What foreign investors hate about Nigerian companies

It is interesting how a good number of Nigerian companies complain of lack of capital to execute their expansion plans but do everything to ensure that they are not attractive to investors that could provide them with the capital they need.

Oscar Onyeama, DG, NSE 

As a financial journalist, I have the privilege of being in contact with several investors seeking to invest in Nigerian companies. However, most of them have similar complaints about Nigerian companies.

The common complaint is lack of information. It is not possible to make an investment without information. It is also not possible to monitor an investment without information.

Most Nigerian companies however see no need to provide information about their businesses. It is so bad that even listed companies do not consider it appropriate to provide information about their finances. In a modern world, the first place most investors go in search of information about a company is the company’s website.

I am not certain how many companies listed on the Nigerian Stock Exchange (NSE) have a website but they are few. Beside listed banks, most other companies do not deem it fit to have a website. Then, even for those that have websites, financial information is not adequately provided. Investors as much as possible want to see the company’s full current annual report. That is the minimum. Most companies will either provide basic financial information or none at all.

The Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC) have also not helped in this direction. It would have been nice if both institutions would have considered it fit to have a link on their website for all listed companies to have their annual report uploaded. The world is too modern for this basic information about quoted companies not to be easily available.

The other thing that foreign investors hate about Nigerian companies is that they never pick their calls. “The CONTACT US” page on most Nigerian company websites is not functional. Put a call to the contact us number on the website, it is never picked up. The question is why provide a contact us number, if you do not intend to pick up your call. It is really frustrating.

Related to this also, is the contact e mail address provided on the website of most Nigerian companies. Send a mail to the number, and there is a 1 in 10 chance that you would never get a reply. The mails are never responded to. And no apologies are provided to even say we cannot respond to your mail.

Finally, foreign investors also hate the fact that you are never sure when dealing with a Nigerian company. An investor told me recently how he travelled all the way to Nigeria to discuss an investment deal with a company. It was only when the discussions had reached an advanced stage that he was  told by his supposed Nigerian business partner that the license they are talking about is not theirs but belonged to another company. He was only the middleman. The potential investor was so disappointed that he never bothered to continue with the discussions again.

There is also the issue of the governance structure of most Nigerian companies. This is usually dominated by the owner manager while most other directors on the board often tend to be beholden to the owner manager. The implication is that business decisions are always dominated by the owner manager. Most Nigerian companies that have sought listing outside the NSE have found themselves being forced to change their governance structure.

The above challenges are by no means restricted to Nigerian companies. In fact, Nigerian companies are quite ahead compared to most other companies in Sub Saharan Africa. But then, Nigeria is a very attractive market in Africa, and so naturally, there is a lot of interest in investing in the country and so it is expected that companies would subscribe to a higher standard of doing business to make them more attractive globally.