The early morning news in Nigeria on Thursday February 28, 2019 was awash with reports of its most successful businessman, Alhaji Aliko Dangote, becoming the world’s 65th richest man.
Reporters, bloggers, celebrity trackers and admirers of the richest man in Africa, could not help celebrating the news which reported Dangote as jumping 39 spots on the scale from his previous 103rd position on the rich list.
The ranking is according to Bloomberg Billionaires Index, a daily ranking of the world’s richest people. The figures are updated at the close of every trading day in New York. So, as at today, February 28, 2019, Dangote, the chairman of Dangote Group, is ranked 65th. According to Bloomberg, the 61-year-old billionaire gained $5.8bn on Monday and within 24 hours, his total net worth rose to $16.6bn on Tuesday, February 26.
But there is another authoritative billionaire tracker and reporter which shakes the world each time it publishes its list of world’s richest persons. That tracker is the Forbes World’s Billionaires yearly and real time ranking.
To many, it might be shocking to note that while Dangote is number 65 on Bloomberg’s list, he is number 132 on Forbes’ Real Time Billionaires list as at Thursday, February 28. To Forbes’ Dangote is worth $10.9 billion but to Bloomberg, he is worth $16.6 billion.
The disparity is not only applicable to Dangote. It applies to all the listed billionnaires.
Below is how the top 10 list of both indexes look like:
So, why is there so much disparity between Forbes’ figure and Bloomberg’s figures?
The first obvious reason is that Bloomberg and Forbes are two different competing media in the billionnaire hunting business. As a matter of fact, their methods and reportage have got billionaires choosing sides, some prefering Forbes and others on the side of Bloomberg.
For example, in March 2013, Saudi Prince Alwaleed Bin Talal, expressed anger at Forbes which ranked him with $20 billion whereas Bloomberg, in the same period ranked him number 16 with $28 billion.
He made it known then that he would no longer cooperate with Forbes due to “what appear to be intentional biases and inconsistencies in the Forbes valuation” process.
That year, qz.com quoted the Saudi Kingdom as saying that while it will not be working with Forbes, it will be cooperating with Bloomberg’s index, which it says uses “a more accurate method of calculating financial holdings.”
Another reason for the disparity, is the difference in methodology. Below is a comparison:
- A daily ranking which debuted in March 2012
- Currently tracks 500 wealthiest people
- Draws information from “action in the stock market, economic indicators and news reports,” The index “is built to change daily depending on stock fluctuations and economic/company news.
- To calculate individuals’ wealth, the index relies on a mixture of public and private data, tracking stock prices and publicly disclosed holdings as well as calculated values for private companies using derived or reported information that is valued using live comparisons to public competitors.
- The valuations are converted to U.S. dollars at current exchange rates and do not include assumptions about personal debt.
- Been tracking billionnires since 1987 but its daily (real time) ranking also debuted in 2012
- Currently tracks about 2,208 billionaires
- Value of the billionaires’ top public holdings, up to three maximum and each worth at least $700 million, are updated on a 15-minute delay every five minutes from the time the New York Stock Exchange opens at 9:30 until trading ends at 4 p.m.
- Figures reflect the changes in people’s top U.S. public holdings, not their total net worth. They do not include the value of any additional U.S. public holdings beyond a person’s three biggest. Options worth more than $100 million, as is the case with Facebook’s Mark Zuckerberg, are included
- Known debt is subtracted from assets to get a final estimate of an individual’s estimated worth in United States dollars.
Below is what Wikipedia says about the methodology of the two wealth trackers:
The index offers a dynamic look at the wealth controlled by the world’s richest people while trying to offer a new perspective on how the media views and tracks the movement of that wealth. The index “is built to change daily depending on stock fluctuations and economic/company news.”
To calculate individuals’ wealth, the index relies on a mixture of public and private data, tracking stock prices and publicly disclosed holdings as well as calculated values for private companies using derived or reported information that is valued using live comparisons to public competitors.
The valuations are converted to U.S. dollars at current exchange rates and do not include assumptions about personal debt.
Journalists have noted that the detailed methodology used for the index is more transparent than the “somewhat vaguer” calculation behind other lists. “The Bloomberg listers say their estimates may be more accurate than the competition’s because they have better data and reporting (from Bloomberg terminals and its reporting staff).”
The Index reported on hidden wealth and uncovered more than 400 hidden billionaires since its founding. Bloomberg Billionaires founding editor Matthew Miller said in 2013 that hidden billionaires are identified by “making sure that we have accounted for all the companies in closely-held assets around the world.” Some of the billionaires the index has uncovered includes JP Morgan Chase & Co chairman Jamie Dimon, In-N-Out Burger president Lynsi Torres, Ferrari Motors heir Piero Ferrari and the chairman of Biel Crystal Manufactory Yeung Kin-Min.
Each year, Forbes employs a team of more than 50 reporters from a variety of countries to track the activity of the world’s wealthiest individuals. Preliminary surveys are sent to those who may qualify for the list. According to Forbes, they received three types of responses – some people try to inflate their wealth, others cooperate but leave out details, and some refuse to answer any questions. Business deals are then scrutinized and estimates of valuable assets – land, homes, vehicles, artwork, etc. – are made. Interviews are conducted to vet the figures and improve the estimate of an individual’s holdings. Finally, positions in a publicly traded stock are priced to market on a date roughly a month before publication. Privately held companies are priced by the prevailing price-to-sales or price-to-earnings ratios. Known debt is subtracted from assets to get a final estimate of an individual’s estimated worth in United States dollars. Since stock prices fluctuate rapidly, an individual’s true wealth and ranking at the time of publication may vary from their situation when the list was compiled.
Family fortunes dispersed over a large number of relatives are included only if those individuals’ holdings are worth more than a billion dollars. However, when a living individual has dispersed his or her wealth to immediate family members, it is included under a single listing provided that individual is still living. Royal families and dictators that have their wealth contingent on a position are always excluded from these lists.