A few weeks
ago, Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, announced
a nearly 10 per cent devaluation of the naira, Nigeria’s currency, after
admitting that a plunge in world oil prices and dwindling dollar reserves were
making it difficult to defend the value of the currency. The naira is now
trading at N187 to $1 officially, compared to N165 in November. In the parallel
market, the naira traded at N218 for a dollar Monday. In dollar terms, the
devaluation has knocked more than $40 billion off the value of Nigeria’s
economy.
Aliko
Dangote, Africa’s richest man, is the biggest loser among Nigeria’s richest
people as the Naira’s slump, coupled with falling stock prices, have erased
more than $7.8 billion of his fortune since February, when FORBES locked in the
values for its annual ranking of the world’s billionaires. Dangote was worth
$25 billion at the time; but at the close of market last Tuesday, his networth
had dropped to $17.2 billion. More than half of the drop in his fortune
has happened since early November. As of November 7, Dangote was worth $21.6
billion, $4.4 billion more than now.
This is
because the last few weeks have been a bit of a disaster for many companies
listed on the Nigerian Stock Exchange (NSE). Several blue-chip stocks such as
Dangote Cement, Zenith Bank, Transcorp and United Bank for Africa among several
others have hit one-year-lows as a result of the fall in oil prices, a general
uncertainty regarding the 2015 general election, Central Bank regulatory headwinds,
and weak earnings from large cap companies. These have all contributed towards
putting naira-denominated assets including equities at risk.
Speaking on
the fall in the networth of stocks, a financial analyst, Ugodre Obi-Chukwu,
noted that, “This is whipping up negative market sentiments as foreign and
institutional investors such as pension funds who hold equity stakes in
companies (due to their large cap and liquidity status) have mostly fled their
positions”. Obi-Chukwu is also the publisher of Nairametrics
<http://nairametrics.com/>, a website that provides analysis and opinion
about Nigerian stocks, investing, personal finance and the economy.
Dangote
Cement, Africa’s largest manufacturer of cement, has shed close to 40 per cent
of its market value between the beginning of November and now. The company’s
stock, which was trading at N215 ($1.15) at the beginning of November, is now
valued at N165 (88 cents) as at yesterday. At the beginning of November,
Dangote’s stake in the cement manufacturer was valued at more than $18 billion.
It is now valued at $13.2 billion.
Dangote has
also lost more than $230 million in paper value within the same period on his
stakes in publicly-traded Dangote Sugar, Dangote Flour, and National Salt
Company of Nigeria.
Between
November (when FORBES published the list of Africa’s 50 richest people and
today) Dangote has lost more than $4 billion in his net worth.
After
Dangote, the second biggest loser among Nigeria’s ultra-rich is Tony Elumelu,
the Chairman of Heirs Holdings, an investment company. Heirs Holdings, which is
wholly-owned by Elumelu, is the controlling shareholder in Transcorp, a
publicly-listed conglomerate with interests in power production, hotels and
agriculture. Transcorp’s current market capitalisation is now $700 million,
down from $1.4 billion at the beginning of November. Heirs Holdings has lost an
estimated $345 million in paper value on Transcorp, and its stake in the
company as at yesterday is now worth roughly $400 million, down from $700
million.
Elumelu’s
investments in other listed companies like UBA, Africa Prudential PLC and UBA
Capital have shed a little over $27 million in value.
Other big
losers include Nigerian multi-millionaire banker Jim Ovia, a co-founder of
Zenith Bank. The value of his stake in the financial services provider is $240
million as of late yesterday, down from more than $350 million last month. He
owns a 9 per cent stake in the bank.
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