Build for the world; the antidote for African Poverty

~Why Aliko Dangote’s Wealth fell over the years, what is happening to us all, and how you can get into wealth if you ever plan to be wealthy ~

_____

I was in an African CEOs group, where someone made a post, a screenshot that shows the decline in wealth of Africa’s richest man, over the period of 9 years, dating from 2011 to 2020

However, the first question that came to mind was this:

Why did Aliko Dangote remain first on the list, for 9 consecutive years, despite the fall?

This wasn’t a question of envy, but a question that begged to have an explanation around the “If”.

If his wealth was declining, why was there none other billionaires, overtaking him? Is this a general pattern?

If his wealth was declining, how was he losing money?

The next big question on my mind was, if the billionaire was Falling in wealth in billions, what is happening to the other Africans?

Are we all getting poorer by the day?

.

Listen, you need to read this if you’ve never or ever read a Financial post, so you can understand the future you hold or the one you have to work towards, for the future generation.

.

So, let’s start here:

1. Networth Determination; Does everyone have a Networth?

The answer is YES, everyone has a Networth.

Businessinsider explains networth, as “what you’re left with after subtracting your liabilities (what you owe) from your assets (what you own)”

That sounds simple, right?

Is your networth your income? NO

Your income is what you make from what you do, your business, etc, your networth is what you have tied down as an asset plus what you keep from what you make.

So it is important to note that a high income doesn’t necessarily translate to high net worth, you could have a higher standard of life that takes much from you and make you keep less

Your networth is a factor of

• What you keep (savings, depending on where you saved)
• What you own without debt (Private Asset Valuation of the assets DECLARED)
• What you invest in without depreciation

How exactly is the networth of a billionaire determined, since they have many income Sources?

Research shows that thorough and continuous interactions with over 50 reporters and investigators from around 20 countries amount to the results we see published. Each and every move that a billionaire takes, the deals negotiated, assets bought or sold, causes they donate to. All these are looked upon to reach a solid valuation of that person’s listed assets.

.

2. Your Networth Vs Country GDP and GDP Per Capita

We might not be able to find relevant data to show the average networth of a Nigerian family, however, relating it with the GDP per Capita.

In simple terms, the GDP Measures a country’s total output, to determine the Real GDP, the GDP is divided by population number to determine personal income, it is then adjusted for inflation and adjusted for purchasing power parity.

As of 2017, the GDP per Capita of Nigeria was $5,887 which was ranking 131 globally and and is at 34%, compared to the world standard of $ 17,100. It’s good to note that over 76 countries have rates higher than the world standard.

Image source: Worldometer, 2020

Meanwhile, an average GDP per Capita in UAE is $74,035 while that in the USA is $59, 928.

Since we are said to be close to China, why not see what that of China looks like?

It’s amazing to see that Hong Kong has a GDP per Capita of $61, 671

Some persons have argued that WEALTH, not just GDP, should be used to determine a Country’s standard, however, still looking at that scale, here is what we have

Nigeria as of 2019, Ranks 50th on the Global Scale of Wealth

Image Source: Wikipedia, 2020

The average American family has a Networth of $97,290 that is looking at the middle class. (It’s good to note that 50% will have higher than this, while 50% will have lower than this).

Now you shouldn’t wonder anymore, on the reasons for having Nigeria as the dumpsite for inferior quality products. It’s simple, The Average Nigerian can’t afford products of the quality standard made for those other countries, the Nigerian prefers quantity to quality, hence the level of decadence in the standard of living

Rather than us Doing much more to push up the standards, attain more income, get more productive, we result in seeking cheaper things and the ruling quarters also resolve to Share pallatives.

I once saw a made FOR Nigeria generator, and I understood why we have such.

The rich get richer by having the money of the masses who are mostly consumers or poor producers, the poor gets poorer by receiving what the rich has made available and paying for it.

To make it worse, the poor saves in the bank for the rich to borrow from, while Inflation of close to 12% makes him poorer since the money is not being used.

However, that is not my focus. Let’s dig a bit deeper.

Does the wealth of a Billionaire relate to the GDP? Answer is YES

A Research made by Aprepim revealed that “The billionaires' wealth is strongly correlated to the country’s GDP (r = 0.92, R2 = 0.85)”.

Note that insignificance analysis, Values higher than 0.05, are considered significant.

So, these values are quite strong, which means the Bigger the GDP of a Country, the Higher the wealth of a Billionaire becomes.

However, does it have a direct correlation with GDP per Capita Income? The research arguably says No stating GDP per capita (r = 0.10, R2 = 0.01) in Relationship with billionaire’s wealth

But I’ll argue this out.

3. Comparing Aliko Dangote’s Wealth Trend and Nigeria’s GDP Per Capita income

Image: Nigeria’s Per Capita Trend, 2011–2020

can you spot the trend?

The major factor at the decline of Dangote's wealth is as follows, from my understanding

1.

Over 50% of Dangote's business serves the poor masses in Nigeria and Africa, as his Investments and Businesses are in

Food

Cement etc

Which makes Dangote Operate in an aspect of the economy that only provides less than 40% of Nigeria's GDP, meanwhile

So far also, the only basic Commodity Dangote exports is Cement and that is to fellow African Countries

The Buying prices are Fixed on Buying power of the people

In a business that serves the mass market, you can’t set prices above-average purchasing power.

And if you take a deep study of the GDP and Per Capita Income growth of Nigeria and other African countries, you'll see a similarity between Dangote's wealth drop and the general populace wealth drop

Now, if you check the Economic growth rate of the African countries in the timeline of 2011 to 2019

Yes there is overall growth, but per-capita income isn’t increasing at any higher pace that could afford wealth increase

A check of other Billionaires in Africa and the Per Capita Income Trend growth or recline shows a similar pattern

It is also good to note that the Industries played in, is a major factor

However, this is the bottom line:

A wealthy economy will breed wealthy people, a poor economy, will only also breed poor people, or get those who are Wealthy to start becoming poor or reclining in Wealth

Why?

The Billionaire’s wealth is tied to his or her holdings in companies.

The companies valuation, are dependent on tractions, sales, Investments, and in places like Europe, Perception of people about the company and all these are affected by inflation and fluctuating currencies

As of 2014, you’ll need to make #120 to have $1

Now in 2020, you must make 300% more to, have $1

Yet you and your worth are being matched globally against the $ US

If all the company does is to sell locally within the country, and makes it’s money in Local currency, especially in Africa

So here are the reasons why Dangote’s wealth kept falling

1. Networth is measured in Dollars, hence what you earn in Nigerian currency and other African currencies, are measured and converted into Dollars
2. He’s serving only poor people (the African mass), only that he’s doing that at a larger volume
3. Over 50% of his holdings are in Cement and food, a bit in fertilizer, which is only exported to African countries, which are fellow poor nations and can’t buy at any level of prices higher than what it’s set right now. A very good review of the 2019 report of Dangote Cements shed light on this

1. As long as Dangote’s only products are within Africa, and except he comes up with a new set of Products, which will substitute already imported ones, his wealth will remain the same just increasing or decreasing at Minor margins
2. I opine that is why he went into the refinery, but most importantly, for Fertilizer, gas and other major products which can substitute already Expensively imported products, hence getting into a very new market entirely, new market share, new flow of income. The refinery will my several levels of percentage increase his wealth

Now, what is your take home as an Individual, an Intending Entrepreneur or an Existing one

1. If you are a salary earner, the country currency instability already places you at a disadvantage on a global level. The Inflation rate is also not helpful. In simple terms, YOU ARE GETTING POORER DAILY.
2. If you’re a teacher, get online, teach language to an Igbo, Hausa etc Person living abroad, that wants to learn your language. You are an accountant, become a Virtual book keeper for a foreign small company. You’ll be surprised that such small company you call small, can retain you for $500 — $1,000 per month. Do you want help? Seek me out.
3. Don’t be ignorant by placing a bulk of your funds in savings accounts, even the Wealthy ones are dropping in wealth, despite Investment, you need to be wise. Find entities, activities, platforms, that will make you earn in forex. You can invest in Nigerian Businesses servicing the global space, in Service or products.
4. As an average entrepreneur in Nigeria, especially if you don’t have access to serve the upper middle class and upper class, your company is already hindered by buying capacity or purchasing power of the people you serve, your company can’t be richer than the quality and the quantity of the market you serve and you as the owner and shareholder can’t be richer than that.
5. What should you do? Build products that can be exported, build services at global Standard that will be patronized by those who have Higher GDP per Capita, countries which have higher networth per family
6. Explore the Possibilities of trade with these countries. Check what you can sell to Hong Kong, check what you can sell to the USA, search for forex paying markets. Earning money in Foreign currency at the real standard global value for your services, will place you afloat of Nigeria’s currency challenges

The only leveler against poverty in Africa is Being producers and exporters

That’s why I made a statement last week somewhere that

• You can’t be richer than the economy of the country you are serving

And

• Individual wealth in the presence of cumulative public poverty will always result in your own decline in wealth*

If Dangote’s wealth is reducing, you as a mid-level earner or business owner, are getting much more impoverished.

Build for the world

Get out of the rat race.

#business #poverty #Globaleconomics #career #finance