West Africa: Nigeria rules sub-region.

After last year's survey of the top African companies, it would scarcely have been credible for Nigeria to further entrench its domination of West Africa's listed companies. Out of the top 50 companies in the region, an incredible 40 were based in Nigeria, with six in Ghana and four in Cote d'Ivoire.

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Yet another year of strong growth in Nigeria has seen the West African giant extend its lead, taking 44 out of the top 50 slots in this year's survey, leaving just three for Ghana and two for Cote d'Ivoire.

First Bank of Nigeria is the biggest company in West Africa in this year survey. The rise in its market capitalisation from $2.2bn last year to $2.6bn in this year's survey has enabled it to overtake Nigerian Breweries. The latter suffered a small fall in value but hangs on to second spot ahead of telecoms company Sonatel of Senegal and a host of Nigerian banks.

Seven of the top 12 listed companies in West Africa are Nigerian banks: First Bank of Nigeria, Zenith Bank International, Union Bank of Nigeria, United Bank for Africa, Intercontinental Bank, Guaranty Trust Bank and Oceanic Bank.

All of the top 12 companies have market capitalisation in excess of $1bn, up from just four firms last year, indicating that the body of substantial Nigerian companies, particularly in the banking sector, is growing strongly.

Oceanic Bank is worthy of particular mention for the rapid rise in its market capitalisation from $463m last year to $1bn just 12 months on.

Under the leadership of governor Charles Soludo, the Central Bank of Nigeria (CBN) has rapidly reformed the banking industry. New standards and regulations resulted in a series of mergers and acquisitions, and while this may have resulted in fewer larger banks in many economies, the opposite has occurred in Nigeria.

The number of registered banks was quickly reduced from 89 to 25, still a relatively high number in relation to the size of the Nigerian economy, but this means that more banks are large enough to qualify for our top 50.

However, even excluding financial services companies, Nigeria has a strong presence in the top 50. While foreign companies continue to dominate the Nigerian telecoms industry, several construction firms are listed.

Despite the predominance of the Nigerian oil and gas industry by the international oil majors, some effort has been put into encouraging the emergence of Nigerian companies in the industry, either as upstream participants themselves, or in associated ancillary services. Falling within this category, Conoil, Oando and African Petroleum all make our list, while others are likely to enter over the coming years.

In addition, some of the majors have listed subsidiaries based in Nigeria. Total Nigeria, Mobil Oil Nigeria and Chevron Oil Nigeria are all among Nigeria's largest 50 companies.

Big fish in a small pond

It is important not to exaggerate the scale of the Nigerian achievement. West Africa's biggest economy may be a very big fish but it is swimming in a very small economic pond. While the country's largest firm by market capitalisation, First Bank of Nigeria, may be bigger than the best that East Africa can offer, there are nine bigger companies in North Africa, the largest of which--Orascom Telecom--is almost six times bigger than First Bank.

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The comparison with South Africa is even more startling, where 35 enterprises have higher market capitalisation than the Nigerian bank. The top African firm, Anglo American, is more than 27 times bigger than First Bank.

Given that Nigeria is the most populous country in Africa by a wide margin, with 140m inhabitants, it is clear that the country's economy and capital markets are hugely underdeveloped. Despite the domination of our table by Nigerian companies, the West African state's economy is built upon the success of foreign oil and gas firms. This situation is unlikely to change for the foreseeable future, but the non-oil economy is now growing more rapidly than for many years and the government and private sector investors are finally beginning to improve the country's infrastructure.

The West African tradition of entrepreneurship is finally being allowed to come to the fore and privately owned firms are taking off. The most successful have a huge country within which to grow and so the lack of progress on creating a single market within the Economic Community of West African States (Ecowas) region should not be too much of a constraint. Yet the Nigerian domination of West Africa should not mask the fact that Nigerian companies have a long way to go before they can measure up to the continent's biggest.

The bar has certainly been raised in terms of qualifying for the top 50. Nigeria's 7-Up Bottling Co came in 50th place in 2006 with market capitalisation of $88m, yet that figure has increased by over one third this year to $118m. This increase is partly the result of Nigeria's economic success but also stems from consolidation in the country's banking system.

The performance of Nigerian companies over the next few years will largely depend on the new government ensuring stability in the country and continuing to improve Nigeria's attractiveness as an investment destination. There are certainly plenty of firms that could expand greatly if Nigerians were to become wealthier, and others still that could prosper if they were able to benefit from more reliable transport networks and other infrastructure. Yet some progress has already been made in this direction and, on balance, continued growth is likely.

Despite the rise of some Nigerian firms in the sector, foreign companies are likely to continue to dominate the oil and gas industry, and there is no prospect of the Nigerian National Petroleum Corporation (NNPC) being privatised. Most large domestic companies are therefore likely to appear in the non-oil sector.

Greater economic stability should prompt more investment in property, construction, hotels and catering.

RELATED ARTICLE: Ghana

Raising of ranking bar hits Ghanaian companies 

The inclusion of Nigerian companies in any survey of the biggest firms in West Africa leaves little room for the analysis of non-Nigerian performance. As a result, we have also opted to examine the region when all Nigerian enterprises are taken out of the equation.

Of the six companies to qualify for inclusion in our overall West African top 50, only one makes a mark near the top of the table. Telecoms company Sonatel of Senegal maintains its third position of last year, with market capitalisation of $1.7bn. This is up from just $1.2bn last year, highlighting an impressive rise.

The two Ivorian firms both feature lower down: Societe de Limonaderies et Brasseries (Solibra) and Societe Generale de Banque en Cote d'Ivoire. The three Ghanaian entrants include Produce Buying Company and two banks: Standard Chartered Bank of Ghana and Ecobank Ghana Ltd.

However, both countries have a large number of companies that could potentially claim a place in the top 50 in the future. The next tranche of 50 companies--that is, those ranked 51-100 in West Africa--includes 14 from Ghana and 15 from Cote d'Ivoire, with the remaining positions taken up by Nigerian companies.

Cote d'Ivoire was one of the strongest economies in West Africa until political disputes at the end of 2000 eventually culminated in civil war. The country has largely been stuck in a stalemate since mid-2003 and the deployment of UN's peacekeepers the following year. It lost its reputation for stability and also its attractiveness as a safe bet for investment. Ivorians themselves also have less money to spend on the products of domestic companies.

Far larger numbers of Ivorian companies would be expected in our top 50 but until the conflict is settled once and for all, stock values will remain depressed and new listings will be unlikely. Nevertheless, companies from Cote d'Ivoire certainly have the potential to claim higher positions in our surveys in the coming years.

The fact that the number of Ghanaian companies in the top 50 was cut in half from six last year could point to a decline in the fortunes of that country's major companies.

The value of Produce Buying Company may have fallen from $158m last year to $130m in this year's survey but the two banks both recorded sizeable increases.

Given the presence of so many Ghanaian enterprises in the 50-100 tier, it appears that the decline in the top 50 is more the result of changes in Nigeria than a decline in Ghana itself, particularly as the relegated Ghanaian companies were previously ranked in the lower reaches of the table. For instance, the value of Guinness Ghana has increased from $99m to $113m over the past year, although the company's ranking has declined.

WEST AFRICA

                                                          Value in
Company Name                               Country        Dollar terms

 1 First Bank Nigeria                      Nigeria        2,619,627,207
 2 Nigerian Breweries                      Nigeria        2,101,909,106
 3 Sonatel                                 Senegal        1,760,801,842
 4 Zenith Bank International               Nigeria        1,686,903,368
 5 Union Bank Nigeria                      Nigeria        1,592,429,380
 6 Transnational Corporation Nigeria       Nigeria        1,344,265,209
 7 United Bank for Africa                  Nigeria        1,333,297,987
 8 Guinness Nigeria                        Nigeria        1,188,458,466
 9 West Africa Portland Cement             Nigeria        1,132,421,241
10 Intercontinental Bank plc               Nigeria        1,088,213,858
11 Guaranty Trust Bank                     Nigeria        1,083,420,362
12 Oceanic Bank                            Nigeria        1,069,514,914
13 Nestle Nigeria Ltd                      Nigeria          926,599,108
14 Ecobank Nigeria Ltd                     Nigeria          809,488,747
15 Flour Mills Nigeria                     Nigeria          751,502,544
16 Benue Cement Company                    Nigeria          683,293,538
17 IBTC-Chartered Bank plc                 Nigeria          613,441,664
18 Springbank plc                          Nigeria          604,830,503
19 Ashaka Cement                           Nigeria          600,190,270
20 PZ Industries                           Nigeria          492,597,197
21 Total Nigeria                           Nigeria          468,723,562
22 Afribank Nigeria                        Nigeria          438,726,077
23 Diamond Bank                            Nigeria          423,809,213
24 Access Bank Nigeria plc                 Nigeria          377,038,965
25 Unilever Nigeria                        Nigeria          352,866,760
26 Nigerian Bottling Company               Nigeria          349,007,531
27 Skye Bank                               Nigeria          341,301,984
28 Mobil Oil Nigeria                       Nigeria          320,846,008
29 First City Monument Bank                Nigeria          318,807,223
30 Oando plc                               Nigeria          298,981,567
31 Chevron Oil Nigeria plc                 Nigeria          284,273,249
32 Nigerian Aviation Handling Company Ltd  Nigeria          278,689,744
   (NACHO)
33 Cadbury Nigeria                         Nigeria          266,626,101
34 Standard Chartered Bank Ghana           Ghana            260,982,731
35 Sterling Bank Ltd                       Nigeria          257,366,851
36 African Petroleum                       Nigeria          257,304,830
37 Bank PHB Nigeria                        Nigeria          255,469,785
38 UAC Nigeria                             Nigeria          251,440,742
39 Wema Bank                               Nigeria          244,182,023
40 Ecobank Ghana Ltd                       Ghana            227,287,976
41 Conoil plc                              Nigeria          205,769,288
42 Fidelity Bank Nigeria                   Nigeria          189,304,408
43 Societe de Limonaderies et Brasseries   Cote D'Ivoire    175,533,921
   (SOLIBRA)
44 First Inland Bank plc                   Nigeria          153,230,504
45 7-UP Bottling Company                   Nigeria          151,959,657
46 EIB International Bank                  Nigeria          139,128,814
47 Produce Buying Company                  Ghana            130,140,986
48 Unity Bank plc                          Nigeria          129,981,242
49 Glaxo Smithkline Beecham Nigeria        Nigeria          122,068,279
50 SocGen Banque en Cote Ivoire            Cote D'Ivoire    118,676,767