In the Nigerian Stock Exchange*, BUA Foods Plc has since joined the club of stocks worth over one trillion (SWOOTs). Yes, just like that, another company has been seeded that is worth at least N1 trillion. Nigeria has a promise for builders and makers despite the paralysis. The club members now are Airtel Africa, BUA Cement, Dangote Cement, Nestle, MTN Nigeria and – BUA Foods.
- Airtel Africa – N3.95 trillion
- BUA Cement – N2.32 trillion
- Dangote Cement – N4.59 trillion
- Nestle – N1.137 trillion
- MTN Nigeria – N3.87 trillion
- BUA Foods – N1.19 trillion
So the three sectors – cement, food and telecoms – now have pairs in the club. In my 2022 Outlook, I explained how you can trace this back to the 1917 and 1967 largest publicly traded companies in the United States. Then, steel companies (US Steel) dominated, then tech infrastructure firms (IBM) and until recently knowledge firms like Apple and Microsoft.
Where are the fintechs? Not yet. Nigeria is at a state where building houses, having core tech infrastructure and eating food are things that interest the investors. So, if you plan to hit it big in the nation’s stock market, you know where to focus.
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Sure, within a decade, we expect the new species of tech firms to register in the big board as the current wave of digitization transforms the economy. I expect startups which are focusing on agriculture related domains like logistics, processing, distribution and actual farming to continue to have opportunities in the local exchange.
Besides food, the battle for cement continues and BUA Cement is also firing all the cylinders.
One of the many reasons why BUA cement is so attractive to anyone looking to invest is its efficiency. BUA Cement has displayed elite level of proficiency in its cost management, let me sight an example with the performances from 2020 in comparison with Dangote Cement and Lafarge Africa.
These are the gross earnings for 2020
- Dangote cement plc- N1.034 trillion
- Lafarge Africa plc- N230.6 billion
- BUA cement plc- N 209.4 billion
Whilst these are the profit after tax for the period.
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Dangote Cement- N276 billion
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Lafarge Africa plc- N30.8 billion
- BUA Cement plc- N 72.3 billion
If you compute profit after tax as a percentage of the gross earnings (eliminating the cost component) you’ll notice that BUA’s percentage (35%) is way higher than even Dangote’s at 27% not to mention Lafarge Africa. This is cost proficiency at its finest.
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It’s interesting to see that BUA Foods is now more valuable than Nestle Nigeria, it tells you that our indigenous companies can grow and compete too. Maybe if Glo had gone public, we could have another telecom company up there.
If we really know how to organize and build various sectors, mining and energy firms should be up there too, because they are also fundamental in our stage of development, just like the aforementioned trio.
We expect a firm in large scale agriculture space to be up there too, and another from logistics/transportation; massive opportunities for growth still abound in these heavy areas.
Fintech cannot be part of the conversations yet, because the activities there are largely anchored on size of foreign capital raised, not really on actual cash flows and revenue size, the traditional banks are still far ahead in those areas, yet none is valued at N1 trillion currently…
Nigeria is a large country with huge population, no astute entrepreneur or businessperson can overlook such a market, despite all the negative things you hear about the land, the opportunities remain tempting and irresistible.
We are just starting, a lot will happen in the coming years, just brace up!
I expect startups which are focusing on agriculture related domains like logistics, processing, distribution and actual farming to continue to have opportunities in the local exchange.- Indeed.
Very Important statement.