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Naira Crisis Costs Aliko Dangote $8.6 Billion, Hits Billionaires Hard

Nigeria’s central bank’s rate hikes and clearing of dollar backlogs have not stopped the naira’s devaluation, indicating insufficient efforts. The country’s billionaires have lost billions of dollars as a result of the prolonged recession.

Mike Adenuga, a telecoms and oil tycoon, has weathered the storm rather well, losing only $300 million, or less than 5% of his net worth as of January 30th. Aliko Dangote, Africa’s richest man and Nigeria’s wealthiest individual, has lost $8.6 billion since Jan. 30, from $23.3 billion to $14.7 billion, according to the Bloomberg Billionaires Index.

Aliko Dangote’s fortune has now reversed early gains, which were driven by good performance in his publicly traded enterprises. The fall is directly related to the depreciation of the Nigerian naira.

Dangote’s holdings in Dangote Cement, Dangote Sugar, Nascon Allied Industries, and United Bank for Africa experienced initial profits in January, but these have since been reversed due to the naira’s weakening. These assets, all denominated in naira, have lost value when converted to US dollars.

Insufficient dollar supply in Nigeria hinders the central bank’s efforts to increase confidence in the currency. As a result, Dangote’s year-to-date wealth loss has totaled $354 million, dropping him to the 139th richest person in the world.

Despite the fall, Dangote Fertilizer, Dangote’s most valuable privately held asset, remains valued at $5.15 billion. This, along with Dangote Cement (now valued at $6.7 billion), are his two greatest interests.

While the Nigerian government has taken stringent measures to fix the naira’s exchange rate, the only major result has been the consolidation of foreign exchange rates among various boards. The government increased energy rates from N68 ($0.045) to N225 ($0.15) per kilowatt-hour for 15% of urban consumers, along with rising fuel prices. These policies, however, continue to exacerbate inflationary pressure.

Nigeria’s inflation rate rose for the 16th consecutive month in April, owing to a threefold increase in electricity bills and greater transportation costs. This acceleration increases the likelihood of another interest rate hike by the central bank’s monetary policy committee next week.

To slow price increases and strengthen the naira, the committee has already raised borrowing fees to a record high. The National Bureau of Statistics said that the inflation rate increased to 33.7 percent in April from 33.2 percent in March. This percentage was lower than the median expectation of 34.2 percent in a Bloomberg poll of eight economists.

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