Nigeria’s Trillion-Naira Companies Multiply

Published 17 days ago
Closeup shot of two person trading Nigerian naira and US dollar
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The Nigerian Exchange (NGX) All-Share Index has reached new heights since the start of the year, propelled by fresh government policies. Despite challenges in other macroeconomic indicators such as inflation, exchange rates, and lending rates, the equity market has doubled in value within this timeframe. Experts weigh in.

The Nigerian stock market has witnessed a surge in recent months, with the number of companies boasting Stocks Worth Over ₦1 trillion ($688 million) or SWOOTs, reportedly increasing from eight to 14. This surge, fueled by an uptick in Nigerian banks’ share prices, reflects a notable shift in investor sentiment towards the African giant’s equities market.

Investors have flocked to the Nigerian stock market seeking returns, which has led to its all-share index (ASI) appreciating by 11% or 8,269 basis points in the first two weeks of the year. This bullish sentiment propelled Nigeria to the forefront as the best-performing stock market in the world in the first three weeks of the year with the Nigerian Exchange (NGX) gaining a year-to-date (YTD) return of 40%.


Several key factors are reshaping the investment landscape. One critical driver is the subdued yield in the fixed income sphere relative to escalating inflation rates. Nigeria’s headline inflation under President Bola Tinubu’s administration increased to 31.70% in February.

This dynamic prompts investors to reassess their asset allocation strategies, tilting towards equities to seek a more favorable risk-return balance. Traditionally, fixed income instruments, renowned for their stability, lose appeal when their returns dwindle, prompting a capital shift towards the buoyant stock market.

Indigenous pension funds and institutional investors are also rekindling their interest in the Nigerian market, injecting renewed vigor into equities trading. This resurgence in confidence forms a virtuous cycle, driven by the pursuit of superior returns amidst an inflationary environment, thereby elevating the appeal of equities. Particularly, banking stocks are in the limelight, fueled by anticipated robust earnings and dividend payouts.

According to reports, last year’s SWOOTs, at some point, included MTN Nigeria, Dangote Cement, Airtel Africa, BUA Foods, BUA Cement, Zenith Bank, Guaranty Trust Holding Company Plc (GTCO Plc), and Seplat Energy. Joining their ranks more recently were Access Holdings, United Bank for Africa (UBA), Transcorp Hotels, and Geregu Power, First Bank of Nigeria (FBN) Holdings and Dangote Sugar, but due to the fluctuating nature of the market, some of these additions may have dipped below the ₦1 trillion market cap mark.



The milestone moment arrived on January 22 when Dangote Cement Plc, a subsidiary of Dangote Industries founded in 1981 by Africa’s wealthiest billionaire, Aliko Dangote, became the first Nigerian company to hit the ₦10 trillion ($6.88 billion) market cap mark. With its share price soaring to ₦592.60 ($0.41) at the time, Dangote Cement’s market cap reached ₦10.095 trillion ($6.95 billion), firmly cementing its position among Africa’s largest corporations. It is also the only Nigerian company among the top 10 largest African companies based on market cap, with the rest being South African companies.

At the end of 2023, Dangote Cement Plc ranked third on the list of companies with the highest market capitalization in the NGX, behind Airtel Africa and MTN Nigeria.

It is believed that Nigerian billionaire Femi Otedola reportedly acquiring $6.73 million-worth stake in Dangote Cement Plc, the only cement company in Nigeria with two export terminals, with a reported combined export capacity of eight million tons per annum, had an impact.


“The growth in revenue was due to a few reasons. Firstly, we delivered double digit volume growth in our pan-Africa business. Secondly, we realized some price increases in line with inflationary realities, especially in some of our pan-Africa operations. Thirdly, there was an improvement in our product and location mix, thereby optimizing our sales for better economic value,” Dangote Cement Plc’s Group Managing Director, Arvind Pathak, told FORBES AFRICA in an exclusive interview when the company reported a profit of ₦178.6 billion ($234.8 million) in the first half of last year.


The ripple effects of Nigeria’s stock market boom extend beyond financial metrics, signaling broader implications for the economy and investor sentiment.

Seyi Ebenezer, Advisory Board Member of Payaza, a payment service provider, views the rise of SWOOTs as a pivotal moment for Nigeria’s economic diversification efforts.


“The rise of SWOOTs is a significant development for the Nigerian economy, with both positive and potential challenges,” Ebenezer tells FORBES AFRICA as he analyzes the impact on the country’s economic landscape.

According to him, sustaining this momentum hinges on various contingencies. The interest rate hike by four hundred basis points to 22.75% from 18.75% by the Central Bank of Nigeria (CBN) in February initially triggered a downturn in the equities market, hinting at a potential resurgence in bond attractiveness and a consequent diversion of investments away from stocks.

Profit-taking behaviors among investors, driven by attained targets in anticipation of dividends, could also precipitate a market correction, temporarily deflating stock prices.

Ebenezer highlights the diversification potential inherent in a robust stock market, asserting, “A strong and diverse stock market may signify a less oil-reliant economy, providing more stability amidst fluctuating oil prices.” Emphasizing the importance of industry diversification, he notes: “The rise of these companies signals Nigeria’s ability to attract investment across various sectors.” He underscores the limited presence of oil and gas companies among the SWOOTs, indicating a shift away from reliance on the energy sector.


Recently, Nigeria’s costly oil industry has experienced a downturn.

While acknowledging the enduring importance of oil, Ebenezer stresses, “A well-developed stock market is a strong indicator of progress towards a more diversified and resilient Nigerian economy.”

Ebenezer also highlights the potential of SWOOTs to enhance Nigeria’s investment appeal.

“The success of these companies can boost Nigeria’s image as an attractive investment destination, potentially attracting more foreign businesses and partnerships. These large companies demonstrate the ability of Nigerian businesses to achieve significant scale and profitability. This success story serves as a beacon for potential investors, showcasing the potential for growth in the Nigerian market.” However, Ebenezer cautions against overreliance on SWOOTs, noting, “A large concentration of wealth in a few companies can make the stock market more susceptible to fluctuations.” He also notes the need for equitable wealth distribution and emphasizes the importance of strong corporate governance practices to maintain investor confidence. Added to this is the importance of innovation and broader investor participation to ensure the continued growth and stability of SWOOTs.


“Encouraging broader participation in the stock market by individual investors can help distribute the wealth generated and create a more stable market base,” says Ebenezer.

Globally, interest rates and commodity prices play significant roles in influencing investor sentiment towards Nigerian equities.

“These factors serve as the bedrock of market confidence and directly impact investment decisions,” Nigerian exporter Oluwaseun Obilana shares with FORBES AFRICA.

Obilana also sheds light on the symbiotic relationship between commodity prices and investor sentiment.

“Nigeria’s economy is intricately tied to commodity exports such as oil, cocoa, and agriculture,” he remarks.

“Fluctuations in global commodity prices directly impact revenue streams, corporate profitability, and ultimately, investor sentiment towards Nigerian equities.”

Drawing from his firsthand experience as an exporter, he underscores the importance of diversification in mitigating the volatility associated with commodity prices.

“Diversifying export portfolios beyond oil dependency, is essential for long-term sustainability,” he says.

“Investors are more inclined towards equities of companies with diversified revenue streams, as they are less susceptible to commodity price shocks.”

Ebenezer suggests that a decrease in U.S. Federal Reserve interest rates could attract foreign investors seeking higher returns, thereby increasing capital inflows into the local market.

Traders closely monitored the U.S. Fed’s decision on March 20, with major stock averages hovering around the same levels in anticipation.

Treasury yields remained stable ahead of the Fed’s announcement, with the two-year Treasury rate dropping slightly to 4.675% and the 10-year yield decreasing to 4.279%, according to CNBC. Ultimately, the Fed decided to maintain interest rates within the range of 5.25% to 5.50% for the fifth consecutive time, aligning with market expectations. It also reaffirmed its earlier projection of three rate cuts by year-end, shown by its dot plot. Reports further indicated that “nine of the Fed’s 19 policymakers see three quarter-point rate cuts this year, and nine see two or less; only one penciled in more cuts than the median, compared with five in December.”

While the NGX’s performance is driven by various factors, understanding both internal and external variables is crucial for navigating future market dynamics. Amidst this growth, considerations abound, highlights Nigerian business analyst, Liadi Oluwaseyi Jimoh, as he cautions investors about the heightened market volatility.

“Rapid growth can lead to increased market volatility, making it essential for investors to carefully assess risks and potential fluctuations in stock prices.”

“Increased market capitalization does not always guarantee deep liquidity, which could affect the ease of buying and selling stocks, especially during turbulent market conditions.”