Fourty-four 44 of the largest publicly listed companies in the Nigerian equities market spent N234 billion as professional fees on lawyers, accountants, and consultants in the 2023 financial year, an analysis by Nairalytics, the research arm of Nairametrics has shown.
Compared to the previous year, it increased by 50.6% from the N155.4 billion recorded in 2022. These professional fees include payments for legal, consultancy, non-audit, and advisory amongst other services.
Organizations in Nigeria allocate substantial budgets to professional fees, and several key factors, including the need for specialized expertise, regulatory compliance, strategic advisory, risk management, and the evolving business environment drive this trend.
For example, some firms outsource their tax management to other firms, in a bid to ensure effective tax advisory services.
In the same vein, other outsourced services include actuarial, assurance, management consulting, and business consultancy.
These services are crucial for businesses to optimize their operations at various stages. Numerous companies in Nigeria offer professional services across different sectors, including legal, tax, consulting, risk advisory, financial advisory, and management consulting, ensuring that businesses can access the expertise they need to thrive.
Most accounting firms have restructured their business model beyond conventional accounting services like audit and tax advisory services to include other major non-conventional financial services. These include financial advisory, risk advisory, assurance services, consulting etc.
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Some of the major legal, advisory, and consulting firms in the country include Aluko and Oyebode, Templars, Deloitte, KPMG, PWC, EY, Phillips Consulting, Workforce Group, and Ascentech Services amongst others.
Last week, Nairametrics presented the list of big-ticket audit accounts in the country as well as the audit market share in Nigeria. In this series, we analyse the biggest companies investing in professional services.
5. FBN Holdings – N18.28 billion
- FBN Holdings, the parent company of Nigeria’s premier bank, First Bank of Nigeria spent a sum of N18.28 billion on legal and professional services in 2023, to rank as the fifth largest spender on our list.
- The professional service expenses for 2023 increased by 32.7% when compared to the N13.78 billion recorded in the previous year.
4. Access Holdings – N27.78 billion
- Access Holdings spent a sum of N27.78 billion on professional services in 2023, surpassing the previous year’s N17.54 billion by 58.4%. This makes Access Holdings the second bank in the list of top spenders on professional services.
- According to the holding company, its professional services fees cut across different facets of the business. For example, KPMG was engaged to review the Group’s internal control over its financial reporting (ICFR) activities, a service that gulped a sum of N120 million from Access Holdings.
- In the same vein, KPMG was engaged to review and make recommendations on People Strategy & HR Operating Model across the Group’s diversified businesses. The Big-4 firm was also engaged amongst others to provide crisis management training and exercise to the bank.
3. Seplat Energy – N30 billion
- Seplat Energy recorded professional and consulting fees of N30.02 billion in 2023, an increase of 109.9% compared to N14.3 billion recorded in the previous year, making the oil exploration company the third-highest spender on professional services.
- Meanwhile, the firm explained that the significant jump was largely due to professional fees associated with the litigation costs in response to the unprecedented and intense period of minority shareholder actions through the Courts and some costs associated with the Mobil Producing Nigerian Unlimited transaction.
2. MTN Nigeria – N35.3 billion
- MTN Nigeria, the largest telecommunications company in Nigeria spent N35.32 billion on professional and consultancy fees, which is 5.3% higher than the N33.54 billion recorded in the previous year.
- According to the telco, the professional fees include fees paid to management consultants, tax advisory, and business consultants amongst others.
1. UBA – N65.7 billion
- United Bank for Africa (UBA) incurred the highest expenses on professional services, which it termed as contract services. Specifically, a total of N65.7 billion was spent as a contract services fee in 2023, representing an 89.3% surge when compared to the N34.73 billion recorded in the previous year.
- While the company did not give detailed breakdown of the items included in the contract services, Nairalytics believes that these costs are associated with non-audit services offered by consulting, legal and advisory firms.
Others include:
- Zenith Bank – N9.39 billion
- FCMB – N7.32 billion
- Dangote Cement – N4.09 billion
- Fidelity Bank – N4.06 billion
- Flour Mills Nigeria – N3.97 billion
