Fitch downgrades Dangote Industries to ‘B+(nga)’ on liquidity, governance concerns

Fitch Ratings has downgraded Dangote Industries Limited (DIL), the conglomerate owned by Nigerian billionaire Aliko Dangote, from ‘AA(nga)’ to ‘B+(nga)’, placing the company on Negative Watch.

The international rating firm revealed this in a report released on Monday, highlighting a significant decline in the group’s liquidity, operational underperformance, and failure to meet financial expectations.

According to Fitch, the downgrade was driven by local currency devaluation, inadequate backup funding to manage substantial debt due by August 31, 2024, and concerns over corporate governance due to the absence of DIL’s audited 2023 accounts.

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Fitch warned that without tangible steps to address these issues, further downgrades could follow, with potential risks of financial restructuring or default looming.

The downgrade also follows operational challenges at the Dangote Oil Refining Company (DORC), where production levels and earnings have been below expectations amid crude supply disputes with the Nigerian National Petroleum Company Limited (NNPCL).

The recent order by President Bola Tinubu for the NNPCL to sell crude to local refineries in Naira has added another layer of complexity to the situation.