EXPLAINER: Why Dangote is only African on Bloomberg’s 100 billionaires list

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To the surprise of many Nigerians and Africans, only one man from the continent made it onto Bloomberg’s Billionaires Index list released recently.

Bloomberg, a private international financial, data and media company headquartered in New York, said only Aliko Dangote had met its criteria to be listed in the latest ‘Bloomberg Billionaires Index’.

The Bloomberg Billionaires Index compiles rankings of the richest people in the world.

According to Bloomberg’s latest ranking, Aliko Dangote Group Chairman Aliko Dangote is now the world’s 63rd billionaire.

However, Nigerians and other Africans wonder why Dangote is the only person to make the list despite a large number of billionaires that the continent boasts.

Africa has around 18 billionaires spread across the eastern, western, southern and northern parts of the continent.

In its list of billionaires published in February this year, Forbes magazine said the 18 billionaires were now worth around $84.9 billion, which is a 15% increase from a year ago and the most big count since 2015.

Reasons for their rising wealth include soaring stock prices, which have driven the tycoons’ fortunes soaring, as demand for products and services ranging from telecommunications to luxury goods has increased.

Although Dangote is the richest man in Africa, there are other high-ranking billionaires on the continent, including Johann Rupert (South Africa) whose main investments are in the fashion and clothing industry. retail, as well as Nicki Oppenheimer (another South African). which invests in the mining and metallurgical industry.

Others are Nassef Sawiris (Egypt), whose investments are in the construction sector; Abdulsamad Rabiu (Nigeria) with investments in cement and sugar; and Mike Adenuga (Nigeria), with investments in telecommunications as well as the oil and gas sector, among many other Nigerians.

Therefore, Daily Trust on Sunday verifications have shown that four major factors were taken into account by Bloomberg in developing the ranking, namely; personal net worth, the value of publicly traded companies, transparency in disclosures and up-to-date records of a company’s activities.

Net value

One of the criteria used in the ranking was the calculation of the total net worth of the individual.

In the calculation, Daily Trust on Sunday observed that the profile of each billionaire has a detailed analysis of how their wealth is accounted for.

According to Bloomberg, “The index is a dynamic measure of personal wealth based on changes in markets, the economy and reports from Bloomberg. Each net worth is updated each business day after the close of business in New York. Investments in listed companies are valued using the most recent closing share price. Valuations are converted to US dollars at current exchange rates.

This is much like the value of private companies adjusts daily based on market movements for peer companies or by applying the market movement of a relevant sector index.

The criteria used to select comparable companies were also based on industry and size of closely held assets.

The international media conglomerate further said that the net worth calculations include income from dividends paid and proceeds from the sale of public and restricted stocks.

Taxes are deducted based on prevailing tax rates on income, dividends, and capital gains in the billionaire’s country of residence. Taxes are applied at the higher rate unless there is evidence to support a lower percentage, in which case an explanation is given in the net worth summary. For calculations of cash and other investable assets, a hybrid return based on holdings of cash, government bonds, equities and commodities is applied.

Value of listed companies

Another factor in determining who made the list, as observed Daily Trust on Sunday was the value of listed companies.

For example, in the case of Aliko Dangote, Dangote Cement and Sugar are listed on the Nigerian Stock Exchange (NSE) and trade daily.

In its explanation, Bloomberg said: “Where ownership of closely held assets cannot be verified, they are not included in calculations. The specific valuation methodology for each private company is included in the net worth analysis section of a billionaire profile.

“Additional details included in the ratings for each asset are available to subscribers of the Bloomberg professional service.”

He added that “a standard liquidity discount of 5% is applied to the most tightly held companies where assets may be difficult to sell. Where a different percentage is used, an explanation is given. No liquidity discount is applied to the values ​​of public participations.

In some cases, a country risk haircut is also applied based on the concentration of a person’s assets and the ease of selling them in a given geographic area. A country’s risk is assessed based on Standard & Poor’s sovereign debt ratings.

“If a billionaire has pledged shares he owns in a public company, the value of those shares or the value of a loan taken out against them is removed from the net worth calculation. If reliable information can be obtained on the final use of these borrowed funds, this value is reintroduced in the calculation.

“Hedge fund firms are valued using the average market capitalization to assets under management ratios of the most comparable exchange-traded funds. Commission income is not taken into account because it cannot be verified in a uniform way. Personal funds invested with outside capital are not included in the calculation.

Transparency in disclosures

A closer look at the criteria used by Bloomberg showed that the rankings were also based on the transparency of corporate ownership claims by individual billionaires.

According to the company, this is because family members often own some of a billionaire’s assets.

He explained that “such transfers do not change the nature of who ultimately controls the wealth. Accordingly, Bloomberg News operates under the rule that all billionaire fortunes are inherently family fortunes and attribute family fortunes to founders or family members who are determined to have direct control over the assets.

“When individual stakes can be verified and adult family members play an active role in a business, value is credited to each individual,” accordingly.

“Every billionaire, or a representative, has the opportunity to answer questions regarding the calculation of net worth, including assets and liabilities, because the majority of the individual’s wealth is held in publicly traded companies and / or personal asset valuations can be verified. . Billionaires or their representatives provide feedback on net worth calculations.

Additionally, Bloomberg argued that the majority of the individual’s wealth is held in publicly traded companies or in private operations that publish transparent information.

“The billionaire may control listed assets through a holding company where ownership is not fully transparent, or have partnerships and structures that require calculated assumptions of ownership,” he said. .

Updating company records

The Bloomberg Billionaire Index also assessed up-to-date records of companies owned by these billionaires.

Bloomberg said each net worth calculation is updated every working day at 5:30 p.m. at its headquarters in New York.

He added that equity interests in publicly traded companies are valued using the most recent closing price of the stock, while valuations are converted to US dollars at current exchange rates.

Background

Africa’s richest man and chairman of the Aliko Dangote Group, Aliko Dangote, according to Bloomberg’s latest ranking, is now the 63rd richest man in the world.

According to the ranking, Tesla CEO Elon Musk remains the richest man in the world.

The other billionaires on the list are Jeff Bezos, Bernard Arnault, Bill Gates, Gautam Adani, Larry Page, Sergey Brin, Warren Buffett, Steve Ballmer and Larry Ellison.

Dangote, who rose 37 places on Bloomberg’s recent billionaires list, is said to be worth $20.2 billion.

It owns 85% of Dangote Cement, a listed company, through a holding company.

Dangote Cement produces 48.6 million metric tons per year, with operations in 10 countries across Africa currently.

Similarly, Dangote Fertilizer Plant in Nigeria commenced operations in mid-2021, while Dangote Refinery has been under construction since 2016 and is expected to be one of the largest oil refineries in the world once completed by the end of 2022, as planned by the company.

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