 2,000 of them – had been unable to source raw materials because they could not obtain dollars to pay for imports. Up to 100 firms either shut completely or cut production, he said. “The large companies have better clout.”

Dangote’s purchases were entirely legal, and some economists say the 59-year-old deserved such special treatment because he has promised to build a much-needed oil refinery. He also has a track record helping Nigeria become more self-sufficient in cement and food.

[By Ulf Laessing and and Himanshu Ojha via Reuters]