On Gov Makinde’s N48bn assets

Forbes uses the quoted value of stocks held by business owners to compute wealth. Consequently, comments about why Forbes has not recognised Governor Seyi Makinde as one of Africa’s richest men because of his asset declaration does not follow logical conclusions.

And there’s the little matter of Forbes rankings being done by computing wealth in US dollars and not in Nigerian naira. Or have they started doing the computation in naira now?

Makinde’s declaration revealed that his three companies have a combined valuation of N48bn. That’s not his personal net worth; of course, we can’t all be economists or accountants, or be versed in matters of money and wealth computations but we should be able to differentiate between a company’s worth and the owner’s personal net worth.

Aliko Dangote’s personal net-worth is about $10 billion as of March 2019. During the same period, the market value of Dangote Group of Companies is nearly seven times that at $67 billion.

Bill Gates’ net worth is $103.8b. Microsoft market value is ten times that at $1,051.53 billion. If we are only interested in facts rather than the sensation, we would remember that deals in oil and gas are mainly denominated in US dollars and N48 billion is just about $130 million – an amount barely enough to cover two contracts in the oil sector.

For companies with a combined total of 33,730,000 shares (easily verifiable with the Corporate Affairs Commission), that only gives a value of $3.85 per share. Conversely, Harliburton, another oil and gas service company, albeit a US-based company, has a valuation of $17 billion and a current stock price of $23.46.

Meanwhile, the average stock price of an oil and gas service company is $18.25 (Makinde’s companies stock is a miserly $3.85) and the oil and gas service industry average price-earning (P/E) ratio is $25.4.

Of course, if we want to see beyond the mere billion naira figure, we could. And if we want to make a sensation of the N48 billion, we also could. But we should not forget that Makinde only declared he has N234 million ((about $630,000) and $30,000 in cash at hand and in the bank.

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This translates to him with his three oil and gas servicing companies having considerably less than $1 million total in his bank account.

A mallam standing on the streets around Sheraton Hotel in Abuja, selling forex, will readily provide you with $5 million worth of forex in the blink of an eye if you approach him with enough naira to cover the transaction.

Those banding the billion figure around conveniently leave out the fact that Makinde’s companies are indebted to creditors to the tune of nearly N3.4 billion.

And his personal net worth, when all assets are computed, stands considerably at less than $10 million. Meanwhile, there are 169 billionaires around the world “too poor” to make Forbes list.

Those hyping Makinde’s supposed N48 billion ($130m) around and wondering why if he is so rich, he’s not on the Forbes list should know that for 2019, there is not a single billionaire worth less than $2 billion on that list.

Ade King Ebimomi,

Oyo State