Nigeria’s external reserves diminished to $25.860 billion as at August 12, 2016, following the settlement of matured obligation by the Central Bank of Nigeria (CBN).
The latest external reserves position revealed by the CBN showed that the reserves derived mostly from the proceeds of crude oil sales fell by 1.9 per cent or N514 million in the last one month, compared with the $26.374 billion it was as at July 12, 2016.
Following the lifting of the peg on the naira on June 20, the central bank conducted a Special Secondary Market Intervention Sales (SMIS) to clear the backlog of $4.02 billion pent-up demand for forex.
According to the CBN, it sold $532 million on the spot market and $3.487billion in the forwards market. A breakdown of the $3.487 billion forward sales by the central bank had shown that $697 billion was for one month (1M), $1.22 billion for two months (2M) and $1.57 billion for three months (3M). Also last month, the central bank settled one-month forward contracts of $697 million.
The naira, which closed at N317.34 to the dollar on the interbank forex market on Monday has been under pressure in the forex market as complaints of scarcity of the greenback persist. The central bank ditched its 16-month old peg on the naira in June and introduced a flexible exchange rate regime to allow the currency to trade freely on the interbank market.
But as a result of forex scarcity in the system which had resulted to the strong volatility observed in the forex market, the banking sector intervened last week in its bid to achieve exchange rate stability.
Oil prices rose on Monday to their highest in nearly a month as speculation intensified about potential producer action to support prices in an oversupplied market. Brent crude was up $1.19, or 2.5 per cent, at $48.16 per barrel. The international benchmark futures are up about 13 per cent above the last close in July. Crude oil prices recorded nearly 20 per cent climb in April to about $46 per barrel. OPEC crude-oil production surged by 484,000 barrels to 33.217 million a day in April, according to a Bloomberg survey.
THISDAY had reported that the external reserves were expected to decline further due to the settlement of large swap positions between the banks and the CBN. The federal government last week said it had saved about N1.4 trillion that would have been paid as subsidy to oil marketers as a result of the successful deregulation of the downstream oil and gas sector a few months ago.
Vice-President, Prof. Yemi Osibanjo who disclosed this while speaking at the Lagos Chamber of Commerce and Industry 2016 Presidential Policy Dialogue Session also said the Nigerian economy remained resilient despite the huge challenges and downside potentials.
According to the vice president, refineries in the country were expected to resume operation in full capacity before the end of 2017,having set a medium to long term strategy in motion to overhaul and sort them out.
“Of course, the medium to long term plan is to sort out the refineries; it is important for us to deal with refineries because as many of us have well known, one of the largest foreign exchange cost for us is the importation of petroleum products and at the moment, most of our refineries are operating at sub-optimum and what we are able to refine is negligible compared to what is required on daily basis.
“The recent introduction of flexible exchange rate regime, which was meant to ease pressure on external reserves, is of course one issue I am sure many will still want to comment on. But I think that the immediate effect of the devaluation and depreciation of the naira and some of the consequences which include inflation is to be expected and I believe that as we see the implementation of that policy and clearer focus on a truly flexible exchange rate, we will be able to see the actual benefit of of this policy. I believe that the foreign exchange market will stabilise; confidence will be restored and there will be an increase in the supply of foreign exchange, especially due to inward investments,” he added.
PZ Cussons Nigeria Plc on Tuesday announced a dividend of 50 kobo per share for its shareholders for the year ended May 31, 2016. The company said in a corporate action filed with the Nigerian Stock Exchange (NSE) that closure date for the dividend is from September 19 to 23, 2016, while payment will be made on October 7, 2016, after its annual general meeting (AGM) in Abuja.
Although details of the audited financial results were not made available yesterday, the 50 kobo dividend is lower than the 61 kobo per share paid the previous year. Market operators said the reduced dividend was expected considering the challenging operating environment that affected the bottom-line of the company.
As at the third quarter ended February 2016, PZ Cussons reported a decline of 41 per cent in profit after tax, which fell to N1.647 billion, from N2.787 billion in the corresponding period of 2015.
Despite the challenging environment, the Chief Executive Officer of PZ Cussons, Mr. Christos Giannopoulos, had some months ago, assured shareholders that the company would continue to pay dividends.
.According to him, PZ Cussons is one of the few companies that have paid dividends consistently over the years, saying that policy would continue. “As long as we paid dividend, it means the fundamental of the company and confidence of investors in the company is strong.”
He disclosed that the company currently imports majority of its raw material, noting that if the suppliers could set up operations in the country, it would reduce the cost of production and increase its bottom line.
“The company is doing everything within its powers to attract our suppliers to set up their operations in Nigeria,” he said.
Giannopoulos said that company was working hard to reduce the amount of foreign goods that comes into the country, adding that the firm has brought its associate companies and currently secured 26 hectares of land which allows it to produce palm oil in Nigeria.
He said: “PZ Cussons has brought its associate companies and got 26 hectares of land plantation which allows us to produce palm oil in Nigeria. Nigeria was once the biggest. Palm tree in the world. So we are doing our part to be able to reduce the amount of foreign goods that Nigeria requires.”
May & Baker Nigeria Plc has sustained its positive performance despite the inclement operating environment, recording profit after tax (PAT) of N30.09 million for the half year ended June 30, 2016.
Details of the results showed that May & Baker recorded a turnover of N3.70 billion, showing an increase of nine per cent above the N29.7 billion in the corresponding period of 2015. The company continued to benefit from management’s focus on overall operational efficiency.
For instance, while administrative expenses rose on the back of the high inflation from N263.45 million to N309.48 million; distribution, sales and marketing expenses dropped by 12.4 per cent from N583.20 million to N510.84 million. In all, total operating expenses declined to N820.31 million in 2016 as against N846.65 million in 2015, while finance costs reduced from N284.38 million to N255.80 million.
Consequently, profit before tax rose to N44.25 million, up from N43.73 million recorded in comparable period of 2015, while PAT increased from N29.73 million to N30.09 million. Earnings per share thus improved from 3.03 kobo in 2015 to 3.07 kobo in 2016.
Market analysts said the performance has raised the prospects of good returns in the ongoing business year. The company had increased total dividend payout by 20 per cent to N58.8 million, for the 2015 business year compared to what it paid for 2014 business year.
Managing Director, May & Baker Nigeria Plc, Mr. Nnamdi Okafor, had told shareholders at the 2016 annual general meeting (AGM) that management would remain focused on improving the performance of the company in spite of the challenges in the macro economy. He assured that the company will remain focused on its long-term goal of building a virile and diversified business that can ensure good competitive long-term returns to the shareholders.
Speaking in a similar vein, Chairman of the company, Lt. Gen. Theophilus Danjuma (rtd), told shareholders that the company was set to break new grounds and enhance the value of their investments.
He said May & Baker Nigeria plans to expand into new business areas as it seeks new opportunities that will add value to its performance while sustaining the growth of existing businesses and investments.
According to him, with its existing businesses showing resilience and the continuing operational efficiency of its World Health Organisation (WHO)-certified pharmaceutical complex in Ota, Ogun State, May & Baker is shifting focus to acquire new competences and expand its business into new profitable ventures.
The management of SunTrust Bank Limited, one of the recently licensed commercial banks in the country officially opened its doors to customers monday. The bank has a regional banking licence.
Speaking at the opening ceremony which attracted top government officials, politicians as well as traditional rulers in Lagos yesterday, the Chief Executive Officer of the bank, Mr. Muhammad Jibrin, said the bank was the first fresh banking licence to be issued by the Central Bank of Nigeria (CBN) since 2001.
Jibrin said SunTrust Bank started about six years ago as a mortgage bank, adding that the board and management were able to grow its balance to a reasonable size before they decided to pursue a commercial banking licence from the CBN which they got in September last year. He said the bank would be a financial technology institution that would focus electronic channels by offering telephone, mobile and internet banking services.
“Banking is no longer where you go, it is what people do. Therefore, the only thing that can stand the future is no longer physical branches, but banking services that would be driven by technology. “So, most customers of tomorrow would no longer be the customers that they want to go to the banking hall. So, you need to be able to position the institution to respond positively to the needs and expectations of customers of tomorrow. That is at the heart of our own vision and strategy as tomorrow’s bank today,” Jibrin said.
In his presentation, the Chairman of the bank, Mr. Charles Onyema Ugboko, said establishing a bank amid the present economic situation showed that the board and management are committed to the growth of the Nigerian economy.
In his goodwill message, the Oba of Lagos, Oba Rilwanu Akiolu, urged the management of the bank to remain focused, even as he appealed to them to employ at least 30 per cent of Lagos indigenes. Also, the Obi of Onitsha, Igwe Alfred Nnaemeka Achebe, pointed out that going into business at this time when “everybody else is trying to get out of business, takes a lot of courage, and to go particularly into banking takes triple courage. “But such occasion throws up opportunities to those who can see far and beyond. It is the courage of the founders of this bank that I want to applaud. If you are just coming in to be another bank, then it is not worth coming in.
“So, you have to come in as a bank with a difference. You must change the game. Service and quality should be your focus. I personally believe that the cost level of banks is very high, so if you can bring your own down, you will win,” the traditional ruler said.
On his part, the Lagos branch controller of CBN, Mr. J. Iyari, who represented the CBN Governor, Mr. Godwin Emefiele, urged the board and management of the bank to keep to the rules and be good corporate citizen.
“The bank should try to create market niche, be special and be the bank of choice. I assure you that the CBN will continue to provide a level playing field for all operators in the financial services industry to support the growth and development of our country,” he said.
Also, the President of the Dangote Group, Alhaji Aliko Dangote, who was at the ceremony, commended the bank for taking such as abold step.
“As we speak here today, it might be easy for us to be overwhelmed by many challenges we face as business people. The lack of growth in the major economies of the world, the declining commodity prices in general, the weakness in our economy and the difficulty faced by the banking sector all over the world.”
“But throughout my business life, I have learnt that problems and difficulties are also great opportunities. People can make quite a lot out of difficulties and I think our difficulties in Nigeria today should be turned to opportunities. In this period, you need the courage to attack when others are retreating.
“As you know, in Lagos, we have many projects that we are doing and we are not retreating. We have continued to invest in this downturn, with expectation that our investment would actually pay a handsome reward as the cycle turns. I congratulate you for taking this step when banks all over the world are facing multiple headwinds. I am excited that their courage would be rewarded in the near future,” Dangote added.
The Central Bank of Nigeria (CBN) has granted Fidelity Bank Plc final licence to operate electronic commerce services in Nigeria.
With this development, the bank stated that it is positioned to empower micro, small, and medium enterprises (MSMEs) in line with its strategic business objectives, through the provision of an advanced electronic commerce platform.
Christened ‘The Fidelity GreenMall,’ the bank in a statement described the platform as an online marketplace with fully integrated e-commerce capabilities for online payments, delivery logistics, advertising, and business networking opportunities, amongst others.
Managing Director/Chief Executive Officer, Fidelity Bank Plc, Nnamdi Okonkwo said: “We have always seen access to markets as critical success factor in our quest to deepen our MSME service offering.
“With this approval and given the rapid increase in internet penetration, we see an exciting opportunity to further open up new markets for MSMEs using technology.”
According to him, the central bank’s decision to grant Fidelity full licence to rollout electronic commerce services was driven specifically by the bank’s unique approach to financial inclusion. The Fidelity boss noted that many MSMEs lack requisite expertise and capacity to manage an online store thereby making it difficult for them to make sales.
Okonkwo, however acknowledged the various constraints that hamper growth of MSMEs such as concerns about their funding, poor record keeping, lack of requisite technology tools and epileptic power supply in the country.
He however advised small businesses to take advantage of the online platform to boost their revenues and income by trading on local and international arena.
“We want to raise the level of competitiveness of Nigerian MSMEs in a global market,” he said. Okonkwo pointed out that e-commerce had gained recognition in national and international trade, disclosing that the Bank plans to strengthen the level of participation of Nigerian SMEs in global e-commerce sales.
According to international statistics portal (Statista.com), the retail e-commerce sales worldwide amounted to $1.67 trillion in 2015.
With the projected value of e-commerce in Nigeria expected to hit $13 billion by 2018, according to the CBN, the Fidelity helmsman pointed out that the online platform offers ample opportunity for perceptive businesses to explore and tap into in order to garner more market share. He noted that the online platform fosters linkages to multilateral agencies and organisations to enable MSMEs explore export markets or franchising opportunities.
The FMDQ OTC Securities Exchange recorded 36.13 per cent growth in fixed income and currency markets transactions in July.
The company posted transactions worth ₦12.74 trillion in July compared with ₦9.36 trillion recorded in the preceding month, indicating a growth of 30.60 per cent or ₦3.38 trillion.
A breakdown of the report indicated that foreign exchange transactions accounted for 27.52 per cent of the turnover against the 26.07 per cent achieved in June, a growth of 1.45 per cent.
Transactions in treasury bills contributed 33.62 per cent of the total turnover in contrast with 38.14 per cent recorded in June.
The report showed that FGN2 bonds and unsecured placements/takings accounted for 3.79 per cent against 4.85 per cent recorded in the previous month.
Member-Member trades stood at $1.8 billion in July against $0.9 billion achieved in the comparative month, accounting for 18.97 per cent of turnover in the FX market.
Secured money market (repurchase agreements (Repos/Buy-Backs) stood at 31.02 per cent in contrast with 26.50 per cent posted in June.
The report stated that the first Naira-settled OTC FX Futures contract – NGUS JUL 27 2016 priced at ₦279 per dollar matured during the review period with a total settlement amount of ₦962.23 million paid to counter parties.
The report also noted that transactions in the FX market amounted to $9.46 billion in the review period in July, against $7.51 billion in the previous month, an increase of 25.97 per cent or $1.95 billion.
FMDQ, a securities exchange and self-regulatory organisation registered by the Securities and Exchange Commission, has promised to lead innovation and development in the Nigerian Debt Capital Market space.
It provides a platform for listing, quoting and trading of fixed income and currency products.
The Bank of Industry (BoI) and Gombe State Government have signed a N360million deal for the deployment of pay-as-you-go solar home systems in selected rural communities in the state.
Gombe was one of the states that benefitted from the first phase of the BoI/UNDP rural electrification programme involving one community in each of the six geopolitical zones.
Due to the success of the initial project, the Gombe State Governor, Dr. Ibrahim Damkambo wants the project replicated in other nine local government areas of the state. The acting Managing Director, BoI, Mr. Waheed Olagunju said the project would boost economic activities in the benefiting communities.
The project, which is expected to commence with the deployment of stand-alone solar home systems in Lule 1 and 2 communities in Dukku LGA and Pata community in Yemaltu Debba, will be co- funded by the BoI and Gombe State Government on equal sum of N180 million each. Olagunju said the problem of electricity supply from the national grid in Nigeria underscored the need to explore other sources of power generation.
He said: “The persistent problem of electricity supply from the national grid in Nigeria has made it imperative to explore alternative power supply options to lift Nigeria and its rural communities in particular, out of darkness and provide them a new lease of life afforded by the presence of not only reliable, but clean and sustainable energy.”
He called on other state governors to replicate the solar systems in off-grid communities in their states, adding that it had been stories of improved livelihood, better living condition and economic rejuvenation in the communities where the first phase of the projects were executed.
According to him, “These communities with an average of 200 homes, each hitherto had no electricity and lived in darkness. But since the provision of solar electricity, the lives of the inhabitants of these communities have changed dramatically. “The provision of solar electricity has reduced energy costs, created more micro businesses, improved healthcare and quality of education.”
While underscoring the overall significance of alternative form of energy, Olagunju maintained that it would be difficult for the country to achieve inclusive and sustainable growth and development without taking proactive steps towards addressing the myriad of challenges that had stalled the progress and prosperity of its people, particularly those at the bottom of the pyramid.
Nevertheless, Dankwambo said he asked that the solar system be replicated in nine other local government areas of the state based on the success story of the pilot project. In order to facilitate immediate the commencement of the project, the governor said he had approved the release of N44million, being its own share of the counterpart funding, for the execution of the project, starting in two rural communities of the state.
He said: “It is in our efforts to create job opportunities to our teeming youths that the bank, in conjunction with GVE Project Nigeria Limited, sponsored a pilot mini solar power project in Kolwa in Kaltungo KGA. The project is the first of its kind in the state and in the entire north east geopolitical zone.
“It is gratifying to note that the Kolwa project is improving the living standard of the people in that community. We have indeed realised the immense economic benefits of the mini solar project and decided to replicate in other rural areas. I have approved the release of the counterpart fund to the bank to facilitate early take off of the project.”
In an ambitious expansion bid, Beloxxi Industries Limited has closed a whopping $80million equity investment deal with a consortium of international private equity firms and German Development Bank (KFW-DEG).
According to a statement by the company’s President/CEO, Obi Ezeude, the minority equity sales deal was consummated on August 1, 2016 with all the funds fully disbursed.
Unveiling 8 Miles (London), African Capital Alliance (ACA) (Nigeria) and KFW DEG Bank, Germany as the faces behind the international consortium acquiring the minority equity for five years, Ezeude said the transaction came on stream after six months of intense due diligence and legal negotiations that was concluded on July 1, 2016.
“With this Equity Investment, we will expand our current operations from five production lines to about 10 production lines,” he said, adding: “That will increase our capacity from 40,000 metric tonnes to 100,000 metric tonnes of Beloxxi Cream Crackers per year.” He said the expansion, which will make the company the largest producer of Beloxxi Cream Crackers in Nigeria and sub-Sahara Africa, would increase its staff strength from 2,500 to 6,000.
“This is a landmark transaction that demonstrates the capacity for growth in the manufacturing sector in Nigeria. The investment will further increase the capacity of Beloxxi Industries and enable it explore the export market accessing the much needed foreign exchange whilst maximising the potential for growth in Nigeria,” Ezeude said.
Companies and group of individuals’ ambitious targets to raise funds through Crowdfunding the Nigerian financial markets are being inhibited by the restrictive provisions in the Companies and Allied Matters Act, 1990 and Investment and Securities Act, 2007 the Securities and Exchange Commission (SEC) has disclosed.
Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture using easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together.
Crowdfunding is very popularly in use in the United States (US), Europe and Asia to raise capital for various financial and non-financial projects. There are more than 1000 Crowdfunding portals worldwide supporting a multi-billion dollar industry. For instance global Crowdfunding hit $16.2 billion in the US in 2014. And given the tremendous growth in online platforms that has led to the success of online shopping portals in Nigeria, many fund seeking corporates and groups have shown interest to source for funds through Crowdfunding in the country.
However, the Director General of SEC, Mounir Gwarzo said crowdfunding cannot be effective in Nigeria for now because of lack of rules and inhibitions in the provisions of CAMA and ISA. Speaking in Lagos last week the SEC boss said while the commission is committed to deepening the nation’s capital market to meet the funding needs of corporates and grow the economy, the legal provisions are a big challenge.
“We are aware of the growing interests among Nigerians to use Crowdfunding to raise funds. However, that cannot materialise now given the legal challenges as a result of the provisions in CAMA and ISA. But we are looking for ways to go about it so that companies will enjoy the benefits of Crowdfunding in the country as well,” Gwarzo said.
According to him, SEC is looking at the Crowdfunding rules in US and Canada in order to ensure an enabling legal and regulatory framework that will support this massive global innovation.
It is believed that equity crowdfunding will prove to be an expedient way for many struggling SMEs to raise capital since they find it difficult to raise startup capital because they are considered as high risk to banks.
The theory behind crowdfunding is that if a large number of people, referred to as the “crowd”, each provide monetary contributions, then it is possible to raise substantial sums of money, without the need to go to traditional lending sources.
However, SEC regulates all securities offered for sale by public companies in Nigeria and currently there are no provisions relating to crowdfunding in the SEC rules. Besides, the provisions of CAMA, regulates the formation and operation of all types of companies and enterprises in Nigeria, will place restriction in dealing with transfer of shares, invitations to the public to subscribe for shares among others.
Dangote Flour Mills on Friday reported a profit before tax of N2.64 billion for the half year ended June 30, after its re-acquisition from Tiger Branded Consumer Goods.
This is contained in a statement issued by the company in Lagos.
The statement said the profit before tax was against a loss of N9.55 billion posted in the corresponding period of 2015.
Its gross profit stood at N14.03 billion during the period, while profit from operating activities rose to N8.47 billion.
The statement said that the financial performance was heart-warming, given that the Dangote Flour Mills recorded losses in the past.
It attributed the growth to the restructuring by the new board and management after the company’s reacquisition, which included the reopening of the closed Dangote Flour Mills in Kano.
Mr Ighodalo Asue, the company’s Chairman, said the firm would continue to embrace investment opportunities to increase market share and shareholders’ value.
Asue said since the takeover that the management had taken a lot steps to reposition the company through expansion to drive growth.
“We bought back Dangote Flour Mills from Tiger Branded and by this move, it means we have a stronger, better sophisticated and more focused Dangote Flour Mills.
“We are also using this medium to restate our commitment to increasing our shareholders value and our dear customers,” Asue said.
He said that the company would continue to invest in the state and other parts of the country and even beyond the country for job and wealth creation.
“It is our hope that our return to Kano will create more job opportunities and impact positively on the economy of the state.
Asue said that Aliko Dangote’s decision to buy back the company had saved the jobs of about 3,000 employees and the shares of over a million shareholders.
He said that the multiplier effect of his investment in the country was immeasurable.
Mr Thabo Mabe, the company’s Group Chief Executive Officer, was also quoted by the statement as saying that it return to profitability was due to several adopted initiatives to increase market share and create value for shareholders.
Mabe said that the company was driven by the vision of putting its products on the table of every Nigerian. NAN
