A few weeks ago, the Governor of the Central Bank of Nigeria, Godwin Emefiele, announced a nearly 10% devaluation of the Naira, Nigeria’s currency, after admitting that a plunge in world oil prices and dwindling dollar reserves were making it difficult to defend the value of the currency. The Naira is now trading at N187 to $1, compared to N165 in November. In dollar terms, the devaluation has knocked more than $40 billion off the value of Nigeria’s economy.
Aliko Dangote, Africa’s richest man, is the biggest loser among Nigeria’s richest people as the Naira’s slump, coupled with falling stock prices, has erased more than $7.8 billion of his fortune since February, when FORBES locked in the values for its annual ranking of the World’s Billionaires. Dangote was worth $25 billion at the time; as of market close on Tuesday, he’s worth $17.2 billion. More than half of the drop in his fortune has happened since early November. As of Nov. 7, Dangote was worth $21.6 billion, $4.4 billion more than now.
Here’s why: The last few weeks have been a bit of a disaster for many companies listed on the Nigerian Stock Exchange. Several blue-chip stocks such as Dangote Cement, Zenith Bank, Transcorp and United Bank of Africa among several others have hit one-year-lows as a result of the fall in oil prices, a general uncertainty regarding the 2015 general elections, Central Bank regulatory headwinds, and weak earnings from large cap companies. These have all contributed toward putting naira-denominated assets including equities at risk.
