The Central Bank of Nigeria says it is examining the potential and future risks of the recent exit of the United Kingdom from the European Union.
The UK had a few days ago exited the EU following the results of a referendum it conducted.
The Deputy Governor, Economic Policy, CBN, Dr. Sarah Alade, said the central bank was monitoring the Brexit development but noted that the perspective of the risks facing Nigeria’s financial system as a result of the situation was a welcome development.
She spoke in Lagos at a one-day breakfast session focusing on the implications of Brexit on the Nigerian banking industry.
The forum was organised by the Centre for Financial Studies, an arm of the Chartered Institute of Bankers of Nigeria.
Alade, who was represented at the event by the Director, Monetary Policy, CBN, Mr. Moses Tule, said, “At the CBN, we are trying to dimension what the risk areas are. Certainly, we will very much like to key into any new developments either seminars or symposia that may be organised on this area in the country.”
She added, “But in the meantime, as the European Union itself is trying to dimension what the risks are, we are doing the same thing here because it’s a volatile situation. The Brexit is not going to be as chaotic as the 2008 global crisis but it presents opportunities and losers.”
The President/Chairman of Council, CIBN, Professor Segun Ajibola, remarked that Brexit would impact trade agreements, global economic union, currencies and exchange rate regimes
He said, “For Nigerian banks, it throws open a number of pressing issues such as lending and borrowing relationship, entered into under the aegis of Europe, correspondence banking relationship, entered into on the strength of Europe, and its impact on bank customers whose deposits and assets are in affected currencies.
“It also throws up issues such as treatment to be given to the differentials in currency values in the books of banks under the International Financial Reporting System.”
The Chief Executive Officer, Proshare Nigeria Limited, Mr. Femi Awoyemi, said that the Federal Government and financial institutions needed an extensive analysis and recommendations on what he described as the “new society.”
Following the Brexit, the expert noted that there was the need to train currency dealers in financial institutions.
Awoyemi charged the CIBN to develop a curriculum to train new set of financial service providers as a direct response to the expected developments that would attend the unfolding scenarios in Europe.
Indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchanges, Oando Plc, has announced a profit after tax of N4.1bn for the three-month period ended March 31, 2016.
The results were delayed due to what the company described as an exhaustive audit process overseen by external auditors, Ernst & Young.
The firm noted in a statement that extension approvals regarding the financial statements were sought and received from the Securities and Exchange Commission and the Financial Reporting Council.
For the financial year ended December 31, 2015, the group reported a revenue of N161.50bn as against N92.91bn in 2014.
The group loss before income tax was N32.74bn as against a loss of N88.73bn recorded in 2014.
The N4.1bn profit after tax for the first quarter of 2016 represents 120 per cent increase compared to a similar period of 2015. The company’s financial highlights also indicate that turnover decreased by 34 per cent, with N64bn realised in the first three months of 2016 compared to N97.1bn for the same period last year.
Global crude pricing fluctuation, the firm said in a statement, had changed the corporate landscape for oil companies, and “has had far-reaching economic implications on Oando and many other indigenous firms in the industry.”
According to the firm, the Q1 results are a welcome contrast for investors and shareholders alike following its dismal 2015 financial performance, which was significantly impacted by impairments and foreign exchange pressures.
Commenting on the performance, the Group Chief Executive, Oando Plc, Mr. Wale Tinubu, highlighted the company’s drive to ensure profitability going forward.
He said, “This first quarter of 2016 demonstrates our dedication to return our business to profitability by the end of the year. We have implemented constructive corporate initiatives, which are driving forces for our business in this new global reality of economic restraint and lower oil prices in our industry.
“The successful and ongoing implementation of these initiatives reiterates our strategy of growth, deliverables and a return to profitability by the end of 2016.
He added, “As a group, we have placed our focus on growing our upstream higher margined business, while still holding fundamental interests in the midstream and downstream sectors. We look forward to a rewarding year, where we will solidify our aspirations and return to profitability.”
As oil prices gradually increased, Oando said it commenced 2016 with a reinvigorated strategy hinged on key corporate initiatives to drive the company back to profitability and ensure fiscal efficacy.
To optimise its balance sheet, the company said it focused on aggressive debt reduction and recapitalisation.
The group said it had successfully restructured its existing debt through a N94.6bn medium-term note with a local consortium with lower interest rates and a renewed five-year tenor.
Its upstream subsidiary, Oando Energy Resources, completed its 2015 year-end summary of reserves, recording a six per cent growth in 2P net reserves from 420.3 million barrel of oil equivalent to 445.3mmboe.
The Executive Chairman, Lagos State Internal Revenue Service, Mr. Olufolarin Ogunsanwo, says taxation is the future of Nigeria following the drop in oil prices.
He made the declaration in a keynote address at a symposium on taxation organised by the Lagos chapter of the Society of Women in Taxation, an arm of the Chartered Institute of Taxation of Nigeria.
The forum was tagged, ‘Tax education/career development for secondary school students in Lagos State.’
Ogunsanwo said, “Many states in Nigeria can no longer pay salaries as a result of over dependence on oil; It is therefore not out of place to say taxation is the future of Nigeria.”
According to the LIRS boss, a tax is an imposition by the government on individuals, corporations, goods and service which no direct benefits is derived but for the benefit of all.
He added that for any tax to be valid, it must be backed up by law.
The President, CITN, Dr. Teju Somorin, while presenting a paper titled: Choosing taxation as a profession’, said the first step in becoming a tax professional was to study a course in taxation.
She said, “The CITN is ensuring that taxation is studied in higher institutions at the levels of Ordinary National Diploma, Higher National Diploma and Bachelor of Science.
“There is a curriculum for both the OND and the HND programmes at the polytechnic. This curriculum was adopted by the National Board for Technical Education and you can also have a second degree in taxation.”
According to Somorin, prospective candidates can also become a member of the institute through professional examinations organised by the CITN, adding that “irrespective of the professional background, you can register to take the examination from the foundation level and you will qualify to be a professional in taxation.”
Meanwhile, the Executive Chairperson, Society for Women in Taxation, Lagos Chapter, Mrs. Dena-Rose Ajayi, explained that the objective of the symposium was to educate the youths, saying “as the tax leaders of tomorrow they need to imbibe the tax culture early in life.
Ajayi said she believed the participating students could imbibe the culture of taxation from the symposium
Despite the appreciable progress recorded in the foreign exchange market since the Central Bank of Nigeria (CBN) announced its new foreign exchange policy, manufacturers in the country have decried their inability to get the greenback to import raw materials for production.
They have therefore called on the federal government to create a special window to enable them access foreign exchange for importation of raw materials.
Speaking on behalf of his colleagues in a chat with journalists during a public lecture he delivered at the University of Lagos, the Group Managing Director of Vitafoam Nigeria Plc, Mr. Taiwo Adeniyi, enjoined the federal government to take urgent steps to address the matter to save the economy.
According to him, “The first half of the year was not good for manufacturers, a lot of policy changes have taken place but it is too early to begin to think that they will have any impact on businesses yet. On the 20th of last month when the CBN announced the new foreign exchange policy, a huge amount of dollars was released into the system and everybody thought it was going to continue that way.”
He added: “ As I speak to you now, we are made to do future placements for dollars. It is tenured 30, 90 days for anyone to be able to access the dollars. The question I asked them is if I am told I can only get the greenback every 90 days what happens before the 90 days? I should fold my hands and wait for what I don’t have guaranty I am going to get. For some time now we have bided for N282, N285/$ and we didn’t get it. All we were told is “your bid is not successful.”
He added: “Where should manufacturers go to get dollars to buy raw materials? We have repeatedly asked this question without an answer. We have asked the government to create a window for the real sector, not traders to access the dollar to get materials to produce and sustain the economy. If that does not happen we will remain where we are. Half year is gone, the second half is year and we still do not have direction.”
Government, he stated, can identify the real manufacturers by checking their status with the Manufacturers Association of Nigeria (MAN) and other organs of government. He advised the federal government to set up committees to visits local manufacturers to see what they are doing and arrange for them to get dollars for raw materials.
“In-fact we have been asked to fill foams with the Raw Materials Research Council (RMRC) to confirm what materials we need for production, that we have done. They issues licences for imports of raw materials, if you don’t have the licence how possible is it for you to import. They know who the manufacturers are, it is not rocket science, “he said.
The Central Bank of Nigeria said it has set aside N2.5bn for members of the National Youth Service Corps with good business ideas to actualise their dreams.
The N2.5bn, which was set from the N220bn Micro, Small and Medium Enterprises Development Fund, the bank said, would be disbursed to the corps members under the Youth Entrepreneurship Development Programme.
The CBN is targeting to create one million jobs through the YEDP, which is an initiative of the apex bank launched on March 15 this year by the governor, Mr. Godwin Emefiele.
The purpose of the programme is to address the challenges of youth unemployment in the country.
Under the YEDP, the apex bank, in collaboration with Heritage Bank Plc, will develop the entrepreneurial capacity of the youth as well as provide each of them with a maximum of N3m to operate a business.
The activities to be covered under the programme are start-ups and expansion projects in the agricultural value chain (fish farming, poultry and snail farming), cottage industry, mining and solid minerals.
Others are tourism, arts and crafts, Information and Communications Technology and any other activity that may be determined by the CBN.
Speaking during the event at the NYSC camp in Abuja on Thursday, Emefiele said the initiative would enable the CBN to conserve the huge foreign exchange, which was currently being spent to import food items.
He said each corps member was entitled to N3m, adding that their discharge certificates as well their degree certificates would be used as collateral to secure the loan.
The governor stated, “It is not a grant and it is a loan that must be repaid. We are determined to give support to the youth and I truly must thank the National Youth Service Corps, which has helped us to put together the first set of NYSC beneficiaries so that we can nurture them as young entrepreneurs, not as people who go into the world looking for jobs.
“We want to nurture them as people who are developing the entrepreneurial spirit and entrepreneurial skills; not only for their good, but also for the good of the country.
Emefiele expressed optimism that the corps members would not default in repaying the loan owing to the fact that they would not want to lose their certificates for N3m.
He added, “We do not anticipate that any of them fails. However, we have as collateral their NYSC certificates as well as their degree certificates. We know that our youths know the importance of their degree certificates as well as their NYSC certificates as collateral for this loan.
“I don’t think that somebody who has a degree certificate or HND certificate to get gainful employment or a gainful life will abandon his certificate or his NYSC discharge certificate just because he wants to take a loan and not pay back.”
The Director-General, NYSC, Brig.-Gen. Sule Kazaure, commended the CBN for initiating the programme for the corps members.
The Nigerian stock market closed the first half of the year with a growth of 3.3 per cent compared with a decline of 3.2 per cent in the corresponding period of 2015. Although the market ended on a bearish noted yesterday, in all, it recorded a growth at the end of first six months of the year. The Nigerian Stock Exchange (NSE) All-Share Index (ASI) closed at 29,597.79 on the last day of June, up from 28,642.25 at which it opened 2016.
Market capitalisation added N314 billion, rising from N9.851 billion to close at N10.165 trillion yesterday. Analysts said but for the rebound the market recorded recently following positive reactions to the new flexible foreign exchange policy of the Central Bank of Nigeria (CBN), the market would have ended the first half on negative note just last like last year.
After a bearish trend caused by policy flip flops, exchange rate uncertainty and budget delay, the market rebounded two weeks back following the new forex, policy bringing the year-to-date(YTD) growth to the positive territory.
Reacting to the development then, analysts at InvestmentOne Limited had said: “In the immediate, while we expect the ongoing optimism regarding a possible shift to a market-determined exchange rate regime to support market performance. We see the impacts of these events on market performance. However, in the medium to longer term, we see improved performance on the back of efficiency gains from an expansionary fiscal policy leading to improvement in aggregate demand.” However, profit taking set in reducing the YTD growth to 3.3 per cent yesterday.
The market closed with a decline of 0.7 per cent yesterday depressed mostly by Ecobank Transnational Incorpodated (-3.09 per cent), Seplat Petroleum Development Company Plc( (-2.94 per cent), FBN Holdings Plc (-2.51 per cent), United Bank for Africa Plc(-2.08 per cent); Forte Oil (-1.90 per cent); Zenith Bank (-1.44 per cent); Nigerian Breweries (-1.44 per cent), Dangote Cement (-1.03 per cent)c among others.
According to analyst at Dunn Loren Merrifield, “the current market trend suggests that, optimism that the new CBN FX policy would bring relief to the market particularly on banking stocks is beginning to fade as investor remains sceptical about the policy sustainability and transparency.”
Global oil benchmark, Brent crude, traded sharply lower on Monday, extending its declines following Britain’s vote to exit the European Union on Thursday.
The dip in the oil price comes as investors were worried about global energy demand and shunned assets perceived as risky in the aftermath of the Brexit decision.
Brent, against which Nigeria’s oil is priced, had hit the $50 per barrel mark for the first time in 2016 on May 26 and was as high as $53 per barrel few days after before dropping to $49 on June 13.
It stood at $46.31 as of 8.05pm on Monday, weighed by a rallying dollar and continued market uncertainty over Brexit.
Brent and US crude futures have lost about seven per cent since Thursday’s settlement after the so-called Brexit vote sent global risk assets plummeting on Friday as investors fled to safe havens such as the dollar, United States Treasuries and gold, according to Reuters.
Analysts at Goldman Sachs and other research houses sought to allay fears over the impact of the EU crisis on oil specifically, pointing out that Britain’s demand for fuel was negligible at the global level.
Oil prices rose slightly early on Monday on some of that sentiment, before slipping again. Market intelligence firm, Genscape’s report of a draw of more than 1.3 million barrels at the Cushing, Oklahoma, delivery point for US crude futures provided little support.
The dollar was up almost one per cent, near Friday’s three-month high, making oil and other commodities priced in the greenback less attractive to holders of the euro and other currencies.
“We feel that a market shock such as Brexit can often induce enough chart damage to force a major long liquidation phase,” Jim Ritterbusch of Chicago-based oil market consultancy, Ritterbusch & Associates, was quoted to have said.
Safetrust Mortage Bank Limited has declared an impressive N150.6m profit before tax (PBT) for the financial year ended 2015 representing an increase of 41.8 percent on the figure for the previous financial year on the account audited by Messrs KPMG. The declaration was made by the Chairman of the Board of Directors, Mr. Akin O. Opeodu in an address issued at the Annual General Meeting (AGM) of the Mortgage Bank held at Eko Hotel & Suites, Lagos on the 7th day of June, 2016.
Also declared by Opeodu was gross earnings of N1.8billion and total assets which stood at N9billion the while the shareholders’ funds stood at N2.8billion representing 1.52 percent growth over the previous financial year’s figure of N2.75billion. Following the impressive performance, the shareholders are to be rewarded with a good chunk of the profit, N84,337,500 as dividend at 5k per share.
Regarding the business outlook in the country, Opeodu said that, “we are continuously optimistic on the outlook of the 2016 financial year. Whilst business and customer confidence remain fragile, the level of activity and Government’s commitment to improving the real sector gives a base for the growth of the Nigerian economy”. But he warned that the country needed “to brace up for likely shocks by developing the appropriate resilience to such risks”.
The Chairman also advised that, “to ensure a sustained economic uplift, the 2016 FGN Budget must be fully implemented”, positing that “lower interest rate regime should be put in place to support economic activities, reform our Governance structure, improve on the efficiencies of our labour market and simplify our process for doing business.”
To brace up for better performance in 2016, he stressed that Safetrust had taken steps to diversify the revenue base while leveraging inherent opportunities in the outlook for continuous revenue growth. He maintained that the Mortgage Bank would also continue to strengthen its risk management capabilities to ensure effective mitigation of existing risk factors in their domestic operations.
Safetrust is managed by a 9-man Board of Directors that also has Mr. Yinka Adeola as Managing Director whose voluntary retirement was announced by the Chairman at the AGM while Mr. Akintayo Oloko, an Executive Director of the Bank was appointed by the Board as the new Managing Director.
Investors in the country’s capital market recorded a loss of N278bn on Monday as concerns that the market might plummet due to the decision of Britain to leave the European Union heightened.
Some traders said there was the worry that the Brexit might slow foreign interest in the market.
The Nigerian Stock Exchange market capitalisation on Monday dropped to N10.248tn from N10.526tn, while the All-Share Index also declined to 29,840.23 basis points from 30,649.66 basis points recorded on Friday.
A total of 40 stocks recorded losses, while 16 made the gainers’ chart.
The market recorded a turnover of N4.027bn from 375.221 million shares traded in 4,229 deals.
United Capital Plc, Zenith Bank Plc, Stanbic IBTC Holdings Plc, Forte Oil Plc and Seplat Petroleum Development Company Limited were the top five losers on the chart.
United Capital’s share dropped by N0.22 (7.94 per cent) to close at N2.32 from N2.52, while that of Zenith Bank lost N1.04 (6.12 per cent) to close at N15.96 from N17.
Stanbic IBTC also closed at N16.15 from N17, losing N0.85 (five per cent), while Forte Oil posted a decline of N10 (five per cent) to close at N190 from N200.
The share price of Seplat Petroleum fell to N331.60 from N348.97, losing N17.37 (4.98 per cent).
Other losers were Dangote Sugar Refinery Plc, Oando Plc, Ikeja Hotels Plc, Guaranty Trust Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, Flour Mills Nigeria Plc, AG Leventis Nigeria Plc, Sterling Bank Plc and Unity Bank Plc, among others.
Analysts said the stocks began the week on a negative footing as sell-offs across board prevailed. Asian markets shrugged off Friday’s global sell-off, while the European markets slid further as investors continued to weigh the impact of Britain’s decision. United States futures pointed to a lower open.
The NSE ASI and NSE 30 lost 2.63 per cent and 2.43 per cent, putting year-to-date returns at +4.19 per cent and +3.24 per cent, respectively.
The value of transactions was above May averages by 70 per cent, while the volume of transactions was below May averages by five per cent.
Fidson Healthcare Plc, Julius Berger Plc and GlaxoSmithkline Consumer Plc led the gainers chart, advancing by 9.91 per cent, five per cent and 4.97 per cent, respectively.
On Monday’s trading result, analysts at Vetiva Capital Management Limited said in the firm’s daily report, “Although we note the impact of broader downbeat global market sentiment, we believe today’s losses were largely fuelled by profit-taking across a handful of large cap stocks following the strength of the gains recorded in recent sessions. We think there’s still some room for profit-taking, and thus see a likelihood for another negative close in the session ahead.”
Lafarge Africa Plc have urged shareholders to leverage the Ashaka Cement’s voluntary tender offer, which provides opportunity for the minorities to participate in a much larger growth platform of Lafarge Africa to boost their portfolio.
Speaking at a shareholders forum in Lagos recently, Chairman, Lafarge Africa Plc, Mobolaji Balogun explained that the offer, which is currently on-going to Friday July 1, 2016, would enable the shareholders to move from being investors in Ashaka Cement with 1metric tones per annum (mtpa) cement production capacity to Lafarge Africa with 12mtpa and an additional 2,5mtpa due for commissioning by the end of 2016.
He added that the consideration offered for the tender is quite favorable to shareholders of Ashaka Cement.
“I encourage you and your members to accept the tender, which in simple terms creates the immediate and direct advantage of moving from investors in Ashaka Cement with 1mtpa cement production capacity to Lafarge Africa with 12mtpa and an additional 2,5mtpa due for commissioning by the end of 2016. “We continued to build on the successful completion of the Lafarge Africa asset consolidation transaction through some strategic initiatives, including increasing our shareholding in Ashaka cement to 82.46 per cent via a mandatory tender offer and acquisition of further stake in Unicem. On the recently concluded N60 billion dual series bond issuance, Balogun told shareholders that the issue comprises of a N26, 386,000,000 three year 14.25 per cent bond due 2019 (“the Series one bond”) and a N33, 614,000,000 five year 14.75 per cent bond due 2021 (“the series II bond”).
According to him, the proceeds of the bond issue will be used to part-refinance the debt of its wholly owned subsidiary, United Cement Company of Nigeria Limited (“Unicem”).
He pointed out that the dual-series issuance, the first of its kind and largest bond issuance by a corporate in Nigeria’s debt capital markets, was concluded, following a book build, with the order being oversubscribed.
He added that the transaction was Lafarge Africa’s second bond issuance in the Nigerian capital markets, having previously issued a N11.8 billion three year fixed rate bond in 2011.
Balogun said the bond affirms Lafarge Africa’s reputation as a prime issuer, adding that the proceeds of the issue would allow Lafarge Africa Plc part-refinance the debt of its wholly owned subsidiary, Unicem.
“We are grateful for the overwhelming support we have received from domestic institutional investors, especially the Nigerian pension funds. We also wish to thank the SEC for its support on the completion of the transaction.”
“These proceeds will deliver savings in financing costs to Unicem and Lafarge Africa. Unicem is currently undergoing a 2.5mtpa capacity expansion which will be completed by the end of 2016.”
