Airline, Bank, Telecom Firm: 6 Top Businesses Aliko Dangote Shut Down Before Building $20bn Refinery
- Dangote’s $20 billion refinery success followed costly setbacks across textiles, flour, telecommunications, aviation and food processing
- Textile closures became his biggest business mistake, affecting thousands of workers and creating substantial pension and gratuity obligations
- Despite abandoning several ventures, Dangote rebuilt his empire through strategic exits, culminating in a refinery valued at about $47.6 billion
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Aliko Dangote’s business empire is one of Africa’s most recognisable, but costly setbacks and abandoned ventures marked the road to building his $20 billion refinery.
His $1.6 billion Dangote Refinery initial public offering has attracted interest from Nigerian retail investors and international institutions, valuing the 700,000-barrel-per-day facility at about $47.6 billion.
Source: Getty Images
Dangote’s fortune is now estimated at $51.3 billion. However, his success was not built on winning investments alone.
Over the decades, Africa’s richest man ventured into textiles, banking, telecommunications, aviation and food processing, with several businesses eventually closed or sold.
Dangote Textiles became his biggest mistake
Dangote’s textile venture was among his most painful setbacks. The group invested in Dangote General Textile Mills and acquired the foreign shareholder in Nigerian Textile Mills, established in 1960 for the Western Region under Chief Obafemi Awolowo.
However, cheap imports, unreliable electricity, high operating costs and competition from Chinese and Indian products made the factories difficult to sustain, according to a report by Business Insider Africa.
“My biggest business mistake was textiles,” Dangote said.
The closures affected nearly 8,000 workers, including 6,920 employees at Nigerian Textile Mills in Ikeja. Many had worked there for between 25 and 30 years, leaving the company with substantial pension and gratuity obligations.
Dangote exits flour business twice
Dangote Flour Mills, established in 1999 and listed in 2008, was another complicated venture.
In 2012, Dangote sold a 65% stake to Tiger Brands for about $200 million. After the South African company struggled and exited, Dangote bought the business back at a lower price.
He later withdrew from the flour industry again, citing foreign-exchange challenges. In 2019, Olam acquired Dangote Flour Mills for ₦120 billion and integrated it into Crown Flour Mills.
Telecom licence failed to produce an operator
Dangote also attempted to enter Nigeria’s rapidly expanding telecommunications industry.
The group reportedly paid about $20 million for a licence and planned to challenge MTN, Glo and Airtel. However, internal disagreements, regulatory delays and the enormous cost of building a nationwide network prevented the project from becoming operational.
Dangote eventually abandoned the venture, missing out on an industry that would become one of Nigeria’s largest.
Tomato factory battled supply shortages
Dangote’s tomato-processing factory opened in Kano in 2016 with the capacity to process 1,200 tonnes of fresh tomatoes daily.
The plant was expected to reduce Nigeria’s dependence on imported tomato paste and provide a reliable market for farmers. Instead, it repeatedly closed because of inadequate supplies and high operating costs.
By 2021, Dangote said farmers were supplying only about 20% of the plant’s capacity and that the investment had barely generated a profit.
Aviation venture proved short-lived
In 2002, Dangote partnered with Sam Iwuajoku and Seaside View Management to establish Executive Jets Services.
The company started VIP charter operations with a nine-seat Hawker Siddeley aircraft and planned to expand into passenger services. Operational difficulties, however, made the aviation venture short-lived.
Source: Getty Images
Liberty Bank sold to settle workers
Dangote ultimately sold Liberty Merchant Bank for ₦1.2 billion to meet obligations arising from the textile closures.
“By the time we sold Liberty, I cashed out N1.2 billion,” he said. “The industry consumed N985 million to pay pensions and gratuities just to get out of the business.”
Dangote said the experience showed that the group had “burnt our fingers”, offering a striking contrast to the refinery success that now defines his industrial empire.
Dangote opens up on biggest business mistake
Legit.ng earlier reported that Africa’s richest man and President of the Dangote Group, Aliko Dangote, has opened up about one of the biggest setbacks he experienced during his decades-long business career.
Dangote described his investment in Nigeria’s textile industry as a major mistake, despite committing billions of naira to build and expand businesses in the sector.
Source: Legit.ng
