Vision, Mission and Core Values

VISION STATEMENT

“To be a first class full-service Investment Bank in the next five years posting the best performance ratios, hiring and retaining the best people in the market and being socially responsible towards contributing effectively to the economic development of Nigeria”.

MISSION STATEMENT

“Driven to be a leading player in the following sectors of the Capital Market: stockbroking, corporate finance & advisory, portfolio management and issuing house service, with a target to capture not less than 10% of the Market in each of the sectors”.

CORE VALUES

Each letter of the word, “SPICE” forms the core values of the Company as follows:

  • Self discipline
  • Peculiarity
  • Innovation
  • Creativity
  • Ethical

The company’s first-class identity is being maintained by emphasizing its sense of tradition as evidenced by “Espirit de Corps”, self-discipline and the pride in getting things done in a first-class way – “Trust Yields Way”.

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NSE sustains bullish trend as Nigerian Breweries, Guinness, 28 others spur gains

At the close of trading on Wednesday the Nigerian Stock Exchange (NSE) further extended gains on investments as value of stocks increased lead to 0.50 percent growth in the market All Share Index which represent 184.44 points. The upturn was largely boosted by value appreciation recorded in some stocks such as: Nigerian Breweries Plc and Guinness Nigeria Plc, as 30 stocks advanced against 18 losers. At the close of trading on the Nigerian stock exchange (NSE) Stocks value added N64.382 billion yesterday as the Nigerian Stock Exchange (NSE) All Share Index (ASI) increased by 0.50 percent or 184.44 points, while the Year-to-Date (YtD) return stood at 37.32 percent. The All Share Index closed at 36,905.06 points against the preceding close of 36,720.62 points, while the equities market capitalization closed at N12.720 trillion as against preceding day close of N12.655 trillion. The volume of stocks traded increased stood at 215.013 million while the total value of stocks traded in 4,047 deals was N3.777 billion. Transnational Corporation of Nigeria Plc led Tuesday’s activities chart as 34.784 million of the corporation’s shares valued at N49.669 million were traded. Fidelity Bank Plc traded with 29.968 million shares exchanged for N39.026 million; followed by FBN Holdings Plc with 28.819 million shares traded for N173.296 million. Stock traders exchanged Zenith International Plc’s 25.604 million shares worth N641.472 million; while they exchanged Guaranty Trust Bank Plc’s 20.995 million shares valued at N815.330 million. Nigerian Breweries Plc led the list of advancers after gaining N4.24 from N167.01 to N171.25, while Guinness Nigeria Plc followed with N3.32 gain from N66.55 to N69.87 The shares of the Lafarge Africa Plc gained N2.75 from N55 to N57.75. Nestle Nigeria Plc rallied from N1025 to N1026.42 adding N1.42; while Flour Mill of Nigeria Plc gained N1.2, from N28 to N29.2. On the laggard table, Seplat Petroleum Development Company Plc share price dipped the most, from N488 to N470.1, down by N17.9; Mobil Oil Nigeria Plc followed from N253 to N240.65, down by N12.35, Total Nigeria Plc lost N8.5, from N270 to N261.5; Okomu Oil Palm Plc also lost 3.8 from N76.95 to N74.5 while Presco Plc lost N2.45 from N76.95 to close at N74.5. Source: Business Day

Equities Market Maintains Positive Momentum on Bargain Hunting

The equities market recorded its second positive performance for the month of August as the bulls remained in control. This followed bargain hunting by investors in value stocks, a development that made the Nigerian Stock Exchange All-Share Index to close 0.50 per cent higher at 36,905.06. Market capitalisation added N64.3 billion to close at N12.7 trillion. This implies that the market has gained 2.96 per cent in August and 37.32 per cent from January to yesterday. A total of 31 stocks appreciated yesterday, while 18 depreciated. C & I Leasing Plc led the price gainers, chalking up 10 per cent as investors continued to react to the positive results reported by the company for the half year ended June 30, 2017. The company grew its profit after tax by 298 per cent to N580 million in 2017, from N145.4 million in 2016. The Managing Director of the company, Mr. Andrew Otike-Odibi attributed the improved financial performance to the strength in the diversity of its business. “Our three business lines namely, Marine, Fleet management and Outsourcing are gaining strength in their different markets with each contributing positively to the overall performance of the business. This is not without the difficulties faced in the operating environment with rising financing and operating costs coupled with continuous pressure on turnover. We remain focused on sustaining delivery of superior customer service and continued diversification of earnings, to take advantage of growth opportunities in the markets and business segments we operate in,” Otike-Odibi said. Lafarge Africa Plc trailed as the second highest price gainer, rising by 5.0 per cent, just as Guinness Nigeria Plc went up by 4.9 per cent. Skye Bank Plc and Caverton Offshore Services Group Plc appreciated by 4.6 per cent and 4.3 per cent respectively. Other top price gainers were Jaiz Bank Plc (4.3 per cent); Flour Mills of Nigeria Plc (4.2 per cent) and United Capital Plc(3.9 per cent). Conversely, Okomu Oil Palm Plc led the price losers with 5.0 per cent, trailed by Continental Reinsurance Plc that depreciated by 4.9 per cent. Mobil Oil Nigeria Plc and Nigerian Aviation Company Plc shed 4.8 per cent apiece among others. In terms of sectoral performance, three sectors appreciated, while two depreciated. The NSE Industrial Goods Index led the gainers with 1.93 per cent following investor interests in Lafarge Africa and Cement Company of Northern stocks. The NSE Consumer Goods Index followed with 1.63 per cent, while the NSE Banking Index appreciated by 0.49 per cent. On the flipside, the NSE Oil and Gas Index dominated, falling 2.43per cent due to sell-off in Seplat, while the NSE Insurance Index shed 0.49 per cent. Source: Thisday

SEC to sanction capital market operators, PLCs on tax default

The Securities and Exchange Commission (SEC) has warned that it will begin to sanction capital market operators who default on tax, going forward. In a circular posted on its website, SEC drew the attention of all Capital Market Operators (CMOs) and Public Limited Company (PLCs) on a new executive order by the Federal Government to comply with the new rule of Taxpayers on Voluntary Assets and Income Declaration Scheme (VAIDS) or face penalty. On June 29, Acting President Yemi Osinbajo signed an executive order that would encourage citizens to voluntarily come forward and pay tax arrears without being punished. The executive order gives impetus to government tax amnesty programme tagged- Voluntary Assets and Income Declaration Scheme (VAIDS) which seeks to boost the country’s very low tax base and raise much needed revenues.   In a statement, SEC said it is now encouraging all taxpayers in the Capital Market (i.e. CMOs and PLCs) to comply with the new Executive Order No. 004 on VAIDS before the expiration of the 9 month grace period as specified by the FG  . “In order words, the Executive Order on VAID signed by the Acting President of the Federal Republic of Nigeria, Prof. Yemi Osinbajo on June 29, 2017 stated that, taxpayers who are under all relevant Federal and State Tax laws are advised to regularize their tax status by honestly declaring their assets and incomes from sources within and outside Nigeria,” the regulator added. SEC further announced that beginning from March 31, 2018, all CMO’s and PLC’s would be required to show evidence of compliance with VAIDS or a clean tax status as part of their mandatory submissions to the Commission. Failure to comply with this public notice shall result in appropriate sanctions in accordance with the law. It however, noted that “the decree of limitations for a tax investigation for honest returns is limited to six (6) years” adding that, “there is no limit where a fraudulent return has been submitted for assessment.” “In a nutshell, all CMO’s and PLC’s are hereby duly advised to comply with the Executive Order by taking advantage of the nine (9) months grace period to rectify their tax status in complying with the order,” SEC advised.   Source: Business Day

NSE market capitalisation grows by N117 bn in one day

The nation’s equity market on Tuesday maintained a bullish trend for the eighth consecutive day with the indices appreciating by 1.28 per cent and the volume by 101.48 per cent. The News Agency of Nigeria (NAN) reports that the market capitalisation increased by N117 billion or 1.28 per cent to close at N9.249 trillion against N9.132 trillion on Monday. Also, the All-Share Index which opened at 26,418.33 rose by 337.88 points or 1.28 per cent to close at 26,756.21 due to huge gains posted by some highly capitalised stocks. A breakdown of the price movement chart indicated that Dangote Cement led the gainers’ table, gaining N2.50 to close at N162 per share. Nigerian Breweries followed with a gain of N2 to close at N132 and Oando increased by 80k to close at N8.69 per share. Okomuoil gained 72k to close at N48.52, while PZ Industries appreciated by 70k to close at N15.70 per share. Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., attributed the growth to investors and traders renewed confidence to impressive earnings of the first quarter of 2017 released by some companies. Omordion stated that the current uptrend was the longest streak since the beginning of the year. He added that investors were taking advantage of low valuation of equities to reposition and increase their stake in the market. Omordion said that the Central Bank of Nigeria (CBN) new foreign exchange policy contributed to the market trend. On the other hand, Total topped the losers’ chart, dropping by N6 to close at N249 per share. 7UP Bottling Company trailed with a loss of N1.89 to close at N102 and Lafarge Africa dipped N1.10 to close at N48.50 per share. Dangote Sugar declined by 24k to close at N6.46, while Presco shed 10k to close at N46.90 per share. NAN also reports that FCMB Group drove the activity chart, accounting for 243.86 million shares valued at N239.40 million. Zenith International Bank followed with 52.29 million shares worth N856.16 million, while United Bank for Africa traded 42.53 million shares valued at N274.51 million. Diamond Bank sold 33.94 million shares worth N29.02 million and FBN Holdings exchanged 22.81 million shares valued at N81.35 million. In all, a total of 539.23 million shares worth N2.82 billion were transacted by investors in 4,519 deals, representing an increase of 101.48 percent. This was in contrast with a turnover of 267.64 million valued at N3.26 billion traded in 3,907 deals.
Source: The Guardian

NSE indices up by 0.44%, turnover 232.43%

Activities on the Nigerian Stock Exchange (NSE) closed for the week on Friday on a positive note, with the turnover volume appreciating by 232.43 per cent, while market indices grew by 0.44 per cent. The News Agency of Nigeria (NAN) reports that a total of 480 million shares valued at N1.98 billion were exchanged by investors in 2,713 deals. This was in contrast with a turnover of 144.39 million shares worth N1.54 billion transacted by investors in 2,303 deals on Thursday. NAN reports that Staco Insurance drove the activity chart with an exchange of 252.12 million shares worth N126.06 million. United Capital followed having accounted for 61.96 million shares valued at N24.88 million and Zenith International Bank traded 59.53 million shares worth N893.06 million. FCMB Group sold 21.29 million shares valued at N27.53 million and FBN Holdings traded 15.19 million shares worth N50.33 million. In the same vein, the market indicators closed higher with a growth of 0.44 per cent due to price appreciation recorded by some highly capitalised stocks. An analysis of the price movement table indicated that Total Nigeria led the gainers’ table gaining N2.90 to close at N273.01 per share. Nigerian Breweries came second with a gain of N1.98 to close at N115 and Julius Berger added N1.82 to close at N38.39 per share. PZ Industry gained N1.23 to close at N13.39 and Presco Plc increased by N1.01kobo to close at N47.01 per share. Conversely, Forte oil recorded the highest loss for the day, shedding N3.11 to close at N59.21 per share. UAC Property trailed with loss of 10k to close at N1.94, while Custodian and Allied Insurance lost 8k to close at N3.34 per share. Guinness Nigeria shed 5k to close at N60.95 and Livestock dipped 4k to close at 76k per share.   Source: The Guardian

Nigerian stock exchange to become one of strongest by 2025

Nigerian Stock Exchange is expected to join league of strongest world capital market by 2025, sequel to the enactment of the demutualisation of the Nigerian Stock Exchange (NSE). Some of the industry players including Chartered Institute of Stockbrokers; Central Securities Clearing System; Central Bank of Nigeria, Federal Ministry of Finance and Association of Stockbroking Houses of Nigeria, expressed the optimism at the public hearing held by the joint Senate and House Committee on Capital Market and Other Institutions, held on Thursday, at the National Assembly complex, Abuja. According to them, the demutualisation was an integral part if the 10-year capital markets master plan, aimed at underpin the rapid growth that is envisioned over the next decade. In his remarks, Tajudeen Yusuf, chairman, House Committee on Capital Market and other Institutions explained that the bill will boost Nigeria’s economic development. On his part, Adedeji Lawal, CBN’s Deputy Director Legal Service Department who pledged solidarity for the demutualisation of the Exchange, disclosed that the initiative was to “stimulate economic growth, promote efficiency in the creation and harnessing of capital as well ad create liquidity in the capital market, adapt and strengthen corporate governance best practices.” “We observed that this transition from a company limited by guarantee to a public company limited by shares, will promote efficiency in operations, enhance liquidity and strengthen corporate governance of the NSE. “The demutualisation process will bring the NSE within the legacies of 56 out of 64 members if the World Federation of Exchanges which have de-mutualised. “The dynamism presented to a demutualised Exchange would augument Nigeria’s debt profile and capital raising capabilities by providing a number of attractive vehicles for foreign and domestic investors. “The proposed demutualisation will also enable the Exchange to facilitate capital to support Federal Government initiatives and infrastructure projects as well as assist corporates and financial institutions in raising much needed capital,” Lawal said. He added that capital market and money market are dependent on each other, as a result, efforts aimed at improving the operations of the capital market would invariably make a positive impact on the money market, which is within the remit of the apex bank’s regulatory powers. On his part, Oscar Onyema, NSE Chief Executive Officer who noted that the Minister of Finance, Kemi Adeosun fully supported the process, disclosed that the NSE is currently registered with Corporate Affairs Commission as a company limited by guarantee. “In its current form, the Exchange is subject to several legal restrictions which have hampered its ability to operate competitively and profitably as a limited liability entity. “Presently, the NSE is one of the right exchanges of the 63 members of World Federation of Exchange that still operate as mutual organization. Therefore demutualisation of the NSE will reposition it to a world class and performing organization. “Demutualisation of the NSE will provide access to global market and capital required for business development. The capital would enable the exchange meet challenges of contemporary market without necessarily placing additional financial burden on participants,” Onyema noted. In its submission, Central Securities Clearing Systems Plc, expressed optimism that the demutualisation of the Exchange will effect technological improvements which will allow for imrpooved efficiency and effectiveness in service delivery to its customers for the development of the capital markets while ensuring that the right of access to trading on the demutualised entity is not prohibitive. “The opportunity to raise capital from new shareholders and a broader and more strategic shareholder pool, significantly improves the visibility institutional investors as shareholders will maximize economies of scale and scope, increase accessibility and market reach. “A demutualised entity affords a wider investor base, including participating organizations, listed companies, institutional and retail investors, the opportunity to become shareholders in the demutualised entity. “As a result of demutualisation, the exchange can build a more sustainable institution given its ability to raise capital, expand across geographies and better consummate strategic relationships,” he said.   Source: Businessday

GTBank Celebrates 10th Anniversary of Listing on LSE

Guaranty Trust Bank Plc (GTBank) is celebrating the 10th anniversary of its listing on the London Stock Exchange (LSE) as the first Nigerian bank to be listed on the London Board. The bank is the first to dual list on an international exchange and the first Nigerian company to raise international capital using listed Global Depositary Receipts. To mark the pioneering feat, the Managing Director/ Chief Executive Officer of GTBank, Mr. Segun Agbaje, led the market open ceremony at the LSE last Friday, accompanied by senior representatives of the bank and other institutional partners. The LSE is a diversified international exchange that offers international business, and investors, unrivalled access to Europe’s capital markets. A statement from the bank at the weekend explained that since its listing on the LSE, GTBank has embarked on a decade of unparalleled growth, leading the financial industry in profitability and products and service delivery. Commenting on the anniversary, Agbaje, said: “To be listed on the London Stock Exchange, one of the most illustrious exchanges in the world, was a pioneering feat which remains fresh in our minds. “We are deeply grateful to all our investors and partners for the integral role they played and their confidence in our ability to pull of that giant leap. Ten years on, we remain committed to maximising shareholders’ value and delivering superior and sustainable return, guided by our founding values of hard work, discipline and integrity.” GTBank offers a wide range of financial services and products throughout Nigeria, with strong footprints in West and East Africa, as well as the United Kingdom. GTBank had been recognised as the Best Bank in Nigeria by Euromoney (2016), the African Bank of the Year by the African Banker Magazine (2016) the Best Bank in Africa for Corporate Governance (2015) and the Most Innovative Bank in Africa by African Investor (2016). Source: Thisday

NSE’s indices plunge further by N44 billion

Following price losses suffered by virtually all the blue chips, transactions on the equity sector of the Nigerian Stock Exchange continued on a downward note, causing market capitalization to plunge further by N44 billion. Yesterday, the All-share index depreciated by 129.75 points or 0.5 per cent from25,986.81 points recorded on Monday to 25,857.06 yesterday while market capitalisation dropped by N44 billion from N8.945 trillion to N8.901 trillion. On the price movement chart, WAPCO topped the losers chart with 4.00 kobo to close at N48.00 per share. Dangote Cement followed with 2.50kobo to close at N164.00 per share. Conoil she 1.79 kobo to close at N35.90 per share. International Breweries shed 0.89 kobo to closeat N19.89 per share. FO also dropped 0.32 kobo to close at N94.32 per share. On the other hand, Mobil led others on the gainers chart with 5.00 kobo to close at N190.00 per share wile Guaranty Trust Bank followed with 0.9 kobo to close at N21.00 per share. National Salt Company of Nigeria added 0.35 kobo to close at N7.18 per share. Nigerian Breweries gained 0.31 kobo to close at N142.00 per share. Custodian and Allied Insurance also appreciated by 0.18 kobo to close at N3.63 per share. United capital traded 11million shares worth N47.5 million while FBN Holdings exchanged 10 million units valued at N34 million. Eternaoil trailed with 10.7 million units valued at N32.9 million. United Bank for Africa exchanged 7 million shares valued at N31 million. In all, investors exchanged 189 million shares worth N905 million in 2,417 deals, higher than a total of N160.9 million units valued at N1.12 billion recorded Monday. Source: The Guardian Newspaper

NSE, CIS endorse ASHON’s new leadership, Ikeja Hotel’s shares suspended

The Nigerian Stock Exchange’s Chief Executive Officer, Oscar Onyema has assured the new executive members of the Association of Stockbroking Houses of Nigeria (ASHON) of the exchange’s support in order to enthrone professionalism and restore investor confidence into the market. Onyema, while congratulating the new members said: “We look forward to working with the new executive committee to further develop our relationship and build our market to the height of global best practice; a free, fair and orderly market that is the envy of the Nigerian.” Similarly, the Chartered Institute of Stockbroker’s President and Chairman, Governing Council, Oluwaseyi Abe has endorsed the ASHON”s new team headed by Patrick Ezeagu and Akinsola Akeredolu-Ale, the Chairman and Vice Chairman respectively. “Considering their enviable track records, we have no doubt that the newly elected office bearers will continue to bring to bear their experiences in transforming the association and the capital market in general.” ASHON’s recent yearly general meeting led to the emergence of a new cabinet in which Sam Onukwe was elected the General Secretary, Seyi Oshunkeye, Treasurer, Micheal Katsi, Assistant General Secretary and Emeka Madubuike and Alhaji Rasheed Yusuff, ex- officio members respectively. The Managing Director and Chief Executive Officer of Solid -Rock Securities and Investment Plc and a fellow of the Chartered Institute of Stockbrokers (CIS) Patrick Ezeagu, is an accomplished professional whose robust career spanned banking, consulting and financial market. He is an alumnus of Liverpool John Moores University, Liverpool, UK (2008), University of Lagos (1988), and University of Nigeria, Nsukka (1979). He holds M.Sc. Corporate Governance and Finance, MBA Finance and B.Sc. Management degrees respectively. He had served in various capacities at strategic committees of the Securities and Exchange Commission (SEC), The Nigerian Stock Exchange and CIS. Akeredolu -Ale, ASHON’s immediate past General Secretary is the Group Chief Executive Officer of Gem Assets Management and a fellow of the CIS. He is an astute capital market analyst with over two-decade experience in Wealth Management. He graduated from the University of Lagos and earned a Master’s degree in Corporate Governance from the Leeds Metropolitan University, UK. He is an Associate of the Nigerian Institute of Management. His career began as a Manager in Fidelity Finance Company in 1992. Akin has managed several large portfolios. Meanwhile, the Nigerian Stock Exchange (NSE) has placed the shares of Ikeja Hotel Plc on full suspension with effect from Thursday, November 10, 2016. According to NSE, the suspension was due to the continued dispute between the major shareholders, which have negatively impacted on the company’s governance structure. The Exchange explained that it has taken this action to safeguard the investments of shareholders of Ikeja Hotel Plc while the Securities and Exchange Commission (SEC) has been notified of this development. NSE added that the suspension would be in place until further notice. Source: The Guardian Newspaper

ICMR seeks regulatory permission to earn fee on all secondary market transactions

Institute of Capital Market Registrars (ICMR) have urged the regulatory authorities to permit registrars operating in the nation’s capital market to earn fee on all secondary market transaction. The secondary market is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. The Registrar Chief Executive, ICMR, Walker Ogogo, lamented that registrars currently do not earn fees on secondary market transactions, while other market operators earn a percentage of the value of transactions. According to him, if the regulators grant the permission, it would go a long way to improve the income and enhance their operations. “The regulators should allow registrars to earn a fee on all secondary market transactions. This will go a long way to improve the income of registrars. “Currently, registrars do not earn fees on secondary market transactions. Other capital market operators earn a percentage of the value of transactions,” he said. Concerning some of the challenges facing the operations, Ogogo explained that registrars are grappling with dwindling income, even as some clients firm are shutting down their businesses due to unfavorable operating environment. The President of the institute, Bayo Olugbemi explained that the registrars were not insulated from the harsh operating environment witnessed in the country. He pointed out that the equity segment of the market has remained flat with no new offering, either rights issue or public offer. “The registrar subsector of the capital market has also been affected adversely by the challenges being faced at the macro level. There has been little or no activity in the capital. The equity segment has been flat with no new offering, either rights issue or public offer. “In the bond segment, because of high-interest rate applicable at a short end of the market, issuers have not been willing borrow money at such a high rate and again, investors, apart from the pension fund, do not have the resources to actually lock in long term instrument. The implication for us is that there have been no new registers.” Source: The Guardian Newspaper

NPA: 25 Years Ports Devt Master Plan Underway

In a bid to ensure a healthy competition among existing ports and the ongoing Lekki Deep Sea Port and Badagry Deep Sea Ports, the Nigerian Ports Authority (NPA) is developing a ports master plan to be unveiled in the next six months. Managing Director of NPA, Ms. Hadiza Bala Usman disclosed this in her speech at the World Maritime Day Celebration held in Lagos. Bala Usman noted that the existing model where port development was not well thought out will see the ports compete each other out of business; a situation she said would be bad for the industry. She said: “One of the important things that I have felt the need to institute is the port development master plan, a 25 years master plan, which will guide the development of ports I the country. We have commenced that activity at the NPA. I met on ground a development master plan for individual port in the NPA but I felt the need to have a holistic master plan which guides all such port development. That way we will not have over laps and have ports that will be competing with each other and compete each other out of business. She added: “We need to have a clear plan and structure with which port development plan s are approved. We have the Lekki Deep Sea Port approval currently going on in Lagos state, we have the Badagry Deep Sea Port and we have Tincan and Apapa ports. We need to have the respective scope with which these ports will operate to ensure that capacity utilisation in terms of capacity is addressed as we approve such port development. So having a master plan, a clear vision of port development is critical and the NPA is leading that. Within the next six months we will come out with a port development master plan which we will unveil to stakeholders before we get the necessary approval.” On port capacity utilisation and its current capacity, she said: “I think what we need to understand is that as we approve and as we present respective port development, we need to understand and assess what we have now on capacity utilisation. Has it been utilised fully? We need to look at clusters of port development to determine the competition as we approve them. We have to determine if indeed what we have would be able to accommodate the need for expansion and traffic to come into the country. “We have noted the period were the deployment has been made and we have identified need to build on the existing infrastructure. Right now we have commissioned our staff to go around all of our ports to determine the level of decay of our infrastructure. Primarily, I have given the clear directive that all our budgetary provisions will be tied to infrastructure that will add revenue to the Nigerian Ports Authority. Indeed our focus is to see that our degenerated infrastructure is built upon and expanded to take on need for the Nigerian port to have expansive capacity to take on additional traffic.” Speaking on the plan to review port concession agreement, she said as someone who worked at the Bureau of Public Enterprise (BPE), she understands the need for private sector to lead in the investment and development of the ports in the country. “I met on ground concessions that have been 10 years in operation and I believe that it is time for us to have a review. The concessionnaires themselves believe that it is time to look at some of its terms. The economic situation in which some of the concession agreements were entered into are not the same today. There are clear assumptions that were made within those initial concessions that are different now. There are also respective obligation across both parties that have not been met within the 10 years has not been met. I think it’s time for both parties to seat around the tale and review those terms to determine what obtains today. “We have noted the operators have development plans that they have not adhere to during the concession period, we have noted that the authority itself has not committed to some of the obligations that were stipulated in the concession. As we go through the review of the concession, both parties need to confirm and commit to their part of the agreements. We will ensure sanctions and penalties for not compliance across the board, both the authorities and the operators, going forward we will ensure that there is a level playing field for all operators. “Within the concession agreement, everyone can confirm that there was need for a review within two years but we have waited 10 years for a holistic review of the concession agreement. We have also noted the few review in view of tenor elongations without a commensurate review of the financing model, which are tied to each other. Whatever timelines you have for the revision period is tied to the financing model and a tariff regime which is contained within the concession agreement, “he said. Source: THISDAY NEWSPAPER

‘Inside Nigerian Banks’ Debuts

The finance and banking community will next week witness a new arrival in the anthology of banking sector intellectual research and publication. The book, ‘Inside Nigerian Banks’, written by Nik Ogbulie, a Lagos based financial journalist, captures the state of the Nigerian banking sector, with special reference to the series of developments, innovations, infractions, hopes, aspirations and disappointments within the various banking institutions in the last sixteen years. The 310 page book presents an insight into the economic intelligence outlook of Nigerian banks, with the intention of releasing their various properties and characteristics, in such a way that equity investors and services delivery consumers would quickly make their long-term decisions to avoid being caught in the web of the inconsistencies the author has perceived in many banks. The book will be presented to the cream of the financial sector on Wednesday, November 9th, at the Lecture Theatre of the Nigerian Institute of International Affairs, Victoria Island, Lagos under the Chairmanship of Okenmor Fidelis Tilije, Honourable Commissioner for Water Resources Development, Delta State. A former Director-General of the Nigerian Stock Exchange (NSE), Professor Ndi Okereke-Onyiuke, will be the special guest of honour while Head Strategy, Ecobank Transnational Incorporated (ETI), Jibril Aku and MD/CEO , Aquila Leasing Limited and Chairman of Equipment Leasing Association of Nigeria (ELAN), Chuka Onwuchekwa will be guests of honour. Divided into eight chapters, ‘Inside Nigerian Banks’ offers readers the benefit of hindsight in its first chapter , ‘from Revolution to Reformation’, where the activities of the last four Governors of the Central Bank of Nigeria (CBN) were analyzed in line with the effectiveness or the efficiency of their policies in the consolidation mantra. The book was chronological in buttressing the roles of the governors in the sanity that the industry enjoys and was even more critical in its presentation of the various controversies in some of the policies that trailed a lot of the decisions by each governor. Short of rating the performances of the various governors, there are obvious imputations in the book that explain the proficiency of each governor above the other in all those efforts that were tailored to instill decorum in the industry. However, the book is of the opinion that the last four governors have performed very patriotic functions in national economic development by concentrating on an industry that has been eager to meets global competitiveness. The highpoint of the book is the author’s courage in dedicating the book to a woman he considers as the brain behind the success of the consolidation project, Professor Ndi Okereke-Onyiuke. According to him, the various efforts like local and international road-shows , as well as high net-worth alliances with globally high-niche markets and equity franchise magnates propelled the perception of the Nigerian market and urged the investors to go for the Nigerian markets first. The book noted that her tenure came with a drive that was consistent with the commitment to offer enough openings for all banks to raise cheap funds. It also mentioned that this motive did not only benefit the banks but caused an over-flow of investible funds into other equities than banks alone, to the extent that a bench-mark of over N14 trillion capitalisation was recorded. According to the book, the dedication was a way of encouraging Nigerian CEOs to embrace cross-section alliances as sine qua-non to national economic growth. The book noted that the Okereke-Onyiuke’s leadership model is what Nigerians need to cultivate enduring growth alliances in the economy. The book takes a copious look into all the banks and came up with positions that may continue to determine the rating of many agencies on our banks over time based on the depth of its data and the antecedents of the author who has spent some 26 years reporting the industry, the economy, public policies of the Nigerian governments, the World Bank/IMF and the nuances of other multilateral financial institutions on Nigeria. In précised presentations, the about twenty banks are put in their proper places in terms of the future of their trade , and this forms a major basis for their going forward in the maze of struggles the industry is experiencing today. The book, in all the detailed chapters may have set a platform for another intensive reform or has set up an interest for a new merger deal, signs of which current developments in the industry third quarter results may be giving credence to. Carefully read, the book tries to tell Nigerians that the industry has come of age, but must watch their banks. Source: THISDAY NEWSPAPER

Lead Asset Management Floats Fixed Income Fund

Lead Asset Management Limited(LAML), a subsidiary of Lead Capital Plc is currently offering five million units of the Lead Fixed Income Fund (LFF) to investors at N100 each. A total of N500 million is expected to be realised from the offer, which opened last Monday and will close on December 7, 2016. The LFF is an open-ended fixed income fund registered as a unit trust scheme. According to the LAML, which is the fund manager, the LFF is designed for all classes of investors who seek steady flow of income, capital preservation and liquidity. “The fund is constituted under the thrust deed and will comprise government and Eurobond and corporate bonds with investment grade rating and other quality money market instruments,” the firm said in the prospectus of the offer. About 20 per cent of the fund would be invested in bonds, 60 per cent in treasury bills and 20 per cent in commercial paper and other short term instruments. The minimum investment is N50,000 and a multiple of N10,000 thereafter. The LAML offer is coming on the heels of a similar fund floated by Cordros Asset Management (CAML). The subsidiary of Cordros Capital Limited, had floated a money market fund tagged Cordros Money Market Fund (CMMF). The IPO opened August 1 closed on September 7. Results of the offer showed that despite the economic headwinds characterised by liquidity challenges and high inflation, it recorded a subscription rate of 60.47 per cent. “This is a very significant success rate given the challenging environment. The outcome of the IPO showed that investors found the offer attractive given its high returns potential. I am very positive that since it is an opened ended fund, more investors will buy into it as the economic situation improves,” a market operator, who is a party to the offer had said. Specifically, at the close of the offer period, a total of 551 applications for 6,046,845 units of the CMMF were received; 2. 549 applications for 6,046,500 valid applications were partially allotted as the applications were not in line with subsequent multiples. Two applications were rejected as the funds deposited were below the minimum subscription. The fund was therefore 60.47 per cent subscribed. The fund’s investment objective is to provide capital preservation and regular income to unit holders by investing in high-quality money market instruments recognised by the Securities & Exchange Commission. Source: THISDAY NEWSPAPER

Investors Blame Market Woes on Government Policies

Capital market stakeholders have bemoaned government economic policies, especially the recent decision by the Central Bank of Nigeria (CBN) to retain interest rate at 14 per cent, They said that the policy was disincentive to investment for both foreign and indigenous investors. They argued that when interest rate is low, speculators move their funds from the money market instruments to the stock market to make a kill. The same speculators, according to them, also move from the stock market to other asset classes, especially, fixed income securities when the interest rate is high. Specifically, the Managing Director of Highcap Securities Limited, David Adonri explained that Nigeria is currently in recession because the fiscal authorities have failed to initiate policies that would boost the supply side of the economy. This, according to him, is affecting the real sector, especially in the production of goods and services, which is having a multiplier effect on the stock market. “If the supply side is not working, there would be scarcity which is adversely affecting the stock market. The circular in flow of money presently is affecting the equities market.” The Managing Director of Renaissance Shareholders Association of Nigeria, Timothy Olufemi said: “Government policies are always detrimental to investors. Retaining Interest rate at 14 percent would attract investment to the money market and make the capital market less attractive which would further depress the market.” The National President Constance Shareholders’ Association of Nigeria, Shehu Mallam Mikail explained that government policies are hitting hard in the stock market. The interest rate has made the equities market less attractive as investors are currently approaching the money market to increase their portfolio. He explained that most listed companies that needed capital to boost their operations; especially those that are already diversifying into other sectors can not approach the banks due to high interest margin. “Banks also are not ready to give loans to listed companies. Government should adopt a policy that would create a better avenue to improve the economy so that our capital market would rebound while investors get good returns on their investment.” Source: Today Newspaper

NSE All Share Index falls marginally as profit taking sets in

Profit taking in oil and gas stocks led to a negative close at the stock market yesterday as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell marginally by 0.05 per cent to 28,248.86. Specifically, Conoil Plc, which recorded an unprecedented rise due to an impressive 2015 full year and 2016 half year results, went down by 7.0 per cent to be at N36.00. Similarly, Oando Plc shed 4.8 per cent to close at N5.32. Conoil Plc had appreciated by 97 per cent within seven trading days due to impressive results. The stock, which was N21.59 before the full year results were released on September 9, soared to close at N42.60 per share last week. “I am not surprised at the way the stock is rising given the better-than-expected performance despite the challenging operating environment. But I think profit taking may set in soon as some investors may want to lock part of the gains recorded by the stock,” a stockbroker, Mr. Ayo Oguntayo, said. The company had posted a profit before tax of N3.448 billion for the year ended December 31, 2015, up by 125 per cent fromN1.532 billion in 2014. Conoil followed the full year performance with similarly impressive results for the half year ended June 30, 2016. Conoil Plc grew its profit before tax by 196 per cent to N1.566 billion, from N548 million in 2015, while profit after tax rose by 190 per cent to N1.04 billion. Due to the profit taking, the Oil & Gas Index emerged the sole decliner, shedding 0.9 per cent. The NSE Insurance Index gained 0.4 per cent on the back of price appreciation in Law Union & Rock Insurance Plc (+7.0 per cent) and Continental Insurance Plc (+3.1 per cent). The NSE Consumer Goods index followed suit, up 0.3 per cent due to bargain-hunting in Guinness (+5.0 per cent) and Flour Mills of Nigeria Plc (+4.6per cent). Also, the NSE Banking Index rebounded from a 3-day losing streak to gain 0.1 per cent on account of Wema Bank Plc (+4.5 per cent) and Zenith Bank Plc (+0.9 per cent). Source: Today Newspaper

Financial Experts Allay Fears over Nigeria’s Rising Debt Stock

Some financial experts have said Nigeria is in a very comfortable zone to borrow more despite the jump in the country’s debt stock to N16.3trillion as at June 30, 2016. The Debt Management Office (DMO) data, which showed an increase of N4trillion in the debt stocks within one year, has expressed doubts over the ability of the federal government to raise more debt to finance the 2016 budget. However, financial analysts at FBN Quest said in spite of the rise in the debt stock, the country’s debt to the gross domestic product (GDP) is still favourable for Nigeria, compared to other of its peers. According to the analysts, the latest report from the DMO shows FGN debt at end-June at N13.79 trillion (then $55.6 billion), equivalent to 14.6 per cent of 2015 GDP. “This compares with N10.95 trillion ($48.7 billion) at end-December, representing 11.6 per cent. The sizeable increase of N2.84 trillion in just six months is divided between N1.76 trillion domestic, reflecting the acceleration in debt issuance, and N1.08 trillion external, driven largely by the devaluation,” they said. They explained that the devaluation has had the result of pushing the domestic/external mix of the FGN’s debt a little towards the target of 60/40 in the DMO’s medium-term strategy. The ratio stood at 77/23 in June, adding the intended route to the target, of course, was via higher issuance in foreign currency (than local) with stable exchange rates. “The debt stock ratios quoted cover federal government, rather than total public debt. The latter measure would have to include the naira borrowings of state governments (N2.50 trillion according to the DMO as at end-December), the obligations of Asset Management Corporation of Nigeria (AMCON), the Nigerian National Petroleum Corporation (NNPC) and other agencies, and arrears due to contractors. The ratio under this fullest definition could approach 25 per cent of GDP, which would still compare favourably with most emerging markets,” they declared. FBN Quest added that this (debt ratio) is one of the positives underpinning Nigeria’s sovereign credit ratings (B+ from Fitch and the equivalent from Moody’s, and B from S&P). The rise in debt is not necessarily due to more borrowings, but due to the weakness of the naira against the dollar. In fact, the debt, in dollar terms, has declined from $65.43billion in 2015 to $61.45 billion in 2016, The Cable reported. As at the end of 2015, Nigeria’s debt, in dollar terms, stood at 13.02 percent of the country’s gross domestic product (GDP). In 2016, however, the debt-to-GDP ratio has risen to 16.83 percent, based on 2015 GDP figures. A rising debt profile may not be a problem if the economy produces enough to service existing loans as seen in the United States and Japan, where debt often equals GDP. A development economist, Mr. Odlim Enwegbara has said before now that Nigeria’s debt to GDP ratio is very comfortable, saying, “with Nigeria at 17 per cent, the country has the opportunity to raise funds that are projects specific to fast-track the infrastructural development of the nation.” Source: Thisday Newspaper

FX Scarcity Heightens Concern over Banks’ Eurobond Obligations

The broad effects of low oil prices and production disruptions, which have resulted in a significant reduction of foreign exchange earnings, have raised concerns about some banks’ ability to honour their Eurobond obligations upon maturity. Some of the offshore funds that were raised by the banks to expand operations and finance foreign currency infrastructure projects would mature between 2017 and 2021. For instance, Access Bank will have to raise $350 million for its maturing Eurobond due in July 2017; Fidelity Bank’s $300 million Eurobond would be due by May 2018; Guaranty Trust Bank’s $400 million will be due in May 2018; Zenith Bank has an outstanding debt obligation of $500 million; Diamond Bank also has a $200 million Eurobond; while First Bank of Nigeria Ltd has two Eurobonds – $300 million and $400 million – maturing in 2020 and 2021. All the Eurobonds issued by the banks with different coupon rates that must be paid annually before maturity, are also callable before maturity. Afrinvest West Africa Limited highlighted this in its 2016 “Nigerian Banking Sector Report” launched last week. The high cost of raising capital from the domestic market was one of the factors that drove the banks and other corporates to the international debt market. The Nigerian economy is in recession with external reserves falling to $24.743 billion as of last Thursday. Since the Central Bank of Nigeria (CBN) introduced a flexible exchange rate regime to allow the currency to trade freely on the interbank forex market, dollar liquidity has remained a challenge. Owing to this, the central bank has remained the major supplier of FX in the market. The naira closed at N440 to the dollar on the parallel market last Friday, while on the interbank FX market the spot rate of the naira closed at N307.79 to the dollar. “With the scarcity of FX in the market, you shouldn’t forget that a number of banks have Eurobond exposure. There are more than $2 billion maturing Eurobond obligations within the next few years. If we don’t find ways to allow more dollars into the system, this could be a potential problem to watch out for as they mature,” the Managing Director of Lagos-based Afrinvest West Africa Limited Ike Chioke said in the report. Furthermore, the report stated that oil and gas loans may also pose a challenge for Nigerian banks in 2016, based on developments in the economy, followed by general consumer goods and then manufacturing. “Power is a perennial one since the power sector privatisation. That is because we have many of these assets which only earn naira revenue, but were sold in dollars. “So, many banks still have many challenges restructuring those facilities because of the massive devaluation and the effect on the balance sheet,” Chioke added. However, the report showed that the Nigerian banking industry remained liquid, with many of the commercial banks reporting very strong liquidity ratios based on their 2015 audited accounts. From a valuation perspective, the report stated that all the issues facing the economy had turned out to be challenging for the banks, adding that they are relatively undervalued compared to sub-Saharan African banks from a price-to-earnings perspective. According to the report, from the composition of risk assets, banks’ 2015 audited results showed that an average of about 35 per cent among the Tier I banks, their risk assets were denominated in foreign currency. “As you translate this on to the balance sheet, because of the exchange rate devaluation, it would have an impact on their capital adequacy ratios. We are projecting NPLs could get to 12 per cent by the end of the year. Clearly, there are lots of concerns for the industry,” the Afrinvest boss said. He noted that the drop in crude oil prices exposed the underbelly of the Nigerian economy, adding that immediately the oil tap stopped flowing, everybody in Abuja began to pay attention to words such as reforms and economic restructuring. “This also affected the country’s current account balance such that quarter-on-quarter, the country was in deficit, trying to find ways to fund the perennial appetite of its citizens importing basically everything it needs, from toothpicks, ice cream, human hair, etc. “But there were other shocks that we caused ourselves. Knowing that our income had declined, we didn’t take appropriate defensive action to correct the dwindling of our external reserves. It took us until May 2016, to actually effect a proper devaluation of the currency and by that time, we had lost close to half of our external reserves. “So, that was a self-induced problem and we could have addressed that. That delay in devaluation was really not a good one for the economy. “Well, we did manage to reform the fuel pricing even though it was a bit late and the current structure is still unstable. We have managed to divert a portion of export proceeds that come from the international oil to fund the oil marketers who then import fuel for us. “But going full and implementing something that allows us to build our refineries and be able to have petroleum products locally would save us between 30 and 40 per cent of the FX we spend in importing fuel. “Another shock was the Treasury Single Account (TSA) implementation. In an environment where you know your income is much reduced and you are trying to deficit finance yourself, you are mopping up the liquidity in the banking system. “You find out that liquidity is a bigger driver in the system than interest rate. So, by mopping up all the liquidity in a very tough market, you actually frustrate many of the banks from lending. “Today, the fundamentals of the country are not as strong as they used to be, and we can see that from our ratings downgrade. This obviously doesn’t help us when we want to go abroad to raise capital to fund our deficit as we plan to do this year,” the report said. Source: Thisday Newspaper

Naira to begin recovery next week – BDCs

The Association of Bureau De Change Operators of Nigeria says it foresees the naira on the path of recovery by Monday due to the introduction of Travelex, a licensed Forex dealer. The President of ABCON, Alhaji Aminu Gwadabe, said on Thursday in Lagos that a licensed Forex dealer would enhance transparency in the distribution network. Travelex, an international money transfer organisation, was officially directed by the Central Bank of Nigeria to distribute Forex to Bureaux De Change operators by Monday. Gwadabe said that a licensed Forex dealer would enhance transparency in the distribution network. He said that Forex distribution would be efficient and uniformed across ABCON members unlike what was obtainable in the past. According to him, Travelex has the technology to sell Forex to about a 1,000 BDCs within a couple of hours, which is a major advantage. He said, “Against this background, the naira is expected to be on a recovery path from Monday as the distribution of Forex to BDCs will boost liquidity in the market. “The boosting of liquidity in the market will dampen the fears of investors and market speculators, thereby raising their confidence in the market. “This is a purely ABCON and Travelex arrangement, and has the capacity of removing the bottlenecks in the Forex distribution chain. “Travelex has the technology to pay about 1,000 BDCs within two hours. Advertisement “The new arrangement also eliminates relating with bank account officers” On the CBN’s retention of the Monetary Policy Ratio at 14 per cent, Gwadabe said, “I agree totally with the decision of the apex bank to retain the rate.” He said that there was an inverse relationship between inflation and interest rate, adding that an increase in liquidity in the economy could put pressure on the exchange rate. He said, “The more naira at the disposal of Nigerians, the more they want to convert it to dollars for speculation purposes.” The coming of Travelex into the Forex distribution chain was a response to easing liquidity challenges in the market. The Nigerian currency has had scarcity of Forex challenges leading to a sustained depreciation of the naira in almost all the segments of the market. The liquidity challenge moved the apex bank to reconsider the sale of Forex to BDCs when it was apparent it could not sustain the ban. Since the resumption of Forex to BDCs, ABCON had complained of poor distribution of Forex to its members which led the association to plead for an independent body to take over the distribution. Stakeholders in the Forex market believed that the latest development would see the naira mounting the wheel of recovery.

Naira crashes to N436 to dollar as foreign reserves shrink

The naira hit a new record low of 436 against the United States dollar at parallel market on Thursday, down from 428 on Wednesday, as dollar shortages on the official market persist. The development came amid depleting external reserves, which stood at $24.8bn on Monday. It also came two days after the Central Bank of Nigeria’s Monetary Policy Committee met and left the lending rate and other key economic indicators unchanged. The latest data posted on the CBN website showed that the foreign exchange reserves were down by 3.4 per cent from a month ago to its lowest level in more than 11 years, as the apex bank sells the greenback at the interbank market to support the naira. At the interbank official market, the naira was quoted at 313.07 to the dollar on Thursday, down from 310.08 on Wednesday. Economic and currency analysts said there had been no significant policy response to the fall in the reserves, further fuelling the concerns. An analyst at Afrinvest, a local research and investment advisory firm, Mr. Ayodeji Ebo, said it was difficult to trace the reason for the sustained fall in the value of the naira after the MPC’s decision to keep the interest rate unchanged. Advertisement He said the development could be traced to the decision or the imminent maturity of the CBN’s forward contract. “Most stakeholders were expecting the MPC to fine tune the interest rate. This was not done and the fall could be a reaction to the development. It could also be that some people are trying to keep the dollar ahead of the CBN’s forward contract that is about to mature,” he stated. The Association of Bureau De Change Operators of Nigeria on Thursday predicted that the naira would recover by Monday due to the introduction of Travelex, a licensed forex dealer. Travelex, an international money transfer organisation, was officially directed by the CBN to distribute forex to the BDC operators by Monday. The President, ABCON, Alhaji Aminu Gwadabe, was quoted by the News Agency of Nigeria to have said in Lagos that a licensed forex dealer would enhance transparency in the distribution network. He said that forex distribution would be efficient and uniform across ABCON members, unlike what was obtainable in the past. According to him, Travelex has the technology to sell forex to about 1,000 BDCs in a couple of hours, which is a major advantage. Source: Today Newspaper

$17b Refinery: AFREXIMBANK promises funding support to Dangote Group

The African Export-Import Bank on Thursday said it would assist the Dangote Group to access foreign exchange and funding for its $14 billion refinery projects. Dr. Okey Oramah, the President of AFREXIMBANK, gave the assurance during a tour of board members to the refinery, which is projected to refine 650,000 barrels of crude oil per day. The tour of the facility was held at its location within the Lekki Free Trade Zone in Lagos. Oramah said the board members decided to visit Dangote Group, which is a leading African conglomerate business in West Africa, and provide support to its ongoing refinery project. He said Dangote was making tremendous impacts across the continent, which included Tanzania, The Gambia, Zambia and Niger and changing lives. He said: “We are supporting them in what they are doing in those countries. “So we are equally supporting them in this ongoing project. “So, it is important for the Board of Directors of AFREXIMBANK to pay a courtesy a visit to the site. “It is important to come and see firsthand the project that is ongoing because we are also planning to support them to ensure the project is delivered on scheduled. “We are looking at providing all necessary support, both financial and otherwise, to ensure that the project is completed within the time frame. “We are also looking at providing support window for Dangote Group that will be used to fund its projects to completion. “The impacts of the projects are not going to be felt in Nigeria alone but across Africa, especially West Africa. “So for us, it’s a strategic partnership were building. “If we help them to impact lives across the continent, they will equally help in delivering on our mandate to meet the objective of AFREXIMBANK. “It’s a wonderful facility that needs to be publicised to the world. “The projects is the largest in the world, which will supply not only Nigeria, but West Africa.” In his remarks, the Chief Operating Officer, Dangote Industries Limited, Olakunle Alake, said the board members of AFREXIMBANK, whom he called partners from Cairo in Egypt, came to see the level of the ongoing project. Alake said the Fertilizer plant project was gradually nearing completion stage, adding that work had also commenced on the refinery project. Advertisement He said foreign exchange still remained a major challenge to the projects, adding that the forex had moved up from N280 per dollar to N310 now, which had further increased the company’s losses. According to him, there are still serious challenges in sourcing for foreign exchange. Alake said: “It s a challenge we found ourselves. “We are posed to complete the projects within the time frame to ease the forex problem. “We are engaging the Federal Government to support the private initiatives by providing funding to the projects. “Government through the Bank of Industry schemes has given us credit facility of N50 billion to develop the fertilizer plant project. “We have also gotten another approval of N75 billion for the refinery, which we have not disbursed.” The COO of Dangote said that the $17 billion refinery project would crash the price of petrol because the product would be refined in the country and would therefore save some costs incurred in the import market. Alake urged government to sincerely pursue the diversification of the economy. He said projects such as these were needed to wean Nigeria from relying solely on oil as well as optimise government revenue. According to him, the best way of diversification for Nigeria is agriculture and out fertelizer plant is in line with that goal. He said: “By the time we finish our gas pipeline, it can generate about 12,000MW and we can export to other African countries. “We would have the capacity to store four billion litres of products and can load 2,680 trucks per day. “Nigeria will save $7.5 billion yearly from the project when completed.” Alake said the plant’s basic engineering was currently at 98 per cent completion, while the construction stood at 30 per cent. He said that the project would aid the country with about $7.5 billion forex savings on import substitution, generate $5 billion forex earnings from savings and another $5.5 billion export earnings. The plant, according to him, will generate over 100,000 employment opportunities and revive over 11,000 filling stations that had been shut down due to shortage of products. Alake said the project was designed to process largely variety of crude, including all African crude, a range of Middle Eastern crude and US crude. Source: Today Newspaper

Conoil Gains 97% as Investors Increase Demand on Impressive Results

An unprecedented increased demand for the shares of Conoil Plc has lifted the shares of company by 97 per cent following the impressive 2015 full year and 2016 half year results. Despite the economic headwinds that led to poor results by some companies, Conoil Plc posted a performance that beat market expectations. In reaction to the impressive results, investors have raised their demand for the equity at the stock market, a development that has lifted the stock by a record 97 per cent within seven trading days. The stock, which was N21.59 before the full year results were released on September 9, soared to close at N42.60 per share yesterday. Conoil Plc has led the price gainers’ table consistently since the announcement of the results. “I am not surprised at the way the stock is rising given the better-than-expected performance despite the challenging operating environment. But I think profit taking may set in soon as some investors may want to lock part of the gains recorded by the stock,” a stockbroker, Mr. Ayo Oguntayo said. Conoil Plc posted a profit before tax of N3.448 billion for the year ended December 31, 2015, up by 125 per cent fromN1.532 billion in 2014. The petroleum products marketing firm rode on the back of cost containment strategy to record a higher growth in profit after tax to N2.307 billion, which is 176 per cent above the N834 million in 2014. As a result of the improved results, Conoil Plc proposed a dividend of N2.08 billion, translating to 300 kobo per share compared with the 100 kobo paid in 2014. The company followed the full year performance with similarly impressive results for the half year ended June 30, 2016. Conoil Plc grew its profit before tax by 196 per cent to N1.566 billion, from N548 million in 2015, while profit after tax rose by 190 per cent to N1.04 billion. . “The result shows that we out-performed our previous year both in the top-line and should exceed our bottom-line performance at the current run-rate. The impressive performance followed the company’s innovative means of manufacturing and distributing products, huge financial investments in developing high-performance products and in the provision of services that matched and surpassed international standards,” the company said.

Guinness Nigeria Secures $95m Loan from Diageo

Guinness Nigeria said on Wednesday that its parent company, Diageo had given it a $95million term loan to support its dollar needs through foreign currency shortages caused by the West African country’s floating of the naira. The company’s Chief finance officer, Ronald Plumridge, told Reuters that Guinness Nigeria’s currency needs were much bigger than it can source locally and from exports and so Diageo had stepped in with the loan. The loan was priced at three month LIBOR plus 4.75 percent, he said.

NERFUND to Prosecute Customers over N17.2bn Bad Loans

The acting Managing Director, National Economic Reconstruction Fund (NERFUND), Dr. Ezekiel Oseni wednesday disclosed plan to engage the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and Economic and Financial Crimes(EFCC) to recover over N17.2billion non-performing loans (NPLs), which were advances to customers between 2013 and 2015. He said about 1, 143 projects, mainly micro small and medium enterprises (MSMEs) benefitted from its financing within the period but failed to honour their repayment plans. Oseni gave the hint in Abuja on the sidelines of a meeting with a delegation from the African Rural and Agricultural Credit Association(AFRACA), led by its Secretary General, Mr. Saleh Gasua. Until Oseni’s appointment last month, NERFUND, which was set up to provide needed medium-to long-term financing to Micro, Small and Medium Scale Industrial Enterprises, had been in turmoil as staff protested alleged corruption and mismanagement. According to insider sources, part of the issues that triggered the tension in the office is the huge loan portfolio of the bank, which had rendered it incapacitated. Oseni, however, said the bank had launched an aggressive loan recovery drive, vowing to bring loan defaulters to book. He said some of the strategies would be to identify and engage the various customers to work out repayment options and sales of assets of those whose projects are on ground but unable to pay back. The NERFUND acting MD also said as part of the moves to encourage repayment, the bank was ready to grant concession on the loan interest to certain categories of customers. He, however threatened to drag some of the customers found to have either invested the loan granted to them on projects not listed in their loan applications and those who out rightly diverted the fund to the ICPC and EFCC. He said: “Many of the loans that constitute the N17.2 billion loans have been hanging for more than 10 years. What we are doing presently is to get the customers to repay. We have reached out to some of them. “This one month that I have resumed, a lot have been coming in to make some payment to us. I expect the rate of recovery to be higher than what we are experiencing right now. What we are planning to do is to give them a little more time to enable them to respond. “But for those that think they don’t have obligation to pay, there are a lot of strategies that we are going to embark upon to recover the money. For those whose projects are on ground, but don’t have the means to pay, we will dispose their assets. “We are going through all the legal processes to enable us sell the assets without violating the legal agreement we signed with them. Those we also need to take to the law enforcement agencies like ICPC and EFCC to help us to collect the money, especially where we discover that there were diversions, we will also do it.” On why the DFI had such a huge NPL portfolio, Oseni said NERFUND was not originally set up to engage in direct lending and as such lacked the expertise to do the business. He said findings had revealed that the ratio of non-performing loans was high because in many instances, no proper appraisals were conducted before some of the loans were granted to customers. However, Gashua said the organisation was in the country to discuss with its various member institutions on how to strike a synergy for the provision of sustainable financial services to the rural and agricultural communities within the continent. He noted that that all hands must be on the deck to address the present economic challenges bedeviling the nation, adding investment in agriculture was key to the country’s economic rebirth. Source: Thisday Newspaper

FG to Raise $2bn from Concession of Lagos-Kano/Port Harcourt- Maiduguri Rail

The federal government plans to raise $2 billion through the concession of the existing Lagos-Kano/Port-Harcourt-Maiduguri rail line, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, has said. He spoke in Abuja just as the Minister of Finance, Mrs Kemi Adeosun, called for the lowering of interest rate to boost economic growth. Udoma, who also explained that the federal government had released N400 billion out of the budgeted N1.8 trillion capital vote for the year, said discussions were on with General Electric (GE) to take over the rail line as part of the efforts to multiply revenue sources to fund the budget. “We are working on all fronts at the same time. One is to get oil production back – it is very important. Two, is the asset sales, concession and all that. We are discussing with General Electric, and I will give that as a practical example,” Udoma said in a document released to THISDAY monday, adding that the firm had already committed to bring in $2 billion into the concession arrangement. He said that the concessionaire would take over the rail lines, revamp them and build coaches in the country, explaining that the process of getting the thing through would however take some time. “We have to wait for the various government agencies because there are certain procedures we have to go through. This is why we met and said, is there a way we can fast track some of these things? Because we need the money today, not in three or four months’ time,’’ Udoma explained. The minister said the recurrent budget, as contained in the 2016 Appropriation Act, had been “virtually fully’’ implemented. “As far as the recurrent is concerned, the 2016 budget has been virtually fully implemented. The emoluments have been paid in full. We’ve released all the money. At the federal level, all salaries have been released. We have met that in full,’’ Udoma stated. He added: “We have also met all debt service in full. With regards to overheads, we have not met that in full but we are almost there. The problem has been capital. In the capital budget, we planned to spend about N1.8 trillion, but we’ve only spent about N400 billion. “So, we have not been able to meet up with the level of capital releases. The reason for that is that if you look at the first six months of the year, the revenue performance was N1 trillion less than we projected.’’ The minister added that given that rate, it meant that at the end of the year, there would be N2 trillion less revenue than the country expected, saying there is no economy and person that could manage that without being where the country is tuesday. On how soon Nigerians are likely to see some activities against the background that many analysts at the Economic (Ministerial) Retreat said recently that the federal government should pump a lot of money into the economy and see some busy activities happening, Udoma said the federal government completely agreed with that, stating that the Economic Management Team had been meeting for the last months over the fiscal stimulus to see how it could raise additional revenues. He added: “We need to raise additional revenues. To release more money, you need to get the money first. So, we have a fiscal stimulus plan, which we have been developing over the last months. We intend to do a number of things. We are looking at assets sales, concession, and getting advance payments from licensing rounds and all that. “We are targeting to raise between $10 billion to $15 billion and we have started that process. Why are we looking for dollars? It is because what we need to charge this economy is actually foreign currency. It is foreign currency shortage that is really responsible for where we are today. So, we have to look for foreign currency. We have a plan already. “We have prepared a bill because we want to fast track some of these processes in order to be able to get the money from concession and all that. There are two sources of getting these additional funds. One is getting more crude oil production. At that time, we still thought we will be able get more oil production and get back to 2.2mbpd.’’ The minister further stated that the federal government was also looking at a strategy to contain the militant activities, adding that the government didn’t expect it to be as prolonged as it has been. He said that the federal government, with the help of all stakeholders in the region, is still working to reduce the militant activity through dialogue and other strategy. “If we can reduce them, we can take oil production immediately to 2.2mbpd. If we do that, we will be able to pump this additional money into the economy,’’ he stated. On whether Nigeria is still producing around 1.1m barrel per day, the minister said it is now moving up because Qua Iboe Terminal had started operating. Udoma also made some clarifications on the monies recovered and lodged in the Treasury Single Account (TSA) and looted funds recovered by the Economic and Financial Crimes Commission (EFCC). “On the TSA, what we talk about is a flow. It is not that the TSA has recovered a surplus. The TSA is a mechanism for making sure that all payments go through a central point so they can be tracked, but those funds belong to various agencies and they end up being paid into the national treasury,’’ he stated. “So, the issue of maybe N3 trillion lying idle in TSA is not correct. The money that has been flowing through, the cumulative amount is what is being spoken about. That money is not lying there idle for us to take. This has been clarified so many times. The Minister of Finance has said so on several occasions and I can’t understand why the issue isn’t still clear,’’ he said. On the funds recovered by the EFCC, he said that until the legal processes were completed, the federal government could not spend them. Adeosun seeks interest rate reduction Meanwhile, as the Central Bank of Nigeria’s (CBN) monetary policy committee (MPC) members are set to announce the outcome of their two-day meeting today, the Minister of Finance, Adeosun, has expressed her preference for a reduction of the benchmark Monetary Policy Rate (MPR). The minister, who said this while speaking on CNBC Africa, argued that the focus of policy makers in the country at this time should be on stimulating growth. The Nigerian economy is in recession. The NBS recently revealed that the country’s gross domestic product (GDP) contracted by 2.06 per cent in the second quarter of 2016, compared to the negative growth of 0.36 per cent recorded in the first quarter of 2016. “I would rather seek growth, we can manage inflation – let’s stimulate the economy, we need lower interest rates,” she said. The finance minister wants the central bank to lower interest rates so that the government could borrow domestically to boost the economy, which is stuck in recession, without increasing its debt-servicing costs. Adeosun said she was working with the Debt Management Office (DMO), Nigeria Sovereign Investment Authority (NSIA) and the pension industry to issue an infrastructure bond to raise money for road and housing projects, although she did not elaborate. She said she wanted the central bank to reconsider its July interest rate hike, which it implemented to help support the naira and attract foreign investment inflows. “We need lower interest rates because when we are borrowing and interest rates go up, it increases our cost of debt service and it reduces the amount of money that is available to spend on capital projects,” she told CNBC Africa. “The attempt was to manage inflation and the trade off for the economy right now is what a bigger problem is: Is it growth or inflation? For me it is growth. I would rather seek growth. We can manage inflation. I think for us at the moment in the Nigerian economy, growth is the most important thing,” she said. Adeosun said the government was working with the parliament to cut procurement timelines to get contractors back to work and inject money into the economy. Nigeria has said before that it plans to set up a $25 billion infrastructure fund to invest in the transport and energy sectors. She said some adjustment was needed to narrow the spread between the official and black market currency rates, which is running at 25 per cent after the central bank floated the naira. “We still need to make some necessary adjustment to ensure that the spread is narrowed so that we have true price discovery,” she said. At the last MPC meeting held in July, the Monetary Policy Rate (MPR) was raised to 14 per cent from 12 per cent, and the Cash Reserve Ratio (CRR) and Liquidity Ratio (LR) were both retained at 22.50 per cent and 30 per cent respectively. The spot rate of the naira appreciated marginally to N307.25 to the dollar on the interbank forex market yesterday, up from the N308.69 to the dollar it closed last Friday. But on the parallel market, the naira remained unchanged at N425 to the dollar monday. NBS Updates Capital Import Figures Nigeria’s total value of capital imported into the country was estimated at $1.04 billion in the second quarter of the year (Q2 2016), representing an increase of 46.58 per cent compared to $710 million in the previous quarter, according to updated figures by the National Bureau of Statistics (NBS), which were released monday. However, the new figures represented a decline of 60.91 per cent relative to the corresponding quarter of 2015, and contrasted with the preliminary estimate which was based on the first two months of the quarter, which indicated a quarter-on-quarter decrease of 8.98 per cent. The release by the NBS came just as the Minister of Finance, Mrs Kemi Adeosun, called for reduction in interest rate to boost growth. The updated version supersedes the preliminary report published in which capital importation for June 2016 was only an estimation as figures were not readily available then. Nevertheless, the NBS said it deemed it necessary to provide an update having laid hands on the real figures for June, which appeared to reset the calculations that earlier put total capital importation at about $647.1 million for Q2. The NBS said a sharp increase in June outweighed the low values recorded in April and May as the level of capital imported in June was the highest monthly value in 2016. It added that the value of capital importation rose to $610.77 million in June, more than the previous three months combined due to a surge in loans, and helped by a significant change in exchange rate policy as the Central Bank of Nigeria (CBN) opted to move to a more flexible regime. Specifically, the NBS said analysis showed that “the sharp rise in June in particular and Q2 2016 over Q1 2016 in general was due to a 115.12% quarter-on-quarter and 239.48% year-on-year rise in loans predominantly to the oil and gas (862.02% quarter-on-quarter rise and 4,023.25% rise year on year) and telecoms sectors (783.25% quarter on quarter and 14.22% rise year on year)”. In May, the value of capital imported was the lowest since August 2009, it added. According to the statistical agency, quarter on quarter, the foreign direct investment (FDI), portfolio investment and other investments all recorded increases, with other investments recording an increase of 96.09 per cent and accounting for $520.57 million, or 49.95 per cent of the total share of capital imported relative to the previous quarter. Portfolio investment, which was the second largest component recorded an increase of 24.45 per cent and accounted for 337.31 million, or 32.37 per cent of total capital imported. Furthermore, portfolio investment was dominated by equity, which accounted for 82.95 per cent, a slightly lower share than a year previously when the share was 84.56 per cent but higher than in the previous quarter when it accounted for 74.41 per cent. On the other hand, FDI recorded an increase of 5.64 per cent in the period under review and accounted for a total of $184.29 million, representing 17.68 per cent of the total figure. Equity accounted for the vast majority of FDI, leaving only $0.08 million as capital imported in the form of other capital. Providing a sectoral breakdown of capital imported in Q2, the NBS stated that the value of share capital imported into the country was $347.99 million, a significant increase relative to the first quarter of 42.89 per cent. Year on year, while share capital declined by 72.83 per cent. It said: “Despite the large quarterly increase, the proportion of total imported capital that shares accounted for in the second quarter was 33.39%, slightly lower than the proportion of 34.25% recorded in the first quarter. It is also less than half the proportion it accounted for in the same quarter of 2015, which is 70.41%. Nevertheless, share capital still accounts for a larger proportion of total imported capital than any individual sector. “For the first time on record, the sector to import the largest amount of capital was Oil and Gas, which accounted for $200.39 million, or 19.23% of the total. In all previous quarters, the sector to import the most capital had been either Banking, Financing, Production or Telecommunications. The Oil and Gas sector is characterised by occasional high levels of capital importation, interspersed with periods in which very little capital is imported. This sector imported $20.83 million in the previous quarter, and only $4.86 million a year previously.” Continuing, it said: “The sector to import the second largest amount of capital was Servicing, which imported capital worth $119.75 million in the second quarter, or 11.49% of the total. This represents a large increase relative to both the same quarter the previous year when capital worth $12.83 million was imported, and the previous quarter in which the value was $55.05 million. “There were five sectors to record no capital importation in the second quarter of 2016 (Marketing, Hotels, Tanning, Transport and Weaving), one more than in the previous quarter. In addition, half of the 20 sectors recorded either a decline in the amount of capital imported relative to the previous quarter, or no change. “The largest fall was in the Electrical sector, which recorded $57.31 million less. By contrast, Oil and Gas recorded the largest increase, and imported $179.56 million more than in the previous quarter, but Telecommunications also recorded a notable increase of $105.27 million, from $13.44 million in the first quarter, to $118.71 million in the second quarter of 2016.” Source: Thisday Newspapers

Nigeria’s foreign exchange reserves fall below $25bn

Nigeria’s foreign exchange reserves have plummeted to a new low of $24.88 billion, indicating dwindling confidence in the economy, despite reassurances by authorities. In the last one week, it lost $230 million, understandably due to series of interventions by the Central Bank of Nigeria (CBN), as post recession announcement pressure continued. The previous week, the reserves lost about $123 million, attributed to interventions in the interbank market by the regulator, and aimed at supporting the local currency. This is in contrast with about $93 million the reserves lost in three weeks, also reflecting reactions over the flurry of negative records released recently by the Nigerian Bureau of Statistics. Since affirmation of the country’s slip into recession, last experienced more than 25 years ago, the reserves have lost about $540 million, as speculations and panic for store of value in dollar heightened. CBN has emerged the major player in the interbank market since the inception of the new regime, except when, recently, foreign investors staked about $270 million, while others remained cautious. Advertisement The reserves have also lost about $1.6 billion since the inauguration of the flexible exchange rate, even as the apex bank steps up modification of its rules, to attract foreign investors, including those associated with investments in government securities. Expected convergence of the interbank and parallel markets exchange rates remain unattainable at the moment, as the liquidity crisis in the currency market persists, pushing both rates apart. At the parallel market, the local unit ended last week at N425/$. Although, no particular date has been announced, the planned $1 billion Eurobonds by the government is being mooted to hold between November and mid-December. The head of the nation’s debt broker, Abraham Nwankwo, has already affirmed that all borrowings would be used for capital projects, while ensuring that local partners to the deal, like banks, are well involved. A new twist, however, has emerged, with sudden downgrade of the country’s credit rating, even as it battles the stigma of recession within the investment community. The development shows two fundamentals about the feasibility of the debt deal: general acceptability of the bond among the international community, and cost. Source: Today Newspapers

CBN to resolve bottlenecks in non-oil export stimulation facility

The Central Bank of Nigeria (CBN) has disclosed its determination to resolve all bottlenecks and issues relating to the non-oil Export Stimulation Facility (ESF), including N500 billion low interest rate non-oil export loans. As part of its efforts in achieving this, the apex has set up a committee to review its policy on the ESF. However, it is important to note that the ESF was established to support the diversification of the nation’s economy away from oil and to expedite the growth and development of the non-oil export sector. Speaking at the Finance Correspondents Associations of Nigeria (FICAN) 2016 annual conference, held in Lagos over the weekend, the director, Development Finance Department, CBN, Mr. Mudashiru Olaitan, said that the policy review was to enhance value addition and engender productivity in the non-oil export trade policies, so as to boost the nation’s economy. Olaitan explained that the intended modified policy would increase sufficient employment capabilities, high growth potentials, increase accretion to foreign reserves, expand the industrial base and consequently diversify the economy. Advertisement According to the apex bank director, the current facility with a tenor of up to three years would be granted at a maximum all-in interest rate of seven and half per cent per annum; facilities with tenor of over three years would be granted at a maximum all-in interest rate of nine percent per annum. “The objective of the modification is also to improve access to finance by the agricultural value chain, manufacturing, mining, solid minerals activities and other strategic sub-sectors of the Nigerian economy. Also, the managing director of Starlink Global & Ideal Limited, Adeniji Adeyemi, pointed out that the government needs to provide an enabling environment, so as to create good atmosphere for export businesses to thrive. Adeyemi, who is also an exporter of cocoa in the country, however, frowned at the export grant given to the Nigerian exporters of raw materials to foreign country. He explained that the Export Expansion Grant (EEG) should be given to people that added value, most especially those that export processed products, adding that people that export raw material are not adding any value and do not deserve such support. Source: Today Newspapers

FSDH Merchant Bank establishes N30bn commercial paper programme

Following the successful establishment of its N30billion commercial paper programme, FSDH Merchant Bank Limited has launched its debut commercial paper (CP) issuance to raise up to N15 billion in the Nigerian money market with the issue of N814.12 million series 1 90-day and N14.17 billion series 2 269-day CP. The CP offers were open to investors on August 24th and subsequently closed on August 29 with subscription levels of over N17 billion. The Bank elected to allot N14.98 billion to investors across both series, in line with its initial target amount. The Managing Director of the bank, Rilwan Belo-Osagie, explained that the CP programme would afford it periodic access to the money market for short term funding as and when required. The funds raised from the concluded series 1 and 2 issuance, according to him, would be applied by the bank for its general banking asset and liability management purposes including replacement of maturing wholesale liabilities. He noted that the FSDH CP Programme is the first ever to be established by a Merchant Bank in Nigeria under the new guidelines on commercial paper from the Central Bank of Nigeria, published in 2009. “There was strong retail and institutional investor (including pension funds, asset managers, insurance companies, trustees and high net worth individuals) participation in the offer. This demonstrates confidence in the FSDH brand as evidenced by the acceptance of the issues in the market by the diverse categories of investors to whom the securities were distributed.” Advertisement Speaking at the signing ceremony that was held at FSDH’s head office in Lagos, Belo-Osagie said: “We are very pleased with the establishment of this Commercial Paper programme for FSDH and the dedication and support of the advisors in making this a success. “FSDH was very active in the commercial paper market prior to 2009 and the establishment of this CP programme serves as an opportunity for the Bank to restate its presence and significance in the money market and participate in the development and deepening of commercial paper market under the new regulations.” He added that the notes would be quoted on the FMDQ OTC platform to facilitate active secondary trading of the CPs. Lead arrangers on the transaction include FSDH Merchant Bank Limited (via its investment banking unit), Stanbic IBTC Capital Limited (a member of Standard Bank Group) and United Capital Limited. FSDH Merchant Bank Limited is acting as the Issuing, Calculation and Paying Agent. FSDH Merchant Bank Limited, formerly First Securities Discount House Limited, was one of the first merchant banks to be awarded a merchant-banking license in Nigeria following the repeal of Universal Banking in 2010. The bank was incorporated in 1992 as First Securities Discount House Limited. Source: Today Newspapers

Interbank rates expected to drop on FAAC disbursement

Having risen to 36 per cent last week, overnight rates at the Nigeria Inter Bank Offer Rates (NIBOR) is expected to moderate this week as the market anticipates disbursement from the Federation Accounts Allocation Committee (FAAC) and N350 billion capital expenditure fund. NIBOR rates which is the rate at which lend to one another rose sharply last week amidst tight liquidity as N304.23 billion was mopped up from the financial market last week. N121 billion was raised at an auction of local currency bonds while N183.23 billion was raised through the sales of Treasury Bills. Overnight rates had risen during the three-day trading week from 16.54 per cent to 36 per cent while 1-, 3- and 6-month rates rose to 20.45, 21.52 and 25.07 per cents from 19.96, 20.83 and 23.84 per cents respectively. Advertisement According to data released by the Debt Management Office (DMO), the bonds were sold at higher rates across board as it raised N15 billion through the 2021 paper at 15.14 percent, compared with 15.08 percent at the previous auction last month. It also sold N30 billion of 2026 debt at 15.53 percent, against 15.28 percent, and N60 billion of 2036 debt at 15.59 percent, compared with 15.53 percent. Meanwhile the N183.24 billion worth in treasury bills auctioned on Wednesday was sold with mixed yields on all the tenors. The debt office said it raised N48.10 billion of three-month paper at 14 percent, down from 14.38 percent at August 31, auction, sold N48.45 billion worth of the 6-month paper at 17.77 percent, higher than 17.50 percent previously. A total of N86.69 billion was sold in the 1-year debt at 18.48 percent against 18.42 percent at the last auction.to Source: Today Newspapers

Honeywell Flour Mills’ New Multi-billion Naira Factory Nears Completion

Shareholders have commended Honeywell Flour Mills Plc for the on-going construction of its new multi-billion naira state-of-the-art foods & agro-allied complex and reaffirmed their confidence in the growth prospects of the company. They expressed their satisfaction with the pace of the on-going construction when they visited the Sagamu site of the new factory complex. The shareholders also conveyed their support for production of food products that use local inputs from Honeywell’s aggressive backward integration programme. They added that with the new facility, the company deserves support and patronage from government, other critical stakeholders and the general populace. The visit is coming ahead of the company’s 7th Annual General Meeting (AGM) scheduled to hold at the Civic Centre, Ozumba Mbadiwe, Victoria Island Lagos, on Tuesday, 20th September, 2016. Occupying over 63 hectares of land within the Ogun State Flowergate Industrial Estate in Sagamu (along the Lagos-Ibadan expressway), the new factory is expected to commence production of various food products in the second quarter of 2017. This investment will create additional jobs in the economy and reduce the company’s demand for foreign exchange. Speaking on the shareholders’ familiarization visit to the new factory complex, the Executive Director, Manufacturing, Honeywell Flour Mills Plc, Dr. Nino Ozara, who led the delegation to the factory site in Sagamu, Ogun State; expressed optimism that with shareholders’ continued support, the new factory, which is near-completion, would not only boost local milling capacity, it would also transform the country’s milling industry and provide lots of jobs. “Honeywell Flour Mills’ new ultra-modern Sagamu factory site is proof of the company’s growth prospects and commitment towards re-enforcing investors’ trust even in the face of the current economic challenges. The plant will produce large scale wheat and non-wheat based products that would meet present and future food needs of Nigerian consumers, thereby further strengthening the company’s leadership position in the Nigerian milling industry. You would recall that in an interview published recently in one of Nigeria’s newspapers, the Vice President, Professor Yemi Osinbajo commended Honeywell for its Sorghum plant being built as one of the many manufacturing installations on the new site. The Vice President’s comment is a recognition of Honeywell’s bold backward integration objective that is the cornerstone of this project”, he said. A representative of the shareholders, Dr. Boniface Okezie, commended Honeywell Flour Mills on the progress of work at the Sagamu factory which is nearing completion. He was particularly delighted at the quality of machines being installed, which are state-of-the-art. Dr Okezie encouraged the company to continue to maintain its reputation for high quality production processes once the factory commences production. He added that unalloyed commitment of the company to transformational investments such as this will guarantee business success and continued profitability of the company. The Executive Director, Supply Chain, Rotimi Fadipe, who was also part of the tour, remarked that the location of the new factory could not have been better, as it is by an interchange along the Lagos-Ibadan expressway, which makes it easily accessible from any part of the country. He assured customers and end users of better product deliveries from the new factory. Also commenting on the shareholders’ visit, the Executive Director, Marketing, Benson Evbuomwan, thanked the delegation for the visit and stated that the company will not rest on its oars but will continue to develop and implement business strategies aimed at reaffirming the company’s position in the industry as well as creating more successes for the company, its stakeholders and the Nigerian economy. He noted that this project provides the company with opportunities to introduce new product offerings that will delight its teeming and loyal consumers and grow market share. Honeywell Flour Mills Plc currently boasts one of the largest milling capacities in the country and produces household wheat-based food brands such as Honeywell Superfine Flour, Honeywell Semolina, Honeywell Wheat Meal, Honeywell Noodles and Honeywell Pasta. With the Sagamu project, Honeywell Flour Mills Plc will backwardly integrate to use a variety of local inputs to produce nutritious foods for its consumers. Source: Thisday Newspapers

Markets Watch CBN for Direction as MPC Meets

As the Central Bank of Nigeria (CBN) commences its 252nd Monetary Policy Committee (MPC) meeting today, investors would been looking up to the committee for favourable rate decisions that would spur investments as well as stimulate the country’s ailing economy. The two-day meeting which would be the fifth to be held this year, holds in Abuja and members of the committee would determine whether or not to adjust upward or downward, the benchmark Monetary Policy Rate (MPR), which was raised to 14 per cent from 12 per cent, and the Cash Reserve Ratio (CRR) and Liquidity Ratio (LR) which were both retained at 22.50 per cent and 30 per cent respectively. The Nigerian economy is in recession. The National Bureau of Statistics (NBS) recently revealed that the country’s gross domestic product (GDP) contracted by 2.06 per cent in the second quarter of 2016, compared to the negative growth of 0.36 per cent recorded in the first quarter of 2016. The country’s external reserves stood at $24.880 billion as at last Thursday. The National Bureau of Statistics (NBS) last week revealed that the Consumer Price Index (CPI)increased to 17.6 per cent (year-on-year) in August, from the 17.1 per cent recorded in July. Also, national unemployment rate rose to 13.3 per cent in the second quarter of 2016, from 12.1 in the first quarter of 2016. Since the CBN introduced a flexible exchange rate regime to allow the currency to trade freely on the interbank forex market, dollar liquidity has remained a challenge. Owing to this, the central bank has remained the major supplier of forex in the market. The naira closed at N425 to the dollar on the parallel market on Friday, while on the interbank forex market, the spot rate of the naira closed at N308.69 to the dollar on Friday. In the same vein, Standard & Poor’s (S&P), one of the world’s leading index providers and independent credit ratings has downgraded Nigeria’s rating further from ‘B+’ to ‘B/B’. The agency stated in its latest rating on the country that Nigeria’s economy had weakened more than expected owing to a restrictive foreign exchange regime, a marked contraction in oil production, and delayed fiscal stimulus. The Organisation of the Petroleum Exporting Countries (OPEC) asserted that the trend of the past years’ moderate global growth was likely to continue in both 2016 and 2017. The OPEC Oil Market Report for September 2016 therefore revised down its 2016 global growth forecast to 2.9 per cent, from three per cent in the previous assessment. Therefore, considering these economic data, analysts at FSDH Merchant Bank Limited, anticipated that the MPC members would resolve to hold rates. They held the opinion that the current economic recession does not support an increase in rates, adding that instead it supports rate cut to boost output. “On the other hand, the rising inflation rate and weak currency do not support rate cut but a rate increase. However, given the stagflation the country faces at the moment, maintaining rates at the current level may be the best option. “We expect the MPC to continue to use the open market operations (OMO) to influence yields to achieve positive real yields on fixed income securities. The weak global economic growth outlook portends a downward pressure on oil prices, which will mean additional pressure on the value of the naira. Thus, a tight monetary policy is an appropriate response to mitigate the negative impact on the Nigerian economy,” FSDH Merchant Bank analysts stated. Also, Afrinvest West Africa Limited pointed out that with economic growth faltering, inflation spiking, forex rates diverging and increasing downside risk to financial stability, the challenge before monetary policy continues to be how to achieve a balancing act amongst competing policy objectives. Afrinvest added: “Whilst we believe the current recessionary shock conventionally calls for a more accommodative fiscal and monetary policy alongside structural reforms to jumpstart growth, we think the MPC will likely not take this path given that fiscal, forex liquidity and terms of trade realities are constraining policy options. “Also, by tightening at the last meeting, the MPC Crossed a Rubicon and to backtrack yet again will jeopardise efforts at ensuring policy consistency and restoring credibility. Thus, we expect the MPC to maintain status quo on policy rates and wait on impacts of fiscal stimulus, talks on reaching a détente with Niger-Delta militants and full implementation of recent forex reforms.” Also, commenting on the move by the federal government to raise $1 billion from Eurobonds by mid-December and also borrow externally, Johannesburg-based sub-Saharan Africa Economist at Renaissance Capital (RenCap), Yvonne Mhango stated in a note at the weekend, that she expect the impact of the foreign loans on the country’s FX reserves (and by implication the naira) to be very small, probably negligible. However, she expects its impact on the government’s capital expenditure spending, and by implication growth, to be more meaningful. In addition, the presidency announced earlier this month that it had approved plans to borrow externally and the plan was awaiting parliamentary approval. The government plans to borrow from the World Bank, the African Development Bank, Japan International Co-operation Agency, and Export-Import Bank of China. Mhango explained: “When countries FX revenues fall substantially, they are inclined to raise external financing. Which does two things: it helps shore up forex reserves, and in some cases slow the depreciation of the currency; and it brings in funds to help a revenue-constrained government finance the budget deficit. “The financing gap for the 2016 N6 trillion budget (which will be implemented until May 2017) is N2.2 trillion ($7 billion). The initial budget showed that the government planned for foreign borrowing of N984 billion, which is $3 billion at today’s FX rate versus $5 billion at the FX rate when the initial budget was released in late 2015. “When we met with the World Bank in May, we were told that the government was in talks with them and the AfDB for loans of $1.5 billion respectively. At the time, the $2 billion difference in external financing was expected to come from a combination of bilateral lenders and a Eurobond. As the 60 per cent depreciation of the naira, against the dollar, since June, has effectively reduced the foreign borrowing requirement in dollar terms, the loan amounts from the various creditors may have changed. “Nigeria’s debt/GDP ratio of about 14 per cent is very low when compared to its peers (versus 50%+ in Kenya). However, Nigeria’s high debt service/revenue ratio of 35 per cent explains why the authorities will need to be cautious when increasing its borrowing requirement. Otherwise debt servicing will crowd out spending to priority sectors, including healthcare and education.” Source: Thisday Newspapers

$66bn Spent On Bureau de Change in 11 years

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has disclosed that the central bank frittered away a whopping $66 billion over an 11-year period funding Bureau de Change (BDC) operators, blaming this as one of the several policies that led to the erosion of Nigeria’s foreign reserves and is partly to blame for the economic crisis in the country today. Speaking to journalists at the weekend, Emefiele recalled that in September 2008, Nigeria’s foreign reserves stood at $62 billion when crude prices peaked at $147 per barrel, noting however that rather than save the money or invest it in infrastructure and industry for wealth creation, previous governments embarked on frivolous spending, disclosing that in 11 years, Nigeria spent $66 billion funding BDC operators. He said: “In September 2008, Nigeria’s foreign reserves stood at $62 billion. But what did we do with $62 billion at a time crude price was in excess of $120 per barrel? “What we could have done was to save the money, if we couldn’t save the money, invest it in infrastructure and industry that will create productivity and wealth for our people. “Instead, the central bank at that time went about licensing Class A, Class B and Class C bureau de change operators. For Class A BDCs, the central bank was allocating $1 million per week, for Class B, the CBN was allocating $750,000 per week and for class C BDCs, the central bank was allocating $500,000 per week. The CBN was among one of the few central banks in the world allocating dollar cash for BDC operations.” He revealed that between 2005 and January 2016 when it was stopped, the CBN had disbursed $66 billion to fund the cash operations of BDCs in Nigeria. “What that meant was that in 11 years, we spent $66 billion funding the operations of BDCs which came to an average of $6 billion a year. If we had thought of other ways to utilise our reserve, especially in 2008 when our reserves were as high as $62 billion, certainly we will not be where we are today,” said the visibly agitated Emefiele. The CBN boss, who recalled his worst experience as the chief executive of Zenith Bank Plc and how he was punished for not participating in funding of BDC operations, said: “We had a situation where at that time, as the MD of Zenith Bank, there was a deputy governor of the central bank that would call to query me as to why I was not coming to the central bank to collect dollar cash to sell to BDCs. “I was informed that some people in Port Harcourt, Lagos and Kano were calling to complain that Zenith Bank was not selling dollar cash to BDCs, but of course the bank did not see any serious need to sell dollar cash for BDC operations at that time. So that was what we did with part of the $62 billion foreign reserves. “Between 2009 and 2014, you remember in 2009 when we had the crisis, when it started with the Lehman Brothers collapse, America pumped a lot of money to stimulate its economy and as a result of that, money flowed into emerging markets including Nigeria. “At that time again, Nigeria removed all forms of captive controls to encourage the flow of capital into Nigeria. So what happened during that time was that for five straight years, we saw crude prices at above $105 per barrel on the average for five straight years. “In that period, we also saw flow of capital into emerging markets including Nigeria. So we should have at that time built our reserves but we did not, and these were some of the actions they took at the central bank that got us where we are today.” Source: Thisday Newspapers

Elumelu to Clinton, Trump: Africa Needs More US Engagement in Trade, Investment

Chairman of Heirs Holdings, Mr. Tony Elumelu, yesterday appealed to the leading candidates in the United States presidential election — Democratic Party’s Hilary Clinton and Republican Party’s Donald Trump — to retain the prevailing US-Africa policy, saying it was adequate and would only need to be expanded and scaled up. “On US-Africa policy, some things don’t need to change,” he told his audience as the keynote speaker at the US Senator Chris Coon’s Opportunity Africa Conference 2016 in Delaware, adding: “What they need is to be expanded and scaled up. In other words, we need more US engagement in Africa through mutually beneficial trade and investment.” He said this would be his and 200 other US and African political and business leaders, including President Obama and over 30 African presidents’ focus during next week’s US-Africa Business Forum in New York. “We would discuss how to strengthen mutually beneficial economic ties between the African and American peoples,” the chairman of Heirs Holdings said. Elumelu, who spoke on the theme, entrepreneurship, is one of Africa’s leading entrepreneurs, who isdedicating time and money to create a new generation of African business women and men, committing $100 million of his own money to the laudable project. According to him, “If we give our people the economic tools to thrive and living standards increase, the political challenges that Africa face can be tackled and fundamental positive change can be assured.” He, therefore, called on the next US president to work in shared purpose with Africans on implementing innovative solutions to the complex but surmountable challenges in Africa. He challenged the American electorate to impress it on their candidates and the eventual president to engage more with Africa. “So when you meet, write, call and email your political candidates and representatives and the elected president in November, tell them that when it comes to Africa, you want more. And by more, I mean more engagements, more positively impactful policies and more development and commercial investment in Africa,” Elumelu said. Closing his address at the eventful conference, Elumelu said: “I am an unashamed optimist and I believe that working together, in shared purpose, which is what Africapitalism is about, we can help usher in economic transformation that will ensure Africa is a critical player in the 21st century global economy.” Source: Thisday Newspapers

Recession: The Worst is Over, Says Emefiele

As Nigerians grapple with the worst economic crisis to befall the country in more than two decades, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has assured the public that the economic recession will soon be over, given the strategic measures being put in place by the monetary and fiscal authorities to turn the economy around. Speaking in Lagos during an interactive session with journalists at the weekend, Emefiele emphatically stated that the “worst is over”, adding that the Nigerian economy was already on the path of recovery. The governor equally reiterated his call for the federal government to partially sell some of its oil joint venture assets, saying that the proceeds raised from the sale would go a long way in boosting Nigeria’s foreign reserves and reflating the economy through infrastructure projects. Emefiele also expressed optimism that the liberalisation of the foreign exchange (FX) market was starting to pay off, revealing that the country had recorded $1 billion capital inflows from foreign investors since the market took off almost three months ago. Low Commodity Prices to Blame He blamed the country’s economic crisis on the global crisis, “which has seen commodity prices dropping in recent times as well as the geopolitical tensions all around the world”. This notwithstanding, the CBN governor was optimistic that the Nigerian economy would rebound by the fourth quarter of this year, as the monetary and fiscal authorities had put adequate measures in place to stimulate and reflate the economy. “We are already in the valley, the only direction is go up to the hill and government is doing everything possible to move up the hill as quickly as possible,” he said. Emefiele declared: “I’m optimistic that with the action taken by the government, the monetary and fiscal authorities, by the fourth quarter, you will see the evidence that we have started to move up north, in the direction of the hill and out of the recession. “I repeat, the worst is over, Nigeria’s economy is on the path of recovery and growth. If you are a bystander, you are losing by being a bystander, join the train now before it leaves you.” The CBN governor, who expressed concern over the hardship Nigerians are contending with owing to the economic downturn, noted that aside from the collapse of commodity prices and geopolitical tensions, some of the actions that the US Federal Reserve Bank took, following the mortgage crisis of 2009, have had an adverse impact on emerging and frontier markets such as Nigeria. “I must apologise when you said people are suffering, I must apologise that this is happening to our people, but I must confess that what is happening today is as a result of a global crisis; a global crisis in the sense that we’ve seen commodity prices dropping, we’ve seen geopolitical tensions all around the world. Here, we are talking about political tensions between Russia, Ukraine and the US and EU staying on one side and watching; political tensions between Saudi Arabia and Iran, trying to play their game. “Of course, the US Fed, following the mortgage crisis of 2009 took a couple of actions, which given the size of the US economy in the world, have had an impact, both positive and negative on emerging and frontier markets which is where Nigeria unfortunately stands today,” he said. On how Nigeria plunged into her worst recession in decades, Emefiele blamed this on the country’s over-dependence on oil receipts, the desire for imported products and the absence of a proper economic planning by successive governments. Diversification is Key He pointed out that prior to the discovery of oil, agriculture was the livewire of the Nigerian economy and expressed regrets that Nigerians abandoned agriculture. “I think that when you want to address the question of how did we get here (recession), it is important to go back into the history to remind ourselves that there was a time in this country when we survived only on revenues from agriculture produce. “There was a time in this country when we survived on revenues from groundnut pyramids in the northern part of the country. There was a time when this country survived on revenue from cocoa that was being produced and exported to the extent that the tallest building at the time, Cocoa House, was built with revenues from the export of cocoa. “There was a time when this country survived on revenues generated from the production and export of palm oil and palm oil products from the mid-western and south-eastern parts of the country. “At that time, I’m talking about the 50s and the 60s, Nigeria was the largest producer and exporter of palm produce in the world. Unfortunately, we abandoned it because we found oil. I wish what we did at that time was to ensure that we held strongly to our potential in agricultural sector. “If we had held strongly to our potential in the agricultural sector and in the same vein, held strongly to the potential that we have because we found oil, our story will be different today,” he said. Citing Norway, one country that saved for the rain day, he said: “Norway is a country with a population of less than five million people. It produces and exports fish today, but it also produces crude oil to the extent that today it has one of the highest investments in its sovereign wealth fund (SWF).” According to him, Norway has $873 billion in its SWF, adding: “But the country also takes very seriously its fish production to the extent that it survives on an annual basis from revenues it generates from the export of fish. “What does the country do with revenues from crude, it invests it at any given time. And when the country wants to make use of the fund, it only uses it for infrastructure development. That is a country that has planned for its people. But unfortunately, we didn’t plan this way for our people, and that is why we are where we are today.” FX Liberalisation Yielding Results The CBN governor added that the liberalisation of the FX market was starting to pay off despite the depreciation of the naira, disclosing that the new FX regime had attracted close to $1 billion inflows into the market in almost three months. He said: “I must say at this time that we are somewhat happy that it is paying off because in two and a half months, we’ve seen at least close to $1 billion coming in as inflows into the market. “And the reason this has happened over these two and a half to three months was because other than just liberalise the market, we brought into the market the OTC Futures market – a market that provides opportunity to reduce the volatility in the FX market so that people will not puncture their supply in the market on demand for FX in the spot market and so that they could do their business without fretting over the exchange rate. “These are some of the actions we’ve taken and today I must say it is successful, but it is important to also speak on how we got here.” ‘We Must Spend Our Way Out of Recession’ Responding to concerns that some of the actions taken by the government have been insufficient to address the current situation, Emefiele explained that during recessions countries spend their way out of the crisis to stimulate their economies. “Basically, what you would do is to spend your way out of the recession and we have not stopped talking about the fact that we need to spend our way out of the recession. I will tell you what has happened and what specific actions we have taken to take us out of this situation: the budget like you know was approved in May 2016 and of course by that time we had started to see signs that the economy was contracting. “Unfortunately, the procurement process is such a long one in the public service, and you dare not breach the rules on the procurement process. I will give you an example, when you start a procurement process for an item, what happens is that you first advertise in the newspapers calling for bids; that process takes 12 weeks, which is three months. “Imagine starting a procurement process in say May or June, you will agree with me that by now, you will be opening the bids, now when you open the bids and see the numbers, you begin to negotiate prices, after that you go to the Bureau for Public Procurement (BPP), may be after that you go to Federal Executive Council (FEC) to get approval and that takes another six months. “What all this means is that we must shorten this process, but shortening this process means that we need to have an emergency spending bill, which I am aware is ready before the National Assembly for approval. What that does is to remove all the bottlenecks that are involved in the process of procurement so that government will spend the money to stimulate the economy. “Unfortunately, at the time the budget was being approved, we started also to see a reduction in revenues, we started to see the Niger Delta Avengers agitating and I must confess to you that at this time the revenue from oil exports is down to less than $500 million on a monthly basis from a peak of $3.5 billion sometime in 2015,” he said. “On our side in CBN, what have we done when we found out that there was a likelihood this was going to happen, we started to advise that there was the need for spending. In March, we reduced the CRR from 30 per cent to 25 per cent and we told the banks; and this was despite the fact that inflation had also started to rise astronomically beyond our target. “However, we said this cash we are giving you, about N1 trillion, we asked the banks to channel this money to agriculture and the manufacturing sector, as the reduction in CRR will help to moderate interest rates and also improve industrial capacity that will moderate inflation. “But I must confess unfortunately, this didn’t happen and because it didn’t happen, during the subsequent MPC meetings we said okay, we will reduce CRR again and by reducing CRR, what we want the banks to do is that we will not give them cash, but asked them to find primary agriculture projects or new manufacturing project, and send them to us in CBN, so we will disburse those funds to the banks and they in turn can loan this money at nine per cent to the relevant sector. “Again, I must confess that till date, the result has not been very encouraging. That is the reason the CBN continues to remain determined to ensuring that its intervention funds go directly to agriculture, either for its Anchor Borrowers’ Programme or its intervention to the micro, small and medium enterprises (MSME) some of the N220 billion would kick in a more aggressive manner to ensure that there is injection of liquidity that will help spur industrial and agricultural capacity. “Part of what has been projected in 2016 is that one million market women will benefit from loans at subsidised rates, which will come from micro small and medium enterprise loans.” Emefiele further revealed that the CBN was also in discussions with the fiscal authorities, especially the Office of the Vice-President that handles social spending, to see to it that “we put this in place as soon as possible so that market women across the country can get this loan at subsidised prices”. “These are some of the actions we have taken and I’m optimistic that going forward, you are going to see more action that will stimulate the economy and turn around the country again,” he stressed. Partial Sale of Oil Assets Emefiele stressed that the monetary and fiscal authorities were working round the clock to reflate the economy, but reiterated his stance over a year ago that the federal government should consider selling some of its interests in the joint venture oil assets in order to grow reserves and invest in infrastructure. He said: “We need more revenue, we need more money to come in not just in naira, but we also need more money in dollars and you will recall that in April 2015, even before this government came on board at the end of May 2015, I had in an interview with Financial Times of London, recommended that there was the need for the government to consider the sale of some of its investment in the oil and gas sector, particularly in NNPC and NLNG at that time. “At that time close to around May, the price of oil was between $70 and $75 per barrel and I had actually consulted some experts, and they told me that if we sold between 15 and 20 per cent of our holdings in the oil and gas sector, we could have realised between $30 billion and $40 billion. “Unfortunately, the market has gotten soft now, but I’m still optimistic that we could get between $10 billion and $15 billion, and if we get that kind of liquidity, it will help to stimulate and assist in turning the country’s economy around. “That proposal is still on the table, because after I made that recommendation, a couple of colleagues in the cabinet continue to talk about it that if we take that option, we will realise some inflow of foreign currency that we can really use to kick start or stimulate the economy.” Between Growth and Curbing Inflation On the implication of increased spending given the current inflation rate of 17.6 per cent, Emefiele explained that the central bank would exercise caution so that excessive spending does not result in skyrocketing inflation. “You can imagine that in December, the inflation rate was just above 9 per cent but below 10 per cent. However, between March and now, it has risen to 17.6 per cent. “That is the reason the CBN considers its mandate of price stability as a core function, and that was why at the last monetary policy committee meeting, the MPC members were trying to weigh the balance between growth and inflation and we said if we allow inflation to grow at a rate that is astronomical and uncontrollable, it could be a problem and that was why we decided at that meeting to adjust the rate a little. “But by the primary reason why we altered the rate in an upward direction was to see to whether we could see an increase in foreign investor flows. “We did that to achieve a higher yield for growth and we adjusted it to encourage foreign investors and that is why I’m saying that I’m happy that the flows have started to come and we would try to see how to maintain the balance by seeing to it that the flows continue to come because when they come, you will get the dollars that we need to fund manufacturing and agriculture activities which in turn will help to moderate inflation. “However we’ve heard a lot of criticism, and many have asked why should the MPC be pushing up the rate when it is supposed to pursue growth. But the objective we are very keen to achieve, and we trying as much as possible to achieve some balance, is whereby we attain growth and avoid a situation whereby you have too much money chasing too few goods, then you push up inflation. “That is why we are trying to boost industrial capacity. In Nigeria today, one major item that can boost industrial capacity is availability of FX and the only way you can ensure availability of FX is to take the action that we took to improve yields, since we have adjusted the currency so as to bring the foreign investors in. “But we will see, going forward we will look at ways to allow some liquidity in the system in order to moderate interest rates and improve lending. Those are the kind of activities you will see going forward,” he said. The TSA was Necessary On suggestion that the government should have a rethink on the Treasury Single Account (TSA) to reflate the economy, the CBN boss said the TSA was a programme that several governments in the past had attempted, but lacked the will to fully implement it. He praised President Muhammadu Buhari for implementing the TSA to stem what he described as “colossal waste” of government funds. He clarified: “It is for the government to give its agencies its money to put in the banks and those banks do not pay anything in interest to the government; at best if they paid may be at one or two per cent. “But at the same time, when government wants to borrow money by selling treasury bills, government still goes to these banks and they pass this same liquidity to government at 12, 13 and 14 per cent. That is a colossal waste of resources on the part of the government. “So when people say the TSA is sitting in the CBN and that is what is causing the crunch, it is not true because when the government wanted to withdraw the TSA, the CBN looked for its own way to release some funds into the system. For instance the CRR was reduced, so I do not agree that the TSA is a major issue here.” Structural Adjustments Not Delayed Reacting to concerns over the delay by the federal government on making the necessary structural adjustments that might have warded off the recession in the country, Emefiele said it was unfair to blame the current economic situation on the delay in taking the necessary actions. “It is also unfair to blame this government for not taking decisions on the necessary structural adjustments. And I will tell you this, normally when there is an adjustment worldwide those adjustments would be followed by structural reforms. “In 1984, there was a government that said everybody should go to the farm, but you know crude prices went up and everyone abandoned the Green Revolution, everybody abandoned this and that is why we are saying now, yes the adjustments are going on – the adjustment in currency market is going on – but there is also the need for us to ensure we follow through on structural reforms that will lead to the diversification of the economy. “For instance, we have somebody who has decided to invest in a refinery, 650,00 barrel per day refinery; we are lucky that the same person has decided to invest in petrochemicals, we are lucky that this same person is investing in fertiliser, and these three projects alone are gulping not less than $11 billion. “And I repeat, these three projects will take not less than 35 per cent of our import bill. However, by 2018 when the projects start production, we will stop the importation of these products and we will be able to conserve our reserves because the demand for these will reduce,” he said. On the issue of the peg on the price of petrol, which the governor was reminded that the government was again failing to address adequately and could lead to fuel queues that trigger higher prices and further impoverish Nigerians, he acknowledged that the pricing of petrol was something that the government and the citizens are very passionate about. “We found out that because (oil) marketers could not access FX, they stopped importing petroleum products and NNPC was saddled with the responsibility of importing products, then of course, it became so bad that we began to see queues and it was embarrassing to our citizens. “Rather than buy fuel at N86, people were buying fuel at different prices, some of them were buying at N150, some were buying at N200 in different parts of the country and people began to agitate, and that was why the government approved the increase of the pump price from N86 to N145, because the marketers said if it were possible for them to get FX at N280 to a dollar they would import,” he recalled. Emefiele added that at the moment, oil marketers had reached an agreement with international oil companies and NNPC to buy FX at between N300 and N305 to the dollar, noting that the marketers’ margin in the pricing template of petrol was sufficient for any FX adjustment within the range agreed with marketers of petroleum products. On the gap between the official FX rate and the parallel market rate, he said the monetary policy committee, which is in charge of exchange rate management, would not look at the rate at the parallel market as a basis to determine the exchange rate of the naira. He also warned that it was illegal to patronise the parallel market, insisting it amounted to encouraging capital flight. Thisday Newspapers

CBN Tasks States to Set Up Bank of Industry

The Central Bank of Nigeria (CBN) has advised states without a Bank of Industry to facilitate the establishment of one in order to speed up industrialisation and other economic development across the country. The Assistant Director, Development Finance Department of CBN, Abuja, Mr. Babatunde Ogunleye made the call recently in Uyo, AkwaIbom State while responding to questions from newsmen. He argued that such an institution with the primary mandate to finance the processing of raw materials and industrialisation of the nation is better positioned to help the micro, small and medium scale enterprises (SMEs) in the country. Ogunleye expressed dismay that in some states without the establishment of the BoI, citizens are compelled to go extra miles like the nearest state to present proposal or seek assistance from the bank on the financing of projects. The Assistant Director who was in the state for a public enlightenment of the residents of AkwaIbom on the activities of the CBN declared that, if there is BoI in a state “the speed of doing business will be fast and the cost of doing business will be low.” “You can easily work to the next street where there is BoI, meet the manager, present your proposal and get consider instead of may be going to Calabar or any other nearer states, that is one of the big gains of having B0I,” he stressed. “Another gain is that, the speed of doing business, especially those who are producing raw materials will quickly get their raw materials evacuated and get paid. “The bank here will get funded because payment will get to all these banks, all these things will amount to improve and increase standard of living for citizen and government will make money quietly through tax revenue because if business and commerce move everybody is happy.” he added. Ogunleye maintained that the organised private sector and associations are the right body to partner with government to ensure the BoI is established in their state. The sensitisation workshop being organised in all the states of the federation was to enlighten members of the public on the activities of the CBN. The three-day workshop with the theme “Promoting Financial Stability and Economic Development” was attended by farmers, cooperative societies, business entrepreneurs, industrialists, market women, bankers, civil servants and government across the state. A Senior Manager and Director of Consumer Protection Department of CBN, Sani Bako Mohammed in his presentation, said customers have the right to information, choice, safety, redress, privacy and confidentiality and good service from any bank of choice. He disclosed that the Consumer Protection Department of the CBN has prosecuted 8,044 complaints out of which 354 complaints were against commercial banks and other financial banks. According to him, the CBN has successfully resolved complaints that involve about N35 billion explaining procedures to the audience on how to lodge complaint and follow-up. A Director in the CBN of the Electronic Banking Payment System Department, Mr. B. I. C. Madunagu briefed the participants of the Clean Note Policy of the Bank and how to handle the naira. Source: ThisDay Newspapers

High Port Charges: Nigerian Importers Divert Cargoes to Neighbouring Countries

Importers in Nigeria are now diverting cargoes to neighbouring countries to avoid undue restrictions at the country’s ports and high custom duties, a report has disclosed. The Chief Executive Officer of the Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, disclosed this in his monthly economic news and views for September presented at Lagos Business School recently. This, he attributed to higher customs duties, bottlenecks and forex shortages, adding that smuggling activities are expected to increase. Clearly, this may jeopardise the federal government’s efforts to boost non-oil revenue following the fall in crude oil prices. Nigeria is officially in an economic recession. The National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), recently identified lengthy and cumbersome documentation process on export, multiplicity of regulatory/security agencies, high and duplicated terminal/ shipping company charges and process and lack of export infrastructures as major obstacles that affect export process from Nigerian ports. In a letter to the Executive Director of the Nigerian Export Promotion Council (NEPC) and copied President Muhammadu Buhari, the Nigerian Ports Authority (NPA) and the Nigerian Shippers Council (NSC), NCMDLCA had called on the federal government to take urgent steps to remove the obstacles before it is too late. The letter signed by its National President, Lucky Amiwero alleged that: “ The federal government agencies duplicate the process of quality inspection with that of the appointed federal government pre-shipment inspection on export. This constitutes serious bottleneck due to lengthy and cumbersome process, procedure and cost, which resulted in attendant delays and high costs that prompted the movement of our product to our neighbouring West African Ports.” On the duplication of charges by shipping companies, the customs agents said: “The Nigerian Shipping companies in line with the contract of carriage, handle import container that are loaded back to the country of origin as empty container without any charge due to the level of export activities that is still very low in the country. The shipping lines Terminal Delivery Charges (TDC) is a charge that is not tied to service, as such charge is duplicated in the charges of terminal operators. Their charges do not represent any service to exporters in Nigeria in any form.” Continuing, Rewane in the report pointed out that ships awaiting berth decreased to 41 from 45 last month, adding that ships awaiting berth are expected to decline further. According to the report, weakness in macroeconomic condition in the country has translated to profitability decline by most quoted companies. He said earnings and profitability fell short of expectations as investor confidence worsened. For the banking industry, the report pointed out that 74.6 per cent of industry revenues in their recently released half-year results amounted to N1.21 trillion concentrated in tier I banks. “Industry’s profitability is slowed by high loan loss charge offs and rising operating costs. Impairment charge continues to record high credit losses of N218.9 billion for first half of 2016, from N41.3 billion as at first half of 2014. Size matters as tier II banks struggles to grow profit before tax. Tier II profit before tax as at the first half of 2016 was N50.3 billion, as against the N59.2 billion recorded in the first half of 2014,” it added. CBN is conducting stress tests as well as routine examinations on banks in the light of growing non-performing loans (NPLs) and deteriorating asset quality due to naira weakness. This, the FDC boss said raises apprehension on the state of Nigerian banks as the last released financial stability report was for December 2015. “The economy has found its bottom and the only way is up. But the pace of recovery is dependent on pace of policy response,” it added. According to the report, the top four fastest growing sectors accounted for only six per cent of new jobs as at the first quarter of this year, adding that sector activity does not mean job creation and employment. It pointed out that growth does not translate into increased consumption and income. In its review of the real estate sector, it showed that Lekki has the highest vacancy rate at 65 per cent, adding that affordable rents are six to 10 per cent above asking rents of $780psqm in Victoria Island. Residential index rose by 6.8 per cent quarter-on-quarter as commercial index remained flat at 148. Prime office rent drop by six per cent to $810 per sqm per annum “Nigeria in recession increases vacancy rates further. Carrying cost of properties is excruciating as landlords reduce rental payment to annually. Previously, they used to collect two to three years payment. Pedigree of tenants remains important. Replacement cost far in excess of market value,” it stated. Source: ThisDay Newspapers

‘Policy Inconsistency, Bane of Nigeria’s Economic Challenges’

The Chartered Institute of Personnel Management (CIPM) has said that policy inconsistency over the years in Nigeria is a major factor that has led to the stunted economic being experienced in the country. The President/Chairman of Governing Council, CIPM, Mr. Anthony Arabome, said this at an interactive session on the Management of National Unemployment Challenge (MNUC) held in Lagos recently. The findings from the MNUC also showed that other issues ranging from poor political governance and setting of policy direction that elicit a harsh business environment, lack of stakeholders’ ownership of employment policy, misalignment of the educational system output and the skill-sets required by current employers of labour were also causes of unemployment in the country. To that effect, the CIPM boss said the committee had made viable recommendations aimed at shaping government’s policy decisions concerning the various ramifications of unemployment. According to Arabome, findings from the MNUC, a study conceived by the leadership of the CIPM as a response to the social, economic and political challenges of managing unemployment in Nigeria. He said the journey of the report was championed by a 7-man committee headed by a Fellow and one-time Registrar/CEO of the Institute, Dr. Musa Rabiu (FCIPM), to collaborate with the federal government in providing implementable and sustainable solutions to the unemployment challenge in the country. This, he said was because indicators had shown that unemployment in the country was growing at an increasing rate, with serious attendant consequences. “For instance, data from the National Bureau of Statistics have shown that youth unemployment has grown from an average of 16.43 percent in 2014 to 21.50 percent in the first quarter of 2016. “Therefore, as human resource management experts, our objective is to proffer and recommend actionable and sustainable solutions which finely align with the current Administration’s focus on job creation initiatives geared at combating this national menace,” he added. According to him, the CIPM Nigeria is in a vantage position, and is ready to collaborate with government and other stakeholders to change the unfortunate situation in the country, by providing learning and development interventions in support of the achievement of the goals and objectives of organisations in the public and private sectors of the economy; provision of expertise and training required for the ministries, departments and agencies’ (MDAs) effective pension management; and designing and facilitating a coaching and mentoring scheme for organisations in the formal and informal sectors. Source: ThisDay Newspapers

Senate to Investigate Recession as Saraki Calls for Collaboration on Economy

Concerned by the worsening conditions of Nigerians as a result of the economic recession, the President of the Senate, Dr. Bukola Saraki, said tuesday in Ilorin that the Senate upon resumption next week, would probe the cause of the recession, stating that it was necessary to know why in spite of budgetary provisions, many more citizens have receded below poverty line. “The Senate on resumption will respond to the economic crisis with a number of measures including getting managers of the economy to give account to the people, making tough recommendations to the president on needed changes, formulating necessary legislative framework for economic recovery and undertaking wide consultations across the private sector,” he told journalists at his residence during the Eid-el-Kabir celebrations. Worries about the ailing economy were shared also by a former Minister of Finance, Dr. Ngozi Okonjo-Iweala, who offered some tips on the way out of the woods, saying effective handling of spiralling inflation, foreign exchange problem, fiscal deficit and debts control were key to resolving the current economic crisis. Okonjo-Iweala who spoke on Aljazeera TV programme, The Stream, said focusing on the basic issues of macroeconomic stability was crucial to fixing the country’s economic challenges. Saraki, in his intervention, explained why the legislative interrogation of the executive management of the economy had become necessary: “We need to know why the promises of external borrowing have not materialised, why devaluation has not helped to strengthen the naira, why inflow of foreign currency has continued to dry up and interest rate is still very high? Doing this will help us to understand where we are, so that we can determine where exactly we want to go from here.” Wondering why all the measures aimed at cushioning the effect of the recession built into the 2016 budget had failed, he said the Senate would interact with the executive to identify where the problems were. “The Senate intends to invite everybody involved in the management of the economy to address the Nigerian people through the parliament on the steps that are being taken to get us out of this mess. We fully intend to hold all those involved in the economic management of the country accountable. However, we will do so in a manner that is transparent and there will be no cover-ups. We will make tough recommendations as necessary,” he said. Suggesting a holistic approach to the efforts to pull the economy out of recession, Saraki said it had become necessary for the executive arm of government to accept his earlier offer of collaboration with the legislature and the private sector to resolve the prevailing challenges. “In every crisis, there is always an opportunity for positive reforms. In this regard, in order to solve this crisis, all hands must be on deck. Ideas should be sourced from all quarters. All arms of government, people of different political beliefs, from all socio-economic backgrounds and every part of Nigeria must work together at this time,” he said. He said the Senate would take the lead in encouraging a collaborative approach to the nation’s economic revival by meeting with stakeholders in the private sector to ensure it collates a broad spectrum of opinions while formulating ideas to stimulate the economy. Saraki assured Nigerians that the Senate would play its constitutional role of providing the legislative framework for the revival and growth of the economy in the interest of the people. “We are going to have an exhaustive and comprehensive debate on fixing the country’s economy when we resume next week. We understand the pains that Nigerians are feeling and we do not take this for granted,” he said. The Senate president called on all political leaders to show concern about the sufferings of the ordinary people, adding that it was necessary for leaders to always empathise with the people. He commended the people for their perseverance and understanding but pleaded with them to exercise patience, saying that the political leadership was genuinely concerned about their plight. Saraki said: “The positive attitude demonstrated by our people during the Eid-el-Kabir festival gave me hope that we, in the leadership of the country, should move swiftly to tackle this economic crisis. We have no option and this we must do without delay. I commend and praise our people for their perseverance and understanding.” Okonjo-Iweala Suggests the Way Forward Former Finance Minister, Okonjo-Iweala, said focusing on the basic issues of macroeconomic stability was crucial to fixing the country’s economic challenges. “If you don’t pay attention to the fundamentals of having a stable and good exchange rate policy, inflation under control, manageable fiscal deficit and debts, there will continue to be trouble in the economy,” she said. Nigeria is facing its worst economic crisis in decades. The economy slipped into recession after contracting in the first two quarters of 2016. Inflation jumped from 16.2 per cent in July to 17.1 per cent in August 2016, according to the National Bureau of Statistics (NBS). Since the introduction of the floating foreign exchange policy by the Central Bank of Nigeria (CBN), which freed the naira from a band of N197-N199 to the dollar, the currency has depreciated heavily on the parallel market. Okonjo-Iweala, a former World Bank Managing Director, told Al Jazeera that she remained optimistic that solutions to the country’s economic decline could still be found. Asked what would be her top three priorities to resolve the country’s current economic crisis if she had remained the finance minister, Okonjo-Iweala said she would prefer the current managers of the economy to talk about it. “I have contributed the best I could to the country. It is still the most interesting country in the world. It is better to leave those who are managing now to say what they would do. “All I can say is that there are solutions. Nigeria is a vibrant country. I love it so much. I know it is going to come out of this one way or another,” she said. On if President Muhammadu Buhari were to ask her to come and help in resolving the country’s economic crisis, Okonjo-Iweala said: “One of the things you learn as you get wiser is to talk less as you grow older. “I have spent my time contributing to the country. It will be better to leave those managing the economy to do what they know how to do. “I served my country for seven years and it was a great honour. The second time was very tough, but it was still an honour. I am not the only person who is a repository of knowledge. There are other people who can equally try their hands in running the economy.” Speaking on developments in Africa, Okonjo-Iweala expressed regrets that the economic gains recorded in Africa have started being eroded in the last two to three years. “On the continent, we have seen a period when the economy was doing relatively well. It’s only in the last two to three years that things have started to go a bit south.” She spoke about the job initiative of the Goodluck Jonathan government, YOU-WIN. “The whole idea was to have a business plan competition. Beneficiaries were expected to create jobs to employ six people or more. “Each created 9-10 jobs. The World Bank did an evaluation of it and found it good. I do believe the government should come in. We started a peer to peer mentoring. Now, one of the things I want to say is that creating employment is not only about struggles, it is about managing success,” she said. On how the anti-corruption war was fought during her time in government, Okonjo-Iweala described it as “a very tough fight”. “It was tough. I must thank my team. You don’t do it alone. I had the support of an economic team in the Ministry of Finance. At the end of the day, you need to have some principles,” she said. Source: Thisday Newspapers

Stock market drops by 0.18 per cent in profit taking trading

Transactions at the Nigerian Stock Exchange (NSE), yesterday remained on a downward trend due to profit taking. The lead indicator, NSE-ASI shed 49.55 absolute points or 0.18 per cent to close at 27,707.12 points. Similarly, the market capitalization shed N17 billion to close at N9.518 trillion. The downturn was significantly imparted by value depreciation recorded by the following large capitalised stocks, PZ Industry, International Breweries, Nigerian Breweries, Dangote Cement, Guaranty Trust Bank and Glaxosmithkline. Stock market analysts have said as economic indicators point to a frail economy, investor sentiment is expected to wane and market performance to remain soft. According to them, there would be profit taking by investors in counters that appreciated in the previous week. Market breadth closed negative with 13 gainers and 17 losers. May and Baker led the gainers table by 4.94 per cent to close at 85 kobo per share. Cutix followed with a gain of 4.67 per cent to close at N1.57, while Diamond Bank advanced by 4.46 per cent to close at N1.17 per share. While UBA went up by 3.69 per cent to close at N4.50 and Nahco rose by 2.94 per cent to close at N3.50 per share. On the other hand, PZ Industries led the laggards’ table by 4.97 per cent to close at N17.17 per share. NEM Insurance trailed with a loss of 4.82 per cent to close at 79 kobo, while Johnholt and Aiico Insurance declined by 4.55 per cent each to close at 66 kobo each per share. Also, United Capital shed by 4.37 per cent to close at N2.19 per share. Meanwhile, the total volume traded declined by 36.98 per cent to 195.024 million shares, valued at N1.57 billion, and traded in 3,221 deals. Transactions in the shares of FBN Holdings topped the activity chart with 53.8 million shares valued at N169.51 million. Guaranty Trust Bank followed with 23.54 million shares worth N635.67 million, while Diamond Bank traded 19.39 million shares valued at N22.42 million. UBA traded 16.95 million shares worth N74.44 and FCMB transacted 16.65 million shares valued at N18.84 million. Source: Today Newspapers

CBN Reads Riot Act on N213bn Electricity Stabilisation Fund

The Central Bank of Nigeria (CBN) has rolled out penalties to be meted out to participating commercial banks that fail to comply with the terms and conditions in implementing the Nigeria Electricity Market Stabilisation Facility (NEMSF). The central bank in a circular by its Director, Financial Policy and Regulation Department, Mr. Kevin Amogu, posted on its website monday, listed 10 infractions and accompanying sanctions to be received by any defaulting participating commercial bank. The CBN had in collaboration with the Ministry of Petroleum Resources, Ministry of Power and the Nigerian Electricity Regulatory Commission (NERC) signed a Memorandum of Understanding (MoU) on the NEMSF. The N213 billion facility was launched in 2014 and was expected to bring about improvements in power supply for the benefit of all Nigerians. In May this year, the CBN disbursed N55,456,161,481 from the facility, which was the fourth batch from the N213 billion. Listing the sanction in the latest circular, the central bank stated that firstly, if a collection bank and the principal collection bank fails to provide the refinancer/administrator with statement of account for the transaction account within five business days after the end of each month, the first sanction would be a warning letter to the bank, instructing that the infraction must be remedied within two working days. Further infraction on the matter involves a financial penalty of a minimum of N500,000 daily until the infraction is remedied, on each account that such infraction is committed. “If there is further infraction by the deposit money bank (DMB) after payment of the above financial penalty, the DMB’s participation as a Mandate Bank under the CBN-NEMSF shall be terminated,” it added. Secondly, the circular stated that if a DMB does not comply with a request by the refinancer/administrator to provide copies of statements for any other Discos’ accounts maintained by it and such other information relating to the transaction effected or to be effected on the transaction accounts within five business days from the date of such request, the bank would be served a warning letter at first. “Failure to comply within two working days will attract a financial penalty of a minimum of N500,000 daily until the infraction is remedied. If there is further infraction by the DMB after payment of the above financial penalty, the DMB’s participation as a Mandate Bank under the CBN-NEMSF shall be terminated,” it added. Thirdly, any DMB that does not comply with the operational process document (circular) issued by the CBN pursuant to the accounts administration agreement, would also be issued a warning letter with other sanctions stated in the first and second infractions stated above. Fourthly, if there is a closure of a transaction account by a DMB without prior written consent of the refinancer, the penalty, according to the CBN, would be N2 million and further infraction entails terminating the DMB’s participation as a Mandate Bank. Other issues that would be regarded as infractions as highlighted by the central bank that could attract various forms of sanctions include: when a collection bank and principal collection banks do not provide the right to view Transaction Accounts or any such other information relating to the transactions effected or to be effected on the Transaction Account in real time; where collection banks allow revenues (including cash collections and revenues received from all electronic or other platforms) generated by any Disco to be paid directly in any account other than the Feeder Collection Accounts as stipulated in the Account Administration Agreement; and where collection banks allow a debit/withdrawal from a Feeder Collection Account (FCA) to the principal collection account contrary to terms of the Accounts Administration Agreement. Others include a situation where the DMBs open additional bank account(s) for a Beneficiary Disco, whether not for the purpose of receiving payments, fines, fees or electricity consumed by its customers without the prior written consent of the refinancer as well as where the DMBs permit debit/withdrawals from the FCA to a non-principal collection account. These attract sanctions that range from N2 million and their termination as Mandate Banks. Meanwhile, the naira closed at N422 to the dollar on the parallel market monday, marginally stronger than the N423 to the dollar it was last Friday. On the interbank forex market, the spot rate of the naira closed at N314.20 to the dollar, slightly higher than the N314.77 to the dollar it closed last Friday. Source: ThisDay Newspapers

How Nigerian govt caused economic recession — Emir Sanusi

The Emir of Kano, Muhammadu Sanusi, on August 24, warned President Muhammadu Buhari to avoid repeating the mistakes made by former President Goodluck Jonathan so his administration does not end up in infamy like that of his predecessor. The former governor of the Central Bank of Nigeria also warned the government against continuing to blame previous administrations for the nation’s woes, saying what was important was for the administration to concentrate on putting the nation back on the path of progress. He gave the warning while delivering a paper entitled, “Nigeria In Search Of New Growth model” at the 15th meeting of the Joint Planning Board and National Council on Development Planning. The Emir also spoke extensively on the nation’s economic recession. Here is his full speech at the event: First of all, I want to break from tradition. Usually I speak in Hausa in Kano. But, I don’t know how I am going to make an economic presentation in Hausa to 36 states’ commissioners and have someone translate it into English. To avoid things being lost in translation, I will speak in the language of economics. Let me start by saying congratulations to you minister. This is the first time I am meeting you in an official function since your appointment, and to tell you in public what I have always said in private; that you are one of the sisters I remain extremely proud of your work. I wish you all the best in these challenging times. I have always told people that Dr. Shamsuddeen Usman, my teacher, (I don’t know if he is an ex or former minister, multiple times) taught me microeconomics. So, he takes a lot of the credits, and none of the blames, for what I have become. Ladies and gentlemen, I was not given a specific topic to talk on. But, because the concern today is the concern about the recession Nigeria is in technically, and also because it is a meeting of Planning and Budget Ministers, I thought I will do a proper economic presentation and put down my thoughts on where I think we are; why I think we are where we are, and what I think we need to do to get out of this. I am sure there will be many other presentations specifically on what a state can do to raise revenues and so on. But, having an overarching view of economic policy, and where we may or may not have done wrong, or what the key drivers of growth should be for the Nigerian economy are things I thought we should talk about at this session. So, I call this presentation, Nigeria: The Search For A New Growth Model. I will start by going back to the past, not just Nigeria, but Africa. Let’s ask ourselves what were the key drivers of growth in Africa, and what has changed since this golden decade Africa had. Africa Golden Decade was basically the decade of the 2000s. Africa moved from the previous decade, where it was a hopeless continent, to a new decade that we have one type lifting all story of Africa rising. This rise in Africa across the world was one of stories of sadness, poverty, famine and hunger to a continent that was full of potentials; where there were opportunities for investments; where capital markets were booming. All of a sudden people heard countries like Nigeria, Kenya, Ethiopia, Ghana, etc. when previously these were supposed to be a basket case in the world. The first pillar of this growth was clearly shifting terms of trade, which as we all know in developing economics, can be a mirage. You can’t have improving terms of trade when you are exporting commodities over short periods of a cycle. But, we know as far back as the 1950s, from the Latin American structure economics, that over the long term, any economy that specialises in exporting primary products and importing manufactures would end up having terms of trade shifting against it. You can have a temporary boost, but If you don’t use that boost to have a structural adjustment that would make for prudent management of the economy, you would be courting trouble. By 2008, one barrel of oil would buy you one Sanyo flip telephone as against 19 barrels of oil to buy the same phone earlier. That gives an idea how well the terms of trade have shifted. We had an oil price of $10 a barrel in the time of Babangida. At one point under Obasanjo, it rose to $140 a barrel. This was a time of rapidly improving technology, cheaper manufactured products and therefore our oil could technically import us much more. This process was not common across all of Africa, because we are aware of other African economies that grew, and certainly it was not just one pillar. Let’s go to the second pillar of growth in Africa in that decade, which was debt. Between 2002 and 2008, the levels of debt to GDP (gross domestic product) in African countries and what they became after the Paris Club, HIPC debt reliefs and so on. Nigeria was at 50 per cent debt to GDP and came down to literally 5 per cent or so. This happened across all Africa in the form of debt forgiveness, debt relief, debt restructuring and so on. What this did was that it freed up government balance sheets and in that decade of Africa rising, the countries went back on a borrowing binge. Nigeria kept borrowing, not externally, but internally. I think our external debt was just about $8 billion on the balance sheet. But, the Naira indebtedness of the Nigerian government, we were spending over 30 per cent (maybe 40 per cent now) of every Naira earned just servicing debts. That’s what you have. Nobody was noticing it. We have written off the debts, and then we kept building it up bit by bit. And when you look at where that debt was going into, you will see why, or part of the answer to the problem we are having. So, we have these two pillars – rising commodities prices, and we monetise oil revenue, we will be able spend money. We were able to borrow because the balance sheets could accommodate more debts. Where did all these debts go? Did it go to roads, power, refineries, or infrastructure? No. The new borrowings were simply recycled into much higher recurrent expenditures. What that did was that it helped sustain a consumption boom. And GDP was growing, largely driven by consumption spending. If you look at public sector wage bills in real terms, Nigeria, Ghana, Ethiopia and Kenya, you will see it was rising significantly from 2005 to 2014. In Nigeria, for example, our public sector wage bill went up from N443 billion in 2005 to N1.7 trillion in 2012. In 2010, the government increased minimum wage to N18,000. I was at the Central Bank, I protested and protested. They had an election coming, they increased the minimum wage N18,000 and basically borrowed money to pay. In 2012, as governor of Central Bank, I said this was an unsustainable wage bill. We needed to reduce the size of the public service. My own government minister came out to say that was the (CBN) governor’s personal opinion. In fact, she said the government wanted to employ more people. And this is the result. I am serious. Sometimes I don’t bother. I’m never going to change. I’m never going to be political. I’m never going to stand here and tell people what they want to hear. The problem is that there is nothing that we are facing today that we did not know would happen. That is the truth. We made mistakes. Many of them deliberate. We ignored every single word that pointed otherwise. Economics is a science. It is not a perfect science. But, over decades and decades and centuries, people have seen that there are certain things that, when you do, will lead to certain consequences. If you take a brand new car and give a driver who doesn’t have a license to drive it and you have an accident, you really can’t say you were surprised, unless you are some kind of idiot. We knew that this was going to happen. You can’t just keep borrowing money and paying salaries, not building roads, not improving power and think this will not happen. We will see the per capita investment development in Nigeria and per capita results we are getting. These were all from a resource in an enclave economy. And not so that we are not always blaming the previous administration, we have also made mistakes in this administration. We have started retracing our steps. But, we have to retrace those steps. And if we fall into the same hole that we fell into the last time, where the government is always right. When the minister is there, you tell them, “You know, Hon. Minister, Nigeria is very lucky to have you in office.” No! You tell the minister that you are doing well, but, you know there are these areas that you must change. If a policy is wrong, it is wrong. Nothing will make it right. And it has to be changed. So, this is what we did. Look at real sector wages. It was not just Nigeria, it was all over Africa. Look at sovereign debt fuelling growth. If you take the example of an individual. You happen to know bank MDs and you can make a few phone calls and get loans. You borrow N1 billion here today and build a very nice mansion in Abuja. You borrow another N1 billion and let your family go out on first class ticket as you are travelling all over the world. You borrow another N5 to N6 billion and buy a private jet. We have very many people in Nigeria who you think are very rich. But, who are really bankrupt, because everything about them are being financed by bank debts. When one debt matures, they have enough connections to call another bank, borrow and refinance that debt. They are not earning anything. They have private jets. They have yachts. Their families travel first class. They go abroad and stay in the most expensive hotels. It happens. And it is happening today. What do you think of those people? When you think about such people, do you think they are foolish people? Or do you think they are wise people? So, what would you say of a country that does this? So, you feel growth by borrowing money, pay salaries, people spend money on pure consumption spending, nothing is produced. It’s fine. It’s short term. But, it is not sustainable. How much can you continue to borrow and consume without producing? And the funny thing is, you did not have to stop borrowing. All you had to do was borrow the right amount and apply them to the right purposes. It doesn’t matter whether they were consumption spending or investment demand, GDP will grow. So, make a choice. As a country, we made a choice. We wanted votes, popularity or palliatives, so long as people are getting high minimum wage, we keep quiet about all other things that were happening in the economy that we should be talking about. That was the relationship between public debts and GDP growth. Today, we are in a new reality. This is what they call the new normal in Africa. And we have a two speed Africa. If we look at the new IMF World outlook, you will see something interesting. Non-commodity Africa will be the fastest growing part of the world, even higher than emerging Asia, whereas commodities Africa (countries like Nigeria and Angola) are among the lowest growing parts of the world, at the rate of Europe and Latin America. And we can’t explain why. But, think of a country like Ethiopia and then Meles Zenawi, the late Prime Minister. Ethiopia keeps growing year after year at 11-12 per cent. And what did Meles do? The simple things we have been saying for decades and decades and decades. This is a country that came out of a war, remember? It’s facing insecurities; got Eritrea and other countries that do not like it around it. I’ll give two examples. Coffee. It originated from Ethiopia in the world. But, Ethiopian farmers, before Meles, would get 10 per cent of the value of coffee from their crops. They would just produce the coffee and sell to companies, and the companies will take their coffee into Latin America and have it improved and dried and and packaged. And Zenawi just asked: “Why can’t we produce coffee in Ethiopia that would go straight from Ethiopia to the coffee shops in Europe?” And all sorts of responses came. “Well, you know your weather is good for growing coffee. You coffee is very good, but your farmers have bad farming practices.” So he said: “Why don’t you teach them?” So, he got in touch with the IFC (International Finance Corporation), got a loan, organised Ethiopian coffee farmers into cooperatives, taught them how to grow the coffee, how to dry, prepare and package it. Today, if you go to coffee shops in Europe and take a cup of coffee that came straight from Ethiopian farm. And Ethiopian farmers are now getting 70 per cent of the value of the coffee, from the former 10 per cent. So, he tells Aliko Dangote, come and build a cement manufacturing plant here. I am going to give you electricity at three cent per kilowatt hour. For a cement manufacturer, that is all the incentive that you need. So, Dangote goes, builds the most sophisticated cement plant in Ethiopia, gets electricity almost for nothing and cost of cement drops by 60 per cent. The construction industries gets boosted. Roads are being built with cement. Jobs are created. And new industry has taken off. He said to the Chinese, “I don’t like this your idea of coming to buy hides and skin and leather from Ethiopia and sell us shoes. Set up the factory here.” Nigeria imports 3 million pairs of shoes per annum from China. Nobody knows how much duty they pay. I am not talking about expensive shoes. I am not talking about what you buy from Pierre Cardin, or Gucci. I am talking about shoes people wear on the streets. Shoes that can be bought here in Kano. We can produce all the shoes, and school bags we want for primary and secondary schools children, millions and millions of pairs. No, we don’t. You know what we do, we export the wet blue and we import shoes from China, and we have Chinese people coming here to take wet blue to China and bring back shoes. We are just a very interesting country. Every single thing we are talking about today about what we need to do have been said before. I have a document “Industrialization Potentials of Northern Nigeria under Ahmadu Bello, 1962.” There is nothing we are saying today that was not part of the industrial plan of Northern Nigeria in 1962. We are clapping ourselves that after 50 years, we have learnt nothing. The whole industrialisation of Kano, starting from Bombay to Sharada to Challawa had space on that plan. These are very simple economic logic. You cannot continue doing the wrong things and expect to have the right result. Since 1950s and 1960s, they understood what was the essence of colonialism. It was to come to these countries, take our raw materials, process them and sell us manufactured goods, and keep shifting the terms of trade against them, so you get richer at their expense. They understood that independence was not about the flag, but about reversing that process. They understood it. We did not. And therefore they said we needed to stop exporting our cotton. We need to build textile industries. We need to stop exporting groundnuts. Kano used to take pride in groundnut pyramids. I still have people who come to me and say: “You know, Emir, you must bring back those groundnut pyramids.” But, I don’t build groundnut pyramids. I want oil mills. What am I doing with groundnut pyramids? They stopped exporting groundnut pyramids and build all these oil mills. We should stop exporting hides and skin. Huge multinational corporations that came to Nigeria, whose business was to buy hides and skin. A company like John Holt. In Hausa anyone who trades in skins is called ‘Dan Janho’. It became a Hausa word, because this was a multinational whose duty was to just buy hides and skins and take to Europe to produce shoes for us to buy. So, they said let us build our own factories and produce our own shoes and bags. It’s so bad in this country. Tomato paste that our wives use in kitchens is imported from China. At best, it is packaged in Nigeria. Now, we have a paste factory 40 kilometres from Kano. That’s about the first. We cannot process tomato. We have to import tomato from China. It’s a very sad case. A country of 170 million people last week Nigerians were celebrating, because we went to Rio and came back with one bronze medal. I saw Nigerians jumping. Somebody said at least we were on the medals table. We don’t have ambitions as a nation. Some of these things are not just about numbers. It is about a mindset and a people and attitude. Do we really love our country? Do we feel any shame when we say that Malaysia that came and took palm seeds from us is now exporting palm oil? Palm oil is what Eastern Nigeria people eat. Now, we can’t produce it. Vegetable oil, groundnut oil. I went to my friend’s house the other day in Lagos and they gave me Moringa tea in a nicely packaged tin. That is the thing that grows wildly here in the Northern part of the country. Somebody takes Moringa, puts it in a tin, packages it. I did not even know it was called Moringa until I took the tea. They packaged it and gave it an English name. I did not even know it again. It was after I drank it that I knew it was Zogale, as it is called in the local language. If they had packaged it and called it Zogale, it would have been known as Zogale tea all over the world. Just like people know coffee from Ethiopia. But, now that it is called Moringa, a Hausa man does not know what Moringa is, and it is growing in his backyard. Then, he takes pound sterling to import Moringa tea. So, this is what Ethiopia did. I will show you what countries like Kenya did, which we didn’t do, and therefore Nigeria is right there in the low band and non-commodities Africa is in the upper band. What is it that works? What is it that these non-commodities African countries have done that we have not done? First, take a model that is investment-driven, rather than consumer or consumption-driven. At the very top, you have Ethiopia, Uganda, Rwanda, Ghana, Kenya and Egypt. Those at the bottom are Angola and Nigeria. And if you talk today in Africa, they will think Nigeria and Angola are the richest countries, because they are oil producing. But, the truth is that we are the worst performers, in terms of investments to GDP. If you look at the other countries that do not have oil, look at what they have done. If you have a high investment to GDP, you will deliver high growth that is also inclusive. If you continue working on consumption and rent-seeking model, your growth is not inclusive, which is why in Nigeria, you have, over the past two decades, increasing income distribution inequalities. It is very easy to be very rich based on rent. Again, we can always talk about the policies of previous administrations. We talk about oil subsidies that brought oil billionaires. But, we have also created our own billionaires since 2015 from foreign exchange subsidies. People are shaking their heads. They don’t seem to understand what I mean. Let me give an example. I did not just become an Emir. Before then I was Governor of Central Bank. Before then, I was a bank MD. So, I have friends in the banking industry. When the CBN was selling dollars at N197 and people were buying at N300, if I sit in my garden and make calls on the phone, I will have enough people to call in the industry to get me $10 million at official rate. Do you doubt it? As a former MD, former governor of the CBN and what they now call a royal father? Think about it. I sit in my garden and make a few phone calls, and get $10 million at N197 per dollar and sell at N300 to the dollar, I will make a profit of N1.03 billion. If I do that four times in a year, for doing nothing, I would have had N4 billion. And people were telling us that this policy was to help the poor. We are not devaluing the Naira, because if we do the poor people would suffer. The people that were profiting from this were people that were telling the government that if it devalued the Naira people would suffer. Meanwhile, they all got the dollars at N197 and priced their goods at N300 to the dollar. The poor paid the price of a devalued currency and the rich schemed off the profits. It went on for one year. We talked and talked and talked. If this government continues to behave the way the last government behaved, we will end up where Jonathan ended. We may not like it. But, that is the truth. You have to listen. You don’t need to be an economist to know that any system that allows you to sit in your garden and with a telephone call make N1 billion without investing a kobo, that system is wrong. It is unsustainable, no matter how positive you think about it. So, the first thing I will like to say is that there are many voodoo economists parading around. And many of them are not economists. They are demagogues. They tell poor people, anyone that says devalue the Naira wants you to pay a high price. It is arithmetics. It is not economics. Many of the arguments I see in newspapers, sometimes I feel like writing back, and I will remember I am an Emir and I am not supposed to. Even this one I am giving this lecture, maybe someone would say: “Emir, stop giving these kinds of lectures.” That you have someone who writes what you call a brilliant economic paper, and he is telling you that if you devalue the currency prices would go up. Is that economics or arithmetics? It is arithmetics! If you ask your boy in Primary 3, if the dollar costs N150 today, and tomorrow it costs N300, what would happen to prices? He will tell you prices will double. He can calculate. One times 300 is two times one times 150. That is not economics. That is arithmetics. The economics of it is, these billions that are being schemed off by people who get official exchange rate, should you give the states their revenue. For example, should you take dollars, for every $1 billion taken from the Federation Account and sold by the CBN at N200 to the dollar, the states were losing N100 billion that could have gone into salaries, agriculture, healthcare. Yet, the states were going to borrow from the same government on a bailout when the government was selling dollars cheaply to a small group of people. What kind of economy are we running? Who is advising the government? I have asked that question before. I want to know so I can talk to the adviser. We did not have money. Oil prices had collapsed. Niger Delta Avengers were blowing up oil wells. The scarce dollars we had, we were selling cheaply, subsidizing people. What was the argument? We need to promote manufacturing. Right? Thank you. But, what percentage of your GDP is manufacturing? Eight percent. Let me ask you Commissioner, you are a manufacturer, you are able to secure $10 million from the Central Bank to import raw materials and produce goods, you spend N2 billion to get $10 million, and somebody says to you: “Listen, I will pay you N3 billion for this $10 million, so that you make a profit of 50 per cent for just doing nothing. Just buy the dollars and sell.” Your option is to buy raw materials, establish a letter of credit, import raw materials, maintain generators, buy diesel, pay labour, produce your goods, take the risk you may not sell at a profit, transport it, or to make a profit margin of 10 per cent over a 120 term period, what would be your choice? Would you import and manufacture? You have an automatic guaranteed 50 per cent return immediately for no labour. With this every manufacturer abandoned production and started looking for FOREX. I had people who would come to me or telephone me and book an appointment only to ask me: “Your Highness, I want you to help me get dollars.” They wanted to turn me into a dollar middleman. So, every manufacturer decided that he would get the dollar and sell, instead of buying raw materials and producing. So, what happens to production and employment? What do you end up with? A recession. And why are we surprised we are having a recession? We created it. But, we did not call it recession. We called it demand management. People were using words they did not understand. You want to manage demand? Fine. You will manage demand for industrial raw materials, you are also managing industrial output. You manage demand into inputs to services and manage down service outputs. The result we have was the result that we were always going to get with sets of policies we put in place. And we don’t realise that we made those mistakes. I am glad it seems we have. But, we need to just come out and come clean. That is the best way. We have taken a few wrong steps. It was all done in good faith. We genuinely wanted help the poor people, that’s why we made those mistakes. Now, we are retracing our steps. Now we begin to talk. Let’s look at the GDP against government spending. For Nigeria, from a base in 2005 to 2015, GDP has been rising nominally, driven largely by recurrent expenditure. If you look closely, recurrent expenditure seems to spike on the eve of elections. The economy has quadrupled in nominal terms since 2005. Our population has grown by 40 million since 2005, but capital expenditure has not changed. 40 million more people, but we don’t have more power, roads, schools, hospitals houses, etc. Where are these 40 million people going to be? The Niger Delta creeks and Sambisa Forests? Our economy, at least in part, created terrorism by simply not creating the opportunities for these young people. If you think the Niger Delta or Boko Haram or other insurgents or something are the issue, let me give you another number. We have over 160 million Nigerians today. The median age is 19. In the next 20 years, we are going to have at least 80 million Nigerian men and women between the ages of 20 and 40. Maybe in the next generation you can start doing something about it. You can start family planning or something. But, these ones have been born, and we have to prepare for them. Those of us who are alive now, we have to prepare for what we are going to do with these 80 million young people. We can’t kill them. And if we do not expand the earnings and production base of the economy through wise investment and very difficult, but appropriate decisions, we will end up in a classical Malthusian situation, where the resources cannot support the population and we start having wars and pestilence. This is Rev. Thomas Max, one of the very first lessons you learn in EC101. Look at the road ahead. You know this is all a combination of old sets of policies. There are times in the history of this country when we had it right. But, we didn’t continue. A lot of the reforms done in the second term of Obasanjo laid the foundation for sustainable growth. But, then we kept going back and forth. And I am hoping that in here we are not like the ordinary innate Nigerian. We do feel a level of shame at what we see. You have got your per capita nominal income – Angola, Botswana, Cote d’Ivoire, Egypt, Ethiopia, Ghana and Zambia. Per capita income in Kenya is $1,388. In Nigeria, it is $2,943. So, on paper, Kenya is half as rich as Nigeria. So, how much is Kenya able to raise as tax revenue per capita? $232. How much was Nigeria raising in 2014-2015? $117. Now, how much was Kenya spending as development spend per citizen? $129. How much was Nigeria spending? $17. The research you see don’t just come out of nowhere. They are the direct consequence of deliberate policy decisions. If you choose to make it very profitable for people to produce fake bills of lading and claim fuel subsidy and build estates and private jets, we are never going to have refineries. If you make it profitable for a Chinese man to come to Kano…. Now in Kano, the Chinese are doing tie and dye. Even the tie and dye pit that has been in Kano for about 600 years are at risk. We have been talking about the protection of this industries. Minister of Planning, nobody has done anything you know. In the next 10 or 20 years, if people of Kano starts picking Chinese and throwing them into the dye pits, because they are importing simple dye, they took the technology from Kano, went to China and they will now be coming to ask the people the pattern that they want. They come in, they bribe Customs, and because there is no way you can produce that thing in China and bring it and they sell and our industries are destroyed. The textile Industries in Kano are gone. The tanneries and leather industries are gone. A combination of a lack of electricity and infrastructure, lack of investments and very bad trade policies. We have to go back to the drawing board. This is why this conference and the Ministry of Planning are the most important economic Ministry. I have always said that the Planning Minister is the most important Economic Minister. Assuming that, one, he is able to produce a very good plan, and two, that the government listens to him. And this is why I thought instead of coming here to talk about just monetary and fiscal policy, I will talk about them. But, let’s try to get into a mindset, where at the federal, states and local levels, we can actually look and see what we can do to change this things. So, are we going to adopt an investment driven model? Now, we talked about the public sector, and public sector fundings, and when I come forward I will show you that for Planning Ministers, you need to think beyond what the government budget is. If you need to build a road, your job is not about whether you can raise enough taxes to build the road, it is whether you can fund that road. With the combination of taxes, and debts and investment and whatever, that road needs to be built. It doesn’t have to come from the government’s balance sheet. Nobody says the government must fund every single thing that is development. This is where investment becomes important. We are not getting money from oil. Our non-oil revenue is not rising fast enough. We talk about taxation, but there is a limit to how much you can tax a man who is not able to eat. And also, there is a limit to how much you can continue borrowing in Naira. You know, we play with these numbers. When I was in the Central Bank, we say: “Oh! You know, our debt to GDP ratio was 25%, therefore it is nothing to worry about. It is not up to 70%. Your debt to GDP ratio is 20%, and you spend 30% of your revenue servicing debt. What does that tell you? 70% of your GDP does not generate government revenue. Agriculture is about 35%. How much tax does it pay? Wholesale and retail trade, how much tax does it pay? You have a GDP where the tax is coming from the oil sector and telecom’s. That’s your government revenue base. And those sectors constitute maybe 30% of GDP. So, for all intents and purposes, gentlemen, if your debt to GDP ratio is 30%, and only 30% of your GDP is generating revenue, you are at 100%, until you broaden your tax base. If you just look at debt to GDP ratio, there is no reason why the Nigerian government cannot borrow more than N2-3 trillion. But, let them borrow now. When are they going to pay? You don’t pay debt from GDP. You service debt from revenue. Nobody talks about debt to revenue. What’s the good news? It’s that Nigeria is not all about oil. I know we all think it is oil. But it is not! Oil does not form even a critical part of our GDP, or our growth. Look at these numbers. That’s your GDP per capita. The present value of your oil reserve in 2016, which was calculated based on 37.2 million barrels, $60 a barrel, production horizon of 40 years and discount rate of 12 per cent. If you sold the entire oil reserves of Nigeria today, the proceeds will add only $1164 per head, compared to GDP per capita of 3000 in 2016. So, those making noise about oil should stop making noise about ii. People should stop being afraid, because oil is not critical. It is just a working capital. We sell it. We get the dollars that we use to import. If you can find another source of working capital, we can do without it. It is 15% of GDP. When I was governor of Central Bank, the economy was growing at 37%. The oil sector was not adding anything to GDP growth. The growth was coming from agriculture, services and trade, which is also very revealing. If we are now saying we are in a recession, because of the collapse in oil price, we are not being sincere. You can’t be in recession, because a sector that is 15% of your GDP has declined. What happened to agriculture, trade, services and health? Something else to look at. This is the slide that got me sacked from my job. You know the truth will always be there and I like this power point presentations because the figures tell you more than a thousand words. These are our external accounts, now look at Nigeria and look at Kenya up there in the blue line. These are current accounts surpluses we have had from 2005 to 2014. Not even one oil price rise in 2014 did we have in our current account deposit. I think today, up to 2014 we have current accounts surpluses. Now, below there you have other investment assets, which will be your capital inflows. I mean your reserve, and you have something called net errors and omissions. Look at 2014, the errors and omissions were about $20 billion, from about minus 5 to minus 35, about $30 billion actually. So, when you are an accountant and you produce accounts and errors and omissions that are 70% of the numbers, or 60%, what does that tell you? These are national accounts published by the Central Bank of Nigeria and the Central Bank is telling Nigeria: “Look, all we know is that this is money that we think should be in the economy, but we cannot find it.” And people didn’t want me to talk. Now, we are hearing where the money went. All sorts of revelations that nobody thought where possible. Everyday they were captured in errors and omissions. Now, look at Kenya. They do have errors and omissions, but compare the errors and omissions bar to what they were able to account for. 5%, even 10%, is acceptable. But when you cannot explain where 50% of your earnings went and the country continues and nobody is asking any questions, and even when you tell Nigerians that this is the thing, they will say: “Don’t mind the man.” Look at that, so where do we have a problem? First of all, as you can see we have not been able to attract investments. All the other investment assets headed as errors and omissions had been headed out. Which means, the money went out and did not come back. Anything below the zero line represents money that went out of Nigeria and did not come back. Anything above represents what came in on the net basis. Now, a country like Kenya was having huge trade deficit, and that’s why the blue lines are below zero, but is able to attract investment. And that’s all above the line and that’s why Kenya is growing. We earn the money, we don’t attract any kind of investments, apart from portfolio flows. How much investment do we have in the oil sector, roads, economy, agriculture, refineries. etc.? When you talk to people, they will tell you this sectors are not profitable. But why are people investing in Kenya agriculture? Why are they investing in roads in South Africa? Why are they building bridges? Why are they investing in power plants in Ethiopia? I am Chairman of a company called Black Rhino. By the way, I don’t have a kobo in that company, but I am a Chairman. This short man who owns black stone said to us: “Gentlemen, here is $5 billion to invest in power projects in Africa, a joint venture with Dangote on a condition that for every $1billion you put in, Dangote puts in $1 billion, so we have $10 billion to invest. We have projects in Ethiopia, Eritrea, and Kenya. I accepted to be Chairman on one condition only, that he will allow me to fix a power project in Kano. And he said: “If you can find a good power project in Kano, I am okay.” Now, power companies are here trying to invest, negotiating. And what did we hear? One day some judge in a court sits down and says reverse the tariffs. I am here talking to someone in New York who cannot understand that a government can issue a power privatization plan; that investors can come in; that there is a regulator for power; that they looked at the numbers, looked at the cost of power, looked at what is cost recovery, agree on a tariff, announce that tariff, they bring in their money to invest on the basis of that and a court in the same country says this is illegal. You know, for you sitting here and for Nigerians, this may not sound well, in fact people were saying yes! They are cheating us. But, what that one judgement does in terms of the signals to foreign investors is very disastrous. There is no country in the world where a court had agreed to interfere with commercial transactions between the government and private investors that are in to attract investments. There is a contract! The judge did not even say do not give this going forward. He said the ones that have been done is illegal, and you expect somebody now to bring in $3 billion to invest in power in Nigeria? Knowing that you can tell him this is the tariff, and tomorrow your court can wake up and say the tariff is illegal? So, as planning ministers and commissioners, if you decide upfront that investment is important to you, the entire system has to be searched, to make sure that these signals are not set. Your Customs officers should know that okay, this is the duty; pay correct duty. Don’t add anything on top. It is the economy’s investment. If a man is entitled to 5 year visa for bringing some kind of investment, he will get it. He doesn’t need to know anybody in immigration. The court should respect legal agreements. And the right incentives should be provided, and when you provide incentives, do not review. Every government comes in and the next thing you know, some businessmen comes to them and say: “Your previous government gave this one tax incentive and you start reviewing and reviewing. The next time you offer somebody your own incentive to invest, he will not come, because he believes that the next government will reverse it.” If the government that has made the mistake is gone, you then offer your own set of incentives and make sure that they are transparent. If you offer somebody an incentive in cement, make sure that every cement manufacturer gets that incentive. Fine, its sectoral. Assuming cement is important to you, if you offer an incentive for agriculture, make sure that everybody who meets those conditions should get those incentives, not just somebody who knows his way around Abuja. The farms are not in Abuja anyway. You can see this. Basically, no investment has come in, and as you can see, I am building a consistent story that you have had growth model driven by commodities and consumption, which is your problem, and you now need to shift and you have a growth model that is driven by investment. And for this forum, it means you got to stop thinking so much about how much the government can spend, as in how much can we get into this economy. Lagos has done very well. If I have money to invest, I will invest it in Lagos, because it is attracting investment. Lagos has realized a long time ago that the government cannot fund all it needs. And I just love what Lagos has done. The Lagos story is a story of what Nigeria can do with itself – transparency, consistency, regulations – and people can be rich. There is no problem if people can be rich while growing an economy. Nobody minds. But, in Nigeria people become rich when people are dying. Let’s take the Lagos story, and that’s why today Lagos state is 30% Nigerian non-oil GDP, and Lagos can do without oil. Lagos can do without the rest of this country. So, we must not let Lagos go. This country is better off with Lagos than with the Niger Delta. Let’s not make that mistake. We should be together as a country. Every part of the country is important. But, let us not be so obsessed by a resource, because we have had the commodity driven model, and we are blind to the potentials of an alternative model. Lagos doesn’t need oil. What is oil anyway? It is a raw material. You don’t drink it. You need it to move your vehicles. Now, you have electricity. You need it to fill your generator. Now you have solar power, and biomass. The future of oil is not there. So, those few people who are trying to break up this country over oil, after sometime that oil will be worthless. You are better off being in a country that is based on this model. This is a country of the future, that is the past. Exchange rate Let me start by congratulating the government for making changes. Unfortunately, those changes were a bit late. But, the adjustment has been very severe. My sense is that where we are today, the Naira is already undervalued. If you look at the real effective exchange rate, we are below the zero line. Basically, what this means is, if the Naira were to strengthen to about 9%, you will get exchange rate palliatives. So, you are not really under any more pressures for a devaluation. This is the nominal exchange rate adjusted for relative prices, and also adjusted for rates of our trading partners. So, on a trade basis, the Naira has gone from one of the most overvalued currencies when we were at N197 to the dollar, to the one that is undervalued. So, that adjustment has been made by the Central Bank. And what the Central Bank needs to do is just to allow this system to operate properly and stop panicking. You know, from what you can see here, even if the markets starts at N320, N340 or N350 to the dollar, if you allow it to operate, it will revalue itself and adjust. What is causing the problem is all the sense that we are not entirely flexible, and sometimes wrong signals. After you have allowed the flexible markets, you act as if you really don’t believe in it. These things don’t just work on fundamentals. I was in the Central Bank, the markets works on the basis of confidence and perception. There was a time speculators started hitting the market when I was with the Central Bank. The Kenyan Shilling got hit and got divided by 25%. Ghana got hit by 30%. South Africa got hit and they started heading towards Nigeria. And I called an emergency monetary policy committee meeting jerked up the monetary policy rate (MPR) by 200 basis points, jacked up CRR (cash reserve ratio) by 400 basis points and declared that I will defend the currency. I didn’t have the money to defend the currency, but everybody believed me and they left me alone. The market works based on confidence. By the time you have taken over one bank, fire one bank MD, they will believe you when you make a threat. I made many threats as governor of the Central Bank that I never carried out. If banks messed up, I will say, I will remove you, and because I have removed bank MDs, they will say sorry sir. They fell in line. So, if you are going on a flexible exchange rate, have the nerves. You have produced a fantastic document, stick to it. You can’t be any worse than you were. You are in a recession anyway, so you are trying something different. So, try it and try it properly. Real interest rates: Again, Central Bank has raised it and people have been attacking the Central Bank for raising the rates. Why? It’s not just about inflation. It is about stabilizing the currency, because the truth is that where we are today, the only way we are going to reverse this recession is to increase liquidity in the foreign exchange markets and reduce the gap between the official rate and the parallel market rate.And this is what I think the Central Bank needs to keep doing. A flexible exchange rate regime and a positive real interest rate will combine to bridge that gap. Bring in the dollars that we need to finance imports, and those imports of raw materials are the things that will increase production, and that production is what will lead to growth. I have been very critical of what the Central Bank has been doing since the beginning of this administration. I am very supportive of the decisions it has taken in the last few Monetary Policy Committee (MPC) meetings, all that we ask is that they have produced a fantastic document on foreign exchange rate they should do it. On the treasury single account (TSA), they should just realize the difference between the dollars balance sheets and the Naira balance sheets, because I have seen this whole thing about banks being banned from foreign exchange markets for dollar TSA. The Naira balance sheets of banks is highly diversified. The government deposits may be 20% of deposits. Banks are financial intermediaries. They engage in what is called maturity transformation. They borrow money short term and loan for long term on their Naira balance sheets. They have this money coming every day – current accounts, savings and deposits. If you tell them to pay off government deposits, they pay off and send marketers out and raise money. On the dollar balance sheets, Nigeria only raise dollar on oil sales. The IOCs (international oil companies) have their money in international banks. NNPC is the only provider of dollar money, and they have lent out that money. If you apply the same rules on the Naira balance sheet and dollar balance sheets, without looking at concentration risk, you bring the banks down. They have lent out these dollars. Look at the maturity of their assets. Give them time to pay back these dollars. For them to pay back these dollars, they have to find dollars elsewhere. Where are they going to find? Who is the other exporter, apart from oil. What do we export in Nigeria? And that is the point. So, they need to be very careful. So long as you know where the money is, give them the time to sort out their assets and pay back. Don’t precipitate a banking crisis and this idea of banning banks from foreign exchange market. In the history of this country, and Dr. Shamsudeen Usman knows that, very few banks have ever survived after being banned from foreign exchange markets, because banks has lent money to customers who depend on import to produce. If banks can’t buy dollars for those customers, they can’t produce. They can’t pay back their debts. You build up non-performing loans. So, let us think through the consequences of some of these decisions that we take. But, apart from that, I am extremely supportive. I think the Central Bank is doing the right thing, and I think we should encourage them. I think the government should be given credit to say we are going to retrace our steps. The government has said we are going to eliminate wasteful subsidies. I don’t want to go deep into this. I have been saying a lot about fuel subsidy since 2011-12. We have seen everything. Just an interesting thing. If you look at 2011-2012, in theory o, because I don’t believe it, we were importing about 60 million liters of premium motor spirit (PMS) every day. Now, we are down to a little above 30million liters every day, has our population gone down? Do we have fewer cars? Are we consuming less? All those numbers were fake. Again, you can go back to the record 2011- 2012, I sat in front of the House of Representatives and made a presentation. I produced documents. I had documents that showed people claiming they had 15 vessels of 30,000 metric tons offloading in Lagos on the same day, and they were being paid subsidy based on those documents. People sat in their offices produced bills of lading, bribed everybody from Customs to PPPRA (Petroleum Products Pricing Regulatory Agency) to whatever and got money out. All they needed was a paper that says you have allocation, and based on that allocation they will go. I am glad again that we are moving towards removing these subsidies. They are painful. Let me make that clear. If you have to pay more for fuel, it hurts, it bites. The truth is that no system is perfect. And the subsidy system benefited a very small groups of criminals much more than it benefited the poor people. And if you are going to subsidies, please provide this subsidy in production. Provide cheap gas to power plants and set power prices to a level where they can make a profit without passing on high gas prices to customers. Reduce the cost of setting up a business. Reduce the tax burden on pioneer industries. Subsidize production. Do not subsidize consumption. Rather than give poor people subsidy on fuel that never gets to them, take that money and put it in their hands. We were spending $6 billion, $7billion per annum on fake subsidies. And where is that money today? It is all in private jets, private yacht, expensive jewelries, property abroad, that’s where it is. It is not in this economy. Its gone out. One number I will give you is that Nigeria earned $16 billion from the oil sector in 2011. I was the governor of Central Bank. We established LCs worth $8billion for importing petroleum products and spent another $8 billion in petroleum subsidy. Every dollar we earned from the oil sector went back to petroleum sector in 2011. Not one dollar went into education, roads, power. It went into importing fuel and paying subsidy on imported fuel. The numbers are there. And if you look at that town hall meeting that has been going on, on Channels TV I gave this number then. Not that this one I am saying will change anything o! I am just saying it. But, tomorrow if you invite me, you will hear. Look at power generation. That is where we need to focus on. Let’s get the power reports back on track. Fantastic policy. Power was privatized. What happened? People bought DISCOs (distribution companies), because they had connections. Dr. Usman was head of what was called the technical committee on privatization and commercialization in the 1980s. I know because as a Merchant Banker, I privatized Okomu. Okomu oil mill is still there. As a solid company, because when they were in TCPC, they have a process where you don’t just buy a company. If you say you are going to invest, they had a process of making sure that after you bought that company, you make those investments. They don’t just sell assets to you. Privatization is not just about selling assets to people, it is about making sure that they make the investment they are committed to making when they bought it. So, we have people who bought DISCOs who said they will invest, but they have not invested. Land Registries. Lagos has done well, but you need to do more. In Lagos alone, you have 13 procedures to register land, according to World Land in Business Report. It takes 77 days, 10% of your property value and the quality of land is 7 out of 30, compared to 22 in the OECD countries. Lagos has now moved up, they are merging all relevant laws into a single piece of legislation. The only reason why I am not praising Lagos is, because I want to see the result first. But, they have at least realized that this is a problem. And I hope all states would look at this. Power and Land reforms are very important and having that data base is critical, especially for agriculture. Mark your land, give a C of O; let the farmer be able to use that land as collateral to borrow, or as security. Many of you had read Henandez De Sotos’ The Mystery of Capitals. Land is capital. I have that big problem here in Kano, especially in the Muslim villages. A woman’s husband dies and leaves her a farm. She doesn’t farm. So, her husband takes over the farm, he farms it, but that is her capital, and she gets no return on it. He uses her farm. He earns a living and he gives her chop money from her own money. I am Chairman of a group call “Babbangona”. We are working on farmers trying to improve their yields, and I am having that problem, and I get to the district heads and say: “Look, get all Muslim women that own farms to sit with their husbands. This money that is being given for seeds, for fertilizer, for inputs is being given to the woman who owns the land. If your husband wants to be the labourer, let him be. If he doesn’t, let her get someone else. You are the boss, because she owns the land. If your husband is ready to farm for you for a fee, let him do it. Otherwise, we will find a farmer for you.” So, this issue of land is crucial to addressing poverty, especially poverty among rural women. Many of them own lands being hijacked by their husbands and they remain poor. And it is all cultural, but what I learn from “Tudun wada” is that the Christian woman has learned to farm and they come out to farm, because they love it. But, the Muslim woman has been stopped from farming, but in the name of culture. What the men had done is that they have taken over their capital, and it’s not religion. And therefore, as leaders, we have to address this social issues as part of economic rejuvenation. Trade Policy: You know, I keep sounding like a broken record 2012 – 2012. I wrote an article in the Financial Times in London in which I criticized China’s relationship with Africa. It was very controversial. I don’t know if you read it. But, if you google it, you will see it. Now, look at this. These are our trade with China. We are all importing from China. Those that export to China are exporting oil or solid minerals. China’s interest in Africa is not our development. America’s interest in Africa is not our development. Europe interest in Africa is not our developments. China’s interest is China’s developments. Likewise America and Europe. Please our government! Our interest should be Nigeria’s development. If the Chinese are going to come back and set up textile factories in Nigeria and buy cotton from our farmers and employ Nigerian workers and produce these textiles and sell to us, they are welcome. If they are going to produce textiles in Shanghai. Subsidize them. Bring them here. Bribe our Customs Officers. Come to our markets and destroy our industries, we have to say no sir! If China is lending us money, and we are going to pay back that money to import equipment from China, we should please check that those equipment are properly and transparently priced; that we cannot get them cheaper from another part of the world; and that they are of high quality. This idea that am lending you $1billion to buy rice mills from me, which you can get at half the price elsewhere, you have already paid interest of 100%. If you don’t know it, the price is not a cheap loan. Now, we go to these countries and we think there are no strings attached, especially at this time that the World Bank and the IMF and the Europeans are saying we want you to pursuit policies, China does not interfere. So, we are running to China, it is a good partner. We must trade with China, India, Europe with America. I have nothing against any of them. What I want us to do is to sit on the table with them and negotiate trade agreements that protect our interest, because that is what they are doing and that is what every reasonable country in the world does. So, I think we have talked about Fiscal Policy, Monetary policy, Trade and Industrial policy and if there is any message I have tried to send is that we have a model. Historically, that was driven by commodity growth, by consumer spending. We have a future that is based on investment that should come in. We need to move to an investment-driven model. We need to have some elements of state planning. We cannot just allow the market. The market will not put money in agriculture, refineries. So, you have to provide the incentive and lead capital so that’s where you are important and that what for me is the way forward. So what’s the summary? The years of Africa rising where one child could lift us up are behind us. Sustainable inclusive growth now depends on investment. Please every planning commissioner should remember that its investment. The role government can play is now by getting appropriate market growth, and we said that you don’t have enough money. You have seen how much money you are raising per head. It is not much. Even if you move money from recurrent to capital expenditure, if the pull does not increase, it is not much. So, the government doesn’t have the pocket to do. If you got to look for private investments, local and foreign, to to do that, and you do that by having a corporate micro-policy and the government is getting it right, finally, and also creating a supportive business environment. So, set excess rate to intensify it flows, eliminate subsidies, that has been done. Now, address failures in the power sector value chain, starting with the DISCOs, digitize state, land registries, prioritise public spending towards investment and protect infant industries. Anybody who tells you not to protect your industries is deceiving you. Create a level playing field between the infant industries and the big ones. I am not saying go and protect everything, but they must be a way of ensuring through power, infrastructure, industrial plasters, research and technology, technical and vocational education and through appropriate trade and tariff policies that critical policies are incubated before they are allowed to go out on the streets. Thank you. Source: Premium Times Newspapers

Financial stocks contribute 89% to NSE’s turnover

The financial services industry dominated in volume terms at the end of last week’s transactions on the Nigerian Stock exchange (NSE) with 993.823 million shares valued at N7.279 billion, contributing 89.11 per cent to the total equity turnover. Following the financial sector last week, was the consumer goods industry with a turnover of 48.047 million shares worth N4.365 billion in 2,682 deals. The conglomerates ranked third with a turnover of 31.648 million shares worth N109.579 million in 487 deals. Consequently, a turnover of 1.115 billion shares worth N13.817 billion in 16,083 deals were recorded by investors, in contrast to a total of 1.124 billion shares valued at N13.839 billion that changed in 15,625 deals during the preceding week. Trading in the top three equities namely – Guaranty Trust Bank Plc, United Bank for Africa Plc and Diamond Bank Plc accounted for 394.511 million shares worth N4.397 billion in 3,142 deals, contributing 35.37 per cent and 31.82 per cent to the total equity turnover volume and value respectively. Also traded during the week were a total of 29,242 units of Exchange Traded Products (ETPs) valued at N283, 495.57 executed in 42 deals, compared with a total of 16,397 units valued at N1.961 million transacted last week in 37 deals A total of 4,470 units of Federal Government Bonds valued at N4.313 million were traded in 8 deals compared to a total of 1,650 units of Federal Government Bonds valued at N1.690 million transacted last week in 3 deals. The NSE All-share index and market capitalisation appreciated by 1.11 per cent and 1.13 per cent to close the week at 27,756.67 and N9.535 trillion respectively. Similarly, all other Indices finished higher during the week, with the exception of the NSE Industrial Goods, index that declined by 0.24 per cent while the NSE ASeM Index closed flat.28 equities appreciated in price during the week, higher than 27 equities of the previous week. 31 equities depreciated in price, higher than 25 equities of the previous week, while 121 equities remained unchanged lower than 128 equities recorded in the preceding week. A total of 30,000,000, 40,000,000 and 149,585,000 units were added to the following bonds: FGN January 2026, 12.40 percent FGN March 2036 and 14.50 per cent FGN July 2021 respectively on August 29, 2016. Also, 3,200,000,000 units of Staco Insurance Plc that arose from a special placing were admitted to trading on the 1st of September 2016. This brings the total outstanding shares of the company to 9,341,087,609 units. Seven-Up topped the gainers chart, adding 28.23 per cent to close at N144.90 per share. Wema Bank followed with 17.19 per cent to close at N0.75 per share. Seplat Petroleum added 15.76 per cent to close at N318.33 per share. Presco gained 11.88 per cent to close at N45.30 per share. Skye Bank garnered 8.47 per cent to close at N0.64 per share. NPF Micro finance Bank added 8.42 per cent to close at N1.03 per share. First City Monument Bank gained 6.48 per cent to close at N1.15 per share. AIICO insurance added 6.45 per cent to close at N0.66 per share. Mobil gained 5.00 per cent to close at N170.78 per share. FBN Holdings also appreciated by 4.95 per cent to close at N3.18 per share. Source: Today Newspapers

CBN launches Nigerian Portfolio Investors programme to boost FX inflows

In its relentless efforts to boost liquidity in the ForEx market, the Central Bank of Nigeria (CBN) has amended its ForEx rule to accommodate portfolio investment by Nigerians who import hard currency through an authorized channel. A circular by the acting Director of the apex bank in charge of Trade & Investment, W D Gotring , to all authorized dealers and general public on Friday, states that “In the continued effort to encourage portfolio investment in Nigeria, resident Nigerian nationals and/or companies who inflowed foreign currency through an authorised dealer are henceforth allowed to invest such funds in money market instruments, bonds and equities.” And to accommodate this, the provision of Memorandum 21 of the foreign exchange manual has been amended. The new version now reads: “A resident/non-resident Nigerian national and/or entities and foreign national or entity may invest in Nigeria by way of purchase of money market instruments such as commercial papers, negotiable certificates of deposits, bankers acceptances, treasury bills, etc subject to the following documentation requirements.” The requirements are as follows: “Tested SWIFT message evidencing the remittance of funds; Board resolution of the local beneficiary authorizing the investment ( in the case of a company); Purpose of capital importation specified in the SWIFT message and evidence of incorporation where applicable.” The original provision entitled: “Purchase of money market instruments” had read: “A foreign national or entity may invest in Nigeria by way of purchase of money market instruments such as Commercial Papers, Negotiable Certificates of Deposits, and Bankers’ Acceptances, Treasury Bills, etc.” The apex bank explains that only funds inflowed through authorized dealer by resident/non-resident Nigerian nationals and companies specifically for the purpose of investment shall be eligible for potfolio investment under the new regime. Source: Today Newspapers

Airtel and Nestle Say Nigeria’s Dollar Squeeze Far From Over

The Nigerian units of Bharti Airtel Ltd. and Nestle SA said shortages of foreign exchange in the West African nation are hindering their operations and ability to import equipment. “It continues to be a major challenge,” Dharnesh Gordhon, chief executive officer of Nestle Nigeria Plc, said at an event organized by the Nigerian Stock Exchange and Bloomberg in Lagos on Wednesday. Imports of machine parts, spare parts and some packaging have become more expensive, and even local suppliers are putting up their prices to compensate for a weakening naira, he said. Businesses have suffered from a shortage of hard currency in the country for the last two years as oil prices and foreign investment have crashed. Manufacturers say they need a steady supply of foreign exchange to pay for imports as they struggle to buy many raw materials and parts locally. An almost 40 percent devaluation of the naira against the dollar since June hasn’t yet led to many new inflows. The scarcity is a “big issue for everyone,” Segun Ogunsanya, head of Airtel Nigeria, said at the same event. It’s “impacted us significantly in the way we invest in new technologies,” he said. Both companies are also battling a downturn in the Nigerian economy. Growth slumped 2.1 percent year-on-year in the second quarter, the National Bureau of Statistics said Wednesday in an e-mailed statement. This was following a 0.4 percent decline in the first three months of the year. The International Monetary Fund forecasts the economy will shrink 1.8 percent this year for the first time since 1991. “People cannot afford anymore protein,” Ghordon said. “The amount of protein they are adding to their meal on a daily basis is becoming less because they just don’t have the money. They are looking for ways to make that meal tastier and” it’s up to Nestle to come up with ways for consumers to achieve that, he said. Power cuts are worsening as gas supplies to electricity plants are reduced, partly because of militant attacks on pipelines in the south of the country, Gordhon said. Nestle Nigeria’s shares are down 24 percent in the past two years, compared with 34 percent for the benchmark stock index in the country. “The challenge is how do you satisfy demand when you have supply challenges,” Gordhon said. “Supply challenges mean no gas, infrastructure challenges, crime increasing, no foreign exchange.” Source: Bloomberg

Nigeria Stock Exchange Sees ‘Total Reduction’ in Activity

The Nigerian Stock Exchange has seen a reduction in activity by almost half this year even after the central bank allowed the domestic currency to float. When the Central Bank of Nigeria removed the 197-199 naira to dollar peg on June 20 after more than a year, “we saw significant activity in the market and then it tapered off,” Oscar Onyema, chief executive officer of the bourse, said in an interview from the commercial capital, Lagos, on Wednesday. Foreign investors “want to see that there is credibility in this floating rate regime. They also want to see clarity in the allocation of foreign exchange.” Transactions for the first half of the year decreased by 44 percent to 624 .4 billion naira ($2 billion) from a year earlier, according to data from NSE’s website. “We have seen total reduction in market activity, both domestic and foreign, the foreign even more,” Onyema said. The NSE All Share Index dropped 7.4 percent over the past year, according to data compiled by Bloomberg. The naira weakened 3.6 percent to 325.50 per dollar by 9:46 a.m. in Lagos, bringing losses this year to 40 percent. Onyema also said the bourse has put on hold plans to introduce depository receipts that would allow investors to purchase foreign company shares in nairas. It “was put on hold because of this foreign exchange issue,” he said. Source: Bloomberg

FG Foresees Growth as Nigeria Enters Recession

Despite the gloomy economic data released by the NBS wednesday, the presidency said that the nation’s economic outlook remained bright, irrespective of the contraction in the GDP growth rate recorded in the last quarter. A statement issued in Abuja wednesday by the vice-president’s media aide, Mr Laolu Akande, assured Nigerians that the second half of the year would be better. Quoting the Special Adviser to the President, Economic Matters, Dr. Adeyemi Dipeolu, the statement said the recession would be short-lived, assuring Nigerians that many of the challenges faced in the first half either no longer existed or had begun to ease. The statement noted that the data released by the NBS on the GDP growth rate, while confirming a temporary decline, also indicated hopeful expectations for the country’s economic trajectory. It also said that apart from the growth recorded in the agriculture and solid mineral sectors, the Nigerian economy, in response to the policies of the Muhammadu Buhari presidency, was doing better than the IMF’s forecast, with clear indications that the second half of the year would be much better. The statement said the administration would continue to work diligently on the economy and engage with all stakeholders to ensure that beneficial policy initiatives are actively pursued and the dividends delivered to the Nigerian people. “The data from the National Bureau of Statistics showed that Gross Domestic Product declined by -2.06 per cent in the second quarter of 2016 on a year-on-year basis. “A closer look at the data shows that this outcome was mostly due to the sharp contraction in the oil sector due to huge losses of crude oil production as a result of vandalism and sabotage. “However, the rest of the Q2 data is beginning to tell a different story. There was growth in the agricultural and solid minerals sectors which are the areas in which the federal government has placed particular priority. “Agriculture grew by 4.53 per cent in the second quarter of 2016, compared with 3.09 per cent in the first quarter. The metal ores sector showed similar performance with coal mining, quarrying and other minerals also showing positive growth of over 2.5 per cent. “Notably also, the share of investments in GDP increased to its highest level since 2010, growing to about 17 per cent of GDP. “The manufacturing sector though not yet truly out of the woods is beginning to show signs of recovery while the service sector similarly bears watching. “The data also showed a reduction in imports and an increase in locally produced goods and services and this process will be maintained, although it will start off slowly in these initial stages before picking up later. “The inflation rate remains high, but the good news is that the month-on-month rate of increase has fallen continuously over the past three months. “Unemployment remains stubbornly high which is usually the case during growth slowdowns and for reasons of a structural nature. “The picture that emerges, barring unforeseen shocks, is that the areas given priority by the federal government are beginning to respond with understandable time lags to policy initiatives. “Indeed, as the emphasis on capital expenditure begins to yield results and the investment as a percentage of GDP increases, the growth rate of the Nigerian economy is likely to improve further. “As these trends continue, the outlook for the rest of the year is that the Nigerian economy will beat the IMF forecast of -1.8 per cent for the full year 2016. “The IMF had forecasted a growth of -1.8 per cent for 2016, however, the economy is performing better than the IMF estimates so far. For the half year, it stands at -1.23 per cent, compared to an average of -1.80 per cent expected for the full year by the IMF,” the presidency stated. In another statement by the Ministry of Budget and National Planning, the federal government said that as capital spending begins to yield positive results with investment/GDP ratio increasing, the GDP growth rate of the Nigerian economy would likely surpass the IMF’s forecast of -1.8% for the full year 2016. The ministry, in the statement yesterday, said a closer look at the data from the NBS revealed that the outcome was mostly due to a sharp contraction in the oil sector due to huge losses of crude oil production as a result of vandalism and sabotage. But it said there was room for optimism that the recent commitment to stopping attacks on oil installations in the Niger Delta would help to resolve this situation, while also improving government revenues. This, it added, would however be a temporary solution in the sense that it still promotes the weak economic structure of the past, which the budget ministry said manifests in two ways – the over reliance on crude oil and the country’s economy being mainly consumption-driven with a high import propensity. “With crude oil contributing 8-12 per cent of GDP and up to 50-53 per cent of the non-oil sector dependent on the oil sector, it is clear that the fortunes of up to 60 per cent of the Nigerian economy rest on a volatile sector. “This shaky foundation was masked in the past by high oil prices and reasonably high foreign reserves. “Again with the availability of foreign exchange it was possible to drive growth in national income through consumption without feeling the fallout of such structural weaknesses. “These vulnerabilities were exposed when oil prices collapsed at a time the country did not have adequate revenues and reserves to cushion the effect, a situation further complicated by loss of production,” the ministry said. It noted that the situation which pointed to the need for difficult but necessary structural reforms necessitated the federal government’s move to improve public financial management and change the structure of the economy through diversification and an investment driven model. “The federal government therefore took policy actions to promote sectors like agriculture, solid minerals, manufacturing and services and to boost public and private investment in infrastructure and housing. “It also acted to remove supply constraints with regards to foreign exchange and the supply of premium motor spirit while encouraging the private sector to add value to crude oil through refineries, petrochemical plants, fertilizer plants and gas infrastructure. “In an attempt to maintain consumption demand in the short term, the federal government also assisted states to pay salaries and to encourage a private sector supply response by bringing about improvements in the ease of doing business,” the budget ministry added. ThisDay Newspapers

Nigeria Slips into Recession, FG Attempts to Allay Concerns

The National Bureau of Statistics (NBS) yesterday admitted that the Nigerian Economy is in recession. NBS confirmed the public’s worst fears that the delayed response by the Muhammadu Buhari administration to the structural adjustments needed to avert an economic crisis has resulted in a contraction of the gross domestic product (GDP) growth rate of 2.06 per cent in the second quarter of 2016. But instead of admitting that it had taken a number of missteps that could have averted the worst economic contraction in 29 years, the presidency and Ministry of Budget and National Planning attempted to put a spin on the damning economic data released by the NBS and engaged in a game of one-upmanship with the International Monetary Fund (IMF), assuring Nigerians that the economy will beat the fund’s gloomy forecast of -1.8 per cent for the year. Nigeria officially slipped into a recession based on NBS’ GDP growth figures for Q2 2016, which showed that the economy contracted by 2.06 per cent, compared to the negative growth of 0.36 per cent recorded in Q1 2016. Also, the increase in food prices and imported items pushed up the Consumer Price Index (CPI), which measures inflation, to 17.1 per cent in July, from 16.5 per cent in the month of June. National unemployment rate also rose to 13.3 per cent in Q2 from 12.1 in Q1 2016, 10.4 per cent in Q4 2015, 9.9 per cent in Q3 2015, and from 8.2 per cent in Q2 2015. However, labour productivity increased by 5.3 per cent to N637.5 in Q2 2016, from N605.27 in the previous quarter, the NBS stated wednesday. According to the statistical agency, Q2 GDP declined by -2.06 per cent year-on-year in real terms, lower by 1.70 per cent from the growth rate of –0.36 per cent recorded in the preceding quarter, and also lower by 4.41 per cent compared to 2.35 per cent recorded in the corresponding quarter of 2015. Quarter-on-quarter, real GDP increased by 0.82 per cent. But in normal terms, the GDP in Q2 stood at N23.48 trillion at basic prices, 2.73 per cent higher than estimates in Q2 2015 of N22.85 trillion and lower than the rate recorded in Q2 2015 by 2.44 per cent. Daily oil production was estimated at 1.69 million barrels per day (mbpd), representing 0.42mbpd lower than Q1 production of 2.11mbpd and also lower than the corresponding quarter in 2015 by 0.36mbpd when output was recorded at 2.05mbpd. The non-oil sector declined by 0.38 per cent in real terms in Q2, representing a growth rate of 0.20 per cent, which was lower than Q1 2016 estimate of -0.18 per cent, and 3.84 per cent lower from the corresponding quarter in 2015 of 3.46 per cent. In real terms, the non-oil sector contributed 91.74 per cent to the nation’s GDP, but contracted by 0.38 per cent in the quarter under review. On the spike in inflation, energy and energy-related prices recorded the largest increases reflected in the core sub-index in the July inflation figure. The core sub-index increased by 16.9 per cent during the month, up by 0.7 percentage points from 16.2 per cent. The highest increases were seen in the electricity, liquid fuel (kerosene), solid fuels, and fuels and lubricants for personal transport equipment groups. Also, in the unemployment report for Q2 2016, the NBS said the nation’s labour force population – those within the working age population willing, able and actively looking for work – increased to 79.9 million from 78.5 million in Q1 2016, representing an increase of 1.78 per cent in the labour force during the quarter. The economically active population or working age population – persons within the ages of 15 and 64 – increased to 106.69 million in Q2 from 106 million in Q1, representing a 0.65 per cent rise over the previous quarter and a 3.02 per cent increase when compared to Q2 2015. According to the NBS, the number of the unemployed in the labour force, increased by 1,158,700 persons, resulting in an increase in the national unemployment rate, while 26.06 million Nigerians were either unemployed or underemployed, compared to 24.5 million in Q1 and 22.6 million in Q4 2015. Also, the total number of jobs added to the economy in Q1 2016 fell to 79,469 jobs, representing a sharp decline of 83.1 per cent (389,605) year-on-year and 84.1 per cent (420,056) from the previous quarter. The NBS noted that the sharp decline in employment generation was strongly correlated to the weakening economic output within that period, where the Nigerian economy recorded a negative growth of -0.36 per cent. It said of the 79,469 jobs created, 21,477 were in the formal sector and 61,026 in the informal sector. The public sector recorded a negative figure of -3.038 per cent in new jobs created within the period in review. The NBC also released its report on Nigeria’s foreign capital importation for Q2 2016, showing that it dropped by 8.98 per cent to $647.1 million, compared to $710 million in the previous quarter. It was the second consecutive quarter to witness record-low levels of foreign capital importation into the economy and also the largest year-on-year decrease. The NBS attributed the continuing decline in capital imported to the “the difficult period that the Nigerian economy is going through”, adding that “the second quarter of 2016 saw the economy enter into the first recession during the rebased period (according to the technical definition of two consecutive periods of decline)”. It said: “This may suggest less profitable opportunities for investment. In addition, in the second quarter there was considerable uncertainty surrounding future exchange rate policy, which may have deterred investors. “The naira was allowed to depreciate towards the end of the quarter. These factors were likely to have contributed to the record decline in capital importation.” According to the Foreign Capital Importation report for Q2, which was released by the NBS yesterday, portfolio investments recorded the largest decline of 88.76 per cent year-on-year, compared with declines of 37.00 per cent and 1.22 per cent for Foreign Direct and Other investments, respectively. “Compared to the previous quarter, however, FDI recorded the largest decline of 23.75 per cent, compared with a decline of 9.49 per cent for portfolio investment and an increase of 1.24 per cent for other investments. “As a result of these changes, other investments replaced portfolio as the largest component of capital importation, and accounted for 41.53 per cent, compared with shares of 37.91 per cent and 20.56 per cent for portfolio and FDI. “In the same quarter of the previous year, portfolio investment accounted for 81.88 per cent of total investment, which highlights the fact that portfolio investment has been the hardest hit by recent economic events. “This is possibly due to portfolio investment having a shorter term focus than other investment types,” the NBS stated. However, other investments were the largest component of imported capital and accounted for $268.77 million, or 41.53 per cent. This was despite the fact that only one type of other investment was recorded during the quarter: Other Investment Loans. The second largest component was portfolio investment, which accounted for $245.32 million, or 37.91 per cent. Portfolio investment was dominated by equities, which accounted for 83.18 per cent, a slightly lower share than the year before (when the share was 84.56 per cent), but higher than in the previous quarter when it accounted for 74.41 per cent. Despite the overall fall in portfolio investment of 9.49 per cent, portfolio equity investment increased by 1.18 per cent. The bulk of the fall was accounted for by portfolio money investment, which fell by $26.60 million, or 39.20 per cent, although investment in bonds fell to zero from $1.50 million in the previous quarter, and from $50.54 million in the second quarter of 2015. The decline to zero in capital imported in the form of bonds was particularly striking when compared to the high of $1,000.28 million recorded in the third quarter of 2014, at which time Nigeria was included in the JP Morgan Emerging Markets Bond Index, the NBS noted. Source: ThisDay Newspapers

How to get cheap forex from your bank

On a daily basis, individuals demand for foreign exchange because of the need to meet specific personal exigencies, which cannot be transacted in naira. While some need it for their relatives upkeep abroad, many individuals travelling out of the country need it to pay for their foreign expenses. Procuring forex at a reasonable exchange rate was not a major challenge a few years ago. The regulatory authourity introduced a flexible inter-bank exchange rate market for those seeking forex. While black market rate is a bit higher, bank depositors can still get forex at a cheaper rate from the bank for approved personal expenses. Some of the expenses include payments for school fees, hospital bills, business and personal travel allowance. While banks may not want to recognise savings account, depositors with active current accounts can apply for Personal and Business Travel Allowance with their banks. Some of the peculiar requirements among banks to get the PTA/BTA include the following: •Have a current account: Banks usually grant forex to customers who have current accounts, which had been in existence for months. The current account must not be dormant and the owner must have a Bank Verification Number. Bank customers can purchase the PTA for members of their immediate families. •Fill form: Intending travellers with current accounts can visit any of the approved branches of their banks and apply for the PTA/BTA. While is it easy for those travelling to countries needing visa to get it, others visiting West African countries and places that do not require visa may not be able to get it. •Maximum application: The maxi-mum limit to apply for the PTA and BTA is $4,000 and $5,000 (or equivalent in other foreign currencies) per quarter. Also, customers are not allowed to purchase both the PTA and BTA on the same trip. They can, however, apply for them within the same quarter. •Documents: To apply for the PTA, customers is required to produce a valid visa and return ticket and a valid international passport. To apply for the BTA, customers will be required to provide additional information such as a copy of the Certificate of Incorporation, letter of invitation from an offshore business counterpart stating the purpose of the visit and letter of nomination. •Other requirements: Some applicants may be exempted from presenting a return ticket. For instance, a student travelling abroad to study or already studying abroad and wants to come home on holiday will be allowed to apply for the PTA with a one-way ticket. Foreign nationals and intending pilgrims can also apply for the PTA with a one-way ticket subject to the presentation of a work/resident permit. Source: Punch Newspapers

Naira hits 418/dollar as forex scarcity lingers

The naira plunged to 418 against the dollar at the parallel market on Tuesday as scarcity of foreign exchange continued to weigh on the official interbank and black market. The local currency, which closed at 414 against the greenback on Monday, traded at 415 in Lagos, 417 in Abuja and 418 in Kano, foreign exchange dealers said. Foreign exchange analysts believe the lingering scarcity of forex has been exacerbated by the banning of eight commercial banks from the forex market by the Central Bank of Nigeria. The CBN last week Tuesday banned nine lenders from forex transactions for failing to remit the Nigerian National Petroleum Corporation’s $2.334bn into the Treasury Single Account. The United Bank for Africa Plc, one of the nine lenders, was later re-admitted after it remitted its share of the funds to the TSA. A day after the CBN banned the nine banks from the forex market, the local currency depreciated to 402/dollar, down from 397 it closed against the greenback on Tuesday. The local currency has continued to depreciate gradually. Forex dealers maintained that the demand pressure on the dollar, mounted by summer travellers and parents paying schools fees of their children studying overseas ahead of resumption in September, was exacerbated by the CBN’s forex ban on the nine lenders. The naira, which hit a fresh record low since the CBN floated the currency on the official interbank market in June, first touched 400/dollar at the black market this month. Meanwhile, the CBN sold around $1.5m at the interbank forex market on Tuesday to support the local currency and ensure the closing rate stabilised, Reuters reported, quoting currency traders. The naira closed at 305.50 to the dollar on the interbank market, same level it had traded since last week, having touched 325.50 a dollar intraday, but gained after the CBN’s intervention. Traders said the naira had consistently closed around 305.5 to the dollar since August 22, an indication that the CBN was concerned about a particular price range for the local currency. On Monday, the forex market registered $327m worth of trades, about six times more than its usual volume. This included a single $270m transaction at 345 naira per dollar, by foreign investors buying local currency bonds. Average trading is around $50m a day on normal days; it may reach $100m on days the CBN intervenes in the currency market. According to traders, dollar shortage remains a major concern in the market even with the daily intervention by the central bank and a pocket of flows from offshore investors. The naira traded at a fresh record low of 418 to the dollar on the black market, against 414 a dollar on Monday, traders said. -Source: Punch Newspapers

NBS: “Nigeria officially in recession, GDP growth drops to -2.06%”

The National Bureau of Statistics (NBS) on Wednesday released the much-awaited Gross Domestic Product figures for the second quarter of 2016 with the GDP growth rate sliding further from -0.36 per cent in the first quarter to -2.06 per cent year-on-year. The negative growth rate recorded in the second quarter of this year is a confirmation of the predictions by the Federal Government and economists that the country was heading into recession. A recession is defined as a significant decline in activities across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country’s GDP. In the GDP report released by the NBS, the bureau said, “In the second quarter of 2016, the nation’s Gross Domestic Product declined by -2.06 per cent (year-on- year) in real terms. “This was lower by 1.70 per cent points from the growth rate of –0.36 per cent recorded in the preceding quarter, and also lower by 4.41 per cent points from the growth rate of 2.35 per cent recorded in the corresponding quarter of 2015. Quarter on quarter, real GDP increased by 0.82 per cent.” -Source: Punch Newspapers

Online fraudsters hit capital market, Sec warns

The Securities and Exchange Commission has raised the alarm over the activities of some online fraudsters, who are currently running an online investment scheme tagged ‘MMM Federal Republic of Nigeria’. The fraudsters, according to SEC, carry out their illegitimate business via Nigeria.mmm.net portal/platform, and are promising investors a monthly investment return of 30 per cent. SEC said the venture had no tangible business model, describing it as a Ponzi scheme, where returns would be paid from other people’s invested funds. Investopedia.com describes a Ponzi scheme as a fraudulent investing scam promising high rates of return with little risk to investors. The scheme generates returns for older investors by acquiring new investors. SEC on its website, said, “The attention of SEC, Nigeria has been drawn to the activities of an online investment scheme tagged ‘MMM Federal Republic of Nigeria (nigeria.mmm.net). The platform has embarked on an aggressive online media campaign to lure the investing public to participate in what it called ‘mutual aid financial network’ with a monthly investment return of 30 per cent. “The commission hereby notifies the investing public that the operation of this investment scheme has no tangible business model hence it’s a Ponzi Scheme, where returns are paid from other people’s invested sum. Also, its operation is not registered by the Commission.” SEC, therefore, advised the general public to distance themselves from the online scheme, adding, “Please note that anyone that subscribers to this illegal activity do so at their own risk.” In a related development, SEC said its attention had been drawn to the activities of one Mrs. Oge C. Ottiwu of No. 118 Zink Avenue, Opposite Eke Market, Awka, Anambra State, allegedly engaging in capital market activities without any registration within Anambra State and its environs. “Section 38(1) of the Investments and Securities Act, 2007 requires any person who intends to operate as a professional in the capital market or carry on securities business to be registered by the commission before engaging in such activities. It is therefore illegal to carry on any kind of capital market business without registration." -Source: Punch Newspapers

SEC Clears NAHCO over Corporate Governance Issue

The Securities and Exchange Commission has cleared Nigerian Aviation Handling Company (NAHCO), its board and management of wrongdoing with respect to corporate governance and capital market activities. The SEC clearance followed the petition addressed to President Muhammadu Buhari alleging amongst others, NAHCO’s violation of the corporate governance code and involvement in capital market related issues, a copy of which it received on July 21, 2016. SEC in its own response to the petition addressed to the acting Chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, signed by E.A. Okolo for its director-general, and copied President Buhari, Chairman of Independent Corrupt Practices and Other Related Offences Commission (ICPC), President of the Nigerian Stock Exchange, Managing Director of Asset Management Corporation of Nigeria and Chairman of NAHCO, disclosed that it “carried a thorough examination of the corporate governance and capital market related issues cited in the letter” and did not find NAHCO, its board and management wanting. SEC in the letter revealed that, “In order to forestall a situation where one individual wields enormous powers, Section 5.1(b) of the SEC Code of Corporate Governance for Public Companies prohibits one individual from occupying the positions of Chairman and Chief Executive Officer, NAHCO complied with this provision.” Also, the commission noted that, “In an attempt to empower the boards of public companies to exercise appropriate oversight on management, Section 4.3 of the SEC Code of Corporate Governance requires that non-executive directors should be in the majority, NAHCO complied with this provision.” Besides, the commission stated that, “For the purposes of efficiency and effectiveness, the Code requires that boards public companies should operate through committees, NAHCO complied with this requirement.” Furthermore, SEC disclosed that, “In 2011, NAHCO entered into a Management Service Agreement with Rosehill Group. It was alleged that due to Mal. Suleiman Yahyah’s interest in Rosehill Group, the process was not transparent. However, documents show that the matter was presented by the management to the relevant board committee; the full board also considered the matter and finally an extra-ordinary general meeting of shareholders was convened to approve the agreement. This process largely complies with good corporate governance practice especially where the interested directors were excused from the meetings when the decision was taken. This is in addition to the fact that detailed disclosure of the management service agreement as well as the value paid by NAHCO to Rosehill Group is made in the Annual Financial Statements (AFS) of the company every year. (Please refer to AFS of 21012, 2013, 2014 and 2015).” In addition, the commission stated that, “ We are yet to identify any rule breaches with respect to the disposal of Sabena Airlines and British Airways shares by the concerned parties. The petitioner expected that the company should have part of the N5 billion bond proceeds on the Cargo Warehouse Modernisation Project when there was a shortage of funds. “Since the Warehouse Modernisation Project was not cited in the offer documents as one of the purposes of the offer, the company had no power to divert the funds as expected by the petitioner. This is in line with Rule 305 (6) of the SEC Rules which prohibits the utilisation of the issue proceeds on projects not contained in the offer documents.” -Source: ThisDay Newspapers

National Bureau of Statistics to reveal we are in recession with -2% GDP growth in the 2nd Quarter

After a two-week delay in releasing the all important Gross Domestic Product (GDP) economic growth data, Nigeria’s National Bureau of Statistics (NBS) will on Wednesday, officially confirm that the country is in recession with data pointing to a further GDP contraction of minus two percent (-2%) in the second quarter of fiscal year 2016. The data would show a record lowest deep in GDP posted by the country in 25 years after the negative growth of minus 0.36 percent (-0.36%) recorded in the first quarter. Technically, an economy is in recession if it records two consecutive quarters of negative growth. Nigeria’s GDP contracted by 0.36 percent year-on-year in the first three months of 2016, as the country’s non-oil sector contracted mainly due to a slowdown in the services and manufacturing sectors, caused largely by a weakening naira, while lower oil prices continue to drag the oil sector down. The Q1 GDP was against 2.11 percent expansion in the previous period and way below forecasts of 1.7 percent growth. But before the first quarter contraction, the last time that Nigeria saw a negative annual growth rate, going by the rebased numbers, was in 1991 at -0.55 percent. Before that, it had settled at -0.51 percent and then -7.5 percent in 1983. The figures would indicate that agriculture showed some growth in the second quarter, but both industry and services contracted, a highly placed source said “Generally, industry, which includes manufacturing was largely affected by the difficulty in accessing forex,” the source said. Figures would also show that the crude oil and gas sector recorded the worst performance. Recent reports have it that Nigeria has lost over N1.1 trillion in oil revenues since the resurgence of militancy in the oil-rich Niger Delta region, as oil installations witnessed about 28 attacks just between February 10, 2016 and the end of last month (July) by the rampaging militants. After hitting a two-year low in June, due to militants’ attacks on oil facilities, production managed to increase from the 1.4m barrels per day to 1.5m bpd, still much lower than the 2.2m bpd OPEC quota for the country, as well as 2016 budget estimates. A confirmation by the NBS on Wednesday is ominous as it would obliterate prediction by the International Monetary Fund (IMF) earlier this year that Nigeria would see growth of around 1.8 percent by end of the year. Analysts say that this is because to attain a positive growth by the end of the year, the economy would need significant positive growth for the remaining third and fourth quarters, which remains unlikely, as the economy still struggles with a weakening naira and low oil prices. But in the first quarter, the oil sector shrank 1.89 percent year-on-year, following an 8.28 percent contraction in the previous quarter. Oil production stood at 2.11 million barrels per day (mbpd), 0.05 mbpd, lower than in the preceding period. Industrial production shrank 2.24 percent: manufacturing declined 8.39 percent (-13.09 percent in Q4), mining and quarrying fell by 2.96 percent (-8.05 percent in Q4) and electricity, gas, steam and water supply dropped 44.46 percent (+1.2 percent in Q4) and construction fell 5.37 percent (+4.14 percent in Q4). The non-oil sector went down 0.18 percent, from a 3.14 percent growth in the previous period. Services expanded at a much slower 0.8 percent, compared with a 3.69 percent increase in the previous period. Information and communication grew 4.07 percent (+4.21 percent in Q4); internal trade went up by 2.02 percent (+4.69 percent in Q4); while real estate decreased 4.69 percent (+0.79 percent) and finance and insurance fell 11.28 percent (+6.41 percent in Q4). Agriculture grew 3.09 percent, lower than a 3.48 percent expansion in Q4. Quarter on quarter, real GDP dropped by 13.7 percent, following a 3.1 percent growth in the previous period. -Source: Businessday

GSK Nigeria extends divestment deal closure date

GlaxoSmithKline Consumer Nigeria Plc (GSK Nigeria), an affiliate of GlaxoSmithKline Plc is extending the deal closure date for the divestment of its drinks bottling and distribution business to Suntory Beverage & Food Nigeria Limited. - Source: Businessday

GT Bank report as at 18th of August 2016

http://www.tustyieldssecurities.com GTBank reports N91.38bn pre-tax profit in H1’16 Guaranty Trust Bank plc on Wednesday released its audited financial results for the half year (H1) period ended June 30, 2016 to the Nigerian and London Stock Exchanges. The results published at the Nigerian Stock Exchange (NSE) for investors and shareholders showed gross earnings for the period grew by 37% to N209.9billion from N153billion reported in the June 2015; driven primarily by growth in fee and commission income as well as foreign exchange income. Profit before tax (PBT) stood at N91.38billion, representing a growth of 45% over N63.11billion recorded in the corresponding period of June 2015. GTBank closed the half year ended June 2016 with total assets and contingents of N3.42trillion and shareholders’ funds of N453 billion. Further review of the half year performance shows that the Bank recorded positive growth across all key financial metrics, a testament to the cutting edge strategy of the bank. The bank’s loan book grew by 14% from N1.373trillion recorded as at December 2015 to N1.562trillion in June 2016 with corresponding growth in total deposits which increased by 23% to N2.008trillion from N1.637trillion in December 2015. The Bank’s non-performing loans remained low and within regulatory threshold at 4.39% (Bank: 3.54%) with adequate coverage of 170.1% (Bank: 214.8%). Increase in collective impairment was borne out of the prudent stance of the Bank, while Capital remains strong with CAR of 18.25%. On the backdrop of this result, Return on Equity (ROAE) and Return on Assets (ROAA) closed at 35.8% and 5.7% respectively. The Bank is proposing interim dividend of 25k per unit of ordinary share held by shareholders. Segun Agbaje, Managing Director/CEO of Guaranty Trust Bank plc, while commenting on the results said that “Going into the year, we knew it would be a challenging year and we prepared for it by focusing on effective management of the balance sheet and adapting our business model to changing market variables. The quality of our past decisions enabled us navigate the challenges that persisted in the business environment most of the half year period” Whilst expressing his sincere appreciation to customers for their loyalty, and to staff for their hard work and commitment, Agbaje added that “While the current economic realities present some challenges to growth, we remain committed to our ideals of staying positive, delivering exceptional service to our customers and adding value to all stakeholders”. abstract from Business day news paper.