Nigeria: 'AfCFTA Will Favour Consumer, Industrial Goods Stocks'

10 July 2019

As Nigeria awaits the positive impact of the African Continental Free Trade Area Agreement (AfCFTA) on the economy, some stakeholders in the capital market have said the consumer goods sector of the stock market will fetch investors significant returns in the long-term.

The AfCFTA is a trade agreement among African Union member states with the goal of creating a single market followed by free movement and an African single-currency union.

The AfCFTA was signed in Kigali, Rwanda, on 21 March 2018, while President Muhammadu Buhari signed the agreement last Sunday, in Niamey, Niger Republic, after an extensive nationwide consultation and sensitisation programme of domestic stakeholders.

Nigeria is expected to extract numerous benefits from the agreement. And as necessary efforts are being made to ensure the benefits are derived, some shareholders and other stakeholders in the stock market have said consumer and industrial goods companies would witness growth. They have therefore said investing in stocks in the sector would yield high returns on the long run.

Stocks in the consumer goods sector of the NSE are: Cadbury Nigeria Plc; Champion Breweries Plc; Dangote Sugar Refinery Plc; Flour Mills of Nigeria Plc; Guinness Nigeria Plc; Honeywell Flour Mills Plc; PZ Cussons Nigeria Plc; Unilever Nigeria Plc; Vitafoam Nigeria Plc; International Breweries Plc; Nigerian Breweries Plc; NASCON Allied Industries Plc; Nestle Nigeria Plc and Northern Nigeria Flour Mills Plc.

On the other hand, stocks in the industrial goods sector are: Berger Paints Nigeria Plc, Beta Glass Plc, CAP Plc, Cement company of Northern Nigeria Plc; Cutix Plc, Notore Chemical Industries Plc; Dangote Cement Plc and Lafarge Africa Plc.

According to the Chief Executive Officer of Financial Derivatives Company Limited, Mr. Bismarck Rewane, once the agreement begins to yield the expected fruits, some of the companies in these sectors with strong management and good strategy would witness improved performance, which will lead to higher earnings and dividends declaration.

An investor, Mr. Moses Igbrude, said the signing of the agreement by President Buhari was a good development that was expected to impact the economy positively.

"Although there are things that the managers of our economy and government in general need to put in place for us to enjoy the benefits of the agreement, I am optimistic that on the long run, companies manufacturing consumer and industries goods would do well and deliver good returns to investors. "In fact, this is the time to acquire those stocks and await the benefits that will accrue from the agreement," Igbrude said.

He explained that listed companies that have affiliates in countries in West and other parts of Africa would be more favoured by the agreement.

Commenting on the AfCFTA, Director General of Lagos Chamber of Commerce and Industry(LCCI), Mr. Muda Yusuf, said Nigeria has enough to offer and benefit significantly.

He, however, added that, "there are issues we need to deal with. We need to fix our institutions, we need to fix our infrastructure, we need to fix some our monetary and investment policies.

"We need to fix all of these. But do not forget, this is just the beginning and the AfCFTA also has provisions through which we can also protect a few of vulnerable sectors.

"We need to ensure that we position our enterprises to be competitive because if you are stepping out the comfort zone of your country or region to continental space, you need to prepare for competitive issues that will arise.

"We need to deal with issue of competitiveness to bring down our operating cost. We will explore that to ensure we do not expose our economy unduly," Yusuf said.

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