Nigeria has continued to dominate West Africa’s business sector as eleven out of the twelve companies with market capitalisation of over $1 billion in the sub-region are Nigerian firms. Seven of these companies are in the banking sector, according to a report by the Africa Development Bank (AfDB).
Forty-four out of the 50 largest firms within West Africa are also from Nigeria says the report which outlines strategy for supporting integration efforts in the sub-region between 2011 and 2015.
The AfDB figures expose numerous challenges that the domestic West Africa private sector faces which have kept most of them at Small and Medium Enterprises (SMEs) level.
“The large companies are mostly concentrated in Nigeria, and operate mainly appointing the banking, telecommunications and industrial sectors”, the AfDB noted.
In the report, AfDB pointed to the fact that businesses in the sub-region are unable to thrive due to poor business climate and that much remains to be done.
It cited the World Bank’s Doing Business 2010 which showed more than two-thirds (11 out of 15) of Economic Community of West African States (ECOWAS) countries ranking in the bottom quintile of the 183 countries assessed.
It, however, noted that in line with reform efforts by individual countries, efforts are ongoing to harmonise business laws and procedures across ECOWAS to facilitate cross-border business which is critical in improving the region’s business climate.
But to facilitate cross-border business will involve integrating the financial market in the sub-region, which had remained narrow and shallow.
It further noted that integration with Nigeria’s financial market alone, considering its size, will be a huge step towards financial integration of West Africa.
It said efforts to integrate the Nigerian Stock Exchange (NSE), the Abidjan based bourse, Regionale des Valeurs Mobilieres and Ghana Stock Exchange, including the mutual cross-listing and trading of stocks were underway and commendable.
This is because the integration of the capital markets in the sub-region had the potential to allow savings to be pooled across the region, cut costs, boost information sharing among members and enhance competition and innovation across financial institutions.
It will also open up wider choices of financial products provided to regional and foreign investors and more integration into the global economy facilitated by increased attractiveness of markets.
At the opening session of a consultation meeting on regional integration in West Africa with ECOWAS Commission in Abuja last week, Nigeria country director, AfDB, Ousmane Dore, said regional integration is critical for Africa to realise its potential for sustainable and inclusive growth, and be able to participate in the global economy. But logistics and policy impediments have been major challenges to economic integration at national and regional levels, Dore said.
He noted that regional integration forms one of the core operational priorities of the bank’s ten year strategy.
He said for instance, that since 2009, AfDB has financed over 70 multinational operations for a total of $3.8 billion, resulting in a construction and rehabilitation of 776 kilometres of roads and cross-border transmission lines.