Dangote Refinery’s overlooked advantage could be its working-capital model

Dangote Refinery's working-capital model may be an overlooked advantage that could prove crucial after its listing. While the refinery's financials have largely focused on valuation and profit, the efficiency of managing the trillions of naira required for crude purchases, product holding, and customer collections is equally important.

Operating cash flow generated about N2.08 trillion from roughly N2.51 trillion in profit, with suppliers and customers financing a significant portion of the daily operations. By June 2026, Dangote held N2.82 trillion in inventory, up from N1.92 trillion at the end of 2025. However, suppliers and customers were not financing the entire N5.27 trillion operating cycle.

Trade payables, representing amounts owed for raw materials, spare parts, and services, increased from N1.93 trillion to N3.35 trillion, while customer advances rose from N296 billion to N655 billion. Together, these amounts accounted for about N4 trillion of the N5.27 trillion inventory and trade receivables. This means suppliers and customers effectively financed roughly three-quarters of the core operating requirement.

The cash-conversion cycle, calculated using inventory, trade receivables, and trade payables, stood at about 11 days. If Dangote maintains quick customer payments, reduced inventory holding, and favorable supplier terms, less cash will be trapped within the business, leaving more available for capital expenditure, debt repayment, and shareholder distributions.