Nigeria’s economy may be down, but its stock market isn’t. As of report time, the All-Share Index was up 45% YTD. Several stocks have given outlandish returns to investors this year. But the biggest winners this year were some of the most unexpected companies.
Two firms have changed from traditional businesses into successful fintech entities and have risen remarkably in the Nigerian stock market. They are Chams Plc and Computer Warehouse Group Plc.
Chams Plc started in 1985 as a company that gave identity verification solutions. But it changed a lot in 2020. It entered the mobile payment platforms and smartcard production for banks, according to Mayowa Olaniyan, its CEO. This move came around when Frost and Sullivan projected Nigeria’s fintech revenue to reach $543.3million by 2022. “We have changed the business model to be full fintech, got all the fintech licenses and we are deploying them,” he told Bloomberg. Chams’ stock has gone up by more than 800% because of this change.
Similarly, Computer Warehouse Group, which was established in 1992, had a turning point last year. It started Fifthlab, its fintech arm. Fifthlab became popular quickly by offering mobile money, billing, and payment platforms. These platforms met the needs of consumers, small businesses, and banks, said Adewale Adeyipo, the CEO of Computer Warehouse.
These companies are profiting off fintech’s appeal to investors. Many people are optimistic about the opportunities to offer financial services to Nigeria’s largely underbanked population. Only about 45% of adults in the nation of more than 200 million have bank accounts, according to the World Bank, compared with an average of 70% in the BRICS economies. Nigeria is home to 32% of Africa’s fintech market.
The case for fintechs, especially digital payments, became stronger this year after cash scarcity took the nation by surprise. Back then, the CBN governor, Emefiele, announced new currency notes, rendering the old ones invalid. But there was barely enough supply of these new notes. As a result, mobile payments rose by 215% in March 2023.
Industry experts have said that these tech companies are appealing to young investors. They have a growing interest in the market and the clear benefits of these tech-focused stocks. Young people are also adopting digital banks for higher interest rates and accessibility.
However, both Chams and Computer Warehouse are still small players on the Lagos Stock Exchange. They are valued at around $11 million and $19 million, respectively. Investors have been excited, but there’s also awareness that the companies’ future performance will depend on their earnings and dividend payouts.
Insiders say that their current market rally will depend on their year-end results and how investors react to their dividend policies. This important period will likely affect how investors, especially those who are new to the market, view these securities in the future.