DANGOTE Cement, BUA Foods and 10 other companies earned over 70 per cent of the N21.84 trillion gains the Nigerian stock market posted in 2024, as the market remains largely untapped by the Nigerian government, The ICIR can report.
The boom saw the market capitalisation, a total market value of all the company’s outstanding shares, rise to N62.76 trillion at the close of trading in December 2024 from N40.92 trillion the market opened in January.
A cursory look at the total market value by companies shows that Dangote Cement, BUA Foods and 10 other companies gained approximately 74.03 per cent or N16.17 trillion of the N21.84 trillion NGX posted in 2024.
The other companies are Airtel Africa, Lafarge Africa, Seplat Petroleum Development Company, Transcorp Hotels, Geregu Power, Transcorp Power, United Bank for Africa (UBA), Zenith Bank, FBN Holdings and Guaranty Trust Holding Company (GTCO).
According to the NGX, high-profile listings energised trading activities on the exchange, providing investors with a broader range of blue-chip stocks with notable entries including Geregu Power, Transcorp Power, Aradel Holdings, and BUA Foods.
It noted that the listings propelled the market capitalisation from N12.79 trillion at the end of 2019 to N62.76 trillion as of December 2024, representing a meteoric increase of N49.97 trillion.
“Inflationary pressures have made equities an attractive hedge, and strategic new listings have significantly boosted market activity,” the group managing director/chief executive officer of Nigerian Exchange Group, Temi Popoola, said.
An analysis of the market capitalisation of the 12 companies shows that BUA Foods gained N3.99 trillion, Dangote Cement N2.71 trillion, Transcorp Power N2.35 trillion, Geregu Power N1.88 trillion, Seplat N1.99 trillion, and Airtel Africa N1.014 trillion.
GTCO gained N485.61 billion, Transcorp Hotels N469.31 billion, Lafarge Africa N619.34 billion, UBA N285.57 billion, Zenith Bank N215.07 billion, and FBN Holdings N161.53 billion.
In Janaury 2024, The ICIR reported that Dangote, Airtel, MTN, and nine others owned 79 per cent of NGX’s total market capitalisation.
Stock market remains untapped
Despite the impressive growth, challenges remain that the Nigerian capital market continues to grapple with high transaction costs, information asymmetry, monetary tightening, low trading volumes, and wide bid-ask spreads, all of which stifle liquidity, according to Proshare’s 2025 market outlook.
Amidst the challenges, however, experts believe in the potential of leveraging the equity market through the listing of national assets, such as Nigerian National Petroleum Company (NNPC) Limited, to unlock liquidity and stimulate domestic and foreign investment.
The capital market is not only a platform for raising funds but also a vital engine for wealth creation, economic diversification, and infrastructure development, the director-general of the Securities and Exchange Commission (SEC), Emomotimi Agama, said at the 28th annual conference of the Chartered Institute of Stockbrokers (CIS) in November 2024.
He stressed that by effectively channelling resources into productive sectors, the market can stimulate industrial growth and technological advancement, adding that the ambitious goal of President Bola Tinubu’s $1.0 trillion economy could only be achieved through the collective efforts of all stakeholders in the financial ecosystem.
The projected federal government revenue of N34.82 trillion would only be sufficient to take care of total recurrent expenditure (debt and non-debt) of N30.02 trillion, leaving about N4.8 trillion available for capital expenditure, if budget benchmarks are met, the president of Capital Market Academics of Nigeria (CMAN) and former Commissioner for Finance, Imo State, Uche Uwaleke, maintained while delivering the inaugural CMAN Fellowship Lecture and investiture ceremony in December 2024.
Uwaleke, who is also the director at the Institute of Capital Market Studies, Nasarawa State University, pointed out that there have been worries that the federal government budget deficit financing in recent years has relied significantly on external borrowing.
He believes the federal government should de-emphasise Eurobonds financing options because of their expensive rates, lamenting that the weight of non-concessional Eurobonds in the external debt portfolio had grown substantially.
Nigeria’s external debt currently stood at N63.1 trillion ($42.9 billion) and its overall debt profit at NN134.3 trillion ($91.3 billion), according to the Debt Management Office (DMO).
“Although Eurobonds represent about 35% of the country’s external debt stock, they now account for 55 per cent of the cost of external debt service,” Uwaleke pointed out.
President Tinubu has proposed a 2025 budget aggregate expenditure of N47.9 trillion, debt recurrent expenditure of N15.81 trillion, non-debt recurrent expenditure of N14.21 trillion, and capital expenditure of N16.48 trillion, deficit of N13.08 trillion and revenue of N34.82 trillion.
According to Uwaleke, capital expenditure should be financed via the capital market plus any surplus from government revenues.
He suggested that the government could achieve this by raising funds through infrastructure bonds (domestic and sovereign Sukuk, Green bonds), and Panda bonds (instead of expensive Eurobonds), securitisation, public-private partnerships (PPPs), privatisation proceeds, and including long-term funds from development partners.
In December 2024, the Nigerian stockbrokers identified strategies by which the federal government can deepen the capital market to achieve its proposed $ 1tn economy without increasing borrowing or deploying ways and means to finance the economy.
In a communique signed by the president and chairman of the council of the Chartered Institute of Stockbrokers (CIS), Oluropo Dada, and the registrar and chief executive, Josiah Akerewusi, the Institute had urged the federal government to list NNPCL and other moribund state enterprises on the secondary markets to deepen the markets, enhance the companies’ ability to make a profit and generate revenue for the government through tax.