Investors 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 recently held Africa CEO Forum in Geneva Switzerland 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. So also, the Chairman of Honeywell Group, Oba Otudeko agreed with Phuthuma, stressing, however, that Africa “has the responsibility for its survival.”
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.
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 added economic recession and plunge in global oil prices meant that revenues of Nigerian companies were taking great shocks. However, he insisted, “volatility is also part of the character of economies throughout 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. The top 500 companies are listed in ‘The Fortune 500 List,’ and characterized by their turnover, with the least of them having over $26 billion in annual turnover.
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. He also 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.”
“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, said on the sidelines of the Geneva conference. He said the Federal Government “should be encouraging these companies to expand. It should also be encouraging state governments to embrace these companies.”