BusinessDay 28 Feb 2018

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14 BUSINESS DAY C002D5556 Wednesday 28 February 2018 COMPANIES & MARKETS Banks credit to private sector to grow in 2018- FSDH BALA AUGIE Banks credit to the private sector is expected to grow in 2018, thanks to a drop in yields on Treasury bills (T-bills), improved consumer confidence and, an improvement in macroeconomic condition, according to research house, FSDH Merchant Bank. The total credit to the private sector in 2017 witnessed a marginal decrease of 2.34 percent to N15.74 trillion compared with N16.12 trillion in 2016, according to the National Bureau of Statistics (NBS). Banks slowed down on lending to the private sector as an economic recession in 2016 brought on by a sudden drop in oil price and a severe dollar scarcity hindered companies and government from paying back interest on money borrowed. The most affected of these sectors are the transportation & storage, general commerce, education and information and communication. Credit to players in the transportation and storage sub sector declined by 26 percent to N332.08 billion in 2017, down from N450.75 billion in 2016. From N1.31 trillion in 2016, credit to the general commerce sub sector fell by 21 percent to N1.04 trillion in 2017. Also, banks slowed lending to the real sector as they made money when yields on short term government securities hovered around 18 percent to 21 percent between April and October 2017. As a result of the aforementioned monetary policy, 13 banks raked in N562.67 billion in interest income from treasury bills in the third quarter of 2017, representing a 53.55 percent increase from 2016 of N366.42 billion figure recorded in 2016. However, yields on 90 days short-term paper saw a sharp decline to 8.75 percent in January to finally hit its current 13.10 percent as government issued more dollars denominated debt and effectively reduce its naira debt. Analysts are of the view that the sharp drop in asset yields on government securities will force banks to start lending to the real sector as the end of free money are over. They add that a rate cut by the Central Bank of Nigeria (CBN) will strengthen lending to the private sector. For the first nine months through September 2017, cumulative loans and advances to customers fell by 2.62 billion in September 2017 as against N14.08 billion, based on data compiled by BusinessDay. Tajudeen Ibrahim head of research at Chapel Hill Denham said that the loan book expansion will be underpinned by possible financial system liquidity as the central could cut the CRR and interest rates in the first quarter of next year. “We have seen the apex slow the issuance of OMO. Market conditions will require that they increase lending to the real sector. We will surely see loan book expand on market dynamics,” said Ibrahim. Credit facilities to the players in finance, insurance and capital market rose by 20.1 percent during the period. Mining and quarrying players got credit facilities 18.7 percent more than what they received in the last quarter of 2016. Also, credit facilities to the construction sub sector were up by 4.1 percent. The governments at all levels received saw their facilities rise by 2.2 percent. The agric sub sector did not get much attention as facilities in the last quarter of 2017 over the last quarter of 2016 rose slightly by 0.4 percent. TL First Group CEO task FG on utilisation of world Bank’s $486m loan Modestus Anaesoronye International Economist and Group Managing Director of TL First Group, Olu Olasode has tasked the Federal Government of to judiciously utilise the $486 million dollars fund approved by the World Bank. The credit which was granted to rehabilitate and upgrade the Nigerian electricity transmission substations and lines, is a welcome investment to help alleviate the current issues militating against the power sector in Nigeria, the Economist added. Responding to questions on implications on rising debt, Olasode, who is also a Chartered Accountant, stated “unlike many professional colleagues who are weary of debts, I have no problems with increasing your labilities if the resulting growth in income, capital, assets or national wealth far outweighs the debt. In essence, it should be about spending to save through better infrastructure in electricity transmission that ultimately powers economic growth.” According to Olasode, effective utilisation of the fund can benefit small scale business owners and contribute to adequate and reliable electricity supply necessary for Nigeria’s continued economic development as an effortto ease the infrastructure constraints these businesses currently face.Electricity is a significant component of virtually any production process. As such, limited supply has the potential to, directly or indirectly, affect the economic productivity of businesses. An attendant effect is the closure of many Enterprises in Nigeria in the last five years. He stated that the Transmission Company of Nigeria can be better empowered to ensure increased transmission network and provision of additional electricity. He further proposed that part of the funds can be used to adopt new models that tap into the vitality of the nation’s potentials. “For instance, investment can be made into solar-powered light centres that help to increase social activity and productivity of communities by generating light after sundown. These light centres can be used to power medical equipment such as an ultrasound, or refrigerators that store vaccines at medical centres.” “Transmission also has a lot to do with logistic and planning”, he continued, “for example, how effectively can we aggregate and redistribute the many dispersed power generation by privately owned organisations”. Olasode, however, expressed concern about the sustainability of the nation’s rising debt stock, especially during a period when the country’s socio-economic development continues to be plagued by myriad of challenges.He urged the Federal Government to apply caution in contracting more debt and identify innovative ways to mitigate the current debt portfolio. Olasodesuggested that current loan funding available to the government should be deployed to tap into thenation’s creative opportunities to facilitate economic growth, resolve security challenges across the regions, address development, generate employment and reduce poverty. South Africa’s JSE to launch project bonds in March Africa’s largest bourse, the Johannesburg Stock Exchange (JSE), will begin listing “project bonds” from mid-March, an official said on Monday, giving institutional investors a window to invest in infrastructure projects. The bonds will provide private firms a chance to get a foothold in infrastructure projects in Africa’s most industrialised economy, where project financing has tradi- tionally come from banks and government. “We launch Project Bonds in the second week of March,” said spokes woman Pheliswa Mayekiso, adding that details of the listing would be made public closer to the launch. “Government and banks alone cannot fund South Africa’s infrastructure programme,” the Treasury said in a review of the 2018 budget released last week. “These bonds will be underpinned by the cash flows of a ring-fenced project, such as infrastructure or energy projects,” it said. Capital markets have already reduced lending to some state-owned companies, such as sole power supplier, Eskom. South Africa plans to spend billions of dollars over the next three years to build and revamp roads, power stations and ports, government officials said Buffett says ‘terrible mistake’ for longterm investors to be in bonds Billionaire Warren Buffett prodded ordinary investors on Saturday to stay invested in United States stocks, ignoring price swings, guidance from people with fancy credentials and the temptation to load up on bonds. Buffett said it is a “terrible mistake” for investors with long-term horizons – among them, pension funds, college and endowments and savingsminded individuals – to measure their investment “risk” by their portfolio’s ratio of bonds to stocks.The long-time bull on U.S. companies and the economy issued his latest letter to Berkshire Hathaway Inc shareholders on Saturday. Treasury yields have been rising since the start of the year, stemming from brewing inflationary pressures and massive bond supply to help fund U.S. President Donald Trump’s tax overhaul. Higher rates have kept U.S. equity markets under selling pressure, as investors worry borrowing costs could hurt companies’ profitability. Earlier this month, stocks suffered their first 10 per cent pullback since early 2016. High-grade bonds, he said, can increase the risk of an investment portfolio as inflation eats away at the return. “There is simply no telling how far stocks can fall in a short period,” Buffett said. “As an investor’s investment horizon lengthens, however, a diversified portfolio of U.S. equities becomes progressively less risky than bonds, assuming that the stocks are purchased at a sensible multiple of earnings relative to then-prevailing interest rates.”
Wednesday 28 February 2018 C002D5556 BUSINESS DAY 15 COMPANIES & MARKETS Oil hits nearly three-week high as Saudi Arabia to keep output well below cap Oil prices extended gains to hit their highest level in nearly three weeks on Monday supported by comments from Saudi Arabia that it would continue to curb exports in line with the OPEC-led-effort to cut global-supplies. Sweet Brent crude gained 12 cents or 0.2 per cent to 67.43 dollars. United States West Texas Intermediate crude for April delivery was up 20 cents or 0.3 per cent at 63.75 dollars a barrel. Prices were increased after Saudi Arabian oil minister Khalid al-Falih on Saturday said that the country’s crude-production in January-March would be well below-output-caps with exports averaging below seven million barrels per day (bpd). Saudi Arabia hopes OPEC and its allies will be able to relax production curbs next year and create a permanent-framework to stabilise oil markets after the current supply cut-deal ends this year. U.S. energy companies, last week, added one oil rig, the fifth weekly increase in a row, bringing the total count up to 799, the highest level since April 2015, Baker Hughes energy services firm said on Friday. Hedge funds and money managers upped their bullish wagers on U.S. crude oil for the first time in four weeks, data showed on Friday. A powerful 7.5-magnitude earthquake struck Papua New Guinea’s Southern-Highlandsprovince early on Monday, the U.S. Geological Survey (USGS) said, prompting oil and gas companies to immediately suspend operations in the energy-rich interior. Meanwhile, Libya’s National Oil Corp said on Saturday it had declared force majeure on the 70,000 bpd El Feel oilfield after a protest by guards closed the field. Oil price watchers believe oil should in truth climb to 70-100 dollars range. High number of Nigerians without insurance worries us – Babington-Ashaye Business Event L-R: Adeola Ambah, head, public sector, Lagos Region of First City Monument Bank (FCMB); Sola Oyegbade, head, training academy of the Bank; Obafela Bank-Olemoh, special adviser on education in Lagos State, and Felicia Obozuwa, divisional head, corporate services of FCMB, during the faculty launch of the ReadySetWork (RSW) initiative designed by Lagos State Government to prepare students in higher institutions in the state for work after school in Lagos. FCMB is a major partner of the programme. gerians could not revive collapsed businesses, buildings or repair their vehicles involved in accidents because they lacked insurance policies that could provide fund to mitigate the losses. “My plea to Nigerians is that it is better to be five years early than to be five minutes late. “I implore Nigerians to henceforth take insurance policies suitable to their lifestyles.” she said She urged media practitioners to support the industry still in its infancy. “The insurance industry today is in a precarious state due to the various unfolding dynamics and it is calling for change of operations and strategies by operators. “The industry would be able to stave these besetting odds and maintain an acceptable image in the eyes of the public only if the media show understanding and appreciation of the times. “It is only when the insurance industry exists and is thriv- Lagos, Feb. 2, 2018 (NAN) The President, Insurance Industry Consultative Council (IICC), Mrs Funmi Babington-Ashaye, has said the high percentage of Nigerians that are still uninsured remains a major concern to the council. Babington-Ashaye said this on Friday in Lagos at a seminar organised for journalists by the council with the theme “Role of Media in Deepening Insurance Penetration.” The IICC was formed with the objectives of raising the profile of insurance Industry and increase its relevance to the nation’s economic growth. Babington-Ashaye, who is also the President of the Chartered Insurance Institute of Nigeria (CIIN), said over 90 per cent of Nigerians were living without insurance. She said wrong perceptions, among others, had hindered Nigerians from taking insurance policies. Babington-Ashaye said Niing that insurance correspondents could also have a safe and comfortable nest.” The Executive Secretary, Nigerian Council Insurance Brokers (NCRIB), Mr Fatai Adegbenro, urged Nigerians to believe in insurance. He said insurance companies were regulated by National Insurance Commission (NAICOM) and the Market Development and Restructuring Initiative (MDRI) intiated by the Commission had enhanced prompt claims payment. Adegbenro urged media practitioners to support the industry by clarifying any information they obtained before publishing. Mr Sanya Oni, an Editor with the Nations Newspaper, decried that only one per cent of 180 million Nigerians have insurance policy. “This denotes that only 1.8 million Nigerians have insurance policy and 70 per cent of the insured are with Lagos state.” he said L-R: Rajneesh Gupta, chief operation coordinator, Wandel International Nigeria Limited; Chinedu Ibezimako, chief executive officer, Green Kapital; Soamy Dixit, regional head (East & West Africa), Luminous Power Technologies (India) Private Limited, and Suresh Pykkat, business promotion strategist, Wandel International Nigeria Limited, during the Luminous Dealers Conference held in Abuja Making Nigeria’s tourism sector viable for economic growth The total contribution of travel and tourism to Nigerian economy has been estimated to be $1.1 billion. According to a report of the World Travel and Tourism Council (WTTC), the total contribution of travel and tourism to the global economy hit $7.6 trillion in 2016, about 10 per cent of the global GDP of $75.6 trillion. Tourism seems to be the way following the dwindling fortunes of oil and gas. The contribution of the tourism industry to Nation’s economy is not only a tiny fraction of the global industry but also shows the gulf between the present reality and the potential of tourism for Nigeria. The potential of tourism could be further enhanced with deliberate focus and more attention to turn around most of the nation’s tourist sites and turning them into wealth. Sally Mbanefo, immediate past Director-General of the Nigerian Tourism Development Corporation (NTDC), said the sector generated the revenue from the more than 6.01 million tourists that visited the country in 2015. “In 2014, about 4.8 million people arrived and the related expenditure was $853 million. “In 2016, about 6.01 million came into Nigeria and the sector generated over $1.1 billion as the expenditure related to their arrival in this country.’’ Mbanefo explained that the situation was an economic indication of the value that tourism could add to an economy where the government and the private sector spur tourism. She said that Nollywood alone, created job opportunities for more than two million persons, 30,000 work in restaurants and over 11,000 in the hotel business. Mbanefo said that in spite of this more needed to be done to improve the sector to further compete globally. She said that challenges limiting the growth of the sector should be address. She listed them to include access to gathering statistics, epileptic power supply, inadequate infrastructure, poor access to visa, as well as absence of uniformed standardisation and classification for hotels nationwide. Ganiyu Tarzan, the President, Association of Tourists Boats Operators and Water Transporters of Nigeria (AT- BOWATN), added that tourism had a link with all other sectors of economy whether religious, education, sport, business, agriculture and medicine. Tarzan, therefore, urged the Federal Government, especially, the Federal Ministry of Information and Culture, to channel the allocation meant for the sector to rehabilitating of tourism projects across the country. L-R: Bosun Sosanya, executive director, physical security service, Halogen Security Company Limited; Uche Mojekwu, associate director, brand and strategic marketing and client account management, Halogen Security Company Limited; Edgal O. Imohimi, commissioner of police, Lagos State Command, and Wale Olaoye, managing director, Halogen Security Company Limited, during the courtesy visit of the Lagos State Commissioner of Police to Halogen Head Office at Mobolaji Bank Anthony Way, recently. L-R: Olumide Sholanke, human resources director, Nigerian Bottling Company Limited; Rosemary Okolo, registrar, Pan-Atlantic University, Lekki; Chidi Nwagu, bursar, Pan-Atlantic University, and Ikechukwu Obiaya, dean, School of Media and communication, Pan-Atlantic University, during a career fair organized by Pan-Atlantic University held at the university complex in Lagos.
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BusinessDay 28 Feb 2018

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