Summary of the top business, economic and political news in Nigeria today.
- Barring further economic upheavals or exogenous shocks, the Nigerian economy is expected to exit the recession in 2018, the Statistician General of the Federation, Dr. Yemi Kale has said. In an interview with Economic Confidential in Abuja, Dr. Kale said that “if oil prices do not collapse and the Niger Delta remains stable, by 2018 we would recover”. Link
- To achieve the President Muhammadu Buhari administration’s target of meeting the nation’s needs and end the importation of petroleum products by 2019 which cost the country N3.35 trillion last year, the Ministry of Petroleum Resources is executing a three-pronged strategy. According to the minister of State of Petroleum, Dr. Emmanuel Ibe Kachikwu, the expected benefits from the strategy include: foreign exchange conservation, job creation, ensuring stability of the market place in terms of pricing, stability of production as well as earning some credibility in OPEC as an oil producing country which successfully transited from importation to local processing. Link
- The total pension assets under the Contributory Pension Scheme rose to N6.4tn at the end of April this year. Figures obtained by our correspondent from the National Pension Commission revealed that 55 per cent of the fund, totalling N3.6tn, was invested in FGN bonds. Link
- The Nigeria Railway Corporation has suspended the Lagos-Kano train operations for two weeks following the collapse of the Tatabu Bridge in the Mokwa Local Government Area of Niger State after a heavy rainfall, which affected the rail line. The Managing Director, NRC, Mr. Fidet Okhiria, stated this in Lagos, adding that the two-week break was to enable the corporation to erect a temporary bridge along the affected rail track that would facilitate the movement of trains. Link
- The Itakpe-Ajaokuta-Warri rail line currently under construction will be ready by December, the Minister of Mines and Steel Development, Dr. Kayode Fayemi, has said. Link
- The Minister of Power, Works and Housing, Mr. Babatunde Fashola, has urged the reconstituted Quantity Surveyors Registration Board of Nigeria to develop a cost data bank to support the formation of cost estimates that will serve as a reference material for stakeholders in the construction industry. Link
- The Central Bank of Nigeria, CBN, has expressed concern over the low level of credit penetration in the country which is estimated at 5.3 per cent of the nation’s adult population. Comparing credit penetration in Nigeria to that of other African countries, Head, Financial Inclusion Secretariat, CBN, Mrs. Temitope Akinfadeyi Akinfadeyi said: “Year-on-year biographic survey from EFiNA looks from 2010, 2012, to 2016 reveal that our credit is struggling. Link
- The Anti Counterfeit Collaboration has cautioned consumers against the purchase of counterfeit home appliances and other products. The Chairman, ACC, Mr. Desmond Adeola, explained that counterfeit home appliances and products were dangerous and could lead to building collapse. Link
- Nigeria’s central bank plans to sell $100 million at a special foreign currency auction on Monday, the bank said as part of its efforts to improve dollar liquidity and reduce pressure on the local naira currency. Link
- Shareholders of quoted firms on the Nigerian Stock Exchange (NSE) in 2017 lost N166.86 billion in income, as dividend payment by 84 companies fell by 31 percent to N363.69 billion this year, compared with N530.55 billion paid in the 2016 dividend season. Link
- The move to enthrone a broadband-driven economy in the country has got a boost with the revelation at the weekend that about 60 firms are currently bidding for five Infrastructure Companies (InFraCo) licences in the telecommunications sector. Nigerian Communications Commission (NCC) has licensed two operators, MainOne Cables for Lagos and IHS for North Central region in 2015. The other five licences, which the commission is currently working on, will go to North East; North West; South East; South West and South South regions. Link
- Nigeria plans to auction 140 billion naira ($460 million) in bonds on June 21, the Debt Management Office said on Friday. The debt office will sell 40 billion naira of bonds due in 2021 and 50 billion naira each of bonds due in 2027 and in 2037, using a Dutch auction system. Link
- Ahead of the Sallah celebration by Muslim faithful, the Lagos state government will resume sales of LAKE rice at approved retail outlets across the state from today. Link
- The 11 electricity distribution companies (DisCos) need to invest additional $7.7billion to upgrade their assets to provide the services required of them, the former Minister of Power, Prof Barth Nnaji, has said. Nnaji, also Chairman, Geometric Power Limited, said each investor would need at least $700 million, saying they require investment to the tune of seven times the cost of the purchase of the assets. Link
- A power sector shortfall of N931bn accumulated since 2015 has compounded the power outage issue in Nigeria, industry statistics and experts have noted. This is as 24 power Generation Companies (GenCos) are yet to be paid N340bn in the electricity market, thereby blocking further chances of getting enough gas to generate electricity. Link
- Daily turnover on Nigeria’s new foreign exchange window for investors has reached eighty million dollars and the vast improvement is now encouraging players to bet on the convergence of rates that should bring in more investment in stocks and bonds. Link
- The Director General of the National Broadcasting Commission, Mallam Is’haq Modibbo Kawu, has said that Nigeria will adopt phased implementation of switch over from analogue to digital broadcasting (Digital Switch Over) (DSO), beginning with six states. According to Kawu, the six states that have been chosen include Enugu in the Southeast, Kaduna in the Northwest; Gombe in the Northeast; Kwara in the North Central; Delta in the South-South and Osun in the Southwest. Link
- Nigeria has moved down by five places to 119 out of 127 economies ranked in the 2017 Global Innovation Index from the 114th position it attained in 2016. A report on the ranking stated that Nigeria performed poorly in the areas of political stability and safety, rule of law, ease of paying taxes, and innovation linkages. Link
- The foremost rating agency, Agusto & Co, has assigned the ‘A’ (PFM) rating to CrusaderSterling Pensions Limited. Link
- The Group General Manager, Public Affairs Division of the Nigerian National Petroleum Corporation, NNPC, Ndu Ughamadu, on Sunday said it had crushed the price of diesel by 42 per cent. He said in a statement in Abuja that diesel had a huge downslide over the last six months, following key strategic interventions by NNPC. Link
- Global manufacturing giants have indicated interest in injecting about N300 billion into their operations to consolidate their market share in the key sectors of the economy. The Nation’s check at the weekend showed a pipeline of about six major equity investments by foreign majority core investors in six quoted companies, with nearly half of the transactions already undergoing issuance. LafargeHolcim, world’s leading building material company, plans to inject N102 billion in its Nigeria-based pan-African operations, Lafarge Africa Plc. Unilever Plc, United Kingdom, will inject N38 billion in Unilever Nigeria Plc. Diageo Plc, United Kingdom, plans to take up additional N21 billion in Guinness Nigeria. Heineken BV was said to be considering injecting more than N15 billion in Nigerian Breweries while world’s largest brewer, Anheuser-Busch InBev plans to invest some N125 billion in its Nigerian operations. Link
- The formal announcement of the exit of Mubadala Development Company as the largest shareholder of Etisalat Nigeria Limited and a new ownership structure is being delayed to allow investment, debt and regulatory issues to be resolved, those briefed about the talks have said. Link
- The Lagos State Government has signed a Memorandum of Understanding with Messrs Brains and Hammers Limited for the provision of housing units in the state. The Commissioner for Housing, Mr. Gbolahan Lawal, said the government had set a target to deliver 200,000 housing units annually in the next five years in order to bridge the state’s housing deficit of three million. Link
- The Minister of Power, Works and Housing, Mr Babatunde Fashola on Saturday signed a N4.34 Billion Memorandum of Understanding (MoU) with Dangote Group and other stakeholders for the rebuilding of Apapa Wharf Road. The project is to be funded by AG Dangote Construction Company Ltd, an arm of the Dangote Group, the Nigerian Ports Authority (NPA) and Flour Mills of Nigeria. Link
- Rand Merchant Bank Nigeria Limited has received approval from FMDQ OTC Securities Exchange to register its N80bn commercial paper programme on the FMDQ platform. This programme positions RMB Nigeria to easily and quickly raise short-term finance from the debt market. Link
- The board of directors of Julius Berger Plc announces the appointment of Mrs. Gladys Olubusola Talabi and Mrs. Belinda Joke Disu as the new Non Executive Directors of the company effective from June 30th 2017. Link
- Paul Gbededo, group managing director of Flour Mills Nigeria plc, has put the contribution of Apapa to the national economy at about N20 billion daily. Link
- Ecobank Group, at the weekend received shareholders’ approval to raise $400 million in convertible bond to boost the Group’s capital position. Link
- Nigeria’s fast rising airline, Air Peace has acquired another aircraft, bringing to 13 the number of aircraft in its fleet. Link
- The Delta State House of Assembly at the weekend approved the state government’s request for a N1 billion loan to enable it access the Universal Basic Education Fund. Link
- Former Plateau Governor, Joshua Dariye, on Monday begged an FCT High Court in Gudu to adjourn his trial over alleged N1.1 billion scam on medical grounds. Link
Zenith Bank notifies NSE of share dealings by insiders
In three separate transactions, major stakeholders purchased 5 million units of Zenith Bank’s shares.
Zenith Bank Plc, Group Managing Director, Mr Ebenezer Onyeagwu, and two Executive Directors, Messrs. Dennis Olisa and Ahmed Umar Shuaib, have purchased an aggregate of 5 million units of additional Zenith Bank Plc shares.
This was disclosed by the bank, in a notification sent to the Nigerian Stock Exchange, and seen by Nairametrics.
According to the notification, signed by the Company’s secretary, Michael Osilama Otu, the purchase was made in the bourse, over three transactions on the 16th and 17th of September, 2020.
As part of the regulatory requirements, the disclosure must be reported to the Nigerian Stock Exchange, especially when the trade is executed by a major shareholder or director of a listed firm.
Breakdown of the deal
According to the details of the deal verified by Nairametrics, Mr. Dennis Olisa pulled the highest deal as he purchased 2,000,000 additional units of Zenith Bank Plc’s shares at an average of N17.18 per unit, totaling N34.36 million. Mr. Ahmed Umar Shuaib also purchased 2,000,000 additional units of the Bank’s share, at an average price of N16.99 worth N33.98 million. Completing the trio was, Mr. Ebenezer Onyeagwu who purchased 1,000,000 additional units at an average of N17.05 worth N17.05 million.
This major purchase boosted the total number of trade deals (Volume) posted by the Bank in the NSE market, as the deals contributed about 11.61% of the Bank’s total deals between 16th and 17th of September, 2020.
What this means
Based on the recently released H1 2020 Financial Results of Zenith Bank, Mr. Ebenezer Onyeagwu had 45,500,000 direct shares as of June 30, 2020. Mr. Ahmed Umar Shuaib had 7,577,343 direct shares, while Mr. Dennis Olisa had 7,122,316 direct shares. All these remained unchanged from their reported shares in H1 2019.
With the addition of 1,000,000 shares, Mr. Ebenezer Onyeagwu’s stake increased to 46,500,000, indicating an increase of 2.19%. Mr. Ahmed Shuaib’s shares also leaped by 26.39% to 9,577,343, while Mr. Deniss Olisa’s shares increased by 28.08% to 9,122,316 direct shares.
This deal may signify that the Bank’s insiders expect an increase in share price. It is a positive signal to outsiders, coming from top insiders who are abreast with latest information on the Bank’s prospects.
This can play a vital role in stimulating a bullish trend. Zenith Bank’s share price is currently trading at N16.70 on the NSE.
Regardless of the impact of the pandemic on the income and revenue of banks, Zenith bank still remained one of the high-flying financial organizations in Nigeria. For example, the tier-1 bank’s gross earnings grew by 4.37% from N331.5 billion in H1 2019 to N346.1 billion in H1, 2020. Its Profit After Tax increased by 16.81% from N111.7 billion to N114.1 billion within the period under review. The aforementioned factors might have been the reason behind the recent bullish trend for its stock.
Fidelity Bank to raise N50 billion in bonds in Q4 to refinance existing debts
The new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
One of Nigeria’s second-tier commercial banks, Fidelity Bank Plc, has concluded plans to issue up to N50 billion ($131.3 million) in local bonds by the fourth quarter of 2020, in order to refinance existing debts as the yields drop.
The disclosure was made by the Chief Operations and Information Officer, Gbolahan Joshua, during an analyst call on Tuesday, September 8, 2020.
The crash of crude oil price globally, which was triggered by the novel coronavirus pandemic, has led to a decline in bond yields on the local debt market. This has made foreign investors to dump their local assets, leaving excess liquidity in the money market. This has also put a lot of pressure on the foreign exchange market as they look for dollars to repatriate their funds.
The Fidelity Bank top executive disclosed that the new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
The global economic situation has seen yields in the debt market drop from as high as 18% about 3 years ago to less than 5% for the one-year treasury bill.
Fidelity Bank had revealed that it expected to see a 15% drop in profit this year when compared to 2019 result due to the coronavirus pandemic. Its profit after tax increased by 21.9% to N12 billion for the half-year 2020.
The second-tier bank also disclosed that its income declined in the second quarter due to a downward review of lending rates on loans as a result of the economic downturn.
Heineken buys more units of Nigerian Breweries Plc
The Dutch firm has invested N276 million in NB since August, to increase its stake in the Brewer by 0.10%.
The major shareholder of the largest brewer in Nigeria, Heineken Brouwerijen B.V, has increased its stake in Nigerian Breweries, with the purchase of 233,110 additional units of Nigerian Breweries shares. This was disclosed by the company in a notification sent to the Nigerian Stock Exchange, which was seen by Nairametrics.
According to the notification, which was signed by the Company’s Secretary, Uaboi G. Agbebaku, the purchase was made on the bourse over two transactions on the 2nd and 3rd of September.
This disclosure is a regulatory requirement that must be reported to the Nigerian Stock Exchange, especially when a major shareholder or director of a publicly quoted company purchases shares in the company they own.
The analysis of these transactions indicates that the purchase consideration for the 233,110 additional units of Nigeria Breweries shares at an average price of N39.94 is put at N9.3 million.
This purchase and previous purchases further cement Heineken Brouwerijen B.V’s status as a major shareholder; the company has accumulated a total of 7,720,236 since 30th June.
As of June 30th, when Nigerian Breweries released its Half-year financial results and reviewed its shareholding pattern, the company had exactly 7,996,902,051 outstanding shares, with Heineken Brouwerijen B.V being the majority shareholder with 3,019,363,804 units, which amount to 37.76% of the total shares of the company outstanding.
Hence, with the current purchase of 233,110 additional units, and previous purchases in August and September 1, which amount to 7,487,126 units, Heineken’s ownership percentage of Nigeria Breweries is now put at 37.85%.
Insider transactions, both sales and purchases, are often an indication of how shareholders perceive a company’s valuation. It could also mean a possible capital raise or that the majority shareholders are strengthening their existing holdings.
In like manners, the purchase of the shares of Nigerian Breweries by Heineken and other majority shareholder has mopped up stray volumes on the bourse, and pushed the stock price higher by 29% or N9, from N31 it closed at on the 3rd of August to its current value of N40 with 38.2x earnings.
About the company
Nigerian breweries is the largest brewing company in Nigeria. It engages in the brewing and marketing of lager beer, stout and non-alcoholic malt drinks, and the bottling of the Schweppes range of soft drinks and Crush Orange. Its brands include Star, Gulder, Legend, Heineken, Maltina, Amstel Malta, Fayrouz, Climax, Goldberg, Malta Gold, and Life. These products are mainly sold in Nigeria and other neighbouring countries.
Key takes on NB’s financials
Nigerian Breweries was affected by the disruption in the global and domestic demand and supply chain, as profit after tax of the largest brewer dropped by as much as 58%, at the back of the adverse impact of the sharp contraction in economic activities.
The knock-on effect of the COVID-19 lockdown, which affected the trade segment of the business, affected the company sales and this triggered the 11% drop in revenue in the first half of the year.