Dangote Group Ends Contract with Fitch Ratings Amidst Downgrade and Financial Uncertainty

In a significant development, Dangote Group has officially ended its contract with Fitch Ratings, following the global agency’s withdrawal of its credit ratings for the Nigerian conglomerate. The decision comes amidst a period of financial uncertainty and mounting challenges for Dangote Industries Limited (DIL), which operates key sectors in cement, fertiliser, oil refining, and food production across Nigeria and West Africa.

Anthony Chiejiena, the Head of Corporate Communications for Dangote Group, confirmed the move, stating, “We ended our contract with Fitch Ratings, we did not renew it.” This announcement followed Fitch Ratings’ decision last week to withdraw Dangote’s National Long-Term Rating of ‘B+ (nga)’ and senior unsecured rating, while maintaining them on a Rating Watch Negative (RWN). The negative outlook from Fitch was attributed to concerns regarding the group’s ability to refinance maturing debts, which had resulted in a strained liquidity position.

Fitch’s withdrawal of ratings, citing “commercial reasons,” highlights the ongoing financial pressures facing the conglomerate. In its report, Fitch noted that the group’s ratings were placed under review due to the significant deterioration in its financial standing, including underperformance relative to previous expectations. The agency also flagged local currency devaluation and the absence of contracted backup funding to repay substantial debt maturing on August 31, 2024, as contributing factors.

Further compounding the situation, Fitch pointed to Dangote Industries Limited’s lack of audited financial accounts for 2023, which it described as a corporate governance issue. This absence of transparency raised additional concerns among analysts and investors about the group’s financial health.

Earlier in August, Fitch had downgraded Dangote’s rating from ‘AA(nga)’ to ‘B+(nga)’—a significant drop that reflected the group’s growing financial leverage and operational setbacks. At the time, Fitch had placed the ratings under a Rating Watch Negative due to the uncertainty surrounding Dangote’s ability to meet its debt obligations amidst weaker-than-expected operational performance.

Dangote Group’s decision to sever ties with Fitch Ratings marks a crucial juncture in the company’s financial trajectory. While the group is still one of the largest and most influential business entities in Nigeria, this development calls into question the sustainability of its ambitious projects, such as its oil refinery and fertilizer plants, without solid financial backing.

As the company continues to face challenges in managing its significant debt load, all eyes will be on how Dangote Industries plans to navigate the coming months and restore investor confidence amid mounting uncertainty. The unfolding situation could have wider implications for the broader Nigerian business landscape, as one of its largest conglomerates contends with the complexities of global financial scrutiny.

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