Nigerian Aliko Dangote, Africa’s richest man according to Forbes, lost $3.7 billion off his net worth after the West African nation allowed its currency to trade freely without a peg to the U.S. dollar.
Dangote, who is worth about $12.7 billion, fell 25 places on the Bloomberg Billionaires Index on Monday to position 71 as the naira plunged 40 percent following the decision by the Central Bank of Nigeria (CBN) to devalue the local currency.
CBN’s move is seen as a response to tumbling oil prices. Nigeria is the top oil producer in Africa and derives most of its revenue from the commodity.
The majority of Dangote’s $12.7 billion fortune is derived from a 91 percent stake in Dangote Cement Plc, which shed 2 percent in trading Monday, Bloomberg reported.
The naira weakened further against the dollar for a second day on Tuesday as demand for dollar by foreign companies operating in the countries continued to stream into the foreign exchange market, Reuters reported.
The CBN introduced tough “currency saving” trading rules last year to stem a rapid fall in the naira and pegs the local unit at 198 to the greenback, something investors complained bitterly about.
The naira, which lost more than 22 percent last year, has already lost a huge chunk of its value so far in 2016 on the unofficial (black) market.
There have been wide exceptions that the central bank would devalue the local currency sooner or later.
Despite growing pressure, including requests by the International Monetary Fund (IMF), to devalue its currency, the West African nation has remained adamant on keep its currency fixed at a lower rate than what market forces dictate, while restricting access to dollars.
At one point President Muhammadu Buhari told BBC a currency devaluation was a kin to “murdering” the naira.
That was until last week on Wednesday, when the CBN announced that it would allow the naira to trade without a fixed exchange rate to the dollar on June 20.
The country has been facing tough financial times since last year after oil prices dropped on the international market. Oil export accounts for over 70 percent of the country’s budget.
