Aliko Dangote has always been interested in business since he was young. He borrowed $3,000 from his uncle shortly after graduating from college at the age of 21 to import and sell agricultural commodities in Nigeria, his native country. His small business was an immediate success, and since then, he has developed a multibillion-dollar business empire.
According to Forbes, Dangote is Africa's richest man and the world's richest black person, with a net worth of $13.9 billion. The majority of the entrepreneur's fortune comes from his 85.2 percent stake in Dangote Cement, Sub-Saharan Africa's largest cement producer. What can we learn from someone who has amassed such a tremendous net worth? In this article, we'll look at five things that young African entrepreneur can learn from Aliko Dangote’s success story.
1 Invest in What You Know
After getting a loan of $3,000 from his uncle, Dangote ventured into commodity selling, a business that he was familiar with. Growing up, he used to work in his grandfather’s business of selling household commodities. He used the loan to acquire rice, sugar, and cement at wholesale prices from other countries, then resell them at a substantial markup in Nigeria. Dangote knew how to run a business thanks to his grandfather, and he was able to make a significant profit right away. In the 1990s, the Dangote Group evolved into one of the biggest trading conglomerates operating in the country.
2 Create Companies that Add Value
Dangote identified a clear need in the market for a manufacturing operation that could cover the fundamental demands of a vast and rapidly rising population in Nigeria, where imports accounted for the great majority of consumed commodities. He had a distinct competitive edge when his company shifted from importing and trading commodities to manufacturing flour, pasta, and sugar since he already had a strong distribution network. Dangote’s transition to manufacturing basic commodities in Nigeria was aided by Obasanjo, the country's then-new president, who created policies that supported local industries.
3 Building a Strong Brand
Dangote said that "To thrive in business, you must first establish a brand and then never destroy it." He branded the goods with his name, maybe to capitalize on his reputation as a commodity trader. The brand is built on high-quality items at low prices, which works just as well in Africa as it does anywhere else on the planet, and it is now one of the most recognized brands on the continent.
4 Concentrate on Effective Capital Allocation
Building and maintaining a brand takes a significant amount of money, and if there's one thing Dangote is known for, it's his ability to successfully reinvest profits in his businesses. He has established businesses of a scale that enables his company to sell things at a lower cost than its competitors.
The Dangote Group purchased a cement company from the Nigerian government in 2000, and by 2003, Dangote was ready to expand the business by combining a $479 million loan with $319 million of his own money to commission Sub-Saharan Africa's largest cement factory.
5. Embrace Diversification
Dangote is recognized for dabbling in a variety of sectors. He is exceptional in his ability to expand in a variety of fields while still reinvesting in current companies. Beyond cement, sugar, and flour, the Dangote Group is looking into real estate, telecoms, steel, and oil and gas.
There are definitely some areas where Dangote will not invest, but it appears that nothing is off limits. Dangote's business — and his personal fortune — have exponentially grown as a result of this approach.
Dangote's success story has a wealth of business lessons and investment recommendations for young African entrepreneurs who are still starting. We can expect to hear a lot more from Africa's richest man in the future.