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‘Despite recession, Nigeria remains ‘critical’ market for Africa’

By Marcel Mbamalu, Geneva   |   21 March 2017   |   7:25 pm

Investors Tuesday expressed confidence in the resurgence of Nigeria’s struggling economy describing it as ‘very critical’ to building African companies that could join the league of top 500 in the next eight years.

A panel of discussants, including chief executives of MTN, Honeywell, KPMG, CFAO and the Casablanca Finance City Authority, at the Africa CEO Forum in Geneva Switzerland Tuesday said despite the volatility in Nigeria’s economy—- as remains the case with many African economies —” it is still an important market. The fact that it is passing through volatility is not enough to reconsider investment of $16billion invested in the last 10 to 12 years,” said Mr. Phuthuma Nhleko, MTN’s non-executive chairman.

Chairman of Honeywell Group, Oba Otudeko agreed with Phuthuma, stressing, however, that Africa “has the responsibility for its survival.”


Expression of confidence on an economy technically in recession but showing signs of recovery on the back of resurging oil prices will strengthen the hand of government and create the needed confidence for more investments and recovery.

Participants variously commented on emergence of African champions and the road to global Top 500 and decried absence of African companies on the list.

The Fortune 500 is a list of world’s top 500 listed companies by turnover, with the least of them having over $26 billion in turnover. Dr. Oba Otudeko, who chairs the Honeywell Group, stressed that First Bank, Ecobank and UBA have begun to show what African companies could become in terms of size but insisted that good business environment would speed up the process of growth. Otudeko holds stakes in First Bank, Ecobank and and others.

“Oil is important to the Nigerian economy because it impacts foreign exchange. We must therefore diversify,” he advised.

The Nigerian government, he explained, “is currently working on measures to strengthen the linkages of our economy on areas we have competitive advantage. Nigeria is becoming a tough market but this is not strange,” Otudeko said.

He said economic recession and plunge in global oil prices meant that revenues of Nigerian companies were taking great shocks. But he insisted that “volatility is also part of the character of economies through out the world, not just Nigeria.”

On the whole, the investors agreed that African governments needed to create the necessary business environment for companies to grow optimally and join the league of top 500 companies and that robust stock markets, either on sub-regional or country basis, would be central to the objective.

Richard Bille of the CFAO noted that, though his company’s $6 billion investments in Africa would be a tough beginning on the road to achieving the feat, the domestic markets in Nigeria, Algeria, South Africa and Egypt would be sufficient for African companies to begin to aspire if only governments could encourage stock exchanges to grow bigger. “We need stock markets with liquidity,” he said.

Brian Leith of the KPMG in his introductory remarks had noted that companies on the top 500 should have an average of $21billion in turnover and expressed the concern that South Africa’s insurance giant, Allianz, though among the Top 500, was not listed as African because of diluted shareholding.

His comments prompted Oba Otudeko’s argument that (pure) ownership should be central to determining “company citizenship.” Bielle believes that once businesses show promises in conducive African environments, “they become targets of companies.” But the CFAO executive thinks that, shareholding structure not withstanding, “part of the control of African companies will remain in Africa.”

Leith in his comments noted that eight of the 10 top companies in Africa are in South Africa, but they are “clearly a long way off the $26billion in the bottom of the top 500. Large companies do matter and they make a difference in economies.”


He argues that half of the United States’ Gross Domestic Product (total value of goods and services it produces in a given year) is determined only by a hundred companies. “In a small economy, one big company can determine the growth of the country. By 2025, when we will gather for the 12th edition of the Africa CEO Forum, how many of them will be from Africa?, he asked.

“Nigeria remains the biggest domestic market; so, the biggest companies are in the best position to become pan-African power houses, Dr. Andrew S. Nevin, chief economist of the PWC, told The Guardian Tuesday on the sidelines of the Geneva conferenc. He said The Federal Government “should be encouraging these companies to expand. It should also be encouraging state governments to embrace these companies.”




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