Companies
Nigeria gains momentum on ease of doing business
The World Bank Group (World Bank) on Tuesday, 31 October 2017, published its 2018 Doing Business Report (the Report) in which Nigeria is now ranked 145th among 190 economies on the ease of doing business index. Nigeria gained 24 places on the latest ranking, an improvement on the prior year’s ranking of 170.
According to the Report, Nigeria alongside El Salvador, India, Malawi, Brunei Darussalam, Kosovo, Uzbekistan, Thailand, Zambia and Djibouti are the top 10 improved countries on the ease of doing business index. Nigeria’s improvement on the ranking is a result of a slew of reforms carried on by the Presidential Enabling Business Environment Council (PEBEC) to improve the business environment in Nigeria.
The PEBEC team worked with various stakeholders across private and public sectors to implement a sixty-day action plan which touched on the various elements that flowed into the doing business assessment. Without doubt, the latest ranking is a direct consequence of the focused pursuit of what the PEBEC Secretariat described as “low hanging fruits” with fundamental impacts on the business environment. The target was to move up by a minimum of 20 positions, with the expectation now greatly exceeded.
Based on the 2018 Report, Nigeria improved in seven indicators with the greatest overall jump being on access to credits. Nigeria is now adjudged as the 6th best country in the world in terms of access to credit and the 2nd best in Africa. Nigeria is the 3rd best country in Sub-Saharan Africa in terms of the protection offered to minority shareholders.
| Indicators | Ranking | No of movements | Position in Africa | |
| 2018 | 2017 | |||
| Starting a business | 130 | 138 | 8 | 23 |
| Dealing with construction permits | 147 | 174 | 27 | 28 |
| Registering property | 179 | 182 | 3 | 45 |
| Getting credit | 6 | 44 | 38 | 2 |
| Paying taxes | 171 | 182 | 11 | 35 |
| Getting electricity | 172 | 180 | 8 | 33 |
| Protecting minority investors | 33 | 32 | (1) | 3 |
| Trading across border | 183 | 181 | (2) | 43 |
| Enforcing contracts | 96 | 139 | 43 | 12 |
| Resolving insolvency | 145 | 140 | (5) | 31 |
| Overall doing business ranking | 145 | 169 | 24 | 21 |
The ease of paying taxes improved by 11 positions with Nigeria now ranked 171st globally and 35th in Sub-Saharan Africa. The improved ranking is traceable to the new efforts at leveraging technology and simplifying the process of filing tax returns and paying taxes. The fact that the overall doing business ranking for Nigeria is much better than the ease of paying taxes is a pointer to the amount of efforts required to get the tax system simplified. Nigeria’s position as the 35th country out of 48 African countries covered in the report should continue to create the hunger and passion at making fundamental structural changes to the system of taxation in Nigeria. The crux of the issue with Nigeria tax system is structural and a fall-out of our federal structure. The quantity and quality of legislation governing our tax system require urgent change.
It is important to note that only Lagos and Kano were covered by the World Bank survey. While this result may be a fair reflection of the overall business environment, the sample size should be put in perspective. For example, while some taxpayers have started taking advantage of the Integrated Tax Administration System (ITAS) to submit their tax returns online, most of the tax filings in 2017 were done manually as most tax offices are yet to migrate to the e-filing platform and still require taxpayers within their jurisdiction to submit manual returns. As the Tax Authorities intensify their campaign and work towards National roll-out of initiatives that are still on pilot in few States, the effect will be felt in more places.
While it is certain that Nigeria’s economy stands to benefit from an improved ranking on the ease of doing business index, all hands must be on deck to ensure that the initiatives that brought about this progress are sustained and improved upon. Nigerian businesses and taxpayers must also take the challenge of demanding for quality service and insisting that reform initiatives announced by government are actualized. Constant feedback and suggestions for improvement should also be provided to affected agencies and organs of government based on field experience. This will ensure that the improvement being noticed is sustained for the collective benefit of the business community.
Companies
Dangote Cement to extend clinker export to other African countries
Dangote is on course to sell more clinker across West Africa and commence shipment to Central Africa in H2 2020.
The Management of Africa’s largest cement producer, Dangote Cement Plc (DCP), disclosed during a virtual event yesterday, that the cement producer is set to commence clinker export to other African countries within the next few weeks.
The Acting Group CFO, Guillaume Moyen, made this known in his presentation at the joint virtual event with NSE, tagged “Facts Behind the Figures and Sustainability report’’ on Wednesday, 24th September, 2020.
Backstory: In its half-year report, the Management of Dangote disclosed that on 12 June 2020, the maiden shipment of 27.8Kt of clinker from Nigeria to Senegal left the Apapa Export Terminal.
READ: Dangote Cement’s N100 billion CP admitted on FMDQ Securities Exchange
The Management reiterated that the company is on course to sell more clinker across West Africa, and commence shipment to Central Africa in H2 2020. As it is in line with the Group’s vision of making West and Central Africa, cement and clinker independent, with Nigeria the main export hub.
The absence of limestone in much of West Africa, especially those in the coastal states, forces those countries to import bulk cement and clinker from Asia and Europe, and this is quite expensive.
READ: BUA Cement Plc posts impressive unaudited H1, 2020 financial results
However, Dangote Cement plans an ‘export–to–import’ strategy, positioning Nigeria as the main export hub of the continent, in a bid to serve West and Central Africa countries from Nigerian factories, making the region cement and clinker independent.
This is consistent with the Group’s vision of cementing Africa’s economic independence, as this would lead to lower clinker cost for pan-African operations, due to the proximity of Nigeria to these countries, as clinker landing cost will be cheaper.
READ: Nigerian billionaires lose billions amid COVID-19 pandemic
The Management emphasized that this is possible, as Nigeria can serve a potential market of 15 countries, with over 350 million people, given the county’s relative abundance of quality limestone, especially in key Southern regions.
It is important to note that DCP’s clinker volume, according to figures contained in its H1 2020 results, has increased to 60Kt from 12kt in H1 2019, which translates to 400% increase.
The benefits of DCP’s export strategy
It is noteworthy that the innovative strategy of Dangote Cement Plc is expected to;
- Cement Africa’s economic independence, and contribute to the improvement of continental, regional, and intra-regional trade, as the company seeks to make regional and continental free trade agreement a reality.
- Ensure that the increase in production due to exports, leads to increase in capacity utilization in the Nigerian operation, and in turn, reduces fixed cost per tonnes.
- Increase foreign revenue exchange for the Nigerian operation, and offset foreign exchange risks.
- Reduce clinker landing cost, by leveraging on the proximity of Nigeria to other African countries.
Some of the benefits of our export strategy are Higher capacity utilization of our facilities; Ecowas benefits; Foreign exchange; and Lower clinker cost for Pan-Africa operations – @guillaumemoyen
#NSEhostsDangote https://t.co/TGd2N6JGZw pic.twitter.com/TvPGHunsb0— The Nigerian Stock Exchange (@nsenigeria) September 23, 2020
Companies
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.
READ: Guinness Nigeria finding it hard to refinance its loans due to dollar scarcity
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.
READ: GTBank, Zenith Bank, UBA record losses, investors down by N12.2 billion
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.
Companies
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.
READ: GTBank revenue for H1, 2020 rises to N225.14 billion
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.
READ: Vitafoam’s 2020 oncourse to make light–work of 2019
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.
READ: Heineken scoops more Nigerian Breweries shares in insider disclosure
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.
READ: Flour Mills and its diverse challenges
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.
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