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“I Knew That We Were Really In Trouble”

A torrid time when Aliko Dangote started his business taught the richest man in Africa not to be frightened of anything.

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Aliko Dangote is a man revered for his remarkable achievements in business and his passion for his country. As I wait patiently in his office at Union Marble House, in the plush Lagos suburb of Ikoyi, an inscribed plaque catches my eye. Before I can read it, I hear a man’s voice.

“Nothing is impossible. That is my mantra in life. No matter what you go through, just remember, nothing is impossible for you to achieve and you will overcome it.”

Dangote, Africa’s richest man and the founder of Dangote Group, is dressed in a blue suit and purple tie. His demeanor is warm and welcoming, his gaze attentive. It is hard to believe this soft-spoken man is worth an estimated $14.4 billion, according to FORBES. Despite this wealth, the plaque in his office serves as a reminder of a day he almost lost everything. It all began with a wrong soil test.

“We were importing cement and we had an import terminal in Lagos and Port Harcourt. The government gave incentives to people who will make Nigeria self-sufficient in cement and so we decided to take advantage of the opportunity and build a cement plant. At the time, the entire production of Nigeria was less than two million tons but we decided that we were going to go ahead and build a [plant with] five million tons capacity,” says Dangote.

Founder and Chief Executive of the Dangote Group Aliko Dangote gestures during an interview with Reuters in his office in Lagos, June 13, 2012. Picture taken June 13, 2012 REUTERS/Akintunde Akinleye (NIGERIA – Tags: BUSINESS) – RTR37GOU

“So we brought in a contractor and we asked them to do the soil test and also the foundation test. Then they gave us the wrong soil test. Normally the northern part of Nigeria has very hard ground. But they came back and said we just needed a shallow foundation with a maximum of two meters. So the drawing and everything was done based on a two-meter foundation. As soon as we were three months into the job we realized it was more than this.”

This marked the beginning of a long battle to salvage the multi-million-dollar project. The group had hedged everything on the cement factory. In order to stay ahead of the competition, Dangote decided not to do a proper feasibility study so as to avoid attention to the new project. That decision came at a high cost.

“So now we had to go and do piling. We had to stop and change all the drawings and all of a sudden we were faced with 1,000 piles to be built and there were not enough rigs in Nigeria. So we had to order new rigs and even buy rigs for some of the contractors,” says Dangote.

To make matters worse, Dangote needed to finance the project.

“We needed to raise $480 million but the problem was 90 percent of the banks at the time had a market capital of only $20 million. In addition, there were no long-term loans, only short-term loans for about 90 days, so you could tell the challenge we faced. The project stopped, we had to change the drawings and we could not borrow too much money in the system. Borrowing short term and investing in a long-term business was so difficult.”

Another problem was infrastructure.

“We realized that we had to build a gas pipeline because the government who promised to build the pipeline in 1978 had actually not done anything, so we had to construct 92 kilometers of a gas pipeline. The water table was very bad in the area so we had to build a dam and over 100 houses because there was nothing there, so the challenges were coming one by one.”

For Dangote, failure was not an option.

“In my office, I had the project drawings on my wall but I knew that once this project fails the group is gone and that is what really kept me going. It was a major project for us because our size, compared to a project of half a billion then, was big money for us.”

Eventually, there was light at the end of the tunnel. The group received a much-needed lifeline in the form of a $479-million loan from a consortium of banks, led by the International Finance Corporation (IFC). But the storm hadn’t abated yet.

“The most challenging was when we had the cost overrun. Now we had finished the cement factory and the factory was not working and that was really when I went from black to red. I knew that we were really in trouble. But we were very adamant and we persevered. We had challenges for over a year or so and the factory was working on and off,” he says.

That was in 2003. Since then, the Dangote Group has expanded into 18 countries in sub-Saharan Africa as well as Nepal. This year, Dangote plans to take on a new challenge, the volatile oil market.

“We have been pushed into oil because we realized that we had too much cash for the type of business that we are running today, so we need to diversify. On the diversification strategy, we look at what the areas are that can actually take Nigerians to the next level and that is where we map out all the issues and the problems that we are facing as a country for lack of diversifying the economy.”

The group is building one of the largest oil refineries in the country with the potential to meet Nigeria’s requirement of 445,000 to 550,000 barrels of fuel, with spare capacity to export, according to Dangote. The project has an estimated completion date of 2018.

As we wrap up the interview, Dangote’s gaze goes back to the plaque on his table.

“It was a challenging experience and that is why I have the plaque on the table saying nothing is impossible. You need tenacity and focus in business. I have learned a lot and since that time I don’t really get scared of anything.”

Entrepreneurs

Leaving Airplane Middle Seats Empty Could Cut Coronavirus Risk Almost In Half, A Study Says

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A new research paper from the Massachusetts Institute of Technology estimates that blocking out the middle seat on airplanes could cause the likelihood of passengers being infected with coronavirus to drop by nearly half, just as some airlines are starting to book flights to capacity again.

KEY FACTS

  • According to the MIT paper (which has not been peer reviewed) the chances of catching coronavirus from a nearby passenger on a full airplane when all coach seats are filled is about 1 in 4,300.
  • However, those odds drop to 1 in 7,700 when all the middle seats on board are left empty, the paper states.
  • Taking into account a 1% mortality rate according to the statistical model, the likelihood of dying from a coronavirus case contracted on a plane is far more likely than dying in a plane crash, which has odds of about 1 in 34 million, the paper stated. 
  • In “Covid-19 Risk Among Airline Passengers: Should the Middle Seat Stay Empty?” the author of the study, Arnold Barnett, wrote that his analysis aims to be “a rough approximation” of the risks involved in flying during the coronavirus pandemic.
  • “The airlines are setting their own policies but the airlines and the public should know about the risk implications of their choices,” Barnett told ZDNet this week.
  • The paper comes just as more flight carriers, like American Airlines, begin booking flights to full capacity despite surges of the virus across the country. 

KEY BACKGROUND

The coronavirus pandemic has been disastrous for the travel industry, and has especially hurt airlines. Major American carriers including American, Delta and United have asked employees to take buyouts and early retirement, Forbes reported, in a bid to cut costs as the pandemic causes them to bleed cash. United Airlines warned this week that it could be forced to furlough 36,000 jobs, or nearly half of its American workers, starting in October if travel doesn’t pick up. In April, the airline estimated that in the first quarter it lost $2.1 billion pre-tax, Forbes reported, and was losing $100 million a day in the last half of March. Boeing CEO Dave Calhoun said in May he expects a major airline to go out of business in 2020 as a result of pandemic pressure.

NEWS PEG

American Airlines announced two weeks ago it would begin booking middle seats again starting in July, although the carrier will allow passengers to switch from a full flight without any extra cost, Forbes reported. United is also selling tickets for middle seats. American Airlines took flak earlier this month when Sen. Jeff Merkley (D-Ore.) tweeted a picture of his crowded flight

WHAT TO WATCH

If airlines continue to extend their policy of keeping middle seats blocked off or if they’ll be forced to book to capacity to turn a profit. Southwest and Delta have both committed to keeping their middle seats blocked off until at least the end of September, while JetBlue will do the same through July, according to the Washington Post.

Carlie Porterfield, Forbes Staff, Business

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Entrepreneurs

From The Arab World To Africa

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Sheikha Hend Faisal Al Qassimi; image supplied

In this exclusive interview with FORBES AFRICA, successful Dubai-based Emirati businesswoman, author and artist, Sheikha Hend Faisal Al Qassimi, shares some interesting insights on fashion, the future, and feminism in a shared world.

Sheikha Hend Faisal Al Qassimi wears many hats, as an artist, architect, author, entrepreneur and philanthropist based in the United Arab Emirates (UAE). She currently serves as the CEO of Paris London New York Events & Publishing (PLNY), that includes a magazine and a fashion house.

She runs Velvet Magazine, a luxury lifestyle publication in the Gulf founded in 2010 that showcases the diversity of the region home to several nationalities from around the world.

In this recent FORBES AFRICA interview, Hend, as she would want us to call her, speaks about the future of publishing, investing in intelligent content, and learning to be a part of the disruption around you.

As an entrepreneur too and the designer behind House of Hend, a luxury ready-to-wear line that showcases exquisite abayas, evening gowns and contemporary wear, her designs have been showcased in fashion shows across the world.

The Middle East is known for retail, but not typically, as a fashion hub in the same league as Paris, New York or Milan. Yet, she has changed the narrative of fashion in the region. “I have approached the world of fashion with what the customer wants,” says Hend. In this interview, she also extols African fashion talent and dwells on her own sartorial plans for the African continent.

In September, in Downtown Dubai, she is scheduled to open The Flower Café. Also an artist using creative expression meaningfully, she says it’s important to be “a role model of realism”.

She is also the author of The Black Book of Arabia, described as a collection of true stories from the Arab community offering a real glimpse into the lives of men and women across the Gulf Cooperation Council region.

In this interview, she also expounds on her home, Sharjah, one of the seven emirates in the UAE and the region’s educational hub. “A number of successful entrepreneurs have started in this culturally-rich emirate that’s home to 30 museums,” she concludes. 

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Kim Kardashian West Is Worth $900 Million After Agreeing To Sell A Stake In Her Cosmetics Firm To Coty

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In what will be the second major Kardashian cashout in a year, Kim Kardashian West is selling a 20% stake in her cosmetics company KKW Beauty to beauty giant Coty COTY for $200 million. The deal—announced today—values KKW Beauty at $1 billion, making Kardashian West worth about $900 million, according to Forbes’estimates.

The acquisition, which is set to close in early 2021, will leave Kardashian West the majority owner of KKW Beauty, with an estimated 72% stake in the company, which is known for its color cosmetics like contouring creams and highlighters. Forbes estimates that her mother, Kris Jenner, owns 8% of the business. (Neither Kardashian West nor Kris Jenner have responded to a request for comment about their stakes.) According to Coty, she’ll remain responsible for creative efforts while Coty will focus on expanding product development outside the realm of color cosmetics.

Earlier this year, Kardashian West’s half-sister, Kylie Jenner, also inked a big deal with Coty, when she sold it 51% of her Kylie Cosmetics at a valuation of $1.2 billion. The deal left Jenner with a net worth of just under $900 million. Both Kylie Cosmetics and KKW Beauty are among a number of brands, including Anastasia Beverly Hills, Huda Beauty and Glossier, that have received sky-high valuations thanks to their social-media-friendly marketing. 

“Kim is a true modern-day global icon,” said Coty chairman and CEO Peter Harf in a statement. “This influence, combined with Coty’s leadership and deep expertise in prestige beauty will allow us to achieve the full potential of her brands.”

The deal comes just days after Seed Beauty, which develops, manufactures and ships both KKW Beauty and Kylie Cosmetics, won a temporary injunction against KKW Beauty, hoping to prevent it from sharing trade secrets with Coty, which also owns brands like CoverGirl, Sally Hansen and Rimmel. On June 19, Seed filed a lawsuit against KKW Beauty seeking protection of its trade secrets ahead of an expected deal between Coty and KKW Beauty. The temporary order, granted on June 26, lasts until August 21 and forbids KKW Beauty from disclosing details related to the Seed-KKW relationship, including “the terms of those agreements, information about license use, marketing obligations, product launch and distribution, revenue sharing, intellectual property ownership, specifications, ingredients, formulas, plans and other information about Seed products.”

Coty has struggled in recent years, with Wall Street insisting it routinely overpays for acquisitions and has failed to keep up with contemporary beauty trends. The coronavirus pandemic has also hit the 116-year-old company hard. Since the beginning of the year, Coty’s stock price has fallen nearly 60%. The company, which had $8.6 billion in revenues in the year through June 2019, now sports a $3.3 billion market capitalization. By striking deals with companies like KKW Beauty and Kylie Cosmetics, Coty is hoping to refresh its image and appeal to younger consumers.

Kardashian West founded KKW Beauty in 2017, after successfully collaborating with Kylie Cosmetics on a set of lip kits. Like her half-sister, Kardashian West first launched online only, but later moved into Ulta stores in October 2019, helping her generate estimated revenues of $100 million last year. KKW Beauty is one of several business ventures for Kardashian West: She continues to appear on her family’s reality show, Keeping Up with the Kardashians, sells her own line of shapewear called Skims and promotes her mobile game, Kim Kardashian Hollywood. Her husband, Kanye West, recently announced a deal to sell a line of his Yeezy apparel in Gap stores.

“This is fun for me. Now I’m coming up with Kimojis and the app and all these other ideas,” Kardashian West told Forbesof her various business ventures in 2016. “I don’t see myself stopping.”

Madeline Berg, Forbes Staff, Hollywood & Entertainment

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