The World Economic Forum which will take place between May 7 and 9, 2014 in Abuja, the country’s capital, is arguably one of the most important economic events in its political history since independence. Multinationals are tapping into Nigeria’s economy will
be keying into WEF theme. These multinationals include Nestle, Larfage, Procter & Gamble (P&G), MTN, Bharti Airtel, Old Mutual, General Electric (GE) and SABMiller have been investing copiously in Nigeria.
MTN Group
MTN group, telecommunication has operations in 22 countries and has a subscriber of 208 million. Its largest markets are in Nigeria and South Africa.
With over a 120 million mobile subscribers in Nigeria, MTN has sought to further increase its share of the market. With immense opportunities in mobile data ahead, the company invested a total of $1.3 billion (N208 billion) in 2012 to significantly enhance its network capacity and provide improved quality of service, as well as make its base stations more environmentally friendly.
MTN Group’s full year 2013 results validates its growth and investment strategy as it spiked by 8.1 percent to N2 trillion compared with N1.85 trillion in 2012. Profit before interest and tax (PBIT) increased by 13.98 percent to N910.42 billion in FY13 from N802.15 billion as at 2012FY. Profit after tax moved by 26.68 percent to N436.6 billion as against N366 billion as at 2012FY.
MTN Nigeria’s revenue spiked by 24.5 percent to N732. billion in FY13 from N588.65 billion as at 2013FY. Subscriber base also increased by 9 million to 56.8 million customers during the year.
Its largest revenue-generating markets are Nigeria and South Africa, with 35 percent and 29 percent of total revenue, respectively, in 2013. On the EBITDA line, the 2013 contribution was 49 percent from Nigeria and 22 percent from South Africa, according to Renaissance Capital in a note released in April 28 2014.
Bharti Airtel
This is another telecoms company tapping into the Nigeria economy. It is increasingly spreading its tentacles across the broad
spectrum of development.
The mobile company plans to invest $600 billion in Nigeria over the next twelve months with a view to expanding its share of the market. The company also aims to have 100 million subscribers and $5 billion a year in revenue in Africa by 2012/2013.
The company has over the past two and half years invested $1.2 billon which has yielded positive results as it has overtook over Globalcom to emerge the second largest telecoms operator in Nigeria with 26.19 million subscribers.
It has operations in 17 African countries and a customer base of over 269 million across its operations at the end of March 2013. It is the world’s fourth largest mobile operator and had revenues of $14.7 billion for the FY ended March, 2013.
Nestle
Nestle is another multinational company penetrating the Nigeria market through its subsidiary Nestle Nigeria Plc. Nestle has invested more than $850 million in Nigeria and other parts of Africa over the past five years.
In Nigeria, the consumer goods companies faced a challenging consumer environment over 2012 and 2013 which resulted in slower reported growth. However, given the size of the population and Nigeria’s strong GDP growth forecasts, coupled with the
current low penetration of packaged food and beverages, there are significant opportunities for consumer players looking further,
according to Renaissance Capital in an April 28 2014 report.
Nestle Plc 2013 audited financial statement showed the company recorded an impressive result despite the downturn as turnover spiked by 14 percent to N133.08 billion from N116.77 billion recorded same period 2012. Nestlé’s profits before tax (PBT) for the
2013FY rose marginally by 4 percent y/y to N26.05 billion from N25.06 billion 2012FY caused by the huge operational and finance cost.
Lafarge
French cement producer Lafarge Cement Wapco Plc, has revealed plans to double its operational facility in Nigeria by investing an additional €1 billion $1.37 billion (N219.2 billion) in the next three to four years.
The infrastructural deficit and rapid urbanization have been driving the demand for cement in Nigeria which explains the double digit growth in revenue of its Nigeria subsidiary.
For the three months through March 2014, Lafarge Nigeria’s gross revenue rose by 16 percent y/y to N27.033 billion from N23.23 billion in the same period of the prior year (1Q13).
Profit before tax (PBT) in the review period surged by 20 percent y/y to N8.62 billion compared with N7.20 billion recorded 1Q14.
Lafarge Group plans for a brownfield (2-3mt) plant at its least-efficient Sagamu facility could effectively augment production there and see margin expansion from a more efficient dry-process plant.
SABMiller
The world’s second largest brewer is expanding and spreading its tentacles across sub-Sahara Africa including Nigeria. It plans to invest to invest $110 million (N1.76 billion) to expand its production capacity in Nigeria, in its latest move to capitalise on Africa’s
growing thirst for beer.
In 2009, SABMiller bought Pabod Breweries, Port Harcourt, with controlling interest of about 57 per cent, Voltic Nigeria Limited, the Lagos-based table-water bottler, owning 80 per cent of the company, and Standard Breweries in Ibadan.
SABMiller Plc, the world’s second largest brewing company is to invest $110 million (N1.76 billion) expanding production capacity
in Nigeria, in the brewer’s latest move to capitalise on Africa’s growing thirst for beer.
Old Mutual
Old Mutual, an international investment, savings, insurance and banking group, is expanding into Nigeria through acquisitions.
The South Africa-based insurance firm has finalized its investment in Oceanic Life Insurance Ltd by acquiring a major stake of the company. Nigeria’s size, macroeconomic fundamentals and low penetration of insurance products are among the reasons Old
Mutual considers Africa’s largest economy as a potential cash cow.
The Nigerian economy is developing at a fast pace and offers strong growth prospects due to the growing political stability and improved governance, a growing population with strong consumer demand, a strong domestic GDP growth and an underpenetrated financial services sector according to recent statement released by the company’s chief executive officer
Offong Ambah. The company has also set aside $600 million to fund operations across East and West Africa.
Procter & Gamble
Procter & Gamble (P&G), is an American multinational consumer goods company headquartered in downtown Cincinnati with enormous investment in Africa largest economy Nigeria.
The company in 2012 invested $250 million in a new plant site at the Agbara Industrial Estate in Ogun state. The new plant in Agbara, makes Procter & Gamble the largest US non-oil investment in Nigeria.
As part of mission to deepen its production capacity in Nigeria and to sustain its status as leading global consumer goods company, Procter and Gamble Nigeria (P&G) has completed a $300 million manufacturing plant in Agbara Industrial Estate Ogun state. The investment is expected to provide about 2,000 direct jobs for Nigerians and several thousands of indirect jobs when it becomes operational.
General Electric
General Electric (GE) is an American multinational conglomerate corporation incorporated in Schenectady, New York,and headquartered in Fairfield, Connecticut, in the United States. It has been tapping immensely with enormous investment in Nigeria.
Over the next seven years, the company plans to invest $1 billion in Nigeria.
In addition it will help build technical expertise and develop infrastructure in various sectors of the Nigerian economy,.
Also, the global infrastructure giant has committed $250 million to build a multimodal facility in Calabar, Cross River, the second of its kind in the world. The facility will bring industrial products across multiple sectors under one roof for servicingand assembly.
The facility will create about 2,000 jobs across the local supply chain, as the facility would manufacture and assemble machinery for Nigeria’s power and the oil and gas sectors.
Unrelenting on its investment drive in Nigeria, recently ,the company has signed a deal with a Nigerian bank to invest $350 million in Nigeria’s ailing power sector.
The scaled-down facilities will produce between one and 20 megawatts of electricity. The GE investment in Nigeria has showcased the US government interest in Nigeria, and this is a boost for a country that wishes to become one of the top 20 economies by 2020.
