Corporate Nigeria invested an estimated N1 trillion ($2.4 billion) on property, plants and equipment in the financial year ended December 2020. This represents a 3.4% increase year on year, as the elite companies spent a total amount of N1.06 trillion on capital investment in 2020.
The data was compiled by Nairalytics and sourced from the cash flow statements of thirty of the most capitalized companies on the Nigerian Stock Exchange.
For a year marked by Covid-19 induced lockdown, widespread insecurity, and social unrest, corporate Nigeria still invested more than they ever did since we started collating this data for about 5 years. In 2019 a total of N1.03 trillion was spent while N823.5 billion was invested in 2018.
Three listed companies spent N571.4 billion, about half the amount disbursed as cash
Three of Nigeria’s largest listed organisations topped the list of major spenders doling out a combined N571.4 billion, about half the amount disbursed as cash.
MTN topped the list with about N214.9 billion in property, plant and expenditure expenses followed by cement giant Dangote Cement. Fierce rival, BUA Cement came third with about N146.1 billion.
On a sector basis, the manufacturing sector topped the list, as Nigeria’s major cement players spent about 65% more on property, plant and equipment perhaps buttressing the fierce competition in the space.
Out of the N366 billion spent in 2020, Dangote Cement and BUA alone dished out N356.4 billion. Lafarge only invested N9.9 billion in 2020, by far the lowest of the three and much lower than the N22.3 billion spent in 2019.
BUA and Dangote Cement have been at loggerhead over the last few years as they struggle for market share across the country. But while nearly all of BUA’s spending is in Nigeria alone, Dangote Cement also expends a significant amount of money in other parts of Africa.
The banking sector spent a total of N285.7 billion to expand capacity in 2020
Eleven Nigerian banks spent a sum of N287.7 billion to expand their operating infrastructure in 2020, 26.5% lower than what they jointly spent on property, plant and equipment in 2019, with Ecobank doling out a total N113.9 billion compared to N147.0 billion the bank spent in 2019.
UBA and GT bank spent N33.4 billion and N31.4 billion respectively on PPE in 2020, while Nigeria’s largest lender by asset value, Access bank spent a total of N29.2 billion on capital investments in 2020, down from the N37.5 billion it spent in 2019.
Impact of these capital investments on capacity
The second-largest spender of the thirty most capitalized companies on the Nigerian Stock Exchange, Dangote Cement Plc, increased its capacity in Nigeria by 3 million MTPA, this move saw the Group’s cement production and bagging capacity increase from 45.550 million MTPA in 2019, to 48.55 million MTPAin 2020.
In addition to this, Dangote Cement Plc completed and commissioned two export terminals, and a gas power plant in Tanzania.
The investment of BUA Cement Plc on key production capacities in previous periods especially 2020, looks set to produce some results as the cement manufacturer prepares to commission its second Kalambaina Cement Line of 3 million MTPA in Sokoto State in the third quarter of 2021.
When the cement line is commissioned it will add to the robust infrastructure of the cement tiger, and expand its installed capacity from 8 million MTPA to 11 million MTPA.
This in addition to the new cement plants in Sokoto, Edo, and Adamawa which will be constructed at the cost of $1.050billion and completed by the end of 2022, will expand the total installed cement production capacity of the company to 20 million MTPA.
MTN Nigeria, another big spender in 2020 also acquired an additional 10MHZ spectrum in the 800MHZ band from Intercellular Nigeria Limited.
This move came in shortly after the acquisition of Visafone, and the transfer of 800MHz spectrum to MTN Nigeria by the Nigerian Communications Commission.