Key Insights and Foresights from 148 Nigerian Public Companies in 99 Years

In 1961, the Nigerian Stock Exchange was established. It is a privately held company that assists firms in raising funding for scaling up or financing existing expansion. The Securities Exchange Commission was founded a few years later, in 1979. These suggest that the capital market began as soon as the country gained independence in 1960. The Nigerian Exchange Group has replaced the NSE, which is regulated by the Securities and Exchange Commission.

This piece is not about disclosing the legal and regulatory frameworks that govern capital market participants. Rather, it concentrates on the NEG database’s quality. After several hours of searching the database, our analyst discovered that 148 companies were reported to be incorporated between 1920 and 2019. There were 79 companies with the year and date of listing out of this total. Companies were more listed between 2000 and 2009, 2010 and 2019, while companies were more incorporated between 1990 and 1999, 1960 and 1969, according to further analysis. Despite the large number of firms established between 1950 and 1969, our analysis finds that just a few were listed on the Exchange.

Exhibit 1: 156 Companies by Sector

Sector-by-sector analysis shows that over 32% of 156 companies are operating within financial services. Services other than finance also dominate with 15.38%. Consumer goods and industrial goods are in the third and fourth position respectively. Our analyst notes that the presence of companies from service sector could be linked to the relative growth of the sector over the years in Nigeria. However, the low representation of corporations in the oil and gas, ICTs, construction/real estate, healthcare, conglomerates, agriculture, and natural resources sectors could not be related to the sectors’ recent underperformance in terms of nominal GDP growth rates. Instead, it should be connected to variables including company size, a lack of interest in attracting public investors, and having too few shareholders to qualify for a listing.

Exhibit 2: 79 and 148 Companies by Decade of Listing and Incorporation

Moving forward, our analyst believes the NEG and SEC should focus on improving data quality by adding necessary variables or indications to the existing database. It’s astonishing that NEG is unable to search the Corporate Affairs Commission’s database for adequate evidence of company incorporation years. Simultaneously, the Group is neglecting to use company data in the creation of the CEO database. Our analyst expects parties to collaborate on data collection and administration.