19102020 - #EndSARS: Stop Army's planned Op Crocodile Smile

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20 — Vanguard, MONDAY, OCTOBER 19, 2020 FINANCIAL VANGUARD By Nkiruka Nnorom Despite the positive sentiment in the stock market that has seen a rebound in both year-to-date (YtD) and month-to-date (MtD) returns, investment experts have said that uptick in inflationary pressure and weakness in the macroeconomic environment may constitute a threat to the continued recovery of the stock market. They project that the yearend may not be rosy due to the impending stagflation, a situation where growth is regarding amidst rising inflation. Headline inflation rose to 13.71 percent, according to September inflation report by the National Bureau of Statistics, NBS, and is projected to rise further through December. In the meantime, performance of the stock market last week show a sustained uptrend on the back of negative real returns in fixed income and significant buy pressure in some highly capitalised stocks. Consequently, the benchmark All Share Index, ASI, rose by 0.9 percent to settle at 28,659.45 points, while the MtD and YtD return for the index grew to 6.8 percent. The market had closed the week flat on four of the five trading sessions, but was driven to another positive close after 1.11 percent gains recorded on Friday session. Commenting, David Adonri, Managing Director/ CEO, Highcap Securities and Investment, said: “Performance of equities beats every imagination. The market moved in opposite direction of the economy. Mixed performance trails national housing delivery Continued from page 19 military rule in Nigeria, they were only able to deliver 1,500 housing units, adding that the Federal Ministry of Works and Housing was able to deliver 1,210 housing units across the 36 states in the country and Abuja between 2015 and now. “It is a welcome development for the managers of the fund to deliver about 1000 housing units within one year. We still need to do more considering the huge housing deficit in the country. If you imagine the number of youth corps members being churned out every year, and the fact that they will need to settle down upon getting jobs, shows that there will always be demand for housing in Nigeria. This is why there is the need to do more by the government and everybody to reduce the huge housing gap of the country,” Awobodu said. Meanwhile, the National Housing Fund (NHF), which came into effect on 31st January 1992, is to facilitate the mobilisation of the fund for the provision of affordable housing for Nigerians, and ensure the constant disbursement of loans to Nigerians for the purpose of building, purchasing, and improvement of residential houses. Contributions by Nigerians both in the public and private sectors; investment in the fund by commercial and merchant banks, investment in the fund by insurance companies registered under the Insurance Act; and Financial contributions by the Federal Government for long-term housing loans are expected to be paid into the fund. Under the Act, a Nigerian worker earning an income of N30,000 and above per annum in both the public and private sectors is required to contribute 2.5 per cent of his/her monthly basic salary to the fund. Commercial and merchant banks are also mandated to invest 10 per cent of their loans and advances in the Fund at an interest rate of one percent above the interest rate payable on current accounts by the banks. Also, all registered insurance companies are required to invest a minimum of 20 percent of their non-life funds and 40 percent of their life funds in real property development and this is to be paid into the fund through FMBN at an interest rate not exceeding 4.5 percent. There is no mandatory percentage of revenue specified for the Federal Government. The proceeds from the fund are used to finance the housing sector through wholesale mortgage lending to primary mortgage institutions by FMBN. COVER Inflationary pressures pose fresh threat to stocks Perhaps the expansionary monetary policy and NESP N2.3 trillion rescue package have positively impacted equities. “Deliberate measures to force down interest rate may also have facilitated migration of financial assets to equities. By Peter Egwuatu Stockbrokers in Nigeria have emphasized the need for government to urgently leverage the capital market for a turnaround in the economy and curtail the effect of the coronavirus, COVID-19 pandemic. The President of the Chartered Institute of Stockbrokers, CIS, Olatunde Amolegbe, ahead of the institute’s 2020 Annual Conference said: “The Federal Government should access medium and long term fund from the market to finance budget deficit and build infrastructure among others. Companies should also explore the market to shore up working capital, invest in Information and Communication Technology (ICT), enhance profitability and boost return on investment (ROI).” Corroborating him, the Institute’s Registrar and Chief Executive, Mr Adedeji Ajadi noted that Covid-19 pandemic had necessitated the need for comprehensive turnaround of Nigeria’s economy. “We are sending a poser to the government: With the challenges of Covid-19, a looming recession and other “The rally may not be sustainable due to expectation of ravaging inflation. More so, the fundamentals of the economy does not support rally. Year end may not be rosy because of reaction to impending stagflation.” In their own projections, analysts at Cordros Capital, a Lagos-based investment banking firm, said: “We expect the market might continue to benefit as domestic investors seek alpha-yielding opportunities in the face of increasingly COVID-19: Stockbrokers seek economic turnaround ...To brainstorm at workshop economic issues in Nigeria, how do we turn our economy around? We are suggesting that, if well- explored, the capital market can be a major catalyst to drive the desired growth, and take us through the ‘storm”, says Ajadi. The stockbrokers shall on Wednesday, November 4 and Thursday, November 5, 2020, converge for the Annual Conference of stockbrokers on both physical and virtual mode to articulate options for the nation’s economic revival with the theme: “Navigating through the Storms- Reenergizing the Economy through the Capital Market”. The Conference, coming at a period when the Nigeria’s Vice President, Professor Yemi Osinbajo says that government is seeking alternative avenues for money, will attract indigenous and foreign finance and investment experts, top level government functionaries, capital market regulators, investors and other negative real returns in the fixed income market. “However, we advise investors to trade in only fundamentally justified stocks as the weak macro environment remains a significant headwind for listed companies.” members of the capital market ecosystem. “The significance of this year’s Theme, is better appreciated against the backdrop of the current situation whereby the Federal Government is in dire need of fund to finance the economy. The key messages to the government and companies in Nigeria are that of hope and renewal by taking advantage of opportunities to source long term fund through the capital market” said stockbrokers. Heritage Bank to engage 774,000 jobs special public works programme Heritage Bank Plc, is set to commence the account opening with Bank Verification Numbers (BVN) for the earmarked 774,000 participants of the Special Public Work, SPW Programme in their branches, throughout the 774 Local Government Areas, LGAs. The participants are to be paid an allowance of N20, 000 (Twenty thousand Naira) only, monthly and the programme is to kick off from 1st November 2020, and a total of 129 LGAs have been assigned to Heritage Bank Plc. The SPW is a post-COVID- 19 poverty alleviation initiative, approved by President Muhammadu Buhari and the Federal Ministry of State for Labour and Employment to implement 774,000 Jobs in all the 774 LGAs in Nigeria, for a period of three (3) months. As part of the modalities of the programme, the 6 participating banks, Heritage Bank inclusive have been mandated to open accounts for all the beneficiaries and capture BVN. Also, a special feature form has been provided by the Federal Government to capture participant’s Bio-data for this exercise. In a bid to align with the rudimentary arrangements, the Divisional Head, Corporate Communications, Fela Ibidapo disclosed that Heritage Bank has prepared seamless process flow for the commencement of the BVN enrolment/ account opening documentation of the assigned shortlisted beneficiaries. Meanwhile, he noted, “For locations that the Bank does not have physical presence, the Agency Banking Team has engaged Super Agents to cover these areas and ensure smooth on boarding in such locations.” He stated that Heritage Bank would definitely adhere strictly to the beneficiary list forwarded to the Bank from the Federal Government for account opening/BVN enrolment to avoid any infractions and work according to the rules set by the government and its agency, National Directorate of Employment (NDE). Ibidapo reiterated the bank’s success stories and legacies in similar exercises sustained through various entrepreneur schemes in the support for economic growth, which had always focused on dependable job-creating sectors, such as agricultural value chain (fish farming, poultry, snail farming), cottage industry, mining and solid minerals, creative industry (tourism, arts and crafts), and Information and Communications Technology (ICT).
“We do many things at the federal level that would be considered dishonest and illegal if done in the private sector” - Donald T Regan, 1986. Donald Regan was US Secretary of the Treasury (equivalent to our own Minister of Finance), from 1981-85 and Chief of Staff from 1985-87 for the Reagan administration. He was familiar with all the dishonest measures of the US federal government which, if engaged in by an individual, will brand him a fraudster or 419er. The Nigerian FG is not only just as guilty but operates with far less restraint than the US government. Add our National Assembly, NASS, invariably accomplices in the budgetary crimes and the Three Arms Zone of Abuja constitutes a greater peril to our economy than all the armed robbers, Area and Yahoo Boys. The quantum of funds mismanaged in Abuja will make all the acclaimed criminals appear benevolent. Every subsequent fraud stems from the way budgets are packaged by the FG and approved by the NASS. Virtually every entry is false and known to be so. President Buhari presented what was announced as the 2021 Budget to the NASS, on October 8, 2020. It was a terrible joke. This article might as well be titled FG PRESENTS ANOTHER DUD CHEQUE TO NIGERIANS and it will be just as apt. Budget 2021 incorporates all the faults of the previous five failed budgets – 2016, 2017, 2018, 2019 and 2020. And, this latest demonstration of incompetence at budgeting, added a few more to ensure that it will never be implemented. By the time Buhari presents Budget 2022, we will all see clearly why this budget represents more than a disservice to the nation. It is almost a crime against Nigerians. If a man had spent the last five years promising more than he could deliver, Nigerians would by now have several unprintable epithets with which to describe him if The 2021 Budget as a joke (1) he announces a sixth attempt at mass deception. “You can fool some of the people all the time.” That was the observation of a late American President. He must have had a nation like present day Nigeria in mind. And some of the people annually misled are the members of the NASS, who assume that because it is their party leader who is presenting the budget, they are duty bound to endorse a bogus document. The blind leading the blind is bad enough. A government of the blind leading people with good eyes, in Abuja, is one of the greatest absurdities of the world today. Show me a NASS member who actually believes that this budget will work and I will show you an economic illiterate who should not be representing any Nigerian. Before the rubber stamp NASS passes the budget, let me provide five cardinal reasons why it will not work: aggregate expenditure estimates, debt burden and servicing, capital expenditure, poverty alleviation and timing of funds release. One can easily add agriculture, manufacturing and lingering impacts of COVID-19. But, the five are more than enough to prove the points made here. As usual, although I can make all the observations myself, it is always better to bring third party evidence – bearing in mind the tendency of the Presidency to instigate comical rejoinders. “Buhari put aggregate expenditure at N13.08tn..,,debt servicing [would gulp] N3.12tn..The 2021 budget deficit…is projected at N5.20tn, representing 3.64 per cent.” The projected expenditure is partly based “on daily crude oil production of 1.86m and oil price of $40 per barrel.” President Buhari, October 8, 2020. Longer before Buhari, the FG had presented annual budgets based on daily production and export of crude oil far in excess of what historical trends or objective future forecasts would suggest. Since 2011, two of our associates had requested from us projections of Nigerian Longer before Buhari, the FG had presented annual budgets based on daily production and export of crude oil far in excess of what historical trends or objective future forecasts would suggest crude oil production and export. Even, globally acclaimed Dr Ngozi Okonjo- Iweala, sadly, had succumbed to political pressure by the Jonathan administration. Budgets for 2012 to 2015 were premised on 2.3mbpd despite annual warnings from us. Not once in four years was Nigeria able to export 2.3mbpd of crude. Yet, the Jonathan government persisted in deceiving itself and Nigerians for four years. It was a blunder. While Jonathan had at least two world-class economists in charge of its Economic Management Team, Buhari, right from the start, till now, had been lacking such global financial experience. It has been extremely easy for them to rely on base sentiments when deciding that basic but most important variable when Vanguard, MONDAY, OCTOBER 19, 2020 — 21 deciding crude oil production and export. For instance, it is a fact that Nigeria, based on agreement with OPEC, is honour-bound not to exceed 1.7mbpd of crude well into the first quarter of next year. Furthermore, as 2020 is coming to a close, Nigeria’s exports of crude have averaged less than 1.5mbpd. Experienced and objective managers anywhere will never ignore historical trends and known future certainties when preparing their budgets as Buhari’s government had done for six years in a row. Just as Jonathan’s administration failed to reach the target in five years, Buhari’s will again fall short for the sixth year in a row – unless a major disruption to global oil supply occurs. No nation’s leaders should gamble and lose repeatedly with the lives of the people. Those who fail to remember history, including their own, are condemned to repeating its mistakes. Unfortunately, crude oil revenue shortfall is not the only problem we have experienced since 2015. With expenditure projected at N13.08tn and deficit of N5.12tn expected, the FG was deliberately evasive about the anticipated revenue for 2021. The figure derived is N7.96tn or 60.85 per cent of expenditure. Close to 40 per cent of projected expenditure will have to be sourced from elsewhere, other than government operations. Once again, we are faced with the analogy of the family head who regularly promises more than can be delivered and frequently fails to redeem his promises. Dud cheques follow. Customer-centricity, Since 2015, the FG has tech to drive insurance growth — will continue Leadway into 2021. failed to generate the revenue budgeted for each year. As we crawl to the fourth quarter of 2020, the actual income of government will most likely not exceed 62 per cent of this year’s estimates. Again, experienced and honest managers base their future projections on trends in the previous five years. So, it can be reasonably assumed that the FG will not generate N7.96tn in 2021; but more likely N4.8tn. The 3.2tn negative variance will comprise of lower receipts of crude oil revenue, remittances from Ministries, Departments and Agencies, as well as Value Added Tax, VAT, etc. This had been the pattern for five years and nothing suggests 2021 will yield a different result. So, though not specifically stated in the budget presentation, the implied Internally Generated Revenue, IGR, remains very unrealistic. Here is third party evidence. “Earlier…, Fitch Ratings….said that the rate of Nigeria’s sovereign debt could trigger a downgrade as government battles to raise revenue amid depleting earnings and low prices…” DAILY INDEPENDENT, OCTOBER 12, 2020. For those still doubting that objective financial experts are unanimous in their verdict that the FG’s estimates are unrealistic, here is more proof. Dr Muda Yusuf, Director General, Lagos Chamber of Commerce and Industry (LCCI), in response to the proposed expenditure of N13.1trillion, in 2021, said, “...revenue projections seem optimistic, having regards to revenue performance over the last few years. We have witnessed large negative variances in revenue targets over the last few years. This poses a risk of bigger deficits than projected.” The safest assumption is that large negative variances To be continued… Financial Inclusion: FirstBank targets 32m customers with innovative products By Babajide Komolafe First Bank of Nigeria Limited has deployed innovative financial inclusion enhancing products and services aimed at achieving customer base of 32 million by 202. Disclosing this in an interview with Vanguard, Deputy Managing Director of the Bank, Mr. Gbenga Shobo, said: “Our current focus is the growth of customer base to 32 million and increasing our agent touchpoints to 100,000 by the end of 2020.” He added that the vision of the bank is to build on the milestones it has so far achieved in its contributions to the attainment of the national financial inclusion goal. These milestones according to Shobo include the financial empowerment of 76,000 Firstmonie agents who have so far processed over 390 million transactions. He pointed out that the bank’s Firstmonie agent network has created over 228,000 indirect jobs with about 26 percent of the agent’s females resulting in financial independence and freedom. “The past three years have been exciting for us. As a bank we have been able to create a distribution channel, agent network, that covers every part of the country, build an ecosystem to empower individuals and communities, and provide a no-frills account (mobile wallet) that allows customers carry out basic financial transactions without a bank account. The wallet is Telco and Bank agnostic and can be funded from multiple sources – debit card, bank account, and via any of our Agent locations”, he stated. Shobo noted that though Nigeria has the potential to drive a significant proportion of the adult population to financial inclusion, progress has been slowed due to the barriers of financial illiteracy, lack of products and services that fit the under banked, affordability as well as the low awareness levels for available products. FirstBank, he added has however deployed innovative products and services designed to overcome the challenges posed by these barriers. He said the products include Firstmonie Wallet, an electronic wallet that allows individuals the convenience of making and accepting payments electronically with their mobile numbers. “Another product is FirstGem accounts, a bespoke solution to foster empowerment of women across the socio-economic strata. FirstGem which has recorded significant milestones is a product that is ideal for all women aged 18 years and above, whether working professionals or entrepreneurs; and it comes in two variants, savings, and current accounts. “We also have Agent Credit, is an innovative digital lending solution designed to solve immediate liquidity challenges especially when Agents account balances are depleted/low despite having cash at hand. Furthermore is BVN enrolment in local communities, where potential customers are registered through our agent banking network in local communities. “We complement the above by conducting financial literacy trainings. This is done through train the trainer methods in local communities, using key personnel of the bank, namely our digital product sales executives and trade developers.”
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19102020 - #EndSARS: Stop Army's planned Op Crocodile Smile

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