Dangote resigns from Dangote Flour Mills

Aliko Dangote, President Dangote Group
Aliko Dangote, President Dangote Group
Aliko Dangote, President Dangote Group

Africa’s richest man Aliko Dangote quit the board of Dangote Flour Mills today, as the company now majority controlled by South Africa’s Tiger Brand faces an uncertain future.

Dangote who holds a 10 per cent equity stake in the company resigned along with three other directors, Olakunle Alake, Asue Ighodalo and Arnold Ekpe following Tiger Brands’ announcement that it’s cutting off further financing of the troubled firm, which produces pasta and flour.

The decision was part of Tiger Brand’s wider review of its investment in the company.

Tiger Brands has not made money from Dangote Flour Mills (DFM) since paying nearly $200 million for a 65 percent stake in the firm three years ago as part of broader strategy to expand in sub-Saharan Africa.

“Tiger Brands has decided not to provide further financial support with respect to its investment in Tiger Branded Consumer Goods plc of Nigeria,” the company said in a statement.

Tiger Brands also said it was reviewing its investment in the business. One industry source said its options were limited because “buyers aren’t exactly lining up” to take its stake.

Tiger Brands wrote down the value of DFM twice last year for a total 954 million rand ($66.3 million) as the business suffered from tough competition and a weakening naira currency.

“Without Tiger Brands injecting money, it is the end of the line for DFM,” said Investec Securities’ analyst Anthony Geard.

Shares in DFM fell 4.7 per cent to 2.41 naira by 1311 GMT, giving it a market capitalisation of 12.64 billion naira ($63.5 million), or less than half its net debt of about 30 billion naira.

Shares in Tiger Brands, however, climbed 7.7 per cent to 335.00 rand by 1313 GMT, putting them on course for their biggest daily percentage gain seven years and outpacing a slightly higher JSE Top-40 index.

Tiger Brands, which makes bread, breakfast cereals and energy drinks, bought the business as part of a plan to expand elsewhere in Africa to offset slow growth at home.

In a bid to turn DFM around, Tiger Brands mothballed some of its mills and introduced new, higher margin products. Those efforts were dealt a blow late last year when Nigeria devalued the naira, resulting in higher input costs that could not be fully recovered in a competitive market.

For Tiger Brands, the move to cut financing would free up cash and enhance earnings in the short term. But it could also set it back in building a business in Africa’s most populous country and biggest economy.

“In the longer term, Nigeria will probably be a good place to be if you have scale but Tiger Brands would probably have to refinance Dangote and probably take it a step forward by, for example, going into baking,” Avior Capital Markets’ analyst Jiten Bechoo said.

Tiger Brands’ other businesses in Nigeria, Deli Foods and UAC Foods, will not be affected by the review. Tiger Brands competes with Nestle Nigeria.


  1. This should send a strong warning to other businesses. Our economy is going down everyday and they should prepare a strong contingency management plan and exit routes if the situation worsens. Nigeria will rise again, i believe.

  2. Haba Aliko Dangote, how can one explains this when some state governors are clamouring for foreign investors. Why didn’t you inject more funds from your other companies to keep DFM afloat. Unemployment looms ex DFM. God have mercy!!!

  3. Yes smarth Mallam collect the SA money and dump him to die this has been always their ways in Nigeria, now he has resigned after seeing the evil he planted growing.

    Dangote will never change

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