Nigerian Billionaires Aliko Dangote and Abdulsamad Rabiu Lose $5.85 Billion Due to Naira Float
In a recent development, two prominent Nigerian billionaires, Aliko Dangote and Abdulsamad Rabiu, have collectively lost a staggering $5.85 billion, according to the Bloomberg Billionaire Index (BBI). This loss occurred shortly after the Central Bank of Nigeria (CBN) floated the country's currency, resulting in changes in the foreign exchange markets.
The BBI, a daily ranking of the world's wealthiest individuals, provides valuable insights into the net worth analysis of each billionaire. As of June 15, 2023, data from the BBI revealed negative fluctuations in the wealth calculations of Nigerian businessmen.
Aliko Dangote, the Chairman and CEO of the Dangote Group, suffered a substantial loss of approximately $3.12 billion in the latest revision. Similarly, Abdulsamad Rabiu, the CEO of BUA Group, experienced a significant decline of $2.73 billion in his wealth.
The losses occurred within a day of the CBN's decision to float the local currency, the naira. The Cable, a Nigerian newspaper, suggests that the recent naira float may have contributed to fluctuations in the foreign exchange markets, leading to the financial setbacks for these billionaires.
Under the new currency float exchange rate mechanism, the value of the naira is determined by the forces of supply and demand on the foreign exchange market. This means that there will no longer be a fixed exchange rate for trading foreign currency in Nigeria. Consequently, the CBN's direct intervention in the foreign exchange market is eliminated.
The unification of the Nigerian foreign exchange system prompted a swift response from the market. According to information from FMDQ OTC Securities Exchange, the naira closed at N664/dollar on Wednesday at the investors and exporters (I&E) window after fluctuating between N700 and N755 to the US dollar.
The investors and exporters (I&E) window serves as the official exchange rate trading platform in Nigeria. It provides a marketplace for investors, exporters, and end users to trade foreign currency at exchange rates determined by prevailing market conditions.
While the exact reasons behind the billionaires' losses are not explicitly stated, analysts suggest that the changes in the foreign exchange markets resulting from the naira float may have played a role in their diminishing fortunes.
As the Nigerian business landscape continues to adjust to the new foreign exchange system, market participants, including billionaires like Dangote and Rabiu, will need to navigate the evolving economic environment to mitigate potential financial risks and capitalize on emerging opportunities.
