Economic News Update

Business & Economic News Update: Monday 25th September, 2017


CBN to Mop Up N123.5bn

Despite system liquidity in deficit on all trading days of the week, the central bank continued with its daily OMO mop-ups, which took place on four days of the week. Also, activities in the treasury bills market stayed soft last week on account of the weaker liquidity levels.

A breakdown of the activities during the week by Afrinvest West Africa Limited, showed that on Monday, average rate on benchmark tenors settled at 17.6 per cent, marginally down by one basis point, from the preceding Friday, as buy sentiment on shorter tenored instruments offset the impact of sell offs recorded across longer-dated bills.

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NSE, SON to enforce engineering codes, standards

The Nigerian Society of Engineers and the Standards Organisation of Nigeria have resolved to work together to enforce engineering codes and standards among practitioners across the country. Both organisations vowed to ensure the effective implementation of codes and standards in the engineering profession considering its benefits to the general public.

Speaking at a workshop organised by the NSE and SON, with the theme, ‘Mobile Storage Vessels and Photovoltaic Standards’ in Abuja, the President, NSE, Otis Anyaeji, explained that codes and guidelines were the technical standards for promoting safety, reliability and efficiency in engineering.

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Capitals inflows push I&E FX window to $11.2b

The Investors’ and Exporters’ (I&E) Forex Window has attracted $11.2 billion as at September 15, a report by FBN Capital, the investment and research arm of FBN Holdings, has said. The foreign exchange reserves which currently stand at $33 billion is expected to cover 8.1 months imports, when imports of services are added, it said.

The research firm said: “The pick-up in oil production has been an obvious positive for accumulation. Officials are encouraging the view that it is back at, or close to the 2.0 million barrels per day level. Further, the FGN may well return to the Eurobond market this year. The heavily-oversubscribed Iraqi sovereign issue last month without US guarantees was a reminder of the strength of the market.”

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Despite Challenges, Analysts Bullish on Banking Stocks

Analysts at   FBN Quest said despite the subdued loan growth picture, banks have been able to deliver strong revenue and earnings growth, capitalising on pricing and foreign exchange (fx)-related gains. “H1 2017 profit before tax (PBT) growth averaged 32 per cent thanks to double-digit growth on both revenue lines.

We expect the trend in H1 to carry on into H2 such that loan growth by the end of 2017 averages a modest four per cent. Having rebounded strongly in 2016 to an average of 18.6 per cent, we forecast the return on average equity (ROAE) for our universe to decline to 17.3 per cent due to base effects: fx-related gains, though visible in 2017, are not as significant as they were in 2016. Our 2018E average ROAE forecast is 16.5 per cent.  GTBank and Stanbic IBTC Bank are forecast to deliver ROAEs well above the sector-average, in the 27-35 per cent range over the next two years,” they said.

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Merger: World’s largest brewer to increase Nigerian equity stake to 75.1%

The world’s largest brewer Anheuser-Busch InBev will increase its majority equity stake in its Nigerian main business, International Breweries Plc, to 75.1 per cent. This will happen after ongoing consolidation of its businesses in the country into a single entity.

Anheuser-Busch InBev has already received the regulatory approvals from the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) to merge its businesses in the country in a strategic move to upend competition and consolidate its base for further expansion into  sub-Saharan Africa. Under the arrangement, three indirect Nigerian subsidiaries of Anheuser-Busch InBev-International Breweries Plc, Intafact Beverages Limited and Pabod Breweries Limited, will be merged.

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NAICOM introduces four operational guidelines

The National Insurance Commission has introduced four different forms of operation guidelines in the insurance sector.

They are the Web Aggregators Operational guidelines; State Government’s Implementation of Compulsory Insurance (or State Financial Advisers) guidelines; Independent Agents Operational guidelines; and the Mutual Organisations, Associations, Community Based, Micro guidelines. The Commissioner for Insurance, Alhaji Mohammed Kari, said that NAICOM decided to expose the draft guidelines to address the issue of low insurance penetration in the market.

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‘Brokers can generate S1m in Lagos’

Brokers can make about $1 million yearly in Lagos State, Mr. Gboyega Olanbiwoninu, Head, Business Development, Scib Nigeria & Co. Limited, a firm of Insurance Brokers, has said. A report from the National Insurance Commission (NIACOM) said   insurance premium stood at N318 billion (or $1.1 million) last year.

He spoke on the sideline of a summit on insurance companies by the Lagos Chamber of Commerce & Industry (LCCI) and the Lagos State Safety Commission to keep Lagos safe and grow the insurance sector. Olanbiwoninu underscored the role of insurance in developed economies, noting that in most developed economies, every aspect of life is insured. He recalled his experience in Switzerland where a compulsory students’ insurance was undertaken.

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20,684 Assets Valued at N392bn on Collateral Registry  

The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele has revealed that movable assets valued at N392 billion have been registered on the National Collateral Register (NCR) as at August 24, 2017.

According to him, 136 financial institutions, 22 commercial banks, 106 microfinance banks, one non-bank financial institution, three merchant banks, three development finance institutions and one non-interest bank have registered 16,236 financing statements for 20,684 movable assets on the NCR as at the aforementioned date.

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Red Star Express to transit to holding company

Red Star Express Plc is concluding arrangements to transit from its group structure to a holding company as the leading logistics and courier company seeks to raise new capital to boost its operations. Its Chairman, Dr Mohammed Koguna, said the company plans to change its operating structure from group to holding company to reflect its business expansion and other emerging opportunities.

According to him, the change to holding company is necessitated by the various initiatives the company seeks to explore and the need to have a more structured accounting system. “These are part of the company’s expansion plans aimed at taking full advantage of business opportunities,” Koguna said.

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Power firms, gas producers disagree on dollar-denominated pricing

The denomination of the price of gas sold to electricity generation companies in the United States dollars is sending ripples across the entire value chain of the Nigerian electricity supply industry.

The Gencos have raised concern about the issue, with the distribution companies also worried that it has contributed to a major mismatch between the invoices they receive and the revenue they collect from consumers. But gas producers said their contracts should be denominated in dollars because their plants were executed in the same currency.

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Nigerian Enamelware doles out 12.67m bonus shares

Nigerian Enamelware Plc has distributed 12.672 million ordinary shares of 50 kobo each as bonus shares to its shareholders, proportionately increasing the shareholdings of shareholders without any cash payment. The bonus shares were issued by the company by capitalising its reserves, drawing about N6.34 million from its retained earnings to pay for the newly issued shares.

The bonus shares were distributed to shareholders for one new ordinary share for every five ordinary shares held by each shareholder. The additional shares have been listed at the Nigerian Stock Exchange (NSE), thus increasing total outstanding shares of the company to 76.032 million ordinary shares of 50 kobo each.

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NAICOM to sack chief executives over unpaid claims

The National Insurance Commission (NAICOM) has revealed plans to work on statutory deposits of insurance firms to settle unpaid claims, while the chief executives of companies whose deposits are applied to such would be discharged from official duty.

This Commissioner for Insurance, Mohammed Kari, disclosed this at the ongoing Chartered Insurance Institute of Nigeria (CIIN) 2017 Professional Forum in Abeokuta, Ogun State. He noted that the Commission had received requests from claimants to apply companies statutory deposits to settle discharged claims, as stated in the law, stressing that the process had already commenced.

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Sukuk bond: No plan to Islamise Nigeria, says FG

The Federal Government has said that there is no plan to Islamise the country with the recent issuance of its N100bn Sukuk bond. The Minister of Finance, Mrs. Kemi Adeosun, said this on the sidelines of an investor conference organised by Stanbic IBTC Bank in Lagos.

Offer for subscription for the Sukuk bond closed on Friday. Adeosun stated that several countries of the world including South Africa had issued sukuk bonds in the past, and Nigeria’s plan to issue the sukuk bond started about six years ago, long before the current administration came into power.

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SPE: Nigeria spends over $10m daily on fuel import

About $10 million (about N3.6 billion) is spent on petroleum products import daily, the Society of Petroleum Engineers (SPE) has said In the Organisation of Petroleum Exporting Countries (OPEC), Nigeria is the sixth largest producer of crude oil but depends on refined product imports to oil the engine of the economy, a development analysts say not only drains the nation’s capital base, but also reduces the job opportunities for the teeming population.

Speaking in Lagos at the weekend, SPE Nigerian Council Chairman Saka Matemilola said the huge foreign exchange (forex) could have been used to develop other areas to create jobs. He said: “That is why it is important for the government to also ensure that the vision and the target of the country becoming self-sufficient in petroleum products by 2019 are given serious attention.”

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Nigeria-EU Trade Hits €20 Billion

Trade Counselor and Head of Trade and Economic section of the European Union (EU) Delegation to Nigeria & ECOWAS, Filippo Amato, has put the total value of trade between Nigeria and the EU in 2016 at €19.9 billion in 2016.

Amato disclosed this while briefing journalists ahead of the 6th edition of the EU-Nigeria Business Forum titled: ‘Youth as an Engine of Broad-based Economic Transformation,’ scheduled to hold in Lagos between October 5th and 6th.

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