The Central Bank of Nigeria (CBN) yesterday, raised the hope that the lingering Naira-Yuan swap deal will be achieved as part of strategies to reducing the huge dollar demand pressure on the local currency.
The CBN Governor, Godwin Emefiele, gave the indication at the ongoing International Monetary Fund/World Bank Group yearly meetings in Washington DC.
According to him, there is a lot of “networking meetings going on, and I can assure you that meetings are going on with some of our partners, particularly, China.”
Expressing optimism that there would be positive outcome, he noted that some of the meetings included the Managing Director of IMF as well as the World Bank Group, in an effort to achieve some of the objectives. “I believe in the course of time, we would achieve it. Nigeria happens to be one of the foremost countries in the world that adopted the Remimbi as a reserve currency. We would work together with China, to ensure that we also get our fair share of the benefit from this arrangement,” he said.
In another development, the Minister of Finance, Kemi Adeosun, reiterated that the planned massive investment in critical infrastructure can improve the country’s productivity, create jobs and bring comfort for our people.
“Nigeria is too big to fail. We are too significant in the region to underperform. So, what we are trying to do is to reset the Nigerian story so that we can grow. To grow, we need to have the enabling infrastructure.
“We need to have power and we have gotten some commitments. We also need to improve transport, rail, and housing. We are really confident that we would get back to growth,” she said.
Meanwhile, Emefiele has affirmed that monetary, fiscal and structural reforms are the directions the country has been undergoing, adding that it is also accompanied by serious coordination and collaborations.
He raised the hope that if the direction is sustained, the country would achieve that desired objective, pointing out that the reforms include the flexible exchange rate regime, which he said, is picking up gradually.
“When you are in the type of situation that we are in, naturally you find out that people are a little bit sceptical. But with time, as we develop the confidence, we would begin to see more of them coming into the country,” he said.
But the World Bank President, Jim Yong Kim, said the institution has effected some changes to help it better deliver results for its stakeholders and the low income countries.
Already, the reforms had helped it receive funding support to the tune of $52 billion, cut $400 million in administrative costs and reinvested savings in the bank’s business. These reinvestments are allowing us to deliver results to our clients more quickly.
But to make headway in mobilising private sector funds for infrastructure and growth support, the bank chief warned of the unpredictable nature of government policies and actions, corruption, and tax regulations, which continue to present the largest obstacles for investment in developing countries, including Nigeria.
“We want to continue working with you to make real progress as you tackle corruption, build stronger institutions, and reform tax structures, which will remove the constraints to private sector investment, foster better service delivery and promote better governance.
“We also want to work with you to make investments more attractive by lowering real and perceived risks, both in established and in emerging sectors,” he said.
The economic recession and prolonged downturn in the capital market have induced significant divestment by foreign investors, while lingering tight liquidity , waning public confidence, among others have led to significant losses by investors.
The stock market, which remained bullish between December 2005 and March 2008, suddenly became bearish in April 2008, and has remained nearly so since then with only marginal recovery.
Unfortunately, with the unprecedented lull in the market, many investors have fallen victim of scams and various ponzi schemes that suggest invested money will yield quick capital appreciation sometimes as high as 90 per cent of the original deposit.
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. The organisers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. Here, investment funds are pooled with others, and investors receive returns that are paid from the deposits of new investors. Rarely is the money invested in real investment vehicles, much less ones that actually can return what is being offered.
In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business.
SEC worried about proliferation Indeed, the proliferation of these unlawful investments outfits in the nation’s capital market has become a source of worry to the Securities and
Exchange Commission (SEC). Efforts to flush them out of the market have remained futile, as the organisers of the schemes have continued to dupe thousands of investors under the guise that such investment would yield high financial returns or dividends.
SEC has issued several warnings to the investing public, urging them to refrain from investing their money in outfits not registered with it. The commission has also advised the public not to subscribe to any financial investment plan without first checking the registration status of the operating company on its website.
The commission maintained that even if the company was registered with SEC, the potential investors should endeavour to find out whether it had approved the company’s activities.
Specifically, SEC had recently issued a warning to Nigerians over the activities of an investment fund tagged ‘MMM Federal Republic of Nigeria’ declaring it to be fraudulent.
SEC in a statement on its website, described the facilitators as online fraudsters, who 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 as returns would be paid from other peoples’ invested funds making it a Ponzi scheme, a fraudulent investing scam promising high rates of return with little risk to investors that generates returns for older investors by acquiring new investors.
“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 is a Ponzi Scheme, where returns are paid from other people’s invested sum. Also, the commission does not register its operation.
”SEC, therefore, advises the general public to distance themselves from the online scheme. Please note that anyone that subscribes to this illegal activity does so at their own risk.”
Also in a recent forum, the SEC warned members of the public against buying ponzi or pyramid schemes not approved by the Commission. According to the Director General of SEC, Mounir Gwarzo, “Those pyramid schemes have not been approved by SEC, and we have been telling investors that anybody that is selling any scheme that is not approved by SEC, investors should not buy.
“If they buy, then they are on their own because people are being pushed to buy those kinds of schemes. And I think it is also a fault on our own parts because by the time somebody tells you that if you buy this thing you will get 50 per cent discount, you know it is not true. “So we too as individuals do not have to be greedy, because it is all driven by greed. How can somebody give you 50 per cent return? Where is he going to get the 50 per cent? where is he going to put the money? What is he going to do?
“And this has been the trend that we have seen in recent times and we have been continuously telling people through radio jingles not to accept all those schemes not sanctioned by SEC.”
The SEC DG advised Nigerians not to subscribe to any financial investment plan without first checking the registration status of the operating company on the commission’s website.
He added that the Commission was collaborating with the police and other relevant law enforcement agencies to check the activities of the operators of such schemes.
Investors’ ignorance, greed boost proliferation Reacting to the development, the Managing Director, Cowry Asset Management Limited, Johnson Chukwu, explained that investors patronize ponzi schemes due to ignorance and greed.
According to him, a lot of people that invest in the scheme do so for lack of knowledge of basic economics or business expertise.
“People invest in Ponzi schemes for two principal reasons; ignorance and greed. A lot of people that invest in Ponzi scheme do so for lack of knowledge of basic economics or business common sense.
“For instance, I am not aware of any business venture that consistently generates 50 per cent net annual return (Net Profit Before Interest and Taxes – NPBIT) on a yearly basis. So if a scheme is offering someone a monthly return of 5 per cent which amounts to an effective annual yield of over 60 per cent, it becomes obvious that such scheme cannot sustain the payment from its income and therefore must be creating a deficit, which can only be funded from contributions from other investors.
“The illusion of meeting such payments becomes punctured once the rate of contributions slows down, hence the crystallisation of the always impending default. The second reason is that of greed which makes informed people to believe that they can earn the return and exit the scheme before the bubble will burst but sometimes they also get trapped.
“The most appropriate way to checkmate Ponzi schemes is to create enough awareness of the modus operandi of such schemes so that the general public will understand that the rewards offered by Ponzi schemes are not sustainable and only serve as bait to attract uninformed investors.
“It may also be necessary for SEC to set up toll-free lines for investors to confirm the registration status of Investment houses seeking for their patronage,” he added.
The Managing Director of InvestData Limited, Ambrose Omordion said: “Many people are patronising the outfit because the stock market is down. They don’t have knowledge of what the capital market is all about. SEC should warn Nigerians to be careful about investing in these fraudulent outfits and should go a step further to arrest people that establishes these outfits.
“People that put their money in wonder bank are still complaining. Government should go and find out who are behind this scheme. Again, government should make capital market liquid so that people will not look for alternatives.”
He urged SEC to roll out enlightenment campaigns to educate investors on what capital market investment is all about and the risks of associated with patronising these schemes.
A Finance and Economics lecturer at the Pan Atlantic University, Prince Osaro, said: “The system itself has no regulation, there is no law guiding such financial practices in Nigeria. Just start a small financial system and coin it under a financial name and use it to rob people. “Government has the regulatory power to check them but government is leaving it open because nobody is really shouting about it, nobody is taking anyone to court about this and this is corruption. And corruption in Nigerian constitution is death. If they can catch one of those people and trial him legally, and the person goes to jail for life or being hanged to death, I think others will learn their lessons.
“But nobody is saying anything. Nigerians will just say ‘let him go, God will judge him’, and the person will run to Dubai or where nobody can trace him. People who are gullible keep putting their money in such outfit and they keep loosing their money. We have that greed to double our money but if you get into it, you will see the problem you will get your friends and families. It is crazy.”
Shareholders of PZ Cussons Nigeria Plc yesterday approved a N1.99 billion dividend for the 2016 financial year. This translated to 50 kobo per share.
The company’s total assets increased to N74.4 billion compared to N67.4 billion the previous year. Speaking in Abuja at its annual general meeting (AGM), Chairman of the company, Chief Kolawole Jamodu said despite the deteriorating operating environment, the company had remained focused and managed to deliver a steady performance for the period to grow shareholder value.
According to him, notwithstanding, the present exchange rate crisis among other unfavourable variables limited the optimal performance of the company.
Jamodu disclosed the company recorded an exchange loss of N2.9 billion, cutting its group profit after tax (PBT) by 52 per cent to N3.15 billion from N6.56 billion in 2015 while its consolidated revenue decreased by 4.9 percent to N69.5 billion from N73.1 billion.
However, the chairman said: “Improved planning and execution in supply chain and targeted investments in key brands helped to limit the negative impact of the scarcity of foreign currency and other adverse effects.” He said in the overall assessment, the company “did well to hold its position in the market, reducing the negative impact of the prevailing adverse conditions and performing satisfactorily against peers in the sector.”
He said there are future prospects for the company given that the presently economic predicament is transient. According Jamodu: ”We regard current economic challenges as transitory and we remain excited about the future of the company. Our confidence has been emboldened by positive policy changes being adopted by the government such as the new foreign exchange regime that has been introduced by the Central Bank of Nigeria. Our brands remain strong and popular with consumers which leaves us well placed to hold our market and exploit any emerging opportunities.”
Meanwhile, shareholders unanimously commended the board for the performance and declaration of dividend amid the current economic uncertainties. They however, urged the company to surpass the current record in subsequent financial years. Meanwhile, Nigerian Stock Exchange All Share Index (NSE ASI) appreciated marginally by 0.08 per cent to close at 28,031.90 yesterday as heavily capitalised stocks lifted the equity market. The appreciation recorded in the share prices of United Bank for Africa Plc, Dangote Cement, Seplat Petroleum Development Company Plc, NASCON Allied Industries Plc and Forte Oil Plc were responsible for the marginal gain recorded in the NSE ASI.
In a related development, in view of the need to foster financial system and economic growth and development, as well as complement the efforts of government at various levels, the Central Bank of Nigeria (CBN) yesterday unveiled the guidelines for granting liquid asset status to Sukuk Instruments issued by state governments.
The central bank stated in the document listed on its website, that the move was to enhance the diversification of sources of funding for development at the sub-national levels. Consequently, members of the public and relevant stakeholders were requested to note the guidelines for operations in the Nigerian financial markets.
It explained that the Sukuk issuance by any state shall be backed by a law enacted by the relevant State House of Assembly, specifying that a sinking fund to be fully funded from the consolidated revenue fund account of the state be established. Also, the state government shall have in place a fiscal responsibility law, with provisions for public debt management, in order to enhance investor confidence.
In addition, the state government shall establish a debt management department in order to ensure transparency and professional management of debt issues.
“The Sukuk shall, at inception and throughout its tenor, be of investment grade as determined by a rating agency accredited by the Securities and Exchange Commission (SEC). A SEC confirmation that the proceeds have been disbursed in line with the provisions of the prospectus shall be submitted to the Director, Financial Policy and Regulation Department (FPRD) of the CBN at the anniversary of the Sukuk issuance.
“Subsequently, SEC confirmation shall be required on amounts that have not been disbursed by the first anniversary. Repayment structure shall be from a funded sinking fund account (supported by a legislated irrevocable standing payment order (ISPO) and/or other legislated sources of repayments disclosed in the offer documents).
“The Trustee(s) to the Sukuk shall submit to Director, FPRD, CBN every six months: (a) a statement of accounts of the sinking funds’ investments and (b) a statement of declaration on the sufficiency of the sinking funds’ investments and investment income in meeting maturing and redemption obligations.
“The Trustees shall advise the Director, FPRD, CBN on the action taken in the event that the Trustees are of the opinion that the sinking fund may be insufficient or there may be the likelihood of default, in line with Sections 255 and 256 of the Investment and Securities Act, 2007 or any amendment thereto.
“The Accountant General of the State shall issue an Irrevocable Letter of Authority to deduct at source from the statutory allocation due to the state, approved by the Federal Minister of Finance, in the event of default by or failure of the state to meet its payment obligations,” the central bank stated in the 11-page document.
In addition, it stated that the maximum investment a bank shall make in any Sukuk issuance of a state government or its agencies is limited to 10 per cent of the total amount outstanding of that Sukuk. This is an investment limit per issue and not per issuer.
Also, the aggregate portfolio of a bank in Sukuk issued by state governments and their agencies shall not exceed 30 per cent of the bank’s total portfolio in debt securities.
The Nigerian Communications Commission (NCC), said it had begun the process of retrieving the N50 billion fine, which MTN Nigeria erroneously paid into the federal government recovery account that is with the Central Bank of Nigeria (CBN).
The Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, made the disclosure in Abuja on Monday, while addressing a press conference on his one year anniversary and achievements since he assumed office. He said the money ought to have been paid into the federal government consolidated account, which the NCC operates with the CBN, and not the federal government recovery account that is also operated by the CBN.
He explained that he had already written a letter to the office of the Attorney General of the Federation (AGF), that would facilitate the transfer of the N50 billion from the recovery account to the federation account.
He said NCC had also remitted N30 billon into the federation account, as part payment of the N330 billion fine imposed on MTN by the NCC, for violating the regulator’s directive on SIM card registration.
He said the additional N30 billion paid by MTN and the N50 billion earlier paid, which summed up to N80 billion, explaining that the amount was based on the payment agreement reached between the NCC and MTN. The payment agreement stipulated that MTN would spread payment of the total N330 billion fine within three years, starting with N80 billion in 2016. Danbatta told the journalists that MTN fulfilled its own part of the payment agreement for 2016, leaving it with a total of N250 billion that would be paid in 2017, 2018 and 2019.
NCC had in October 2015, fined MTN a whopping N1.04 trillion for violating its directive on SIM card registration, and gave it up-till November 16, 2015 to pay the fine.
According to NCC, it gave a standing order that all telecoms operators should deactivate all unregistered and improperly registered SIM cards on their networks, but discovered 52 million unregistered and improperly registered SIM cards on the MTN network. Each unregistered SIM card attracts a fine of N200,000 and MTN had 5.2 million unregistered SIM cards on its network, amounting to N1.04 trillion. After much plea on the part of MTN, NCC reduced the fine by 25 per cent, bringing it to N780 billion. Unsatisfied with the reduction, MTN went to court to challenge NCC over the fine in January 2016, but withdrew the case in February 2016, and paid N50 billion, as part payment for the fine.
The fine was again reduced to N330 billion and MTN was asked to pay the amount in three tranches.
The Central Bank of Nigeria’s (CBN) Financial Stability Report (FSR) has revealed that in terms of size of assets and deposit of banks, the market share of the five largest banks in the country, declined to 43.30 per cent and 51.96 per cent in the first half of 2016, from 60.61 per cent and 52.94 per cent in the second half of 2015 respectively.
The FSR for June 2016 posted on the central bank’s website showed that the market share of the largest bank’s deposits and assets stood at 12.84 and 13.52 per cent respectively in the first half of 2016.
The remaining 18 banks had market shares ranging from 0.21 per cent to 6.58 per cent in deposits and 0.26 per cent to 6.41 per cent in assets, reflecting low competition in the market. This finding, according to the CBN, was supported by the Herfindahl-Hirschman Index (HHI) of the industry of 743.37 and 751.17 for deposits and assets, at end-June 2016, compared with 788.09 and 781.40 at end-December 2015, respectively.
” Despite the improvement recorded relative to the first half of the year, the structure of the banking industry in the first half of 2016 remained oligopolistic. Net domestic credit (NDC) of the banking system grew by 12.52 per cent to N24, 318.14 billion at the end of the first half of 2016, compared with the growth of 12.13 and 11.08 per cent at the end of the preceding and the corresponding periods of 2015, respectively.
“This reflected the increase in net claims on the private sector. In terms of growth in M2, NDC contributed 13.51 percentage points, compared with 12.27 percentage points at the end of the preceding half year,” it added.
According to the report, the structure of bank credit in the first half of 2016 indicated that short-term credit remained dominant. Credit maturing within one year accounted for 46.0 per cent, compared with 47.1 per cent at the end of the second half of 2015. The medium-term7 and long-term8 credit stood at 18.1 and 35.9 per cent, compared with 16.9 per cent and 36.0 per cent at the end of the second half of 2015.
Although the report stated that the central bank’s efforts towards maintaining a stable foreign exchange rate were sustained in the first half of 2016, it revealed that external shocks, speculative demand pressure and low accretion to external reserves remained the major challenges to the stability of the exchange rate.
” Consequently, the CBN introduced the Flexible Exchange Rate regime on June 20, 2016 and revised guidelines to strengthen the operation of the foreign exchange market were issued. The objective of the new policy was to enhance efficiency, boost liquidity and promote stability in the market. “In the review period, the average exchange rates at the interbank and BDC segments depreciated by 15.00 and 26.58 per cent from N196.99/US$ and N258.30/US$ as at end- December 2015 respectively, to close at N231.76/US$ and N351.82/US$ at end-June 2016, respectively,” it added.
“Although the outlook for the rest of the year appears to be challenging, the current measures put in place … are expected to minimise the impact of shocks to the domestic economy.”
Total bank loans and advances to the private sector of the economy grew by 17.62 per cent to N15, 677.68 billion at the end of the first half of 2016, in contrast to the decline of 1.44 per cent at the end of the second half of 2015. Relative to the second half of 2015, the amount of credit extended to the various sectors by banks during the review period showed an upward trend. Credit to the oil and gas sector accounted for the highest share of total credit, as it accounted for 28.78 per cent of the total, compared with 24.82 per cent in the second half of 2015 The manufacturing sector accounted for 12.95 per cent of the total credit, compared with 13.91 per cent in the second half of 2015. Agriculture, forestry and fishery accounted for 3.08 per cent of the total, indicating a 0.69 percentage point decline compared with 3.77 per cent in the preceding half year.
The Nigerian National Petroleum Corporation on Wednesday announced that it had commenced the integration of biofuels production from selected energy crops through its agriculture development programme.
It stated that it had started mobilising to site on a first large-scale commercial biofuels venture in Nigeria, adding that it would plant an energy crop known as Jatropha and convert the extracted oil from its seeds to biodiesel to fuel diesel engines.
The Group Managing Director, NNPC, Dr. Maikanti Baru, disclosed this during the Environment Dialogue on the Diversification of the Nigerian Economy – the Role of Jatropha.
The GMD explained that the increasing negative impact on the environment due to the exploitation of fossil fuels was promoting a global search for alternative energy that could be obtained from renewable sources.
Baru, who was represented by the Group General Manager, Renewable Energy Division, Mr. Rabiu Sulieman, said, “As one of its key focus areas, the NNPC is currently diversifying its products portfolio for enhanced and sustainable energy mix. This, we are doing by integrating biofuels production from selected energy crops with a robust agric development programme.
“Based on commercial considerations, Jatropha ranks second to oil-palm as the biofuel of choice for biodiesel production in the NNPC biofuels programme.
Baru said, “Though the feedstock for this first project slate is sugarcane, we intend to cultivate Jatropha plants around the peripheries of the plantation and sidelines of the internal road network.
“This will safeguard against livestock encroachment, while the oil that will be extracted from the Jatropha seed will be converted to biodiesel to fuel the diesel engines of the plantation machineries.”
Meanwhile, Global oil benchmark, Brent crude, traded above $52 per barrel on Wednesday for the first time since June, as data showed a fifth straight weekly decline in the United States crude inventories.
THe market capitalisation of the Nigerian Stock Exchange dropped by N92bn at the close of trading on the floor of the Exchange on Wednesday to N9.620tn from N9.712tn.
The NSE All-Share Index also fell to 28,009.40 basis points from 28,277.93 basis points.
PZ Cussons Nigeria Plc, Caverton Offshore Support Group Plc, Flour Mills Nigeria Plc, Nigerian Aviation Handling Company Plc and Dangote Flour Plc emerged as the top five market losers.
A total of 187.156 million shares valued at N1.472bn were traded in 3,132 deals, with the highest index point attained in the course of trading hitting 28,335.40 basis points, while the lowest and average index points stood at 28,009.40 and 28,221.30 basis points, respectively.
There were 22 decliners and 20 gainers, according to the NSE data.
The shares of PZ Cussons depreciated by N2.01 (9.71 per cent) to close at N18.69 from N20.70, while the Caverton’s share price closed at N0.64 from N0.70, losing N0.06 (8.57 per cent).
Floor Mills shares closed at N20.05 from N21`.10, shedding N1.05 (4.98 per cent), while NAHCO share price lost N0.17 (4.91 per cent) to close at N3.29 from N3.46.
The share price of Dangote Flour also plummeted by N0.19 (4.67 per cent) to close at N3.88 from N4.07.
Other losers were Wema Bank Plc, Forte Oil Plc, Livestock Feeds Plc, Zenith Bank Plc, Guaranty Trust Bank Plc, Unilever Nigeria Plc, Transnational Corporation of Nigeria Plc, Dangote Cement Plc, May & Baker Nigeria Plc and Access Bank Plc.
Ecobank Transnational Incorporated Plc, Honeywell Flour Mill Plc, Nascon Allied Industries Plc, FBN Holdings Plc, Conoil Plc, Glaxo Smithkline Consumer Nigeria Plc and Nigerian Breweries Plc also recorded losses in their share prices.
Topping the gainers’ table were FCMB Group Plc, Okomu Oil Palm Plc, Diamond Bank Plc, Transcorp Hotels Plc and 7UP Bottling Company Plc.
The share price of FCMB appreciated by N0.07 (6.31 per cent) to close at N1.18 from N1.11, while Okomu Oil shares closed at N39.90 from N38, gaining N1.90 (five per cent).
The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), has signed a memorandum of understanding (MoU) with NICON Insurance Limited.
SMEDAN and NICON, in the agreement, determined to reinforce the agenda of diversification of the economy through the empowerment of the informal sector.
They said it represents their steps towards ensuring the success of Micro, Small and Medium Enterprises (MSMEs) in the country. SMEDAN, in the agreement, promised to provide insurance services for its more than 37 million members across Nigeria in order to protect them from the vagaries of the economic environment.
The agency, which was established by the federal government, to promote the development of the MSME sector of the economy, signed the epochal document with NICON Insurance Ltd in Abuja .
At the ceremony, the Director-General of SMEDAN, Dr. Dikko Umaru Radda, described the initiative as a sure means of ensuring the sustainability of MSMEs in Nigeria by providing adequate insurance cover for them from various types of risks. Radda called on both organisations to ensure they implement the MoU to the letter, adding that it will be reviewed periodically in order to make it remain on track.
Managing Director, NICON Insurance Limited, Mr. Bayode Samuel acknowledged SMEDAN’s capacity to manage the huge pool of members who make up a significant proportion of Nigeria’s Gross Domestic Product (GDP).
According to him, this makes NICON Insurance the ideal partner to provide insurance services for this important segment of the economy. He pledged that NICON Insurance will provide generic insurance cover as well as tailor made products to meet the peculiar needs of MSMEs.
Samuel noted that NICON Insurance with its network of 40 branches nationwide and experience as sole underwriter for all government assets for 35 years, will ensure that MSMEs receive cutting edge insurance services to enhance their growth and sustenance.
Glaxosmithkline Consumer Nigeria Plc has completed the divestment of its drinks bottling and distribution business to Suntory Beverage & Food Nigeria Limited (SBFN). The company said the completion of the divestment followed approvals from the shareholders and the Nigeria Securities & Exchange Commission (SEC).
Following this approval, GSK has transferred ownership of the drinks business in Nigeria to SBFN effective October 1, 2016. Consequently, GSK Consumer Healthcare Company (retained business) now consists of the consumer healthcare wellness, oral healthcare and nutrition categories and pharmaceutical business.
Suntory Beverage of Japan had in 2013 bought British drinks brands Lucozade and Ribena from GSK for 1.35 billion pounds ($2.1 billion at the time). Since then, the company has outsourced production and sales of the drinks in Nigeria to GSK Nigeria.
The management of the company had said the divestment of its drinks bottling and distribution business would not affect its financial fortunes.
GSK Regional Head for Asia, Middle East & Africa, Mr. Zubair Ahmed had told THISDAY that the divestment was strategic.
“It is not a question of economic decision that the business was not making money. It did not fit into our global portfolio. Nigeria was the only exception in the beverage market. Our focus globally is that GSK globally compete in five categories, which is pains, respiratory, skin, oral healthcare, and digestive. These are the five categories that we compete globally. Nigeria was a bit of an aberration. What we have done has brought the portfolio synergized. We will not be getting into functional beverages. We stick to these categories for now,” he said.
According to Ahmed, the divestment was part of the company’s overall strategic plan that have been in place for quite some time now. “As you look at what we call the construct of what we called the GSK Company. What has changed is that we have a joint venture with Novatis, and the entire positioning of the new company is one of the world’s biggest over-the-counter (OTC ) and healthcare companies. So in keeping with that focus globally, for Nigeria, for strategic reason to bring that focus on the global portfolio, we took that decision of divestiture, ” he said.
