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The brand would be built on high-quality products at affordable prices -- which is something
that works as well in Africa as it does everywhere else in the world -- and is now one of the
most recognizable brands on the continent.
4. Focus on strong capital allocation
Building and maintaining a brand requires substantial investment. And if there's one thing
that stands out about Dangote, it's his ability to successfully plow money back into his
businesses. He has created the economies of scale that allow his company to sell products at
cheaper prices than his competitors do. That's something many CEOs attempt to do but only a
handful do well. Warren Buffett and Jeff Bezos are two names that come to mind.
In 2000, the Dangote Group acquired a cement company from the Nigerian government, 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 the largest cement plant in sub-Saharan
Africa. Today, Dangote Cement Plc is valued at roughly $14 billion, which makes it the
largest company on the Nigerian Stock Exchange and accounts for 25% of the exchange by
market cap.
The successful reinvestment into Dangote companies is a consistent theme. It's also happened
by way of multiple expansions at Dangote Sugar, which has grown to become the second
largest sugar refinery in the world. The company's distribution network has grown from 600
trucks to over 1,500 since the late 1990s.
5. Embrace optionality
However, along with reinvesting into current business, what makes companies such as the
Dangote Group special is their ability to move in multiple directions. The Dangote Group has
ventured beyond its initial focus of cement, sugar, and flour and into real estate, telecom,
steel, and oil and gas.
There are probably sectors Dangote won't move into, but it seems as if nothing is off limits.
That approach is what has allowed Dangote's business -- and his net worth -- to grow so
incredibly. Today, Dangote Group is a massive conglomerate generating $3 billion in revenue
annually.
In Africa, Dangote Group is viewed as part folk hero -- for reinvesting in and creating jobs on
the continent -- and part villain -- as Dangote himself came from wealth and has potentially
leveraged government relationships to establish unfair advantages. Dangote is a polarizing
figure, but his story provides plenty of interesting business insights and investment advice.
And since he's just 58 years old, we can expect to hear plenty more from Africa's richest
man.
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AUTHOR
Dave Koppenheffer
(TMFPeoplesInvest)
Dave Koppenheffer, is a contributor for the Motley Fool's financial sector. And much like Dwayne "The Rock" Johnson,
when he speaks, he speaks with an earnest vibe and an earnest energy.
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