The Nigeria Deposit Insurance Corporation (NDIC) has stated its resolve to lead in enhancing capacity building and bridging skills gaps in the banking industry in general and the Deposit Insurance Scheme (DIS) in particular in Africa.
The NDIC’s Managing Director/Chief Executive, Alhaji Umaru Ibrahim, made this remark during the accreditation ceremony of the NDIC Academy as a training service provider for its staff and the banking industry by the Council of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.
According to a statement, Ibrahim said with the NDIC Academy’s new status, it was positioned to fulfil the corporation’s goal of serving as a centre of academic excellence for capacity building on the DIS for countries in the sub-Saharan Africa.
He added that the corporation prides itself on establishing high standards of professionalism and competency among its staff through the corporation’s NDIC Academy and other human capital development initiatives, including the Chartered Banker/MBA programme of University of Bangor, Scotland in partnership with the CIBN.
The NDIC CEO emphasised the importance of continuous high level training in order to achieve the corporation’s core mandates of deposit guarantee, bank supervision, bank distress resolution and bank liquidation. The ultimate goal, he said, would be to enhance depositor protection and public confidence in the banking system.
In his earlier address, the President and Chairman, Council of CIBN, Prof. Segun Ajibola, commended the corporation for its consistent efforts towards meeting high standards for the benefit of the banking industry and larger economy. Ajibola described the NDIC’s readiness to subject itself to the rigours of the accreditation process as a testimony of its management’s commitment towards capacity development in order to equip its workforce with critical skills to enhance their performance and productivity.
The Law Union & Rock Insurance Plc ended the 2016 financial year with N3.935 billion gross premium, up from N3.858 billion.
The company grew its profit before tax (PBT) by 101 per cent, from N328 million in 2015 to N658 million in 2016, while total assets rose from N8.580 billion while shareholders’ funds grew by 13.03 per cent from N4.45 billion to N5.039 billion.
Addressing the shareholders at the 48th annual general meeting (AGM) of the company in Lagos, the Chairman of Law Union & Rock Insurance, Mr. Remi Babalola, said the company recorded marginal increase its top-line and significant growth in its bottom-line.
Babalola said: “If you look at the performance of the company in 2016, you will realise that the company is doing better every year. Since 2012 we have been doing better than other years. The company had a very good brand, but faced some challenge which made things not go very well for them. We were among the topmost insurance companies in the country if you trace through history.
By the time we came into the company, it was struggling, therefore what we did was to change the management, the board, and improve the policies. Also, we put good risk management practices. We then came up with a corporate plan and good strategy and we allowed the management to implement that strategy.”
He said the company has brought in a foreign investor as part of the shareholders, disclosing that the company did a private placement last year which was successful and the foreign investor has put money into the company.
“We are looking for leverage in the areas where we are going to bring in technology to enhance product and diversify the company,” he said. Speaking on the insurance industry, he said insurance business in Nigeria has not started because when you compare the contribution of the insurance sector to the Gross Domestic Product (GDP) it is very low.
“When we compare with Ghana, Kenya and South Africa, while we have zero per cent in terms of GDP, they have above three per cent. There is tremendous opportunity in the insurance business, but it needs the right risk management, appropriate capital, right technology and well-motivated workforce. These are what the Law Union and Rock has right now,” he added.
According to Babalola, upon the approval of the shareholders of the company to raise additional capital by way of private placement requisite regulatory approvals were obtained for the issue.
He added that consequent upon a conditional approval issued by the National Insurance Commission (NIC) that the investor’s post-placement position should not exceed 20 per cent of the company’s equity, the placement subscribed was 83.3 per cent, thereby bringing the total shares subscribed to the 859 million ordinary shares.
The Chief Executive Officer, Mouka Nigeria Limited, Mr. Ray Murphy, says the London Stock Exchange Group’s ‘Companies to Inspire Africa’ report is meant to increase awareness of investment opportunities in Nigeria and Africa in general.
He said the initiative could also enhance capital inflows into the continent.
“It (London Stock Exchange Group’ Company to Inspire Africa report) is to increase awareness of investment opportunities, to get capital inflows going again; obviously, as companies grow they need further levels in capital,” Murphy noted.
Mouka was recently listed in the London Stock Exchange Group’s inaugural ‘Companies to Inspire Africa’ report, a landmark report that identifies the fastest-growing and most dynamic businesses across Africa, the company said in a statement on Thursday.
The ‘Companies to Inspire Africa initiative’ is part of London Stock Exchange Group’s broader support campaign for dynamic companies that have shown excellent growth rate and potential to power Africa’s development.
Murphy described his company’s recognition in the report as great honour, saying “Mouka’s inclusion in the inaugural Companies to Inspire Africa report was in recognition of the company’s unfailing commitment and passion to manufacturing high quality mattresses and pillows that adds comfort to life for every Nigerian.”
During the London LSEG’s regional event in Lagos recently, Murphy expressed his delight at the listing.
He said, “I think for us it is a tremendous honour to be recognised internationally for the performance of the company within Nigeria. It is a tremendous honour. We were contacted several months back by the London Stock Exchange Group, they were putting together this programme of companies to inspire Africa and they identified companies with some criteria.
“I think the first is exponential growth, so we were one of a select band of companies, not just in Nigeria but throughout Africa, which are recognised for their successes and we were asked to participate in this ‘Company to Inspire Africa initiative.”
He added, “The companies selected were about 300 around Africa which we were identified but out of that 300, nearly 60 of them were in Nigeria and Mouka was one of those selected in Nigeria.”
The Nigerian National Petroleum Corporation (NNPC) is in talks with American and Chinese investors interested in working to grow the corporation’s business interests in the non-core oil sectors of its operations.
The corporation, which disclosed this in a statement, added that so far, it has identified potential investors to collaborate with in expanding its research and development (R&D), health, shipping and telecommunications business interests. These investors, it noted are Americans and Chinese.
According to the corporation, the collaboration was necessary following the volatility in crude oil prices in the international market. NNPC explained that it would look to its non-core oil sector to stay afloat, adding that it has specifically established contacts with some Chinese investors to partner in its R&D venture.
The statement quoted the Chief Operating Officer in charge of Ventures at the corporation, Dr. Babatunde Adeniran to have said this at the recent 10th edition of the Annual sub-Saharan Africa Oil and Gas Conference in Houston, Texas, where he affirmed that response from the Chinese prospects had been favourable. Adeniran, the statement noted, said the NNPC had also extended it dragnet to American investors who he affirmed were interested in working with the corporation on R&D.
He said there had been low investment in R&D in the industry in sub-Sahara Africa, thus necessitating NNPC’s commitment to key in to maximise available opportunity in the sub-sector and region.
Adeniran, further outlined in the statement which was signed by NNPC’s Group General Manager, Public Affairs, Mr. Ndu Ughamadu, other non-core oil and gas sectors that are of interest to NNPC to include healthcare, shipping and telecommunications.
On health, he stated that NNPC has 52 clinics across Nigeria, indicating it perhaps has the largest healthcare investment owned by a single business entity in Nigeria.
“NNPC Medical is already talking to top class medical centres across the world for partnership. Billions of dollars went into medical tourism in Nigeria yearly. NNPC is poised to take advantage of the gaps in the healthcare delivery in Nigeria,” said Adeniran.
In a similar development, the corporation also disclosed that it has received about 34 bids submitted by different companies for the digitisation of all of its legacy documents domiciled in its corporate headquarters.
It explained that the bid opening exercise was conducted in the full glare of representatives of the bidding companies and Civil Society Organisations (CSOs) in Abuja.
Quoting its Group General Manager, Information and Technology Division (ITD), Mr. Danladi Inuwa, at the bid opening, the corporation said the exercise was geared towards having electronic copies of all NNPC documents in line with global best practices.
“I am happy that there is much show of interest in this process. The process is going to be transparent from the beginning to the end and we want the best yield in terms of value addition and best services and this was why the bid tender was extended to twelve (12) weeks,” Inuwa who was represented by represented by General Manager Applications, Mr. Kunle Osobu.
The statement also quoted the General Manager, Supply Chain Management (SCM) of NNPC, Mrs. Sophia Mbakwe, as saying that the corporation would seek to engage the services of reputable organisations that would digitise its legacy documents.
Mbakwe stated that the process would be transparent, in line with the corporation’s bid to reposition its business activities as an accountable organisation.
The UACN Property Development Company (UPDC) Plc led price gainers at the stock market on Tuesday as investors increased demand for the equity on news that the company is being repositioned to deliver better value to all stakeholders. UPDC appreciated 9.4 per cent to close at N1.86 per share, trailed by Fidson Healthcare with 8.8 per cent. Vitafoam Nigeria Plc, Honeywell Flour Mills Plc and Newrest ASL Plc appreciated by 4.9 per cent apiece to complete the top price gainers.
Market analysts linked the renewed demand for UPDC shares to the efforts by the management to reposition the company. The Chairman of UPDC, Mr. Larry Ettah told shareholders at the annual general meeting (AGM) held in Lagos yesterday that despite the challenging business terrain, the company continued its ongoing project developments in 2016 and commenced new ones.
Providing details on the company’s plan for the future, he said: “A key strategic imperative for 2017 is to deleverage the company. This is being achieved through deployment of an aggressive sales strategy, one for one Rights Issue that is about to be launched, and divestment from low yielding investment properties. The fundamentals of the company are strong and the brand remains positioned to deliver value to all stakeholders.” According to him, Nigeria’s real estate market still presents substantial opportunities as well as a number of challenges for property investors and developers.
He said: “Cumbersome and time-consuming processes for land acquisition, insecure land title, infrastructuredeficiency are few of the challenges of the sector. Existing concerns such as underdeveloped mortgage market, paucity of medium to long term infrastructure and financial institutions with reasonable interest rates are areas the federal government would need to pay particular attention to in the near future in order to move the sector forward.”
Ettah said that housing demand in residential real estate has consistently exceeded supply, explaining that a keyconstraint in bridging the huge gap in housing delivery on the demand side is affordability.
“The reduced purchasing power of Nigerians and the inability of the low-income earners to pay the prevailing exorbitant rents have led to increased demand for affordable houses. Consequently, developers in recent times have shifted focus to the middle-income segment of the market, where there appears to have been a significant level of income stabilisation. The federal government and certain state governments have embarked on initiatives regarding affordable homes and have specific agencies set-up towards that end,” he said.
Nigeria’s indebtedness will climb to 24.1 per cent of its Gross Domestic Product by 2018, the International Monetary Fund has said.
The IMF, which stated this in its World Economic and Financial Surveys, also projected that by the end of 2017, the country’s current indebtedness would have reached 23.3 per cent of the GDP.
The country closed 2016 with a debt to GDP ratio of 18.6 per cent. By the end of 2015, Nigeria’s debt to GDP ratio stood at 12.1 per cent, according to the Bretton Wood institution.
Nigeria’s GDP for the year ended December 31, 2016 stood at N67.98tn, according to the National Bureau of Statistics.
Going by the projection of 24.1 per cent for 2018, it means that within three years, the nation’s debt to GDP ratio would have gone up by 100 per cent, from 12.1 per cent in 2015 to 24.1 per cent.
Although Nigeria’s debt to GDP ratio is considered among the lowest in Africa, some are worried about the spate of debt accumulation in recent years, while others are not happy with the quality and utilization of debts by the nation.
The World Bank recently expressed concern over the debt payment to revenue ratio, saying that reduced revenue earnings might render the country’s debt unsustainable. A total of N1.84tn was provided for in the 2017 budget for debt servicing.
Senior Economist at the World Bank office in Nigeria, Yue Man Lee, said for the interest payment to be sustainable, the country either had to increase its revenues or work towards balancing the debt profile.
She said, “Nigeria’s debt to GDP ratio is relatively low. What is of concern is the ratio of interest payment to revenue. That is what is concerning. This reflects the fact that there has been a massive drop in revenues because of drop in oil revenues.
“There are two main strategies to reduce this debt burden. One is to increase the revenues. Here, in order not to be vulnerable to the volatility of the oil sector, the critical thing is to increase the non-oil revenues – the VAT, the income taxes and the excises outside of oil. This is something we have been discussing with the government about.”
Reduced earnings owing to the fall in prices in the international oil market have led to increased borrowing, with a projection of N2.35tn expected to be borrowed in the 2017 fiscal year. The 2016 budget projected a borrowing of N1.84tn for deficit financing.
Nigeria’s debt profile is dominated by local debts, which are characterized by high interest rates. Efforts are being made to secure more foreign loans and reduce the exposure of the Federal Government to the domestic debt market.
The United Bank for Africa Plc (UBA) on Tuesday notified the Nigerian Stock Exchange (NSE) and the investing public of its intention to launch a $500 million senior unsecured medium term debt notes. The bank said it intends to list the notes on the Irish Stock Exchange, with the expectation that it would be traded on its regulated markets.
It revealed that the Central Bank of Nigeria and the Securities and Exchange Commission have since given “No Objection” approvals to the transaction.
“UBA intends to issue the notes directly, but will retain the flexibility to substitute the issuer with an offshore special purpose vehicle, where market conditions require and allow for such, prior maturity of the notes.
“The bank intends to utilise the net proceeds of the notes for its general banking purposes. UBA will pay the net proceeds from the notes issuance into its foreign currency domicilary account, which may be retained by UBA in foreign currency or converted into naira, depending on UBA’s requirement from time to time,” the bank explained. Meanwhile, Fitch Ratings yesterday assigned an expected rating of ‘B (EXP)’ to the proposed senior unsecured medium-term notes.
Based on Fitch’s assessment on expected recoveries in a liquidation scenario, an expected Recovery Rating (RR) of ‘RR4 (EXP)’ was also assigned to the notes, implying average recovery prospects.
“The notes will constitute senior unsecured obligations of UBA and will be used for general corporate purposes. The assignment of the final rating is contingent on the receipt of final documents conforming to the information received to date. The expected rating is in line with UBA’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B’.
“In Fitch’s view, the likelihood of default on these notes reflects the likelihood of default of the bank. According to Fitch’s criteria, a bank’s IDR usually expresses Fitch’s opinion on the risk of default on senior obligations to third-party, non-government creditors as in Fitch’s view these are typically the obligations whose non-performance would best reflect the uncured failure of the entity.
“Where a bank has a Long-Term IDR of ‘B+’ or below, Fitch usually assigns an RR to the entity’s issues. RRs provide greater transparency on the recoveries component of Fitch’s assessment of the credit risk of low-rated issuer’s securities. A change in UBA’s IDR would affect the rating of the notes and may also affect recovery prospects and the RR,” the global agency stated in a report yesterday.
In a bid to eliminate some bottlenecks in the nation’s capital market, the Securities and Exchange Commission, SEC, has commenced moves to ensure that the process of issuing new shares is completed within three to four weeks and at less cost to the issuers. The Director General of SEC, Mr. Mounir Gwarzo, revealed this to Financial Vanguard at the last Capital Market Committee, CMC, meeting, in Lagos. He said that in order to reduce the cost burden associated with issuing new shares, the SEC, the Nigerian Stock Exchange, NSE, and the issuing houses have agreed to cut their transaction cost using a formula that would be developed by the CMC later in the year.
He expressed optimism that with the various measures, progress would be made in attracting more issuers to the market, while time to market would be reduced. He said: “We also looked at the issue of transaction cost, which some issuers are complaining that is discouraging them from accessing the capital market. The issuing house, the NSE, the SEC and the receiving agents agreed based on the formula developed by the market that there must be hair cut. “Even though SEC has very limited resources, but because of our commitment to the market, we agreed to shed weigh. NSE has also agreed to shed weight and issuing houses have agreed to shed weight. So collectively, we agreed on a formula and it will be implemented very soon. We believe that with this, the processes will be made easier”.
He said that in order to stop the practice where issuers file separate application and document to the NSE and SEC, a portal would be developed where the issuers will upload the documents for assessment by the SEC and NSE. “We will try and harmonise some of the documents that are concurrently filed with SEC and NSE. We will also look at documents that are more related to SEC and those that are more related to NSE jobs and we harmonise them so that it will be more easier for issuers to file those documents,” Gwarzo asserted He warned that henceforth, incomplete application forms would be thrown out by the SEC, saying: “We informed operators that greater job is actually on them because if the application forms are incomplete, there is no way SEC will finish its review and revert back to them within five working days.
They have to do their own part. Any application filed with us that is incomplete will not be attended to again. So, issuing houses and operators must sit down and do their jobs very well so that within a maximum of three to four weeks, once application is filed, it is approved.” On direct cash settlement, Mr. Seyi Owotura, Managing Director, USL Registrar, explained that the important aspect of the initiative is that it is going to promote significant transparency and engender speed in capital market transactions. He added that the era of moving from one registrar and stockbroking firm to the other trying to validate dividend is gone. Gwarzo said that within the next six months, all registered operators would be required to have sponsored individual as required by SEC rules such that any operator that has less than the required number will not eligible to operate in the market.
The shares of Oando Plc and 24 other quoted companies appreciated at the close of trading on the floor of the Nigerian Stock Exchange on Wednesday, thus boosting the bourse’s capitalisation by N291bn.
The NSE market capitalisation appreciated to N9.644tn from N9.544tn, while the All-Share Index climbed to 27,900.44 basis points from 27,609.67 basis points.
A total of 371.455 shares valued at N3.49bn exchanged hands in 3,910 deals.
The Nigerian equities market continued its bullish run, which was punctuated by two consecutive days of decline. It advanced by 1.05 per cent to settle the year-to-date return at 3.82 per cent. There were 25 gainers and 13 losers.
Oando topped the gainers’ list, advancing by 9.90 per cent to close at N8.55.
May & Baker Nigeria Plc, Linkage Assurance Plc, Red-Star Express Plc and Glaxo Smithkline Consumer Nigeria Plc followed on the gainers’ table, appreciating by 9.84 per cent, 7.41 per cent, five per cent and 4.97 per cent, accordingly.
However, C & I Leasing Plc topped the losers’ chart, depreciating by 8.22 per cent to close at N0.67. This was followed by Law Union and Rock Insurance Plc, Livestock Feeds Plc, Union Bank of Nigeria Plc and Africa Prudential Registrars Plc, which depreciated by 4.76 per cent, 4.71 per cent, 2.91 per cent and 2.17 per cent, respectively.
At the close of trading, all sector indices recorded appreciations aside of the NSE industry index, whch traded flat. The NSE food/beverage index fared the best, with a gain of 1.99 per cent.
Commenting on the market outcome, analysts at Meristem Securities Limited, in a post, said, “We attribute the day’s gain to positive sentiments towards some large cap stocks such as Guaranty Trust Bank Plc, FBN Holdings Plc, Nestle Nigeria Plc and Nigerian Breweries Plc gained 4.07 per cent, 3.65 per cent, 3.12 per cent and 2.07 per cent, accordingly.
“We also note the improved sentiments towards healthcare stocks in recent weeks.”
In the Treasury bills space, bullish sentiments replaced the bearish sentiments witnessed in the last two trading days , as average yield declined, albeit marginally, by 0.06 per cent to close at 20.81 per cent. The one-month (0.02 per cent), 12-month (0.05 per cent) and six-month (0.21 per cent) instruments recorded yield advancements, while the six-month and three-month instruments declined by 0.03 per cent and 0.56 per cent, accordingly.
Similar sentiments were recorded in the treasury bonds market as the average bond yield declined marginally by 0.04 per cent upturning Tuesday’s increase, to close at 16.87 per cent. Six instruments recorded yield advancements, two declined, while all others traded flat.
The naira closed flat at 386 against the United States dollar on the parallel market on Monday, the same rate it closed on Friday.
This was despite a $457.3m injection into various segments of the forex market by the Central Bank of Nigeria on Monday.
The central bank has continued to supply into the foreign exchange market. It had supplied over $380m into the forex market last Monday.
Before appreciating to 386/dollar on Friday, the local unit had closed at 390/dollar daily consecutively between last Tuesday and Friday.
According to financial and currency experts, the naira’s outlook remains stable in the near term as the regulator steps up efforts to improve dollar liquidity and achieve exchange rate convergence.
Critics of CBN policies have, however, said the regulator may not be able to sustain steady supply of forex into various segments of the market over a long time.
The naira closed at 305.60 to the dollar on the interbank market on Monday, same level it did on Friday.
The Global Economist, Renaissance Capital, Charles Robertson, described the official rate of the naira as a “fair value”.
He suggested that the value might need to be weaker to attract foreign investors into the country.
According to Robertson, exchange rate issues are making Nigeria to underperform its peers in East Africa.
He, however, said the country would make significant improvement in ease of doing business and corruption data over the next one year owing to recent positive steps by the Federal Government.
A currency expert at Ecobank Nigeria, Mr. Kunle Ezun, believes the CBN’s policies are yielding result. He said the foreign exchange window tagged ‘Investors/Exporters FX Window’’ recently created by the apex bank was a good development.
Ezun, however, said it was too early to determine the amount of forex inflows going through the window.
“We expect the naira to trade within the prevailing band in the coming days, but investors are still worried over the multiplicity of exchange rates in the market,” one senior currency trader told Reuters.
The CBN has been intervening aggressively since February to try to narrow the spread between the official and black market rates and has sold more than $4bn.
But the CBN said on Monday that the lull witnessed in the forex market last week had been terminated by the injection of $457.3m into various segments of the market.
In a statement, the regulator said a breakdown of the offer indicated that both spot and forwards garnered the sum of $267.3m while the wholesale segment got $100m.
The regulator said the SMEs and invisibles segments comprising of basic travel allowance, tuition fee and medical got $50m and $40m respectively.
Meanwhile, the volume of trading on the “Investors and Exporters FX Window” in the past three weeks on the FMDQ platform has reached the sum of $600m.
This includes the amount sold by both the CBN and autonomous sources.
The Acting Director, Corporate Communications, CBN, Isaac Okorafor, said the level of activities in the market was encouraging.
Okorafor said the Investors and Exporters FX Window segment had recorded significant volume of activities.