The federal government monday unveiled new measures to turn around the Nigerian economy which last year plunged into its first recession in 24 years.
The Minister of Budget and National Planning, Udo Udoma who announced the measures at a government-private sector engagement forum on the Nigeria Economic Recovery and Growth Plan (ERGP) at the Presidential Villa, Abuja, said the new plan would enable Nigeria to attain a minimum GDP growth rate of 7 per cent within the plan’s period The minister said the programme would be implemented between 2017-2020.
In designing the plan, Udoma said government consulted widely and received inputs from all segments of the Nigerian society including the states.
According to him, some of the 34 key actions selected for immediate implementation were already yielding results, especially the reforms in agriculture and solid minerals.
He said the government would tackle the constraints to growth, noting that Nigeria’s growth faces various supply constraints including fuel, power, foreign exchange and even business unfriendly regulations.
He assured his audience that the strategies were designed in such a way that they would overcome the bottlenecks that impeded growth in the past.
The minister also pointed out that government would leverage on the private sector, adding that economic recovery and transformative growth cannot be achieved by the government alone.
He said: “Economic recovery and transformative growth cannot be achieved by the government alone. “It is essential to harness the entrepreneurial nature of Nigerians from the MSMEs to the large domestic and multinational corporations.”
Udoma further listed the principles of the plan to include: “Promoting national cohesion and social inclusion: the ultimate beneficiary of more inclusive growth is the average Nigerian man and woman.
“Allowing markets to function: we recognise the power of markets to drive optimal behavior among market participants. The plan prioritises the use of markets as a means of resource allocation where possible and supporting a more business friendly economic environment.
“Upholding core values: the economic recovery and growth plan is rooted in the core values that define the Nigerian society and are enshrined in the 1999 Constitution, notably discipline, integrity, dignity of labour, social justice, religious tolerance, self-reliance and patriotism.”
According to him, the goal is to have an economy with low inflation, a stable exchange rate, and diversified and inclusive growth.
He listed the immediate priorities of the recovery plan as agriculture and food security, energy (power and petroleum), small businesses and industrialisation, and stabilising the macroeconomic environment. “There will be a major emphasis placed on the implementation, monitoring and evaluation of this plan, and also the establishment of a specially staffed delivery unit to drive the implementation of the NERG plan,” he added.
The Central Bank of Nigeria (CBN) monday advised all banks and their external auditors to adhere to Rule 9 (Application of International Standard on Auditing (ISA) 701 – (Communicating Key Audit Matters in the Independent Auditor’s Report) of the Financial Reporting Council of Nigeria (FRCN).
The rule requires independent auditors of listed and unlisted entities to comply with the requirements of ISA 701 for audit of financial statements for periods ending on or after December 15, 2016 and June 30, 2017, respectively.
The central bank stated this in a letter titled: “Application of International Standard on Auditing (ISA) 701 (Communicating Key Audit Matters in the Independent Auditor’s Report) in the Banking Sector.”
The letter with reference number: BSD/DIR/GEN/LAB/10/006, dated February 6, 2017, was addressed to all banks and their external auditors.
It explained: “The attention of all banks and their external auditors is hereby drawn to the Rule 9 (Application of International Standard on Auditing (ISA) 701 – Communicating Key Audit Matters in the Independent Auditor’s Report) of the Financial Reporting Council of Nigeria (FRCN) which requires independent auditors of listed and unlisted entities to comply with the requirements of ISA 701 for audit of financial statements for periods ending on or after December 15, 2016 and June 30, 2017, respectively.
“In order to create a level playing field for the implementation of ISA 701 in the Nigerian banking industry, the CBN has obtained the concurrence of the FRCN for external auditors of all banks (both listed and unlisted) to comply with the requirements of the new standard for audits of financial statements for periods ending on or after December 15, 2016.
“Accordingly, the auditors’ reports accompanying audited financial statements of all banks for the applicable periods should be compliant with ISA 701.” Meanwhile, the central bank in its revised “Guidelines for Direct Debit Scheme in Nigeria 2017,” among other things, stated that payment service providers must be duly licensed by the CBN and subject to electronic payment guidelines.
“The payment service providers shall execute direct debits in line with the instructions on the direct debit mandate. It is the responsibility of the Payment Service Provider to give information, advice and guidance on all aspects of the scheme to the biller,” it added.
The European Union Commission says it is offering £4bn credit to Nigeria and other members of the Economic Community of West African States to cover risks arising from investments in digital economy.
It said the credit, globally known as the European Fund for Strategic Investment, would trigger private investment in digital economy.
The European Commissioner for Digital Single Market and Vice President of the European Commission, Andrus Ansip, said that the requirements for accessing the fund included bankability and appropriate business plans.
Ansip, a former Estonian Prime Minister, stated this on Saturday in Lagos, two days after leading a delegation of the European Union to Nigeria.
He told our correspondent that the fund became necessary given that more than six per cent of Africa’s Gross Domestic Product came from the digital economy.
“I am a firm believer in using technology to promote sustainable development, to reduce socio-economic inequalities, and to give everyone access to digital opportunities. Nigeria’s digital environment and ecosystems are excellent places to make some headway with the (£4bn) funding,” he added.
According to him, its implementation has been successful in growing the digital economy in the EU.
The digital economy focuses on getting people access to affordable broadband, promoting digital skills and literacy, supporting digital entrepreneurship and encouraging cross-sector digital services such as e-government, e-health and e-agriculture.
The EU commissioner said that the digital economy was contributing up to eight per cent of the GDP of the G-20 major economies, powering growth and creating jobs in mostly European nations.
Ansip stated that more significant for Nigeria was the need to create the right regulatory environment than the fund, adding that technology may just become its major revenue earner.
“It is about investing in digital infrastructure, developing the right digital skills, helping emerging technology start-ups to grow and scale up, remarkably similar challenges to those we face in Europe as we build a digital single market,” he added.
He also said Africa’s collaboration with the EU on the single digital market would help bring down barriers to unlocking online opportunities.
Ansip said that the EU single market offered European citizens and businesses significant freedom and the right to travel trade or operate across the member countries.
“Connectivity is vital for unlocking digital potential. More people online means more opportunities for businesses and digital entrepreneurs; Nigeria is no exception, nor is Europe,” he added.
Five Nigerian banks – First Bank of Nigeria Limited, Zenith Bank Plc, Guaranty Trust Bank Plc (GTBank), United Bank for Africa (UBA) Plc and Access Bank Plc – have been named among the top 500 global banking brands.
The Banker magazine of the Financial Times and Brand Finance, London, said this in a statement yesterday.
FirstBank was named as the most valuable banking brand in Nigeria in the report.
According to the country representative of The Banker magazine, Mr. Kunle Ogedengbe, FirstBank led four other Nigerian banks in the global ranking.
With a $301 million brand value, FirstBank ranked 357, followed by GTBank, which was ranked 395 with a brand value of $258 million. Zenith Bank was ranked 414 with a brand value of $247 million, Access Bank was in 476th place with a brand value of $182 million while UBA with a brand value of $172 million ranked 487 in the world.
According to the chief executive of Brand Finance, David Haigh, the brand value is the amount a third party will need to pay in using the brand name.
Explaining the methodology for the ranking, the editor of The Banker, Brian Caplen said: “Brand Finance employs a discounted cashflow technique to discount estimated future royalties at an appropriate rate to arrive at a net present value of a bank’s trademark and associated intellectual property – its brand value.”
Caplen stressed that the process involved five steps of obtaining brand-specific financial and revenue data; modeling the market to identify market demand and the position of individual banks in the context of all other market competitors; establishing the royalty rate for each bank; calculating the discounted rate specific to each bank, taking account of its size, geographical presence, reputation, gearing and brand rating; and discounting future royalty stream (explicit forecast and perpetuity periods) to a net present value – the brand value.
He said the approach was used for two reasons: “It is favoured by the tax authorities and the courts because it calculates brand value by reference to documented third-party transactions and it can be done based on publicly available financial information.”
Globally, deputy editor of the magazine, Joy Macknight said the Industrial and Commercial Bank of China was number one with a brand value of $47.832 billion followed by Wells Fargo of the United States with a brand value of $41.618 million.
The top ten banking brands in the world were shared by four countries, China and the U.S. with four each while the United Kingdom and Spain got one each.
The other eight banks in the top ten were China Construction Bank, JP Morgan Chase & Co., Bank of China, Bank of America, Agricultural Bank of China, Citibank (USA), HSBC (UK), and Satander (Spain).
Of the top 50 countries in the world, only four African countries made the list. These are South Africa (26), Nigeria (42), Egypt (46) and Morocco (47).
First Bank was the only Nigerian bank in the top 10 banking brands in Africa along with nine others banks from South Africa, Egypt and Morocco.
In its deliberate effort to protect the interest of the insuring public and safeguard the image of insurance sector, the National Insurance Commission (NAICOM) last year compelled some operating firms to settle a total of N5 billion worth of claims to the members of the insuring public. The claims were paid following the resolution of 218 cases of complaints filed against some insurance firms by policy holders at the NAICOM’s complaint bureau office.
NAICOM during the period under review, received a total of 413 complaints from aggrieved policy holders and resolved 218 cases, which resulted in the settlement of claims worth N5,475,174,716.63 to the aggrieved policy holders by the insurance companies.
NAICOM’s head, Corporate Affairs, Rasaaq Salami, said in a statement that in resolving the disputes, the Commission held adjudication meetings and had direct contacts with all the parties involved, adding that NAICOM is at the verge of resolving a total of 650 ongoing cases from 2014.
He assured the insurance public that NAICOM would continue to strive hard to ensure protection of policyholders, beneficiaries and third parties of insurance contracts.
Giving break down of how the cases were resolved, Salami, said that not all resolutions were in favour of the complainants as in some cases, the underwritters were right in repudiating claims.
“A case was withdrawn because it was found to be fraudulent, five cases were referred to Pension Transition Administration (PTAD) over non payment of pension while another one was transferred to National Pension Commission (Pencom).
“While cases that are found to be subjudice were not treated but left to the courts to do the needful, cases not resolved are still being looked at by the Complaint Bureau Unit in the Commission.”
The Commission urged aggrieved members of the public to send their insurance complaints to it through email on: contact@naicom.gov.ng.
Over 300 investors of Partnership Investment Plc whose stocks total N4.8 billion have urged the nation’s capital market regulator to ‘wield the big stick’ and ensure that investors are protected from suffering losses arising from fraudulent actions. The investors who used partnership Securities Limited as their broker were persuaded by the company to deposit their portfolio with the Partnership Securities Deposit Account (PSDA) for trading activities.
PSDA allows investors to deposit their portfolio with the company for trading while the company pays the investor interest for the use of his shares. Also, the value of the shares in terms of dividend is maintained while the usual tenor of such investments is 365 days.
According to investors, the recent revelations in the market has revealed that the company is about to deny them of their shareholding since the company has no intention of returning the stocks at maturity. Speaking at a press briefing in Lagos recently, one of the investors, Sola Alabi whose investment portfolio worth N36 million has been stuck in the company, explained that when it was obvious that the company was no longer following the terms of agreement, as he had written to the company last year, demanding a termination of the investment.
According to him, he requested that the shares should be returned to the Central Securities Clearing System to enable him to claim the shares but the request was not granted.
The National Coordinator, Standard Shareholders Association, Godwin Anono, who invested the sum of N160 million explained that after the PSDA agreement, he received payment on the initial sale of his shares.
He however added that the company has subsequently defaulted on payment. Another investor who happened to be a widow, explained that her husband invested the sum of N4.1 million in the company.
“Even organised and regulated institution can defraud investors, not only MMM. We were not driven by greed. It is our stocks and a topmost brokerage firm is involved in this mess.”
Bitcoin transactions in Nigeria have been hovering at over $1million weekly since the beginning of 2017, says LocalBitcoins.com.
The site showed that the number of Bitcoin exchange in Nigeria in the last 30 days was almost equal with the figure for the entire Eurozone.
According to Alexa.com, which provides website traffic statistics, 16 percent of LocalBitcoins.com’s visitors are currently located in Nigeria.
The founder, BitcoinNow, Davidson Atere-Roberts, however, said Nigeria and Africa generally are showing a huge sign of optimism for Bitcoin trading.
“The reality is that we live in the technology era and technology will continue to disrupt whatever comes across and that includes money. Global Bitcoin is still evolving into mainstream finance, so expectedly Africa is still at the nascent age of adoption and acceptance,” he said.
Following the plummeting oil prices, limited access to foreign exchange, high inflation, low investor confidence (both local and foreign), FMDQ OTC Securities Exchange (‘FMDQ’ or the ‘OTC Exchange’), on Thursday reported a 17 percent drop in market turnover in 2016.
FMDQ saw its turnover decrease from ₦137.43trillion in 2015 to ₦113.66trillion in 2016, a year-on-year (YoY) decline of 17.00%. However, despite the overall YoY decline, the OTC Exchange experienced positive growth in the Foreign Exchange Derivatives product line, propelled by the introduction of the OTC FX Futures product into the market.
Trading activities in T.bills contributed the largest to overall turnover, accounting for 40.00% of the market. Secured market transactions (Repos/Buy-backs) accounted for 27.00percent, whilst FX market transactions accounted for 22.00percent, Bonds, 8.00percent and Money Markets transactions (which include Unsecured Placement & Takings, Commercial Papers and Money Market Derivatives), 3.00percent, of overall market turnover. The turnover represents trades executed among Dealing Members, Dealing Members & Clients, and Dealing Members & the Central Bank of Nigeria. Though mindful of the economic headwinds, FMDQ looks ahead into 2017 with much enthusiasm. The OTC Exchange expects to continue to focus on its core mandate, leveraging on and garnering the collaborative support of its stakeholders, in order to foster economic development relevant to the growth of the Nigerian financial markets.
Chief among the initiatives which FMDQ will focus on for 2017 include the following: standardisation of repurchase agreements trading (with collateral management),new products development geared towards short-term and private companies’ bonds, financial markets education for FMDQ markets’ stakeholders, development of the non-interest finance (Sukuk) market, expansion of the fixed income and currency derivatives market, nigerian debt capital market development in line with the Capital Market Master Plan of the Securities and Exchange Commission.
Since the launch of FMDQ OTC Securities Exchange onto the Nigerian financial markets landscape in 2013, championed initiatives geared towards providing an enabling environment for the growth and development of the Nigerian fixed income, currencies and derivatives markets and the economy at large.
As a market organiser, the OTC Exchange has through its product and market development initiatives empowered the markets within its purview to enhance their global competitiveness, transparency and liquidity. As a self-regulatory organisation and front-line regulator of its Members’ activities, FMDQ has led strategic initiatives, ensuring that requisite and quality oversight is availed to make the Nigerian markets credible, in line with international standards. The year 2016, challenged and beleaguered with plummeting oil prices, limited access to foreign exchange (FX), high inflation, low investor confidence (both local and foreign), etc., had a significant impact on trading activities.
THISDAY investigations have revealed that the aviation industry in 2015 and 2016 lost over $2 billion investment from international financiers who wanted a stake in Nigeria air transport sector due to the prevailing economic downturn.
Considering the huge potential market for aircraft maintenance in Nigeria, THISDAY gathered that in mid 2015, one European based aircraft maintenance company opened discussions with a Nigerian carrier to establish Maintenance, Overhaul and Repairs (MRO) facility in Lagos. The company was said to have withdrawn from the deal, citing Nigeria’s volatile economy.
Also in 2015, an African airline, which has entry points in Nigeria was said to have commenced feasibility studies to locate MRO facility in Lagos to serve West African sub-region, but decided last year to locate it in Togo, targeting the Nigerian market.
“We gathered that Asky Airlines based in Lomé, Togo and shareholder, Ethiopian Airlines are planning to establish an aircraft MRO and training centre in Lome, Nigeria was first considered and the market is targeting Nigeria,” informed source told THISDAY.
The CEO of Ethiopian Airlines, Tewolde Gebremariam was quoted to have explained that Asky was in discussions with the Togolese government and that if approved, the MRO facility would service Boeing and Bombardier aircraft. The training facility would train back-office staff and cabin crew.
“Our main MRO hub remains in Addis Ababa and (we) will have regional MRO hubs in Lomé, Lilongwe and Kigali (home to partner RwandAir). Our planned Lomé MRO hub would maintain aircraft operating in Nigeria, Ghana, Côte d’Ivoire and Senegal,” Gebremariam.
During the said period, three international airlines withdrew their plans to partner Nigerian airlines and inject funds for their operation and training of technical personnel, with plans to introduce simulators for pilots training.
“We have discussed with three international airlines that were eager to buy stakes in our airline. They will bring in the technical support and inject funds into our company but later they become lukewarm and I have also decided not to go into any negotiation with any potential partner again because, looking at the recession, you will not get the actual value for your shares, as our economy is down now. They will be calling ridiculous amount of money. We have to rebuild our economy and I am optimistic that we will come out of this recession. When we stabilize then we can go into such partnership. The country is actually losing investment now; not only in aviation but in all the sectors of the economy,” industry source told THISDAY.
THISDAY also gathered that more international retailers plan to join Dufri at the nation’s international airports but such plans have been put in abeyance “because what is biting them hard is how to repatriate their earning because of the drastic fall of the naira,” explained a Federal Airports Authority of Nigeria (FAAN) official.
The official also disclosed that although Dufri has established its shops at the Lagos and Abuja international airports “but they are finding it difficult now. Their officials came and left on January 19, 2017. They are hoping that there will be a quick change in our economy.”
During media briefing by the Director-General of the Nigerian Civil Aviation Authority (NCAA), Captain Muhtar Usman on Monday he disclosed that some airlines have been in the process of obtaining Air Operators Certificate (AOC) with 18 firm applications and AOC certification process on-going, while nine are unfirm at the level of intent.
THISDAY also learnt that some of the airlines in the process of obtaining AOC might have lost their foreign backers because of the market uncertainty occasioned by the precarious economic situation.
“People are just waiting for things to turn around. I have also decided to hold on till next year when, hopefully, things will get better. People are just reluctant to invest here, but I believe it will get better,” one airline operator said.
The stock market opened February on a bearish note yesterday as investors’ sentiments remained dampened by weak corporate earnings by some companies. The Nigerian Stock Exchange (NSE) All-Share Index fell by 0.51 per cent to close at 25,903.55, extending the loss of the previous day.
Market operators said investors are being cautious as they await more corporate results for 2016 full year and quarterly performance. Already, Guinness Nigeria Plc, a leading brewing firm had announced a loss of over N4.6 billion for the half year to December 31, 2016. Similarly, Seven-Up Bottling Company Plc, declared a loss of N4.8 billion for the nine months ended December 31, 2016. Forte Oil Plc, which announced its full year results ended December 2016, posted a drop of 50 per cent in profit after tax and did not declare a dividend for the year.
“These results are serious concerns for shareholders who are not enthusiastic about increasing demand for stocks for now until positive results begin to come in to the market,” a stock dealer said.
In all, only nine stocks appreciated while 25 stocks depreciated yesterday led by Forte Oil with 5.0 per cent to close at N67.66 per share. Guinness Nigeria Plc and Unilever Nigeria Plc trailed with a decline of 4.9 per cent apiece. Forte had posted a revenue of N148.6 billion in 2016, up by 19.3 per cent from N124.6 billion in 2015. However, profit before tax fell by 24 per cent to N5.3 billion, from N7.0 billion, while profit after tax declined by 50 per cent to N2.9 billion, compared with N5.8 billion recorded in 2015.
While operating expenses declined by 2.9 per cent to N13.3 billion compared with N13.7 billion in 2015, net finance cost soared by 154.9 per cent from N1.7 billion to N4.3 billion, a development that affected the bottom-line.
Similarly, a jump of `166 per cent in net finance cost from N1.723 billion to N4.578 billion led to the loss of N4.6 billion recorded by Guinness Nigeria. However, the Managing Director/Chief Executive Officer of Guinness Nigeria Plc, Mr. Peter Ndegwa, said there are many bright spots for the company but that the challenging economic environment and high finance charges impacted results.
