By Jeph Ajobaju, Chief Copy Editor
Major companies listed on the Nigerian Stock Exchange (NSE) invested N1.06 trillion on property, plants and equipment in the financial year ended December 2020 and spent N31.22 billion on business travel expenses.
Investment rose 3.4 per cent year on year, according to data compiled by Nairalytics sourced from the cash flow statements of 30 of the most capitalised companies on the NSE (NSE-30).
Despite coronavirus lockdown, insecurity, and social unrest, corporate Nigeria still invested more than it ever did since Nairalytics started collating the data for about five years.
A total N1.03 trillion was invested in 2019 and N823.5 billion in 2018.
Their travel expenses slashed 36.97 per cent from N49.54 billion in 2019 to N31.22 billion in 2020, gleaned from another set of data obtained by Nairametrics Research from the audited financial statements of the NSE-30.
Travel expenses include flight tickers, hotel expenses, cost of renting and maintaining private jets, local interstate and intrastate transportation, et cetera.
- Only three of the 30 companies increased travel expenses in 2020.
- Guinness did by 283.1 per cent, from N261.4 million to N1 billion; Nascon Allied Industries spent N91.8 million, rising 125.2 per cent and Presco Plc N2.02 billion or 33.7 per cent.
- MTN Nigeria recorded the highest decline of 79.9 per cent worth N964 million against N4.79 billion in 2019.
- Travel expenses by Stanbic IBTC dipped 60.95 per cent to N676 million.
- Some companies were not included in this study as they did not disclose their travel expenses in 2020.
Explanation for reduction
Coronavirus lockdown in 2020 contributed to the decline in the travel expenses of the companies, as Abuja introduced movement restrictions to curtail the spread of the virus.
- Business travel expenses were cancelled across Nigeria’s commercial and political nerve centres. Airlines, hotels, and the entire travel industry suffered huge revenue losses.
- The travel industry was one of the worst-hit.
- High travel cost implications, hotel rates, and reduction of airline services also made companies to phase out in-person meetings and business travel, finding it more affordable and productive to hold virtual meetings.
- Deployment of technology helped companies cut travel expenses since part of the reasons for business travel are conferences, meeting suppliers, and customers.
- Going forward, video calls show strong potential to replace in-person meetings, resulting in fewer business travels.
- Business travels for training and other learning activities can be done virtually.
- Further adoption of digital meetings may continue to reduce business travel expenses.
Online work from home with tools such as Microsoft Teams and Zoom had a revenue boost as the private sector and the government relied on them to connect with clients, employees, and other stakeholders.
Top five spenders
Increase or drop in travel expenses in some companies suggests the approach management took in response to lockdown. Some went fully virtual, others continued spending, perhaps due to inefficient cost structure that could not be scaled down.
Access Bank (N7.15 billion)
Access Bank spent N7.15 billion on business travel expenses in 2020, a 31.9 per cent reduction compared to N10.5 billion in 2019.
It accounted for 22.9 per cent of the total travel expenses by the top 30 companies on the NSE.
The bank’s total asset as of December 2020 stood at N8.67 trillion, the highest on the NSE.
UBA (N4.94 billion)
United Bank for Africa (UBA) spent N4.94 billion, down 30.1 per cent against N7.06 billion in 2019.
Its accounted for 15.8 per cent of the total travel expenses of the NSE-30.
UBA grew 27.7 per cent profit after tax from N89.1 billion in 2019 to N113.8 billion in 2020.
FBN Holdings (N3.51 billion)
FBN Holdings, the parent company of First Bank of Nigeria, one of the major financial institutions in the country, spent N3.51 billion on travel expenses, a reduction of 48.24 per cent to N3.51 billion, against N6.78 billion in 2019.
FBN Holdings accounted for 11.2 per cent of the total business travel expenses by the NSE-30.
FBN Holdings classified its travel expenses as passages and travels.
Dangote Cement (N2.11 billion)
The most capitalised company on the NSE, valued at N3.7 trillion, Dangote Cement spent N2.11 billion on business travel expenses in 2020, a 13.8 per cent decline from N2.45 billion in 2019 to N2.11 billion.
Presco Plc (N2.02 billion)
Presco Plc, a company specialising in the cultivation, extraction, refining, and fractionation of palm oil into finished products, spent N2.02 billion.
Its travel expenses represent a 33.71 per cent increase compared to N1.51 billion in 2019.
It accounted for 6.5 per cent of the total recorded by the NSE-30.
Bubbling under
Zenith Bank (N1.88 billion)
Seplat (N1.26 billion)
Guinness (N1 billion)
MTN Nigeria (N964 million)
Fidelity Bank (N964 million)
Note: Fidelity Bank classified its expenses as travelling and accommodation, MTN Nigeria listed them as trainings, travels, and entertainment cost.
