The Federal Government is talking to the World Bank and African Development Bank for $3bn loans before it determines how much it will raise from Eurobonds to help fund this year’s budget.
“From the World Bank, we are hoping to get $2bn,” the Minister of State for Budget and National Planning, Zainab Ahmed, said in an interview on Tuesday in Abuja, Bloomberg reported on Wednesday.
While the African Development Bank in November disbursed $600m of a $1bn loan, the Federal Government wants the Abidjan-based lender to top up the remaining $400m.
“We are talking to see whether they can up it to $1bn,” she said.
Lawmakers are debating the 2017 budget of a record N7.3tn that the Budget ministry said would help to boost an economy that shrunk by 1.5 per cent last year, the first contraction since 1991.
This came after lower prices and production of oil and shortages of both foreign currency and power weighed on output.
The government raised $1bn of Eurobonds in February and a further $500m last month to finance projects approved in the 2016 budget.
Ahmed said the government would return to the market for a new fundraising round for this year’s spending plans.
Yields on the bonds sold in February and maturing in 2032 were little changed at 7.23 per cent as of 1pm on Wednesday.
“We should be able to do higher than what we borrowed in 2016,” she said.
“It will be determined by how much we get from the World Bank and African Development Bank because that’s a lower rate. Our preference is always to get the lower rate first.”
President Muhammadu Buhari on Wednesday forwarded the names of five nominees to the Senate for confirmation as non-executive directors of the Central Bank of Nigeria.
According to a statement by the Special Adviser to the President on Media and Publicity, Mr. Femi Adesina, the nominees were picked from five of the six geopolitical zones of the country.
The statement read in part, “In accordance with Sections 6 (1) (d) and 10 (1) and (2) of the Central Bank of Nigeria (Establishment) Act, 2007, President Muhammadu Buhari, Wednesday, forwarded the list of his nominees to the Senate for confirmation as non-executive directors on the Board of the Central Bank of Nigeria.
“The letter to the Senate President, Abubakar Bukola Saraki, contained the following as the nominees and their geopolitical zones: Prof. Ummu Ahmed Jalingo, North-East; Prof. Justitia Odinakachukwu Nnabuko, South-East; Prof. Mike I. Obadan, South-South; Dr. Abdu Abubakar, North-West; and Adeola Adetunji, South-West.”
THE Nigerian Economic Summit Group, NESG, yesterday, gave an insight into why Nigeria experienced trade deficit of N290 billion in 2016, even as it projected that the economy will experience a Gross Domestic Product, GDP growth rate of 0.6 per cent. Speaking during the 21st Annual General Meeting of the NESG, chairman of the Group, Mr. Kyari Bukar, said that the lower crude oil prices and inability of the country to finance its rising import bills in the face of plummeting non-oil export led Nigeria’s trade balance to a deficit of N290 billion while balance of payment deficit climbed to N1.8 trillion in the third quarter of 2016. Bukar hinted that aside from the foreign exchange crisis, the inability of government to respond swiftly and appropriately to economic challenges worsened the situation.
“For instance, the delayed passage of the 2016 budget and cloudy policy direction increased the level of uncertainty in the business environment. This also resulted in a decline in foreign direct investments which closed below $1 billion in the year. Major economic sectors such as construction, manufacturing and oil and gas also contracted by six percent, four percent and 14 percent respectively in the year.” “In terms of competitiveness, Nigeria fell three places to 127th in the 2016- 2017 World Economic Forum Global Competitiveness Rankings. According to the GCR report, the five most problematic factors for doing business in Nigeria are inadequate supply of infrastructure, corruption, access to financing, foreign currency regulations and policy instability.” Bukar expressed confidence that the year 2017 will witness GDP growth even as he prayed for sustained peace in the Niger Delta to guarantee improvement in government revenue which is crucial for payment of salaries and infrastructure development.
On his part, the Chief Executive Officer of NESG, Mr. Laoye Jaiyeola disclosed that NESG has been working rigorously to support government’s policy response to the foreign exchange crisis and its negative impact on manufacturing, and economic activities in general. “There is need for all hands to be on deck. In particular, there is an important complementary role that the private sector needs to play in order for us to stem the tide of decline. Let me use this opportunity to reiterate NESG’s commitment to remain at the fore of advocacy and intervention on all issues regarding the adoption of policies conducive for good governance and sustainable private sector led economic development in 2017.”
THE Nigerian Stock Exchange, NSE, yesterday, directed managers of Real Estate Investment Trusts, REITS, and closed-end funds listed on the NSE to henceforth file quarterly and audited full year financial statements as part of new rules being proposed by the Exchange.
The NSE also said that REITs and closed-end funds listed on the Exchange would be expected to submit their key performance metrics on a weekly basis. In a notice on its website, the NSE said the financial statements and other performance metrics would be available to the public via its website and other NSE platforms.
It added that REITs and closed end funds listed on the Exchange will be reclassified from the Main Board to a separate board specially created for them under the equities market. “In addition, the fund managers will be required to post the information on their website. The information to be provided will include: net asset value (NAV), number of properties, property type/distribution, occupancy rates, delinquency rates on rents and average property age.”
The NSE stated that the proposed changes, which will be implemented over the next three quarters of 2017, are aimed at promoting transparency, disclosure, visibility and liquidity of listed REITs and closed end funds in the market. The changes will also make it easier for existing and potential investors to access information required to make investment decisions thereby contributing to the growth of these products in our market.
While saying that it planned to host the first REITs Workshop before the end of the second quarter of 2017, to further engage with the relevant stakeholders within the market .
Shareholders of Fidelity Bank Plc are to receive a dividend of N3.9 billion for the year ended December 31, 2016. The dividend, which translates to 14 kobo per 50 kobo share, will be paid from profit of N9.734 billion recorded for the year, down 29 per cent from N13.904 billion in 2015.
The full year audited results for the Nigerian lender, released at the Nigerian Stock Exchange (NSE), showed a 3.5 per cent growth in gross earning to N152 billion compared with N146 billion achieved in 2015.
Net interest income grew by 1.7 per cent from N60.9 billion to N61.9 billion in 2015, while fee and commission income rose from N17.23 billion to N20.557 billion. Impairment charges rose from N5.764 billion in 2015 to N8.671 billion in 2016. Profit before tax and after tax fell from N14.024 billion to N11.061 billion and N13.904 billion to N9.734 billion in 2015 to 2016 respectively due to the one-off staff cost incurred during the year.
But total deposits, a measure of customer confidence, grew by three per cent from N769.6 billion in 2015 to N793.0 billion. Similarly total assets increased by 5.4 per cent to N1.298 trillion from N1.232 trillion in the corresponding year.
Commenting on the results, Chief Executive Officer of Fidelity Bank, Mr. Nnamdi Okonkwo said: “Our financial performance in 2016 reflects the sound fundamentals of our evolving business model as we continued with the disciplined execution of our medium-term strategy which positions the business for improved and sustainable profitability.”
He explained that profits dipped due to the cost of N4.8 billion incurred as Fidelity Bank discontinued its legacy gratuity and retirement scheme. “Excluding this one-off charge, PBT for the year would have been at N15.8 billion” he stated.
Nnamdi said, however, that Fidelity Bank’s retail and electronic banking strategy has continued to deliver impressive results with savings deposits growing by 30.1 per cent to N155.0 billion while customer enrollments on its flagship Instant Banking (*770#) and Online Banking products grew by over 200 per cent leading to a 44.6 per cent growth in net e-banking revenues to N7.5 billion.
This performance he said was “driven by the upgrade of our core banking system which provides a superior architecture that enhanced our operational efficiency and deepened our electronic banking capabilities.”
The Chief Executive Officer of Diamond Bank Plc, Uzoma Dozie, has urged European entrepreneurs and investors to step-up their investment stakes in Africa, noting that the fundamentals for sustainable growth and development in the continent has remained positive.
Addressing investors, captains of industry, corporations, thought leaders, opinion and policy makers in the UK, during the presentation of the ‘Companies to Inspire Africa 2017 Report’ by the London Stock Exchange Group, Uzoma stated that returns on investment in Africa is strong, pointing that many companies in the continent are as profitable as their peers in other parts of the world.
According to him, the continent was dotted with huge number of start-ups and micro, small and medium scale enterprises, which are structured to catalyse the continent’s economic and industrial growth. He said that the continent’s 1.2 billion people with more than half of the population below 25 years, remains a huge demographic advantage to investors as it presents one of the biggest markets and workforce in the world.
“It is a great pleasure to give this keynote address at this important event. For us at Diamond Bank, we are passionate about Africa and the opportunities…. For investors looking for returns either in the short term or long term, Africa remains an investment destination of choice. Despite the recent challenges in some African Economies, the forecast is that Africa will still grow more rapidly than the OECD countries. The outlook is positive and this is the time to explore the opportunities that exist in Africa,” he said.
He stated that although, the risk elements may be high investing in Africa but the returns neutralises the challenges. “Yes, there are risks associated with investing in Africa but then business is all about taking risks and striking the right balance between risk and returns. Yes, there are challenges with investing in Africa; infrastructure is still relatively poor to support businesses, power supply is epileptic, there is political instability and security challenges, but with over 50 countries, over 1.2 billion people with more than half of this huge population under 25 years, the opportunities are enormous and more than compensate for the investment risk”, he noted.
According to Uzoma, who was represented by Femi Jaiyeola, the Chief Compliance Officer, the challenges in the continent should serve as an investment stimulant especially as forecasts on returns and growth by analysts show that investors have nothing to lose in the long and short term. He added that Diamond Bank has remained resolute and focused on its innovative and digital-led retail strategy, pointing that this has helped in deepening financial inclusion in the most populous African country.
He said: “Changes are happening in Africa: trade barriers are being dismantled with intra Africa trade holding a lot of potential; customers’ profile are changing with educated, young urban professionals who are brand-aware and sophisticated in terms of their consumption; ongoing digital transformation; and importantly, African economies are beginning to diversify beyond commodities. These are positive changes for discerning investors and Businesses.”
Nigeria is in the worst position among major oil exporting countries in the Middle East, Africa and parts of Europe to have balanced budgets this year, with oil forecast to average $52.50 per barrel, according to Fitch Ratings Limited.
The country needs an oil price of $139 per barrel to balance its budget, the global rating agency said in a report on 14 major oil exporting nations in the Middle East, Africa and emerging Europe.
The forecast break-even oil prices of other African countries, Angola, Gabon and Republic of Congo were put at $82, $66 and $52 per barrel, respectively.
According to Fitch, Saudi Arabia needs an oil price of $74 per barrel; Bahrain, $84; Russia, $72; Kazakhstan, $71; Oman, $75; Azerbaijan, $66; Iraq, $61; United Arab Emirates, $60; Qatar, $51; and Kuwait at $45.
It said even after cuts in government subsidies and currency devaluations, 11 of them would not have balanced budgets this year, including Saudi Arabia, Bloomberg reported on Thursday.
“Fiscal reforms and exchange rate adjustments are generally supporting improved fiscal positions compared to 2015, but have not prevented erosion of sovereign creditworthiness,” Fitch said.
Only Kuwait, Qatar and the Republic of Congo have estimated break-evens that are below Fitch’s oil price forecast for this year.
Kuwait at $45 per barrel traditionally has a low break-even because of its high per-capita hydrocarbon production and more recently its “large estimated investment income” from its sovereign wealth fund, Fitch said.
Brent crude, a global benchmark, has averaged about $55 per barrel this year. It traded around $54.96 per barrel on Thursday.
The rating agency said it “substantially” raised the fiscal break-even prices for Nigeria, Angola and Gabon from 2015 levels because of rising government spending.
Meanwhile, the Nigeria LNG Limited has begun talks with potential buyers on new contracts for gas supplies from its first three production units at its Liquefied Natural Gas terminal, Reuters quoted a senior official of the company as saying.
Contracts for gas supplies from Trains 1, 2 and 3, which together produce nine million tonnes of LNG a year, are being discussed, said the official who requested anonymity. He was attending the Gastech trade conference in Chiba, outside Tokyo.
