Corporate Nigeria represented by the largest listed companies on the Nigerian Stock Exchange experienced a reduction in business travel expenses in the year 2020.

According to data obtained from the audited financial statements of the top 30 companies listed on the Nigerian Stock Exchange (NSE) known as the NSE-30 and verified by Nairametrics Research, travel expenses dipped by 36.97% from N49.54 billion recorded in 2019 to N31.22 billion in 2020.

Travel expenses include flight tickers, hotel expenses, cost of renting and maintaining private jets, local interstate and intrastate transportation etc.

• Of the 30 companies considered, only 3 of them increased their travel expenses in 2020. Notably, Guinness increased its travel expenses by 283.1% from N261.4 million to N1 billion in the review period.
• Nascon Allied Industries and Presco Plc incurred a sum of N91.8 million and N2.02 billion in travel expenses, representing a 125.2% and 33.7% increase respectively.
• On the other hand, MTN Nigeria recorded the highest decline in travel expenses, reduced by 79.9% to stand at N964 million as against N4.79 billion recorded in 2019. Stanbic IBTC followed with a decline of 60.95% to stand at N676 million.
• It is worth noting, that some companies were not included in this study as they did not disclose their travel expenses during the period under review.

READ: Banks earn N216 billion in E-banking income amidst threat from challenger banks

Why the drop?

The drop in travel expenses was expected as the entire private sector experienced a lockdown for most parts of the year due to Covid-19. The Federal Government introduced movement restrictions on land, sea, and air commute in response to the spread of the Covid-19 virus.

• This resulted in the cancellation of business travel expenses across the commercial and political nerve centres of the country. Bearing the brunt of this cut in expenses were airlines, hotels, and the entire travel industry who suffered massive revenue losses.
• The travel industry has been one of the worst-hit sectors due to the COVID-19 outbreak with lockdowns, travel bans, restrictions, and quarantines, which have had a severe impact on business travel for corporate entities in Nigeria.
• High travel cost implications, hotel rates, and reduction of airline services also made companies resort to phasing out in-person meetings and business travel, as it is more affordable and productive to go digital.
• The deployment of technology has helped companies cut their travel expenses since part of the key reasons for business travel is for conferences, meeting suppliers and customers. Going forward, video calls show strong potential to replace in-person meetings, resulting in fewer business travels.
• Additionally, business travels that are meant for training and other learning activities can be done through e-learning.
• The consistency of corporate entities in adopting technology by going digital will likely continue to reduce business travel expenses of corporations in the country.

READ: Nigerian corporates spend N1 trillion on capital investment in 2020

Gains and losses

On the flip side, online virtual work from home tools such as Microsoft Teams and Zoom recorded massive revenue boost as the private sector and even government relied on them to connect with clients, employees and other stakeholders.

• Unfortunately, Nigerian businesses, particularly the tech sector failed to take advantage of the travails of the hospitality sector losing much of this revenue to the likes of Microsoft, Google, Netflix, and Zoom. Nevertheless, other Nigerian tech companies, especially in the entertainment, payment, savings and loans space all recorded a significant boost in topline revenues.

The top 5 spenders

The increase or drop in travel expenses for some of the companies under review suggests the approach management took in response to the Covid-19 lockdown. While some reacted by going completely remote as indicative of their numbers, others continued spending, perhaps due to an inefficient cost structure that could not be scaled down despite the imposed lockdown.

Access Bank (N7.15 billion)

Access Bank Plc spent a total of N7.15 billion on business travel expenses in 2020, representing a reduction of 31.9% compared to N10.5 billion recorded in the previous year.

• The tier-1 bank accounted for 22.9% of the total travel expenses incurred by the top 30 companies on the NSE.
• The bank’s total asset as of December 2020, stood at N8.67 trillion, representing the highest on the NSE.

UBA (N4.94 billion)

United Bank for Africa incurred a sum of N4.94 billion on business travels in the year 2020. Its travel expenses reduced by 30.1% compared to N7.06 billion recorded in 2019.

• Its expenses accounted for 15.8% of the total recorded by companies under consideration.
• UBA recorded a growth of 27.7% in profit after tax from N89.1 billion recorded 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 a total of N3.51 billion on travel expenses in the year under review.

• The tier-1 bank reduced its business travel expenses by 48.24% from N6.78 billion recorded in 2019 to N3.51 billion.
• Also, FBN Holdings accounted for 11.2% of the total business travel expense of the companies under consideration.
• It is worth noting that FBN Holdings classified its travel expenses as passages and travels.

Dangote Cement (N2.11 billion)

The most capitalized company on the Nigerian Stock Exchange, valued at N3.7 trillion spent a total of N2.11 billion on business travel expenses in 2020.

• The foremost cement manufacturer in Nigeria recorded a 13.8% decline in travel expenses from N2.45 billion recorded in 2019 to stand at N2.11 billion in 2020.

Presco Plc (N2.02 billion)

Presco Plc, a fully-integrated agro-industrial establishment specializing in the cultivation, extraction, refining, and fractionation of crude palm oil into finished products, spent a total of N2.02 billion on travel expenses in 2020.

Its travel expenses in 2020, represent a 33.71% increase compared to N1.51 billion recorded in the previous year.

• It also accounted for 6.5% of the total travel expenses recorded by the companies under consideration.

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, while MTN Nigeria as Trainings, travels and entertainment cost.

A major Management restructuring is at the final stages of completion at Guaranty Trust Bank, one of Nigeria’s most respected commercial banks.

Sources with knowledge of the matter informed Nairametrics that a clean sweep of top management staff above the age of 45 has been effected as current maverick MD/CEO Segun Agbaje prepares to retire as MD/CEO of the bank and proceed as MD/CEO of the bank’s Holding Company.

Segun Agbaje is expected to leave following the end of his 10-year tenure as Managing Director of the bank.

According to multiple sources, the bank is set to announce Miriam Olusanya as its new Managing Director. We understand the Central Bank has already been notified and a formal announcement could be made anytime soon.

READ: BankTech War: Segun Agbaje says GTBank not afraid of Fintech

In an internal memo dated April 28, 2021, and seen by Nairametrics, Thomas John has been appointed Managing Director of GTB West Africa while Bayo Veracruz was appointed Managing Director of GTB East Africa.

Others are Olayinka Odusote as Divisional Head, Digital Banking, an important position considering the bank’s ambition to transform into a full-fledged digital bank. Ijeoma Esemudje is appointed Divisional Head Corporate Bank Mainland & Agric.

As part of the management restructuring already in effect, two of the oldest and revered Executive Directors of the bank have already been asked to retire after illustrious years of service to the bank. Nairametrics also understands 4 General Managers out of 9 have also been asked to exit the bank paving the way for younger executives mostly under the age of 45 to take charge.

A list of appointments and exits purportedly approved by the board is already being circulated across several social media groups on WhatsApp and Telegram. Nairametrics cannot confirm the authenticity of the list and although officials at the bank did not confirm the list, they stated that a press release would soon be made to announce the appointments.

READ: GTB, Zenith, UBA lead banks with highest social media followers 

Recruitment vs Selection Process?

In September 2020, Agbaje disclosed during the bank’s investor earnings call that GTBank was already looking for its next Managing Director. According to him, five of the bank’s Executive Directors were in line for the top job and were at the concluding stages of the recruitment process.

He said:

“What we are looking for now is a Managing Director for Guaranty Trust Bank Nigeria. The process has started; we have 5 Executive Directors and so all of them are going through the process at the moment.

We are working with a consulting firm in the UK ….. at the end of this process which will end at the beginning of the fourth quarter, we will have a Managing Director for GT Bank Nigeria.”