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The Nigerian Economy Today 11/5/2017

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Summary of the top buisness, economic and political news in Nigeria.

 

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  • The Managing Director of Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim, has urged the public to ignore rumours of financial distress in some banks. He said the NDIC had continued to closely monitor the challenges facing the industry in order to further safeguard depositors’ interest in the banking system. He listed challenges affecting the banking industry to include poor corporate governance, insider loans and non-performing loans.  Link

 

  • As the 2016 budget closes, the Federal Ministry of Finance says N1.2 trillion capital releases have been made in line with government’s increased focus on capital expenditure. “The following releases were made: Power, Works and Housing received the largest allocation of N307.4 billion. “This is followed by Defence and Security, N171.9 billion and Transport and Aviation, N143.12 billion. “Other sectors were Agriculture and Water Resources; and Education and Health,” it stated. Link

 

  • The apex regulator of the Nigerian capital market, the Securities and Exchange Commission, has said shareholders who buy shares with fake and unverifiable names and cannot provide clear proof of ownership, will lose their entire holdings covered in the deals. Link

 

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  • The Federal Government on Wednesday at an auction raised N110 billion worth of bonds to mature in 2021, 2027 and 2037, the Debt Management Office, DMO, said in Abuja. According to DMO’s auction result obtained from its website on Thursday, fewer bonds were sold at the auction than the N140 billion anticipated. The website stated that subscriptions from investors for the July 2021 bond, stood at N17.29 billion, while that of March 2027, which was reopened, stood at N52.5 billion. Also, subscriptions for the April 2037 bond, which was also re-opened stood at N91.67 billion. Link

 

  • Direct cash payment is now compulsory for all investors in the capital market effective from September 1st 2017. This verdict was given yesterday by the Capital Market Committee (CMC), the umbrella body of all capital market stakeholders under the leadership of the Securities and Exchange Commission (SEC). Once those shares are sold, payment is made directly into the client’s account. This is in contrast to the current practice where proceed from sale of securities is paid directly into the stockbroker’s account and the stockbrokers then deduct transaction fees and remit the balance to the client’s account. Link

 

  • Nigerian telecoms regulator, the Nigerian Communications Commission (NCC) will soon develop a regularly-published ranking index for telecoms companies as part of measures to firm up healthy competition among telecoms firms.  Link

 

  • Securities and Exchange Commission, SEC, yesterday, disclosed that it has set aside N5 billion as seed capital for the take off of the proposed Nigerian Capital Market Development Fund, NCMDF.  Link

 

  • Nigeria’s dollar liquidity constraints are likely to persist for the foreseeable future, despite the recent improvements in foreign exchange earnings and availability, Moody’s Investors Service has said. “Oil prices are highly unlikely to return to the $100 per barrel level that would lead to greater foreign exchange inflows,” Moody’s Vice President (Senior Credit Officer and co-author of the report), Aurélien Mali, said. Link

 

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  • The N2 billion long-term facility Heritage Bank Plc and Central Bank of Nigeria under the Commercial Agriculture Credit Scheme (CACS) gave to Triton Aqua Africa Limited (TAAL) has continued to boost job creation. The fund was disbursed to enable TAAL expand its aquaculture businesses- nursery/hatchery for the production of fingerlings and brood stock in Ikeja; and earthen ponds for catfish and tilapia in Asejire, Iwo and Gambari towns in Oyo. Link

 

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  • The Bank of Industry (BoI) has reduced its interest rates for corp members under its Graduate Entrepreneurship Fund (GEF) programme, to zero per cent interest charge from 9%, as part of measures to encourage entrepreneurship and aid business growth. According to the BOI, the GEF scheme being implemented by it in partnership with the National Youth Service Corps (NYSC) Directorate is currently on the second edition and has recorded over N262.9 million disbursements to 177 successful candidates. Link

 

  •  Three subsidiaries of a Nigerian oil and gas conglomerate, Obijackson Group – Nestoil, Energy Works Technology (EWT) and B&Q Dredging have been listed on the London stock exchange. Link

 

  • Barely a few months after Zenith bank shareholders rejected the proposed capital raising exercise, the bank has come up with another method of raising capital. In a note to the Nigerian Stock Exchange (NSE), the bank signified its intention to raise$500 million in the second tranche of its Global Medium Term Note Programme. Link

 

  • The board of directors of Capital Hotels Plc has announced the appointment of Chief Victor C N Oyolu has the new Chairman of the Company following the retirement of Mr. G.M. Ibru and also the appointment of Mr. Robert Itawa as the new Executive Director of the Company. Link

 

  • Unilever Nigeria Plc., has declared a dividend of N378 million following the approval of the company’s shareholders at the 92nd Annual General Meeting of the Company held in Lagos on Thursday, May 11 in Lagos. The dividend declared amidst a challenging operating year and environment translates to a dividend payout of 10 kobo gross per share to the shareholders Link

 

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  • Shareholders at the  48th Annual General Meeting  of Union Bank Plc plans to  launch a rights issue in the second quarter of 2017 to raise up to Fifty Billion Naira (N50 billion) in Tier 1 capital as it looks to accelerate business growth and position as a leading commercial bank in Nigeria. Link 

 

  • The Ogun State government has signed a Memorandum of Understanding (MoU) with the a private firm, Sino-African Investment Free Trade Zone Company, for the construction of a four-lane, 10- kilometre Lusada-Igbesa Ogun Quangdong Free Trade Zone road in Ado-Odo Local Government Area. Link

 

  • Oyo State Government Thursday said it has terminated its contract of 400 registered Private Waste Contractors in the state for lack of capacity to undertake the job awarded to them.The government said the termination of contract awarded in 2013 took effect from May 5, 2017. He said it was sad that the contractors were getting money from the public, but failed to render the services. Link

 

  • The State of Osun received the least allocation from the Federation Account Allocation Committee between January and March, collecting N1.19bn. An infographics released by BudgIT on Thursday indicated that the Rauf Aregbesola-led state got the amount after debt deductions and other obligations amounting to N7.22bn. However, Akwa Ibom got the highest allocation for the first quarter, after deductions for debts and other obligations. It received N34.88bn ahead of Rivers’ N26.83bn;  Bayelsa received N22.97bn;  Delta got N21.54bn; N19.03bn was allocated to Lagos, while Kano received N14.02bn. Link

 

  • The Bill for an Act to amend the Pension Reform Act to provide for definite percentage a retiree can withdraw from his Retirement Savings Account passed second reading at the Senate on Wednesday. The bill was meant to ameliorate the sufferings of retirees who found it difficult to withdraw their benefits after retirement. It would enable retirees to withdraw 75 per cent of their benefits as lump sum after retirement rather than the current provision which allowed for withdrawal of only 25 per cent. Link

 

 

 

Mudeerat Olawunmi is a graduate of Business Administration with over 5 years experience in online data gathering and analysis. Wunmi is a data analysts at Nairametrics and helps ensure that our readers get some of the most important macro and micro economic data required to help make investing decisions.

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Oil & Gas: DPR announces 2020 marginal field licensing round

While we see the need for these asset sales to generate much-needed revenue for the Federal Government, we are concerned that a bidding process under the current environment will be fraught with difficulties.

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DPR

The Department of Petroleum Resources (DPR) on Monday announced the commencement of the 2020 marginal field bid round. This bid round is coming 18 years after the last bid round in 2002 and is open to indigenous oil & gas companies and investors interested in participating in the exploration and production business in Nigeria. Marginal fields are known oil or gas discoveries on an IOC-owned block and where there has been no activity in at least the last 10 years. With the agreement of the IOC, the DPR carves-out a piece of land surrounding the discovery and this becomes a Marginal field. On this occasion, there are 57 marginal fields available for bidding, including 11 fields revoked by the DPR.

The exercise would be conducted electronically and would include expression of interest/registration, pre-qualification, technical and commercial bid submission, and bid evaluation. The process is expected to be completed in six months. The first bid round that was formally organised by the FGN began in 2001 and was concluded in 2003. At the end of the bid round, 24 licenses were awarded to 31 indigenous companies. Another bid round was proposed in 2013 with a lot of preparation and guidelines released. Unfortunately, it never held.

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Flagging off this bid round under the current economic situation points to the government’s urgent need for funds. According to the DPR guidelines, interested bidders will be required to pay a total of US$115,000 and N5m in non-refundable statutory fees comprising an application fee of N2 million per field, Bid Processing Fee of N3million per field, Data Prying fee of $15,000 per field, Data Leasing fee of $25,000 per field, Competent Persons Report of $50,000 and $25,000 for Fields Specific Report.

While we see the need for these asset sales to generate much-needed revenue for the Federal Government, we are concerned that a bidding process under the current environment will be fraught with difficulties. Firstly, the current fluctuations in oil prices may mean that intending investors may base their valuations on pricing models that can become unrealistic in the near term and then are unable to develop such fields acquired. Many local companies have been hard hit by the effects of covid -19 and the ensuing significant decline in oil prices, hence they may not have sufficient cash flows nor be able to raise needed funds from both local and international banks.

In addition, we see regulatory difficulties hampering interest in the fields. For example, the lack of passage of the long awaited Petroleum Industry Bill (PIB) remains a significant deter. Furthermore, the recently passed Deep Offshore and Inland Basis Production Sharing Contracts (Amendment) Act (DOA) has made investments in Nigeria oil & gas assets less attractive. These negative regulatory sentiments has led to many IOCs decreasing investments in the Nigerian oil & gas industry. Overall, we think this may result in many of the fields ending up in the hands of individuals with cash but with no industry expertise. Again, with the current economic crunch, many of the fields may be sold significantly below their fair value.

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CSL Stockbrokers Limited, Lagos (CSLS) is a wholly-owned subsidiary of FCMB Group Plc and is regulated by the Securities
and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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May Output Cut: OPEC+ records 86% compliance as Nigeria beats expectation

Some of the non-OPEC member countries recorded less than impressive compliance rates. Kazakhstan, Brunei, and South Sudan recorded 47%, 22%, and 13% compliance respectively.

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OPEC+ output cut: The oil cartel records 86% compliance as Nigeria beats expectation

As OPEC+ pushes for an extension of the current output cut of 9.7 million barrels beyond June, a new report suggests that the alliance may have achieved a fairly impressive level of compliance in May, the first month of the biggest global effort to curtail oil production.

Energy Intelligence estimates that the alliance achieved an 86% compliance rate (in May) with the production cut of 9.7 million barrels per day that was agreed for both May and June. This contradicts the 74% compliance rate that was earlier reported by a Reuters survey.

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The massive output cut is intended to counter the dramatic slump in global oil prices which was triggered by the coronavirus pandemic and supply glut. The output cut has since helped to move up prices well above the April lows.

Meanwhile, some West African OPEC members fell short of their pledged output cuts, with Angola and Congo recording compliance rates of 54% and 20%, respectively. Gabon’s May output actually exceeded its volumes in October 2018, which was chosen as the baseline month against which the cuts are measured.

(READ MORE: Oil prices hit 2-months high as Bonny light rises to $33.9/barrel over vaccine test optimism)

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However, the compliance by Nigeria for the month of May was better than the expected 83% after its output fell by around 260,000 barrels per day between April and May. This is, however, at variance with 52% compliance that was disclosed by Nigeria’s Minister of State for Petroleum, Timipre Sylva.

Worry for Nigeria as forecast shows OPEC countries will face a challenging 2020 , Why OPEC may not change output cut soon, Weaker oil demand overshadows proposed OPEC output cuts, as oil price dips , Nigeria tops compliance list, as OPEC’s December crude output drops, OPEC, Russia planning biggest oil cut ever, OPEC+ output cut: The oil cartel records 86% compliance as Nigeria beats expectation

Some of the non-OPEC member countries recorded less than impressive compliance rates. Kazakhstan, Brunei, and South Sudan recorded 47%, 22%, and 13% compliance respectively.

The OPEC+ alliance’s overall compliance rate was lifted by the performances from four of its top five producers, which were close to 100%. Among these heavyweights, only Iraq lagged well behind with a compliance level of less than 50%.

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Russia failed to live up to its obligations under previous OPEC+ deal. But after removing condensate, which is not counted as part of its current quota, its oil output is 8.6 million barrels per day in the month of May; indicating an impressive 96% compliance rate.

Patricia

Compliance is expected to improve in the month of June.

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COVID-19 palliative: Sanwo-Olu concludes Homegrown School Feeding Programme

The homegrown school feeding programme, was targeted at providing food packages for 37,589 households of pupils in Public Primary Schools years 1-3

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Sanwo-Olu, COVID-19: Lagos ramps up measure to smash disease as it begins fumigation, Covid-19: Total lockdowm imminent as Lagos fears confirmed cases could hit 39,000, Hotels to remain shut in Lagos, as manufacturing and construction companies get conditional waivers, COVID-19 palliative: Sanwo-Olu concludes Homegrown School Feeding Programme

The modified homegrown school feeding programme, launched on May 21, as part of palliatives offered by the Lagos state government to cushion the economic impact of the COVID-19 pandemic, has been concluded.

The programme, which basically modified the already existing school feeding programme, was targeted at providing food packages for 37,589 households of pupils in Public Primary Schools years 1-3.

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According to an official tweet from the Lagos state government, the programme was concluded on Tuesday, June 2, 2020.

The Executive Chairman of Lagos State Universal Basic Education Board, LASUBEB, Mr. Wahab Alawiye-King, noted that the distribution of the packages to the beneficiary households took off on May 21, and was spread across 202 centres across the 20 Local Government Education Authorities in the State.

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(READ MORE:COVID-19: Lagos receives N200 Million, 5 ambulances from BUA Foundation)

Items contained in the Take-home rations:

Each beneficiary of the packages received a take-home ration made up of “5kg Bag of Rice; 5kg Bag of Beans; 500 ml Vegetable Oil; 750ml Palm Oil; 500mg Salt; 15 pieces of eggs and 140gm Tomato Paste,” which is expected to assist the parents and guardians feed the children as they remain at home during the prolonged holiday.

What you should know:

The Federal government also introduced a modified homegrown school feeding programme on May 15 to be coordinated by the Honourable Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Umar Farouq.

Farouq noted during one of the Presidential Task Force media briefings that the distribution of Take-Home Rations (THR) to the households of the children on the programme as a feasible method, after exploring several options of reaching children in vulnerable households.

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Each Take-Home Ration is said to be worth N4,200, although the Minister has not released full details of the programme.

Patricia

According to the World Food programme, there are 17 countries currently distributing Take-Home rations to school children. In Liberia, Take Home Rations have been distributed since 2019.

 

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