In May this year, President Buhari refused any argument supporting devaluation of the naira. This policy affected many companies, including Dangote group.
At a meeting with members of the Council of Retired Federal Permanent Secretaries, the president told them he was not buying into the logic or benefits that such an action would bring.
That decision lead to serious economic hemorrhage as many international companies left the country. Local producing giants also suffered major setbacks.
Essentially, a country undertakes currency devaluation to boost export or make its goods cheaper, thereby earning more foreign exchange; shrink trade deficit; and reduce its sovereign debt burden.
Dangote group was no spared in the Government’s decision to devalue the naira. After huge loses, President Buhari, faced with pitfall of his decision, allowed the naira to float.
It sent shockwaves across the country.
Let’s back up a little.
Dangote group is building a refinery, petrochemical and fertilizer plants in Lagos State. These mega projects require foreign exchange.
On the project, Dangote stated that: “Mechanical completion will be end of 2018 but we will start producing in 2019.”
“This site is the biggest site in the world, the refinery is the biggest single refinery in the world.
“The petrochemicals is 13 times bigger than Eleme petrochemicals while the fertilizer plant will be 10 times bigger than former National Fertilizer Company.
“The project, with the $2 billion fertilizer unit was funded through loans, export credit agencies and our own equity, Dangote said.
According to Aliko Dangote, when the CBN scrapped the dual exchange rate policy, “We lost 50 billion naira. If the president had heeded to advice and had done this earlier on, it wouldn’t have been this bad.
“We have been badly affected like any other company. When you are talking about 20 billion dollars’ worth of projects, what is 161 million? One-hundred-and-sixty-one million dollars is what I need in just six weeks.”