BusinessDay 31 Oct 2017

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38 BUSINESS DAY C002D5556 Tuesday 31 October 2017 NEWS Hunt for frontier yield may hasten Nigeria’s return to... Continued from page 1 bond indexes, Barclays and JP Morgan. The two indexes expelled Nigeria due to currency restrictions that sparked a liquidity crisis, hammered foreign investors and made it difficult to repatriate profit. US-based JP Morgan kicked Nigeria out of its frontier bond index in October 2015 and this was soon followed by an expulsion from Barclays bank’s emerging market local currency index in February 2016. “Investors are more comfortable with where the FX liquidity is today and more confident to come and take advantage of opportunities in Nigeria, although index eligibility is still an issue,” said Ignacio Temerlin Head of Africa Debt Capital Markets, Citi Bank. The latest proof of investors’ appetite for risk assets with high yields came when Tajikistan, a small nation in Central Asia with a population of 8.7 million, sold a 10-year $500 million bond at 7 percent in September 2017. It was oversubscribed. The bond represents 7 percent of Tajikistan’s gross domestic product and dwarfs the $74 million the country holds in foreign exchange reserves. Nigeria’s retention on the Morgan Stanley Capital International (MSCI) frontier market index after some 17 months of deliberations is also likely to herald a speedy embrace by Barclays and JP Morgan, analysts say. “The market trend backs up a possible re-inclusion on the JP Morgan bond index,” said Tajudeen Ibrahim, head of research at Lagos-based Chapel Hill Denham. “We have seen increased foreign inflow to fixed income, as bond prices are rallying and yields are falling. Combine those with the stabilising foreign exchange market and the increased foreign inflow into bonds, and you are more convinced that it’s only a matter of time before we are restored on that index,” Ibrahim said by phone. Bond yields across all tenors cooled Monday, with exception to the 10.70 30-MAY-2018 bond which gained 0.06 percent and the 7.00 23-OCT-2019 which gained 0.01 percent. Other tenors were flat, according to data obtained from the FMDQ website. Portfolio inflows into bonds totalled $USD57.8 million in May, according to CBN data, a month after the Investor and Exporter window was created. Before May, there were no foreign inflows into Nestle, Dangote Flour revenues surge as FMCG firms... Continued from page 1 Dangote Sugar Plc, Dangote Flour Plc, and NASCON Plc. It is generally accepted economic principles that a weaker currency makes it cheaper for foreign buyers to purchase domestic goods and so makes such goods more attractive and benefits manufacturers as a result. “Nestle and its peers have intensified their export strategy to partly offset the impact of naira depreciation on their cost of imported raw materials,” said Tajudeen Ibrahim, head of research at Chapel Hill Denham Limited. Drilling down into the figure shows Nestle’ Nigeria’s 43.10 percent bonds. The month of June also recorded zero inflows. However, in July, the month with latest data, inflows came to $USD17 million. Ibrahim of Chapel Hill Denham expects subsequent months to seen substantial inflows, as the I & E window continues to lift confidence and puts the debilitating liquidity crisis to bed. In a statement last week, MSCI said Nigerian stocks will remain part of its frontier index and are no longer under review for a possible demotion to a standalone status, following the improved foreign exchange liquidity triggered by newly introduced Investors and Exporters window. The naira gained 0.25 percent to N359.91 per US dollar Monday at the said I&E window, according to data provided by trading platform, FMDQ. The Central Bank of Nigeria (CBN) in April, 2017 established the Investors and Exporters (IE) window that allowed for FX transactions at market determined rates in a bid to ease the concerns of foreign investors. The window has handled over $15 billion since inception, according to data compiled by BusinessDay. Following the creation of the I&E window, the MSCI decision on whether to retain Nigeria in its Frontier market indexes in June, 2017, was postponed to ascertain jump in profit to N185.52 billion was enough to cover a 41.10 percent rise in cost of sales as net income surged by 4643 percent to N22.14 billion in the period under review. A breakdown of the Nestle’s sales for the period shows that export revenues was up 46 percent to N1.9 billion in the period under review. Dangote Flour Mills sales spiked by 101.15 percent to N100.28 billion while net income surged by 359 percent to N13.05 billion as at September 2017. Dangote Flour, up 10.19 percent was the best performer on the Nigerian Stock Exchange (NSE) yesterday. An August, 2017 visit by business day to the Seme border in the effectiveness of the IE window. “The MSCI decision is like (the latter’s) approval of the I&E window,” said Ayodeji Ebo, managing director of financial advisory firm, Afrinvest Securities Limited. “With the MSCI hurdle crossed, returning to the JP Morgan bond index is the next stop,” Ebo said by phone. In October 2012, Nigeria became the second African country after South Africa, to be listed in the JP Morgan bond index, which tracks bond yields in emerging markets, after removing a requirement that foreign investors hold government bonds for a minimum of one year before exiting. However, things turned sour for the continent’s most populous nation, when in October 2015, the United States-based lender kicked it out of its index- tracked by funds with a combined value in excess of $200 billion- due to the lack of liquidity and transparency in the nation’s foreign exchange market. This FX crisis and Nigeria’s removal from the index, forced several global funds to sell Nigerian bonds, triggering an unprecedented capital flight, raising borrowing cost for the government and creating panic in an already constrained economy, which later pushed the economy into a debilitating recession. Improved oil prices and production and the creation of a separate window for Investors called the Investors and Exporters window have boosted liquidity, staging a comeback for investors. Lagos found that trucks loaded with goods coming from Nigeria are passing through the border to other West African countries. “A lot of Dangote trucks, Flour Mills and others are coming from Nigeria carrying flour, sugar and the likes to sell across the West Africa region,” said Monday Akpa, a Nigeria who is trading at the Seme boarder. However, the lower Naira has raised the price of imported raw material as the cumulative cost of sales of the 8 firms spiked by 41.45 percent, more than double the 15.98 percent September inflation figure. FMCGs were hard hit by dollar scarcity from a sharp drop in oil prices in 2016 which made it difficult for them to import raw Buhari to restructure NIA, sacks Lawal, Oke.... Continued from page 4 L-R: Tiko Okoye, managing director/CEO, Fortis Microfinance Bank; Akin Lawal, managing director/CEO, NPF Microfinance Bank; Tony Okpanachi, managing director/CEO, Development Bank of Nigeria (DBN), and Godwin Ehigiamusoe, managing director/CEO, LAPO Microfinance Bank, during the commencement of lending activities by DBN to Participating Financial Institutions in Abuja, yesterday. materials and equipment to meet production. Margins were also hurt due to the economic downturn. However, there is relief for these firms as the introduction of the investors’ and Exporters’ window by the apex bank in April and the subsequent liberalization of the foreign exchange market has resulted in increased dollar supply. Analysts at FBN Quest expect Nestle, like its peers, to continue to contend with the macroeconomic headwinds in 2018. “In our view, sector leaders like Nestle are likely to fare better compared with competition. Given recent foreign exchange interventions by the central bank we believe imported competition will ultimately start to stage a comeback,” said analysts at FBN Quest. medical trip to London. Adesina noted that the President had studied the report, “which investigated allegations against the suspended Secretary to the Government of the Federation, Babachir David Lawal, and the Director General, NIA, Ayo Oke. “The President accepted the recommendation of the panel to terminate the appointment of Mr Lawal, and has appointed Mr Boss Mustapha as the new Secretary to the Government of the Federation. The appointment takes immediate effect.” According to Adesina, “President Buhari also approved the recommendation to terminate the appointment of Ambassador Oke, and has further approved the setting up of a three-member panel to, among other things, look into the operational, technical and administrative structure of the Agency and make appropriate recommendations.” The new SGF, Boss Mustapha, is a lawyer, management consultant, politician, businessman and boardroom guru of considerable repute, and hails from Hong Local government of Adamawa State, same local government as the sacked Babachair Lawal. Until his current appointment, he was the managing director/CEO of the National Inland Waterways Authority (NIWA). Meanwhile, the acclaimed national leader of the All Progressives Congress (APC) party, Ahmed Tinubu, has declined comment on President Buhari’s 2019 presidential ambition. His meeting with President Buhari came immediately after Buhari had met separately with the national chairman of the party, John Odigie-Oyegun and the leadership of the National Assembly represented by Senate president, Bukola Saraki, and speaker of the House of Representatives, Yakubu Dogara. Tinubu came in just as Oyegun and the NASS leadership were leaving the Presidential Villa. But speaking with State House Correspondents after the meeting with the President yesterday, Tinubu who said he had confidence in the leadership of Buhari and the current administration, however, refused to say a word on the 2019 presidential election. When asked his opinion on the current move by different groups calling for the President to run in 2019, he simply replied that such should not be discussed with him; “Don’t discuss that one with me. “I just met with the President. Our discussion was fruitful, productive and it was about the country and leadership as a whole. And that got him excited and happy.” Asked about his alleged displeasure about the direction of government since the last election, Tinubu described reports of his unhappiness as “fake news,” adding that “I have confidence in this President, there is no doubt about that.” According to Tinubu, “We worked hard to bring about the government, there are certain things that are unpredictable and those are things that can lean itself to gossips, insinuations and all of that. But once you create leadership and is functioning you don’t have to babysit that leadership, unless there is a loss of confidence and I don’t have that. “You know me. I’m not known to shy away from talking my mind and rebelling if it is necessary and taking charge of things that I believe are necessary. “What is the myth in this leadership thing? What is cable? It Is a myth. We are the party of the people for the people and by the people and this is democratic environment. “Each of us have our roles to play and that is why we are playing it. I don’t believe in the myth, I believe in confidence building, the trust that we have in the president. In the journey of democracy you are going to have twists and turns, you are going to have conflicts. Conflicts resolution mechanisms is inbuilt on how you handle your party and the governance and the party are joined by the hips.” On allegations that there is panic ahead of the party’s NEC meeting coming up today, and efforts to mend fences ahead of the meeting, Tinubu denied the rifts, saying, “Did I tell you that? Why do you want to know; are you a member of our party?” Tinubu also assured that the party was on course, adding however, that it was not easy to “face the kind of challenges Buhari’s government faced. “Can you go back to the history of 16 years of the PDP? APC government is on course and will remain on course, and we will remain focused to those necessary things about development, welfare and progress of our people.
Tuesday 31 October 2017 Access Bank, GAC Motors crash car prices HOPE MOSES-ASHIKE Access Bank plc and Guangzhou Automobile Group (GAC Motors) have collaborated to give value to Nigerians who desire to own a car at affordable prices through a financing scheme that covers purchase on the GA3 S, GS4 and GS8 models of the GAC Motors. Consequently, the two firms on Monday signed a memorandum of understanding (MoU) in Lagos, which allows customers of Access Bank access finance to purchase the latest brands of GAC at discounted price with a reduced interest rate. According to Victor Etuokwu, executive director, personal banking division, Access Bank, the focus of the partnership is on affordability and cost savings. He explained that Nigerians would drive the cars with 10 percent equity contribution. Meanwhile, the standard equity contribution is 30 percent. The financing scheme by the two organisations in- NAMA boosts critical manpower with 40 ATCOs IFEOMA OKEKE Worried by the depleting number of Air Traffic Control Officers in its employ as a result of ageing workforce, the Nigerian Airspace Management Agency (NAMA) has recently engaged the services of over 40 Air Traffic Control cadets to undergo various levels of training as recommended by the Nigerian Civil Aviation Authority (NCAA). Making this revelation at the recent annual general meeting of the Nigerian Air Traffic Controllers Association (NATCA) in Uyo, the Akwa Ibom State capital, Fola Akinkuotu, managing director of NAMA, who said his administration placed premium on safety over any other consideration, noted that efforts were underway to increase the above number to a level consistent with global best practices. Akinkuotu said in line with his determination to enhance safety of the airspace, a total of 150 Air Traffic Controllers have in the past 10 months of his administration been trained in different cadres and specializations of Air Traffic Control. He listed these trainings to include Basic ATCO Course (Aerodrome and Approach), Area/Airways Non- Radar Control, Aeronautical Search and Rescue Mission Coordinators Course as well as other management skills development workshops and conferences, aimed at sharpening the skills of ATC systems managers. cludes free comprehensive insurance in the vehicles purchased for the first one year. With this partnership, the interest rate has also been brought down to 24 percent as against 28 to 30 percent obtainable in the banking industry. He said the bank could support people who want to buy a fleet of cars by arranging deeper discount rate, saying, “We are passionate about our customers and the Nigerian economy and that is why we are in this partnership.” Speaking at the signing of the MoU, Diana Chan, chairman, Choice International group, said, “We have two strong brands, GAC, one of the best car makers in China, and Access Bank which is passionate about customers coming together to give Nigerians the chance to buy new cars with high durability at low cost.” According to Chan, the partnership is to enable more Nigerians afford high-end vehicles, adding that the output of the partnership will come in short term. Osun harps on peace as tool for societal integration BOLA BAMIGBOLA, OSOGBO Osun State government has canvassed for sustainable peace as a way of integrating societies across borders. This was disclosed by the state’s Commissioner for Regional Integration, Bola Ilori, while presenting to the press, Wale Alabi, who was recently appointed senior special adviser to the governor on regional integration. He said the administration of Governor Rauf Aregbesola in collaboration with other governments in the South West region, was working towards fostering peace and harmony in the region through societal integration. This, according to Ilori, requires right orientation and constant interactions among youth for positive socio-economic impact. “We are looking at a generation where people would be able to collaborate beyond boundaries, we are concerned about the future of our race and we want our youths to be productive and active in the affairs of the government. “We are working towards encouraging youths’ participation in the affairs of the government and to enlighten them on regional integration,” Ilori said. Speaking on the achievements of Governor Aregbesola within the last seven years, Ilori noted that Osun, with the various initiatives of the present administration, is rated second with the least poverty rate by the United Nations in South West region. C002D5556 BUSINESS DAY 39 NEWS L-R: Tunde Mabawonku, CFO, Wema Bank plc; Ronke Akinpelu, head, treasury marketing, Wema Bank plc; Kenneth Ero, GTL; Ademola Adebise, DMD, Wema Bank plc; Tumi Sekoni, FMDQ; Moruf Oseni, executive director, retail, Wema Bank, and Kayode Bakare, treasurer, Wema Bank plc, at the signing of Wema Bank’s Series I Commercial Paper at FMDQ. Development Bank of Nigeria to lend N5bn to over 20,000 MSMEs ONYINYE NWACHUKWU, Abuja Development Bank of Nigeria (DBN) is to lend some N5 billion, longterm money to over 20,000 Micro, Small and Medium Enterprises (MSMEs) in commencement of its first mandate - lending activities to the MSMEs. The loan would be disbursed through three selected Participating Financial Institutions, including Fortis Microfinance Bank, LAPO Microfinance Bank and NPF Microfinance Bank, which are all national MFBs. Announcing this in Abuja, DBN managing director, Tony Okpanachi, said the loan rates were not predetermined but that pricing would depend on market rates, saying, “Our pricing Alaghodaro Investment Summit: Conglomerates, MSMEs jostle for sponsorship deal As preparations rev up for the maiden Edo State Alaghodaro Investment Summit, small, medium and large-scale companies are jostling for sponsorship slots of the event, which will host over 3,000 participants. According to the organisers, sponsors may be categorised into Platinum, Gold, Silver and Bronze right holders to accommodate the deluge of sponsorship requests from companies, ranging from quoted companies to small and medium scale enterprises. With this development, the sponsors are well on their way to deflecting the state government’s financial commitment to the summit, by making it a private sector driven event. The scampering for sponis quite pragmatic. We are referencing some specific instruments in the market.” Okpanachi explained that the risk profile of the different Participating Financial Institutions (PFIs) matters, but that they would benchmark rates against major instruments like the Treasury Bill rates or the bond, whether it was long or short tenor. “In the short tenor, we benchmark treasury bills rate and in the long tenor, we benchmark the bond rate, plus some premium based on the risk profile of the PFIs, that is our model. “But ultimately, we will ensure the end borrowers get cheaper rate than what they have been getting before,” he added. According to Okpanachi, DBN loan repayment tenure is flexible of up to 10 years sorship rights is fallout of the huge interest in the summit by investment gurus, manufacturers and industrialists, who are aiming to exploit the state’s enormous potential. The summit also recently got a boost with the endorsement by the London Stock Exchange (LSE), representatives of which would be at the event next month. It was gathered that entrepreneurs, artists, micro, small and medium scale enterprises (MSMEs), conglomerates, stock exchanges, Nigerians in the Diaspora and many more are among those jostling for sponsorship slot. Alaghodaro, which means ‘progress,’ is a brand-child of the state government to showcase investment potential in its 30-year grand plan and will provide business leaders, with 18 months moratorium period. The Nigerian economy is powered by the MSMEs, which are largely unstructured. Figures from the National Bureau of Statistics indicate that there are over 37 million MSMEs with activities within the segment accounting for over 50 percent of the country’s GDP. The DBN commenced in March 2017 as a Wholesale Development Finance Institution to then provide sustainable financing through eligible PFIs, which would, in turn, lend to end-borrowers- the MSMEs for the development of that critical sector. With a vision to be Nigeria’s primary development finance institution; promoting growth and sustainability, DBN seeks to fulfil three key mandates, including lending industrialists, the academia and investors opportunity to key into the plans. The three-day summit will hold from November 10 to 12, at Edo Hotels, Okada Avenue, Benin City. Recall that the state governor, Godwin Obaseki, inaugurated the organising committee for the summit at the Government House, in Benin City, recently. Headed by Julius Ihonvbere, a professor, the organising committee will coordinate planning and ensure the smooth running of the summit. Enquiries for intending sponsors at the event Local Organizing Committee (LOC) Secretariat showed that aside the manufacturing heavyweights already signed up to attend, entrepreneurs are showing imto MSMEs, offering Partial Credit Guarantees as well as Capacity Building for the sector. Explaining why the DBN rates cannot be cheaper at least in the short run, Okpanachi said the DBN was crafted, to be a long-term, private sector-led institution which would be self sustaining, and could eventually go to the market, local and international to raise funding for its business. When asked of the specific rate, which the institution would be lending, he stated, “… we benchmark against the current macroeconomy rates so that as the macroeconomic situation improves and rates are going down, our rates too will go down unlike saying putting a fixed rate, irrespective of whatever macroeconomic situation. mense interest in participating at the event. Businesses and companies domiciled in the state are also putting their books in order to showcase prospects for partnership and collaboration. Dignitaries expected at the summit include President Muhammadu Buhari; Vice President Yemi Osibanjo; minister for industry, Okechukwu Enelamah; minister of state for health, Osagie Ehanire. Others are former Governor of Cross River State, Donald Duke; former Inspector General of Police (IGP) and current chairman of the Taskforce for the implementation of the Edo State Anti- Community Development Association Law, Solomon Arase; Senator Ben Murray Bruce, and many more.
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