Dangote Cement Plc has emerged as the highest corporate income taxpayer and biggest employer of labour in the country for the year 2020.
The cement manufacturer came first among top 100 elite companies listed on the Nigeria Exchange (NGX) posting into the coffer of the federal government a princely sum of N97.24 billion in the year, while MTN Communication Nigeria Plc paid N93.6 billion and Guaranty Trust Bank (GTB) now known as Guaranty Trust Holding Company (GTCO) came third with an income tax of N36.66billion.
In the same breath, the cement company with presence in other African countries also emerged as the company with the highest number of employees with a total number of 16,199 staffers on its payroll as at the time of performance review.
In the performance analyses of 100 top elite corporate bodies on the Nigeria Exchange carried out by the reputable business magazine, ‘Next Money’, Dangote Cement was ranked as the most capitalised company in the country with N4,173.22 billion.
Despite the COVID-19 pandemic in 2020, the cement giant reported full-year revenue of N1 trillion, the highest it has ever recorded since it was privatised almost 20 years ago.
The company also reported a profit before tax of N373.3 billion only and a profit after tax of N276 billion, its highest since 2018.
Nigeria like most countries in the world has faced a challenging 2020 due to the impact of COVID-19 on the economy, especially the private sector. However, mega-corporations like Dangote Cement appear to have even performed better during the year99
The cement industry in general also appears to have performed well during the year.
Taxation is an important fiscal policy instrument at the disposal of governments to mobilise revenue and promote economic growth and development. Governments use tax revenue to carry out their traditional functions such as the provision of public goods and services; maintenance of law and order; defence against external aggression; and regulation of trade and business to ensure social and economic maintenance.
Effective tax revenue mobilisation reduces an economy’s dependence on external flows, which have been found to be highly volatile.
Taxation also allows governments’ greater flexibility in designing and controlling their development agenda; conditions states to improve their domestic economic policy environment, thus creating a conducive environment for the much-needed foreign direct investments; and strengthens the bonds of accountability between governments and the citizens.
Meanwhile, the 2008/2009 global financial and economic crises provided useful lessons for countries on the need to direct more attention to domestic resources mobilisation efforts, including through increasing tax revenues, and shift away from over-dependence on external financial flows and export revenues.
Although tax structures vary considerably across countries, the primary objective of any tax structure is to attain maximum revenue and economic growth with minimum distortions.
Different countries have different philosophies about taxation and different methods of tax collection. In the same manner, countries have different uses for their revenue, which affect growth differently.
Speaking on the analysis, publisher of Next Money, Mr Ray Echebiri said the performance index analysis of companies listed on the Exchange was carried out with a view to establishing the best performing ones among the over 150 of them.
Echebiri, a renowned financial analyst, explained that the exercise is to provide existing and potential investors with information that they can rely on when they are taking investment decisions, saying, “the first step we take in the analyses is to extract the total assets of each of the listed companies from their audited accounts.”
He said: “We sorted the total assets of the companies from the largest to the smallest and cut off at the 100th. We tagged the hundred companies that emerged from this exercise ‘Nigeria’s Top 100 Companies’. Any company that makes it to the corporate elite club of Nigeria’s Top 100 Companies is automatically a candidate for further ranking by revenues, profits, market capitalization, number of employees and tax payment.”
According to him, the rankings show how the listed companies stand on the corporate ladder with regards to the various performance indices. This edition of Nigeria’s Top 100 Companies covers the 2020 accounting year. It is therefore a performance analysis of companies listed on the Nigerian Exchange (NGX) based on their audited accounts for the 2020 reporting year.
“In other words, the information used in the analyses are extracted from the annual reports and accounts of the various companies published in 2020 irrespective of whether a company’s year-end is March, June, September, December, or any other month in 2020,” he stressed.
Echebiri further pointed out that the analyses were restricted to publicly held companies in the country and the reason being that the accounts of listed companies are easier to access than those of private companies, adding “moreover, accounts of publicly-held companies are more believable because they are usually subjected to regulatory scrutiny and approval.”
He explained that his group had no doubt that there are many private companies that would easily count among the top 100 companies in the country given their huge balance sheet size, the sizeable revenue they post yearly and the mouth-watering profits they declare.
However, he added that, they were not a part of the performance review and analyses because their audited accounts do not go through the kind of regulatory examination and approval that the listed companies face and, are, therefore not as believable as those of the publicly-held companies.
The analysis indicated that while Dangote cement with market capitalisation of N4,173. 22 billion beat the rest of the companies listed on the Nigerian Exchange (NGX) to emerge as the company with the largest capitalisation, MTN Communications Nigeria Plc and BUA Cement Plc, as at December 31,2020, followed as the second and third respectively with market capitalisation of N3,458. 23 billion and N2,619.41.
Dangote Cement paid the highest corporate income tax during the year under review and was followed closely by MTN Communications Nigeria Plc which paid corporate income tax of N93.66 billion and Guaranty Trust Bank placed third with corporate income tax payment of N36.66 billion.
Stakeholders noted that the manufacturing sector’s contribution to the tax was significant despite the effects of the COVID-19 pandemic, saying that the manufacturing sector in Nigeria faces challenges like infrastructure issues and an enabling business environment, which needs to be unlocked to spur growth and create jobs